Nova LifeStyle(NVFY) - 2022 Q4 - Annual Report

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].