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].
Nova LifeStyle(NVFY) - 2024 Q3 - Quarterly Report