Nova Lifestyle Reports Decreased Assets, Net Loss, and Increased Expenses in Latest Quarter

As of September 30, 2024, Nova Lifestyle, Inc. reported total assets of $5.06 million, a decrease from $6.24 million at the end of 2023. Current assets also fell to $3.12 million from $3.75 million, primarily due to a significant drop in cash and cash equivalents, which decreased from $369,137 to $162,285. However, accounts receivable saw a notable increase from $46,998 to $126,800, and inventories rose from $2.21 million to $2.44 million.

Total liabilities increased to $5.95 million from $5.74 million, with current liabilities rising to $4.40 million from $3.69 million. In contrast, noncurrent liabilities decreased from $2.05 million to $1.55 million. The company reported a total stockholders’ deficit of $(895,909), a significant decline from a positive equity of $496,354 at the end of 2023.

For the nine months ending September 30, 2024, net sales were $7.68 million, down 13% from $8.81 million in the same period of 2023. This decline was attributed to a complete drop in sales to Asia, previously bolstered by jade mat sales, which were liquidated in 2023. However, sales to North America increased to $7.51 million from $6.62 million. Gross profit improved to $3.39 million, reflecting a gross profit margin of 44%, up from 36% in the prior year.

Operating expenses surged to $7.78 million from $5.79 million, with general and administrative expenses rising by 13% to $4.43 million. Research and development expenses saw a dramatic increase to $1.97 million from just $10,144 in 2023. Consequently, the company reported a loss from operations of $(4.39 million), compared to $(2.61 million) in the previous year. The net loss for the nine months was $(4.49 million), compared to $(3.05 million) in 2023.

In terms of strategic developments, Nova Lifestyle plans to participate in four major U.S. furniture fairs annually to attract new customers and increase sales. The company is also developing innovative home decoration design IT software systems through its subsidiary, Nova Malaysia, to diversify revenue streams. Additionally, Nova Lifestyle aims to raise funds in the market during the second half of the year to enhance cash flow and investment capital.

The company has faced challenges, including a notice from NASDAQ regarding non-compliance with stockholders’ equity requirements. However, it submitted a compliance plan and believes it has regained compliance through a recent inventory transaction. The company continues to shift its focus away from low-margin products to improve profitability and has identified key factors affecting its operating results, including economic conditions and consumer preferences.