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Nova LifeStyle Sales Grew 72% in 2012 Third Quarter; Consumer Embrace of Urban Contemporary Home Furnishings Led Strong Gains in the U.S. and Worldwide

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COMMERCE, CA -- (Marketwire) -- 11/14/12 -- Nova LifeStyle, Inc. (OTCQB: STVS) (OTCBB: STVS) (website: www.novalifestyle.com), a rapidly growing U.S. based designer, manufacturer and global distributor of urban contemporary furniture, today announced another quarter of record sales in its third quarter ended September 30, 2012. Sales grew 72% to $19.20 million, up from $11.19 million in the same period last year. Growth was fueled by strong demand for the Company's products around the world, with triple digit gains achieved in the U.S., and double digit gains in Europe and China. Net income in the 2012 third quarter declined slightly to $1.24 million, from $1.68 million in the year earlier quarter, primarily because keeping pace with strong global demand required utilization of higher cost third party manufacturers.

On a per share basis, earnings in the third quarter of 2012 were $0.07 on 18,709,596 diluted shares compared with $0.10 per share in 2011 on 16,641,815 diluted shares.

Sales Up 76% Through First Nine Months of 2012
The year over year sales gain for the nine month period ended September 30, 2012 was 76%. Sales reached a record $46.35 million, up from $26.08 million in the same period in 2011, reflecting year to date quarter by quarter sequential sales gains. Net income in the first nine months of 2012 grew 12% to $3.65 million, or $0.20 per share on 18,652,892 diluted shares from $3.27 million, or $0.24 per share, on 13,522,150 diluted shares in the 2011 period.

The Company noted that the increase in diluted shares outstanding in the three month and nine month periods in 2012 was primarily a consequence of two successful private placements in late 2011 and early 2012 which netted the Company a combined $5.61 million to finance growth.

Gains Achieved Globally

Sales in North America of the Company's Diamond Sofa brand urban contemporary furniture grew 110% year over year in the 2012 third quarter, reaching $7.82 million, as it continued to add new "top 100" furniture retailers and distributors to its customer base. Despite a decision to temporarily maintain marketing efforts in Europe rather than increase them, European sales in the quarter were up 85% to $4.87 million. Overall sales in China during the 2012 third quarter increased 83% to $5.07 million including wholesalers, agents and branded sales to the Company's 100+ domestic franchise stores. Sales to other Asian countries also continued to grow in the quarter reaching $1.26 million.

Gross Margin Target Remains 30%

While gross profit grew 20% to $3.83 million in the 2012 third quarter, gross profit margin declined to 20% from a year earlier 29% for the reasons noted above. Additionally, the Company cited costs for raw material and labor in China, and costs in connection with building a new factory in Dongguan. Nevertheless, it believes that gross profit margins will stabilize at about 30% in the future for several reasons. First, the Company's new factory is now in a test phase with most construction completed. Second, recent inflation figures in China indicate that inflation has begun to moderate. Further, accompanying the sales volume increase of 22% in the 2012 third quarter was an increase in average selling price of 54%. Going forward, the Company is focused as well on increasing the percentage of higher margin products in its sales mix. A particular focus will be on increased direct sales to consumers at its growing franchise units in China as well as on increased Internet sales following the recent establishment of its Internet infrastructure in China. The Company also has seen steady quarter over quarter improvements in inventory turnover, as well as in accounts receivable collections which it expects will continue.

On Target For Growth Goals This Year

Ms. Tawny Lam, president of the Company, and a Co-founder of Diamond Sofa in the U.S., commented, "While never fully satisfied, we are pleased with our progress thus far this year, in particular the strong growth and excitement generated by our contemporary furniture brands in the U.S. and around the world. We design our furniture to fill the needs of modern urban consumers and obviously are succeeding. We remain very comfortable about achieving our growth goals for the year, which are full year sales growing to between $50 million and $58 million (mid-range: +25%) from $43.2 million in 2011, and net income increasing to between $7 million and $8 million (midrange: +39%) from $5.4 million last year."

Excitement Building for 2013

Mr. Jeffrey Wong, CEO, Chairman and Co-founder of the Company, added, "Looking ahead we already have in place a very strong foundation for continuing gains in 2013. In particular, this includes the planned start up by year end of production for IKEA in our new 161,460 square foot production line adjacent to our existing factory. As previously announced, we believe this will generate between $20 million and $25 million in new sales in 2013. In addition, we recently announced our first shipment of "Made in the USA" luxury natural latex mattresses to selected franchise stores in China. As 2013 progresses, we see this business growing increasingly rapidly, generating high margin sales that could equal or exceed our revenue forecast for sales to IKEA. Of course, we also will remain focused on other "Made in the USA" products we can sell in China where the possibilities really are unlimited and we have a jump on competition with our own growing distribution network in place. Further, any pickup in the world economy, especially in housing, should help us substantially, as home furnishings will be near or at the top of consumers' desired purchase lists."

About Nova LifeStyle, Inc.

Nova LifeStyle, Inc., a U.S. company headquartered in California, is a fast growing, innovative designer and manufacturer of modern LifeStyle furniture, primarily sofas, dining rooms, cabinets and bedrooms in matching collections. Nova's products are made in the U.S and Asia. Nova's collections of LifeStyle furniture brands include Diamond Sofa (www.diamondsofa.com), Colorful World, Giorgio Mobili and others. Nova's products feature urban contemporary styles with comfort and functionality and upscale luxury designs appealing to LifeStyle-conscious middle and upper middle-income consumers in the U.S., China, Europe and elsewhere in the world. To learn more about Nova LifeStyle, Inc., please visit www.novaLifeStyle.com.

Safe Harbor Statement

All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Nova's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Nova's filings with the Securities and Exchange Commission.


NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) Nine Months Ended Three Months Ended September 30, September 30, ------------------------ ------------------------ 2012 2011 2012 2011 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited)Net Sales(Including sales to related party of $0 and $902,638 during the nine months ended September 30, 2012 and 2011; and $0 and $277,056 during the three months ended September 30, 2012 and 2011, respectively) $46,351,192 $26,079,694 $19,204,877 $11,187,474Cost of Sales 35,690,294 18,645,205 15,369,908 7,994,772 ----------- ----------- ----------- -----------Gross Profit 10,660,898 7,434,489 3,834,969 3,192,702 ----------- ----------- ----------- -----------Operating Expenses Selling expenses 2,322,996 1,216,546 968,443 421,437 General and administrative expenses 3,457,455 2,187,875 1,096,354 770,877 Loss on disposal of plant, property and equipment 123,587 -- -- -- ----------- ----------- ----------- -----------Total Operating Expenses 5,904,038 3,404,421 2,064,797 1,192,314 ----------- ----------- ----------- -----------Income From Operations 4,756,860 4,030,068 1,770,172 2,000,388 ----------- ----------- ----------- -----------Other Income (Expenses) Non-operating income (expense) (7,397) 21,719 15,642 11,245 Foreign exchange transaction gain (loss) 39 (79,450) (23,936) (18,721) Financial expense (54,341) (49,821) (7,443) (33,499) ----------- ----------- ----------- -----------Total Other Expenses, Net (61,699) (107,552) (15,737) (40,975) ----------- ----------- ----------- -----------Income Before Income Tax 4,695,161 3,922,516 1,754,435 1,959,413Income Tax Expense 1,047,646 655,859 510,542 277,824 ----------- ----------- ----------- -----------Net Income 3,647,515 3,266,657 1,243,893 1,681,589Other Comprehensive IncomeForeign currency translation (78,267) 423,204 (29,182) 187,219 ----------- ----------- ----------- -----------Comprehensive Income $ 3,569,248 $ 3,689,861 $ 1,214,711 $ 1,868,808 =========== =========== =========== ===========Basic weighted average shares outstanding 18,460,955 13,451,350 18,518,089 16,431,723 ----------- ----------- ----------- -----------Diluted weighted average shares outstanding 18,652,892 13,522,150 18,709,596 16,641,815 ----------- ----------- ----------- -----------Basic net earnings per share $ 0.20 $ 0.24 $ 0.07 $ 0.10 =========== =========== =========== ===========Diluted net earnings per share $ 0.20 $ 0.24 $ 0.07 $ 0.10 =========== =========== =========== =========== NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2012 (UNAUDITED) AND DECEMBER 31, 2011 September 30, December 31, 2012 2011 -------------- -------------- (Unaudited)AssetsCurrent Assets Cash and cash equivalents $ 1,712,185 $ 2,505,179 Accounts receivable, net 24,452,857 18,974,612 Accounts receivable - related party -- 28,289 Due from factor -- 203,351 Advance to suppliers 1,614,369 349,767 Inventories 2,778,627 1,848,081 Prepaid expenses and other receivable 202,350 113,853 Deferred tax asset 156,208 156,974 -------------- --------------Total Current Assets 30,916,596 24,180,106 -------------- --------------Noncurrent Assets Heritage and cultural assets 127,873 128,687 Plant, property and equipment, net 8,594,748 8,721,186 Construction in progress 2,319,560 91,466 Construction deposit 796,241 634,830 Lease deposit 27,652 - Goodwill 218,606 218,606 Intangible assets, net 1,220,310 724,465 Deferred tax asset, net 187,782 118,144 -------------- --------------Total Noncurrent Assets 13,492,772 10,637,384 -------------- --------------Total Assets $ 44,409,368 $ 34,817,490 ============== ============== NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2012 (UNAUDITED) AND DECEMBER 31, 2011 September 30, December 31, 2012 2011 ------------- ------------- (Unaudited)Liabilities and Stockholders' EquityCurrent Liabilities Accounts payable $ 5,081,639 $ 6,758,058 Line of credit 4,535,745 -- Advance from customers 77,608 91,021 Accrued liabilities and other payables 925,930 834,128 Taxes payable 863,740 198,984 ------------- -------------Total Current Liabilities 11,484,662 7,882,191 ------------- -------------Noncurrent Liabilities Deferred rent payable 54,122 58,949 Income tax payable 4,407,302 4,016,266 ------------- -------------Total Noncurrent Liabilities 4,461,424 4,075,215 ------------- -------------Total Liabilities 15,946,086 11,957,406 ------------- -------------Contingencies and CommitmentsStockholders' Equity Common stock, $0.001 par value; 75,000,000 shares authorized, 18,536,567 and 17,898,267 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively 18,537 17,898 Additional paid-in capital 19,107,845 17,074,535 Subscription receivable (1,950,000) (1,950,000) Statutory reserves 6,241 6,241 Accumulated other comprehensive income 2,060,707 2,138,974 Retained earnings 9,219,952 5,572,436 ------------- -------------Total Stockholders' Equity 28,463,282 22,860,084 ------------- -------------Total Liabilities and Stockholders' Equity $ 44,409,368 $ 34,817,490 ============= =============





Contacts:
Corporate Contact:
Tawny Lam
President, Nova LifeStyle, Inc.
Tel: (323) 888-9999
Email: info@novalifeStyle.com
www.diamondsofa.com

IR Contact:
Ken Donenfeld
DGI Investor Relations, Inc.
Tel: (212) 425-5700
Email: kdonenfeld@dgiir.com



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