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)

Nevada

90-0746568

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

6565 E. Washington Blvd. Commerce, CA		90040
(Address of principal executive offices)		(Zip Code)

(323) 888-9999

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		NVFY		Nasdaq Stock Market

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 7,238,375 shares of common stock outstanding as of May 12, 2023.

Nova LifeStyle, Inc.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	1
	Condensed Consolidated Statements of Loss and Comprehensive Loss for the three months ended March 31, 2023 and 2022 (unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements for the three months ended March 31, 2023 and 2022 (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 6.	Exhibits	42

	Signatures	43

	March 31, 2023		December 31, 2022
	(Unaudited)
Assets

Current Assets
Cash and cash equivalents	$	649,400	$	1,374,167
Accounts receivable, net		262,641		288,478
Advance to suppliers		62,880		21,173
Inventories		4,165,449		4,932,642
Prepaid expenses		1,873,600		1,504,671
Other receivables		34,858		79,175

Total Current Assets		7,048,828		8,200,306

Noncurrent Assets
Plant, property and equipment, net		349,396		368,624
Operating lease right-of-use assets, net		2,466,645		2,660,977
Intangible assets, net		12,496		13,837
Lease deposit		71,066		71,146
Goodwill		218,606		218,606

Total Noncurrent Assets		3,118,209		3,333,190

Total Assets	$	10,167,037	$	11,533,496

	March 31, 2023			December 31, 2022

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable	$	416,184		$	321,261
Operating lease liability, current		723,732			736,428
Advance from customers		185,945			170,139
Accrued liabilities and other payables		314,230			413,599
Income tax payable		629			629
Other loan interest payable		—			621
Current liabilities of discontinued operations		—			—

Total Current Liabilities		1,640,720			1,642,677

Noncurrent Liabilities
Other Loan		149,815			150,000
Operating lease liability, non-current		1,786,888			1,971,386
Income tax payable		1,157,603			1,157,603

Total Noncurrent Liabilities		3,094,306			3,278,989

Total Liabilities		4,735,026			4,921,666

Contingencies and Commitments		-			-

Stockholders’ Equity
Common stock, $0.001 par value; 15,000,000 shares authorized, 7,245,393 and 7,119,180 shares issued and outstanding; as of March 31, 2023 and December 31, 2022, respectively		7,245			7,199
Additional paid-in capital		43,279,499			43,233,942
Accumulated other comprehensive income		74,135			77,242
Accumulated deficits		(37,928,868	)		(36,706,553	)

Total Stockholders’ Equity		5,432,011			6,611,830

Total Liabilities and Stockholders’ Equity	$	10,167,037		$	11,533,496


	Three Months Ended March 31,
	2023			2022

Net Sales	$	1,874,565		$	3,665,946

Cost of Sales		1,213,263			2,137,618

Gross (Loss) Profit		661,302			1,528,328

Operating Expenses
Selling expenses		714,514			768,333
General and administrative expenses		1,130,398			1,584,738

Total Operating Expenses		1,844,912			2,353,071

Loss From Operations		(1,183,610	)		(824,743	)

Other Income (Expenses)
Non-operating income		1,719			—
Foreign exchange transaction income (loss)		(5,383	)		17,763
Interest (expense) income, net		(1,909	)		(17,567	)
Financial expense		(33,132	)		(47,746	)

Total Other Expenses, Net		(38,705	)		(47,550	)

Loss Before Income Taxes and Discontinued Operations		(1,222,315	)		(872,293	)

Income Tax Expense		—			—

Loss From Continuing Operations		(1,222,315	)		(872,293	)

Loss From Discontinued Operations		—			(25,754	)

Net Loss		(1,222,315	)		(898,047	)

Other Comprehensive Loss
Foreign currency translation		(3,107	)		(54,873	)

Net Loss and Comprehensive Loss		(1,225,422	)		(952,920	)

Weighted average shares outstanding - Basic and Diluted		7,170,060			6,845,683

Loss from continuing operations per share of common stock
Basic and Diluted	$	(0.17	)	$	(0.13	)

Loss from discontinued operations per share of common stock
Basic and Diluted	$	—		$	(0.00	)

Net loss per share of common stock
Basic and Diluted	$	(0.17	)	$	(0.13	)


							Accumulated			Retained
					Additional		Other			Earnings			Total
	Common stock				Paid-in		Comprehensive			(Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficits)			Equity

Balance at beginning of period		7,198,680	$	7,199	$	43,233,942	$	77,242		$	(36,706,553	)	$	6,611,830

Stock issued to employees		-		-		885		-			-			885

Stock issued to consultants		-		-		16,000								16,000

Stock issued to designer		46,713		46		28,672								28,718

Foreign currency translation loss		-		-		-		(3,107	)					(3,107	)

Net loss		-		-		-					(1,222,315	)		(1,222,315	)

Balance at end of period		7,245,393	$	7,245	$	43,279,499	$	74,135		$	(37,928,868	)	$	5,432,011

Balance at January 1, 2023	$	2,914
Provision for the period		(261	)
Balance at March 31, 2023	$	2,653

Computer and office equipment	5 - 10 years
Decoration and renovation	5 - 10 years

	March 31, 2023			March 31, 2022

Net loss from continuing operations	$	(1,222,315	)	$	(872,293	)
Net loss from discontinued operations		-			(25,754	)
Net loss	$	(1,222,315	)	$	(898,047	)

Weighted average shares outstanding – Basic and Diluted *		7,170,060			6,845,683

Net loss from continuing operations per share of common stock
Basic and Diluted		(0.17	)		(0.13	)

Net loss from discontinued operations income per share of common stock
Basic and Diluted		-			(0.00	)

Net loss per share of common stock
Basic and Diluted	$	(0.17	)	$	(0.13	)

●	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●	Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Balance sheet items, except for equity accounts
March 31, 2023			RM 4.41 to 1
December 31, 2022			RM 4.40 to 1

Income Statement and cash flow items
For the three months ended March 31, 2023			RM 4.39 to

SEC Form 10-Q filed by Nova Lifestyle Inc.