Financial Performance - Net sales for the three months ended September 30, 2024, were $2.62 million, a 6% increase from $2.48 million in the same period of 2023, primarily due to a 19% increase in average selling price[243]. - Gross profit for the three months ended September 30, 2024, was $1.18 million, representing a gross profit margin of 45%, up from 43% in the same period of 2023[247]. - Operating expenses increased to $3.59 million for the three months ended September 30, 2024, compared to $2.12 million for the same period of 2023, driven by a 28% increase in general and administrative expenses[248]. - Net loss for the three months ended September 30, 2024, was $2.47 million, compared to a net loss of $1.29 million for the same period of 2023[251]. - For the nine months ended September 30, 2024, net sales were $7.68 million, a 13% decrease from $8.81 million in the same period of 2023, primarily due to a 43% decrease in sales volume[253]. - Gross profit for the nine months ended September 30, 2024, was $3.39 million, with a gross profit margin of 44%, up from 36% in the same period of 2023[256]. - Cost of sales for the nine months ended September 30, 2024, decreased by 24% to $4.29 million, with cost of sales as a percentage of sales decreasing to 56% from 64% in the same period of 2023[255]. - Sales to North America increased by $0.89 million to $7.51 million for the nine months ended September 30, 2024, compared to $6.62 million for the same period of 2023[254]. - Other expenses, net, decreased to $58,986 for the three months ended September 30, 2024, from $90,321 in the same period of 2023, primarily due to a decrease in foreign exchange loss[249]. - Income tax expenses for the three months ended September 30, 2024, were $211, a significant decrease from $147,371 in the same period of 2023, due to no taxable income from Nova Malaysia[250]. - Operating expenses increased to $7.78 million for the nine months ended September 30, 2024, up from $5.79 million in the same period of 2023, representing a 34% increase[257]. - Research and development expenses surged by 193%, reaching $1.97 million for the nine months ended September 30, 2024, compared to just $10,144 for the same period in 2023[257]. - Net loss for the nine months ended September 30, 2024, was $4.49 million, an increase from a net loss of $3.05 million for the same period in 2023[261]. - Cash used in operating activities was $1.13 million for the nine months ended September 30, 2024, a decrease of $2.65 million from cash provided by operating activities of $1.52 million in the same period of 2023[264]. Compliance and Regulatory Matters - On April 18, 2024, the company was notified by NASDAQ that it did not meet the requirement of maintaining a minimum of $2,500,000 in stockholders' equity for continued listing[192]. - The company submitted a compliance plan to NASDAQ on May 28, 2024, and received an extension until October 14, 2024, to regain compliance[194]. - Nova LifeStyle entered into orders to purchase inventories totaling $4,650,000, to be paid in 3,321,429 shares at $1.40 per share, which the company believes will help regain compliance with stockholders' equity requirements[195]. Financing and Capital Structure - The company received loan proceeds of approximately $139,802 under the Paycheck Protection Program and $176,294 from Cathay Bank, along with a $150,000 SBA loan[191]. - The company completed a registered direct offering in July 2021, raising gross proceeds of $3,120,622, and two private placements in May and August 2024 for $600,000 each[191]. - The company has increased its authorized shares from 3,000,000 to 250,000,000 as of September 5, 2023[203]. - Net cash provided by financing activities was $0.96 million for the nine months ended September 30, 2024, compared to $0 for the same period in 2023[268]. Operational Changes - The company has shifted a portion of its manufacturing from China to other Asian countries like Vietnam and India to mitigate tariff impacts[197]. - The company launched its Summer 2024 Collection in Las Vegas and High Point Markets, focusing on attracting higher-end customers[197]. Tax and Earnings - The income tax expense for the nine months ended September 30, 2024, was $5,087, significantly lower than $149,771 for the same period in 2023[208]. - The company maintained unrecognized tax benefits of approximately $0 as of September 30, 2024, indicating no anticipated significant changes in the next 12 months[219]. - The accumulated undistributed earnings from foreign subsidiaries were approximately $25.4 million as of September 30, 2024, with no deferred tax expense recorded[218]. Accounts Receivable and Credit Losses - As of September 30, 2024, the allowance for expected credit losses on accounts receivable was $1,281, compared to $532 as of December 31, 2023[205]. - The gross accounts receivable as of September 30, 2024, was $128,081, with $2,546 being over 90 days past due[205]. - As of September 30, 2024, gross accounts receivable totaled $128,081, with 61.6% or $78,930 collected by November 4, 2024[269]. - Advances to suppliers increased to $132,678 as of September 30, 2024, up from $93,740 at December 31, 2023[270]. - Advances to suppliers are generally received within 4 to 6 months from the date of advance payment, indicating a stable supply chain[206]. Legal and Governance - The company is not currently involved in any legal proceedings that could materially affect its business or financial condition[288]. - There were no insider trading arrangements adopted or terminated by the company's directors or executive officers during the quarterly period covered by the report[288]. Accounting Policies - The company adopted ASU 2017-04 for goodwill impairment tests beginning January 1, 2023, with no impact on the financial statements[236]. - The company recognizes revenue from product sales when control is obtained by the customer, typically upon shipment[222]. Currency and Translation - The translation rate for Malaysian Ringgit to U.S. dollars was RM4.12 to 1 as of September 30, 2024, compared to RM4.59 to 1 as of December 31, 2023[230].

Group 1: Company Performance - Nova Lifestyle Inc. experienced a significant stock price decline of 5.30%, reaching $1.34 per share with a trading volume of 6,867 shares [1] - The latest financial report indicated an operating income of $2.69 million and a net loss of $563,489, resulting in an earnings per share of -$0.22 [2] - The gross profit was reported at $1.19 million, with a price-to-earnings ratio of -0.30, and currently, there are no institutional ratings or recommendations for the stock [2] Group 2: Industry Context - The furniture and appliances sector overall decreased by 1.12%, while Nova Lifestyle's stock volatility was noted at 3.89% [1] - Other companies in the same industry, such as Energy Focus, Inc., Viomi Technology, and Northann Corp., showed notable gains, while Lovesac Company, Mohawk Industries, and Irobot Corporation had significant trading activity with turnover rates of 0.67%, 0.66%, and 0.56% respectively [3] - Stocks like Fgi Industries Ltd C/Wts, Viomi Technology, and Purple Innovation, Inc. experienced higher volatility with swings of 13.12%, 10.37%, and 7.93% respectively [3] Group 3: Company Overview - Nova Lifestyle designs and distributes modern-style furniture for both residential and commercial markets, offering retail and online purchasing options globally [4] - The company manages various bedding component sales and its lifestyle furniture brands, including Diamond Sofa, are produced in the U.S. and Asia, primarily catering to distributors and retailers of mid-to-high-end private-label home products [4]

Financial Performance - Net sales for the three months ended June 30, 2024 were $2.69 million, a decrease of 40% from $4.46 million for the same period in 2023, primarily due to a 69% decrease in sales volume[195]. - Gross profit was $1.19 million for the three months ended June 30, 2024, compared to $1.45 million for the same period in 2023, representing a decrease of $0.25 million, while the gross profit margin increased to 44% from 32%[199]. - Operating expenses were $1.69 million for the three months ended June 30, 2024, a decrease of 7.2% from $1.83 million for the same period in 2023, primarily due to a 28% decrease in selling expenses[200]. - Net loss for the three months ended June 30, 2024 was $0.56 million, compared to a net loss of $0.54 million for the same period in 2023[203]. - For the six months ended June 30, 2024, net sales were $5.06 million, a decrease of 20% from $6.34 million for the same period in 2023, mainly due to a 52% decrease in sales volume[205]. - Gross profit for the six months ended June 30, 2024 was $2.21 million, an increase of $0.10 million from $2.11 million for the same period in 2023, with a gross profit margin of 44% compared to 33%[208]. - Operating expenses for the six months ended June 30, 2024 were $4.20 million, an increase of 14.4% from $3.67 million for the same period in 2023, driven by a significant increase in research and development expenses[209]. - Net loss for the six months ended June 30, 2024, was $2.03 million, compared to a net loss of $1.76 million for the same period in 2023[212]. Compliance and Legal Matters - The company is currently not in compliance with NASDAQ listing rules, failing to maintain a minimum of $2,500,000 in stockholders' equity[157]. - The company submitted a compliance plan to NASDAQ on May 28, 2024, and received an extension until October 14, 2024, to regain compliance[158]. - The company settled a class action lawsuit for $750,000 without admitting liability[229]. - The Company is not currently involved in any legal proceedings that could materially affect its business or financial condition[234]. Inventory and Sales - The company reported a liquidation sale of jade mats inventory for $2.00 million in June 2023, marking its exit from the jade mats business[155]. - Sales to Asia decreased by 100% to $0 million for the three months ended June 30, 2024, compared to $1.99 million for the same period in 2023, due to liquidation sales of jade mats[196]. - Sales to North America increased by $0.76 million to $4.96 million for the six months ended June 30, 2024, from $4.19 million for the same period in 2023, primarily due to more sales orders received[206]. Financing and Cash Flow - The company received loan proceeds of approximately $139,802 under the Paycheck Protection Program (PPP) and an additional loan of $176,294 from Cathay Bank[156]. - Net cash used in operating activities was $690,415 for the six months ended June 30, 2024, an increase in cash outflow of $2.12 million from $1.43 million cash provided in the same period of 2023[215]. - Net cash provided by financing activities was $760,000 for the six months ended June 30, 2024, compared to $0 for the same period in 2023[217]. - The company plans to meet liquidity requirements primarily through cash flow from operations and collections of accounts receivable[213]. Operational Changes - The company has shifted a portion of its manufacturing from China to other Asian countries, such as Vietnam and India, to mitigate the impact of U.S. tariffs[161]. - The company launched its Summer 2024 Collection in Las Vegas and High Point Markets, focusing on attracting higher-end customers[161]. - The company operates in a single reportable segment focused on the design and sale of furniture, with operations in the U.S. and Malaysia[186]. Accounting and Financial Reporting - The company adopted ASU 2017-04 for goodwill impairment tests beginning January 1, 2023, with no impact on financial statements[188]. - The company recognizes revenues when control of goods is obtained, following a five-step model under ASU No. 606[178]. - As of June 30, 2024, the company maintained an allowance for expected credit losses of $449, down from $532 as of December 31, 2023[166]. - The expected credit losses provision for the six months ended June 30, 2024, was a reversal of ($83), compared to a reversal of ($196) for the same period in 2023[166]. - The gross accounts receivable as of June 30, 2024, was $44,918, with none over 90 days past due[166]. - The income tax expense for the six months ended June 30, 2024, was $4,876, compared to $2,400 for the same period in 2023[169]. - The company had accumulated undistributed earnings from foreign subsidiaries of approximately $25.2 million as of June 30, 2024[175]. - Unrecognized tax benefits were approximately $0 as of June 30, 2024, indicating no anticipated significant changes in the next 12 months[175]. Shareholder and Equity Matters - The company completed a registered direct offering of common stock in July 2021, raising gross proceeds of $3,120,622[156]. - The company increased its authorized shares from 3,000,000 to 250,000,000 as part of an amendment to its Articles of Incorporation[164]. - Advances to suppliers were $50,793 as of June 30, 2024, down from $93,740 at December 31, 2023[218]. - Long-term taxes payable recorded as of June 30, 2024, amounted to $640,000, primarily from a one-time transition tax[219]. - As of June 30, 2024, 77.1% of accounts receivable outstanding had been collected[217]. Other Financial Information - Other expenses, net decreased by $96,995 to $60,949 for the three months ended June 30, 2024, compared to $157,944 for the same period in 2023, mainly due to a decrease in foreign exchange loss[201]. - Other expenses decreased by $161,335 to $35,314 for the six months ended June 30, 2024, primarily due to a foreign exchange gain increase of $204,310[210]. - Working capital deficit decreased by $382,527 to $322,470 as of June 30, 2024, from a net working capital of $60,057 at December 31, 2023[214]. - No insider trading arrangements were adopted or terminated by the Company's directors or executive officers during the quarterly period[234]. - There are no unregistered sales of equity securities or use of proceeds reported during the quarterly period[234].

Financial Performance - Net sales for the three months ended March 31, 2024, were $2.38 million, a 27% increase from $1.87 million in the same period of 2023, driven by a 30% increase in sales volume[245]. - Gross profit increased to $1.02 million for the three months ended March 31, 2024, compared to $0.66 million for the same period of 2023, resulting in a gross profit margin of 43%[248]. - Operating expenses rose to $2.50 million for the three months ended March 31, 2024, from $1.84 million in the same period of 2023, with research and development expenses increasing by 636,524% to $0.75 million[249]. - The net loss for the three months ended March 31, 2024, was $1.46 million, compared to a net loss of $1.22 million for the same period of 2023[252]. - Cash used in operating activities was $0.22 million for the three months ended March 31, 2024, a decrease in cash outflow by $0.51 million from $0.73 million in the same period of 2023[256]. - Sales to North America increased by 32% to $2.33 million for the three months ended March 31, 2024, compared to $1.76 million for the same period of 2023[246]. - Cost of sales increased by 12% to $1.36 million for the three months ended March 31, 2024, with cost of sales as a percentage of sales decreasing to 57% from 65%[247]. - Other income, net was $25,635 for the three months ended March 31, 2024, compared to other expenses, net of $38,705 for the same period of 2023, representing an increase of $64,340[250]. Assets and Liabilities - As of March 31, 2024, the company had a working capital deficit of $441,348, a decrease of $501,405 from net working capital of $60,057 at December 31, 2023[255]. - As of March 31, 2024, 85.3% of accounts receivable outstanding had been collected, with gross accounts receivable totaling $137,264[259]. Taxation - The company had no income tax expense for the three months ended March 31, 2024, and 2023[208]. - Unrecognized tax benefits were approximately $0 as of March 31, 2024, with no anticipated significant changes in the next 12 months[218]. - The corporate tax rate decreased from 35% to 21% effective for tax years beginning after December 31, 2017, due to the Tax Cuts and Jobs Act of 2017[214]. - The Company is subject to Malaysia income taxes at a statutory rate of 24%[212]. - The Tax Cuts and Jobs Act of 2017 introduced new taxes on certain foreign-sourced earnings, effective for tax years beginning after January 1, 2018[213]. - The CARES Act, enacted on March 27, 2020, includes provisions relaxing limitations on the deductibility of interest and the use of net operating losses[215]. - Beginning in 2022, the Tax Cuts and Jobs Act requires taxpayers to amortize research and development expenditures over five years[216]. - As of March 31, 2024, the accumulated undistributed earnings from foreign subsidiaries were approximately $25.3 million, which were previously subject to U.S. tax, GILTI, or the one-time transition tax[217]. Business Operations - The company sold its entire jade mats inventory for $2.00 million in liquidation sales in June 2023, exiting the jade mats business[196]. - Nova LifeStyle completed a registered direct offering of common stock in July 2021, raising gross proceeds of $3,120,622[197]. - The company shifted a portion of its manufacturing from China to other Asian countries, such as Vietnam and India, to mitigate tariff impacts[199]. - The company launched its Summer 2023 Collection in the Las Vegas and High Point Markets, focusing on attracting higher-end customers[199]. - The Company operates exclusively in one business segment: the design and sale of furniture[233]. Stock and Shares - A 1-for-5 reverse stock split was executed on May 22, 2023, affecting the company's authorized shares of common stock[203]. - The company increased its authorized shares from 3,000,000 to 250,000,000 as of September 5, 2023[204]. Credit and Receivables - The allowance for expected credit losses increased to $1,373 as of March 31, 2024, from $532 as of December 31, 2023[206]. - Nova LifeStyle reported a gross receivable of $137,264 as of March 31, 2024, with no amounts over 90 days past due[206]. Currency and Exchange Rates - The exchange rate for translating Malaysian Ringgit to U.S. dollars was RM4.72 to 1 as of March 31, 2024[231]. - The financial statements are presented in U.S. dollars, with foreign currency transactions translated at prevailing exchange rates[229]. Market Conditions - The company aims to maintain a relatively high gross profit margin despite challenges in the North American market due to high interest rates and inflation[199].

Sales Performance - For the year ended December 31, 2023, the largest selling product categories were sofas (37%), jade mats (18%), and beds (13%) from continuing operations [39]. - Sales to North America accounted for 79.1% of total sales from continuing operations in 2023, down from 94.2% in 2022 [44]. - Revenues from Diamond Bar accounted for 82.4% of total sales from continuing operations in 2023, while Nova Malaysia's revenues accounted for 17.6% [59]. - Sales to North America accounted for 79.1% of total sales from continuing operations in 2023, down from 94.2% in 2022, indicating a shift towards diversifying international sales [59]. Business Operations - The company sold its entire jade mats inventory for $2.00 million in liquidation sales in June 2023, exiting the jade mats business [44]. - The company sold its entire jade mats inventory for $2.00 million in liquidation sales in June 2023, exiting the jade mats business due to the negative impact of COVID-19 from 2020 to 2022 [45]. - The company has 27 full-time employees worldwide as of December 31, 2023, with 24 in the U.S. and 3 in Malaysia [28]. - Approximately 36% of total purchases in 2023 were from two principal suppliers, highlighting the company's reliance on a limited number of suppliers [55]. Financial Actions - A 1-for-5 reverse stock split was executed on May 22, 2023, consolidating every 5 shares into one [26]. - The company increased its authorized shares from 3,000,000 to 250,000,000 on September 5, 2023 [27]. Strategic Focus - The company focuses on integrating new sources of distribution and manufacturing to expand its customer base and drive growth [24]. - The company aims to respond to changing market conditions and take advantage of upturns in global and local economies [44]. - The company has established long-term relationships with worldwide customers by providing high-quality, cost-effective sourcing solutions [25]. - The company plans to expand the "Diamond Sofa" brand and introduce new brands for direct sales in the U.S. and international markets [50]. - The company aims to increase direct sales to a broad range of retailers and chain stores across the U.S. and international markets [50]. Product Development - The company invested $3.12 million in research and development in 2023, focusing on developing Virtual and Augmented reality software and AI systems [66]. - The company has developed over 230 products exclusively for international markets, showcasing its commitment to product diversification [48]. - The company anticipates introducing new products under the "Diamond Sofa" brand on a quarterly basis for the U.S. market [65]. Shipping and Logistics - The company experienced significant delays in shipping from Asia due to the pandemic, but shipping and related costs returned to normal by June 2022 [56]. - The company markets its products through wholesale and retail channels, as well as various online platforms worldwide [22].

Financial Performance - Net sales from continuing operations for Q3 2023 were $2.48 million, an 18% decrease from $3.02 million in Q3 2022[242]. - The average selling price decreased by 12%, and sales volume decreased by 7% compared to the same period last year[242]. - Sales to North America decreased by 12% to $2.43 million in Q3 2023 from $2.77 million in Q3 2022, primarily due to inflation and tightening monetary policy[243]. - Cost of sales decreased by 25% to $1.41 million in Q3 2023, with cost of sales as a percentage of sales decreasing to 57% from 62% in Q3 2022[244]. - Gross profit was $1.06 million for Q3 2023, down from $1.14 million in Q3 2022, with a gross profit margin of 43% compared to 38%[246]. - Operating expenses increased to $2.12 million in Q3 2023 from $2.09 million in Q3 2022, with selling expenses decreasing by 8% and general and administrative expenses increasing by 5%[248]. - Other expenses, net, decreased significantly to $90,321 in Q3 2023 from $758,994 in Q3 2022, mainly due to a reduction in foreign exchange loss[249]. - Income tax expenses were $147,371 in Q3 2023, compared to $0 in Q3 2022, due to net taxable income from Nova Malaysia[250]. - Loss from continuing operations was $1.29 million in Q3 2023, an improvement from a loss of $1.71 million in Q3 2022[251]. - The net loss for Q3 2023 was $1.29 million, compared to a net loss of $1.71 million in Q3 2022[253]. - Net sales from continuing operations for the nine months ended September 30, 2023, were $8.81 million, a decrease of 16% from $10.50 million for the same period in 2022[256]. - The average selling price decreased by 39%, while sales volume increased by 37% during the same period[256]. - Sales to North America decreased by 33% to $6.62 million, primarily due to inflation and reduced purchasing power[257]. - Gross profit from continuing operations was $3.17 million for the nine months ended September 30, 2023, compared to a gross loss of $0.88 million for the same period in 2022, representing an increase of $4.06 million[260]. - Operating expenses decreased to $5.79 million for the nine months ended September 30, 2023, from $6.58 million for the same period in 2022, a reduction of 12%[262]. - Other expenses, net, decreased by $538,750 to $286,970 for the nine months ended September 30, 2023, primarily due to a reduction in foreign exchange loss[263]. - The net loss for the nine months ended September 30, 2023, was $3.05 million, compared to a net loss of $8.30 million for the same period in 2022[267]. - Cash provided by operating activities was $1.52 million for the nine months ended September 30, 2023, an increase of $4.97 million from cash used in operating activities in the same period of 2022[270]. Operational Changes - Nova LifeStyle transitioned away from low-margin products to improve gross profit margins and net profitability, focusing on high-end product lines[197]. - The company launched its Summer 2023 Collection at the Las Vegas and High Point Markets, targeting a higher-end customer demographic[197]. - Nova LifeStyle is actively pursuing alternative product lines, particularly in the health-oriented furniture segment, which has shown positive growth potential[192]. - The company has shifted some manufacturing from China to other Asian countries like Malaysia and India to mitigate the impact of U.S. trade tariffs[197]. - The de-registration and liquidation of Nova HK were completed in February 2023, with its assets transferred to Nova Malaysia[190]. - The company experienced significant operational disruptions due to COVID-19, impacting its showrooms and manufacturing capabilities[193]. Financial Position - Nova LifeStyle's financial resources are currently believed to be adequate to finance operations for the next 12 months, following a registered direct offering that raised gross proceeds of $3,120,622 in July 2021[194]. - The company received approximately $139,802 under the Paycheck Protection Program (PPP) in May 2020 to support its operations during the pandemic[194]. - As of September 30, 2023, the allowance for bad debt was $692, down from $3,420 as of September 30, 2022, indicating a significant reduction in expected credit losses[204]. - The gross receivable as of September 30, 2023, was $69,203, with $302 over 90 days past due, reflecting the company's credit management practices[204]. - The company maintains an allowance for potential credit losses based on historical bad debt experience and current economic trends, reflecting proactive risk management[204]. - The company recorded no unrecognized tax benefits as of September 30, 2023, indicating a stable tax position with no anticipated significant changes in the next 12 months[216]. - The accumulated undistributed earnings from foreign subsidiaries were approximately $25.5 million as of September 30, 2023, with no deferred tax expense recorded for U.S. federal and state income tax[215]. - Long-term taxes payable as of September 30, 2023, amounted to $0.64 million, primarily due to a one-time transition tax recognized in 2017[279]. - The company elected to pay the one-time transition tax over eight years starting from April 2018[280]. - As of September 30, 2023, 95% of accounts receivable outstanding had been collected, indicating improved cash flow management[273]. - As of September 30, 2023, $9,150 or 12% of advances to suppliers had been delivered in the form of furniture purchases[276]. Stock and Securities - A 1-for-5 reverse stock split was executed on May 22, 2023, affecting the company's authorized and outstanding shares[201]. - The authorized shares of common stock were increased from 3,000,000 to 250,000,000 as per the amendment approved on September 5, 2023[202]. - The company filed a new shelf registration statement on October 13, 2023, allowing for the sale of securities up to a total amount of $55,000,000[278]. - The previous shelf registration statement, effective from October 15, 2020, expired on October 15, 2023, with gross proceeds from a prior offering amounting to $3,120,622[277]. Market and Currency Risks - The translation rate for Malaysian Ringgit (RM) to U.S. dollars was RM4.69 to 1 as of September 30, 2023, compared to RM4.40 to 1 as of December 31, 2022, showing a depreciation of the RM[228]. - Quantitative and qualitative disclosures about market risk are not required[283]. - There are no off-balance sheet arrangements that materially affect the company's financial condition or operations[281]. - The company has not entered into any financial guarantees or derivative contracts that are not reflected in its consolidated financial statements[282]. - The company does not have any retained or contingent interest in assets transferred to unconsolidated entities[282]. - The company has not engaged in any variable interest arrangements with unconsolidated entities[282].

Financial Performance - Net sales from continuing operations for Q2 2023 were $4.46 million, a 17% increase from $3.81 million in Q2 2022, primarily driven by a 149% increase in sales volume[243]. - Cost of sales decreased by 59% to $3.02 million in Q2 2023, compared to $7.36 million in Q2 2022, with cost of sales as a percentage of sales dropping to 68% from 193%[246]. - Gross profit for Q2 2023 was $1.45 million, compared to a gross loss of $3.55 million in Q2 2022, resulting in a gross profit margin of 32% versus a gross loss margin of 93%[248]. - Operating expenses decreased by 14% to $1.83 million in Q2 2023 from $2.13 million in Q2 2022, with selling expenses down by 27%[250]. - Loss from continuing operations was $0.54 million in Q2 2023, significantly reduced from $5.69 million in Q2 2022[253]. - Net loss for Q2 2023 was $0.54 million, compared to a net loss of $5.69 million in Q2 2022[255]. - For the six months ended June 30, 2023, net sales were $6.34 million, down from $7.48 million in the same period of 2022[257]. - Gross profit for the six months ended June 30, 2023, was $2.11 million, compared to a gross loss of $2.02 million in the same period of 2022[257]. - Loss from operations for the six months ended June 30, 2023, was $1.56 million, a decrease from $6.50 million in the same period of 2022[257]. - The net loss was $1.76 million for the six months ended June 30, 2023, compared to a net loss of $6.59 million for the same period in 2022[269]. Revenue and Sales Trends - Net sales from continuing operations for the six months ended June 30, 2023, were $6.34 million, a decrease of 15% from $7.48 million for the same period in 2022, primarily due to a 46% decrease in average selling price, partially offset by a 56% increase in sales volume[258]. - Sales to North America decreased by 41% to $4.19 million for the six months ended June 30, 2023, compared to $7.10 million for the same period in 2022, mainly due to inflation and reduced purchasing power[259]. Operational Changes - Nova LifeStyle transitioned away from low-margin products to improve gross profit margins, which is expected to adversely impact revenue and net profit in the short term[198]. - The company is shifting a portion of its manufacturing from China to other Asian countries such as Vietnam and India to mitigate the impact of U.S. trade tariffs[198]. - The company launched a line of high-end physiotherapeutic jade mats in 2019, targeting therapy clinics and hospitality sectors in Southeast Asia[193]. - The company has limited experience in Southeast Asia, which may require considerable management attention and resources[193]. Financial Position and Cash Flow - As of June 30, 2023, the gross accounts receivable amounted to $1,206,030, with $208,478 being over 90 days past due[205]. - The allowance for bad debt was maintained at $2,718 as of June 30, 2023, compared to $2,104 as of June 30, 2022[205]. - Net cash provided by operating activities was $1.43 million for the six months ended June 30, 2023, an increase of $2.75 million from cash used in operating activities for the same period in 2022[273]. - Net cash used in investing activities was $2.47 million for the six months ended June 30, 2023, an increase from $1,487 used in the same period in 2022, primarily due to a software project[275]. Regulatory and Compliance - The company completed the de-registration and liquidation of Nova HK in February 2023, transferring its assets to Nova Malaysia[190]. - The company adopted ASU 2016-13 and ASU 2022-02 effective January 1, 2023, with no impact on the financial statement presentation or disclosures[235]. - The company recorded long-term taxes payable of $0.64 million as of June 30, 2023, primarily arising from a one-time transition tax recognized in 2017[282]. - No off-balance sheet arrangements that materially affect financial condition or results of operations[284]. - No financial guarantees or commitments to guarantee third-party payment obligations[285]. Market Conditions - The markets in North America (excluding the U.S.) are experiencing a slowdown, potentially entering a recession due to high interest rates and inflation[198]. - Nova LifeStyle's operations in Malaysia faced multiple closures due to COVID-19, with the showroom reopening on March 5, 2021, after a nationwide lockdown[194]. - The exchange rate for translating Malaysian Ringgit (RM) to U.S. dollars was RM4.67 to 1 as of June 30, 2023[229].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-36259 NOVA LIFESTYLE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 6565 E. Washington Blvd. Co ...

Sales Performance - For the year ended December 31, 2022, the largest selling product categories were sofas (41%), beds (15%), and chairs (11%) from continuing operations [41]. - In 2021, the largest selling product categories were sofas (47%), beds (15%), and coffee tables (7%) from continuing operations [41]. - In 2022, sales to North America accounted for 94.2% of total sales from continuing operations, down from 97.9% in 2021, while sales to other regions increased from 2.1% to 5.8% [46]. - The company’s revenues from Diamond Bar accounted for 99.5% of total sales from continuing operations in 2022, highlighting its reliance on this subsidiary [58]. Employee Information - As of December 31, 2022, the company had 28 full-time employees worldwide, with 24 in the U.S., 3 in Malaysia, and 1 in Hong Kong [26]. - The U.S. corporate office employed 24 full-time employees, while operations in Malaysia and Hong Kong employed 3 and 1 full-time employees, respectively [68]. - The company believes that relations with its employees are satisfactory [68]. - There are no collective bargaining agreements in place with employees [68]. COVID-19 Impact - The company experienced significant shipping delays and increased costs from Asia due to the COVID-19 pandemic, although shipping costs returned to normal by June 2022 [28]. - The ongoing COVID-19 pandemic has adversely affected revenue generation in 2022 due to government-imposed quarantines and supply chain disruptions [46]. - The company has implemented changes to ensure employee safety in response to the COVID-19 pandemic [26]. Product Development and Marketing - The company has developed over 230 products exclusively for international markets, showcasing its extensive product range [48]. - The company aims to introduce new products under the Diamond Sofa brand on a quarterly basis for the U.S. market, indicating a commitment to innovation [64]. - The company anticipates increasing internet sales under the Diamond Sofa brand through third-party shopping portals and its own website [58]. - The company has resumed participation in major trade shows since 2021, which were previously suspended due to COVID-19, to enhance brand visibility and product offerings [52]. Business Strategy - The company has established long-term relationships with worldwide customers by providing high-quality, large-scale, and cost-effective sourcing solutions [24]. - The company’s products are marketed through wholesale and retail channels as well as various online platforms worldwide [21]. - The company has been actively integrating new sources of distribution and manufacturing aligned with its growth strategies [23]. - The company plans to expand direct sales and marketing efforts in North America, particularly in the U.S., which is the largest market for imported furniture [50]. Financial Information - The company invested $10,917 in research and development in 2022, a decrease from $110,287 in 2021, indicating a potential shift in R&D focus [65]. - The company’s functional currency is the U.S. Dollar (USD) [20]. - The company has faced uncertainties in market growth projections due to rapidly changing customer industries [16].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-36259 NOVA LIFESTYLE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 6565 E. Washington Blvd ...