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Nova LifeStyle Announces Third Quarter 2018 Financial Results

November 9, 2018

North American Sales Up 11% Versus Prior Year Period

LOS ANGELES, Nov. 09, 2018 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (NASDAQ: NVFY), a leading U.S.-based, innovative designer and distributor of modern LifeStyle home products, today announced financial results for the third quarter and nine months ended September 30, 2018.

Management CommentaryTawny Lam, Chief Executive Officer of Nova LifeStyle, commented, “Our North American sales increased by 11%, which was offset by a decrease of sales to Australia and our sales efforts continue to be focused on higher margin products following our exit from the low-margin, mass product segment of the market. We are optimistic that our sales growth will continue in North American region. Our largest selling product categories in the three months ended September 30, 2018 were sofas, cabinets and beds, which accounted for approximately 64%, 10% and 9% of sales, respectively. Overall, third quarter sales faced a very challenging comparison with last year as the prior year period featured very significant orders from an Australian customer. We are also working diligently with existing customers to shorten our collection cycle and lower our receivable amounts, and expect to make great progress in this regard in the coming fourth quarter. We are looking forward to a strong year end after solid order activity and significant indications of interest at the recent High Point Market.”

About Nova LifeStyleNova LifeStyle, Inc., a NASDAQ Global Market listed company headquartered in California, is a fast growing, innovative designer and distributor of modern LifeStyle furniture; primarily sofas, dining rooms, cabinets, office furniture and related components, bedrooms, and various accessories in matching collections. Nova’s products are made in the US, Europe, and Asia that include LifeStyle brands such as Diamond Sofa, Nova QwiK, and Bright Swallow International. Nova’s products feature urban contemporary styles that integrate comfort and functionality, incorporating upscale luxury designs appeals to middle and upper middle-income consumers in the U.S., China, Europe, and elsewhere in the world. Visit Nova LifeStyle’s website at www.NovaLifeStyle.com.

Safe Harbor StatementAll 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.

Company Contact:Investor Relations:The Equity Group Inc.In U.S.Adam Prior, Senior Vice President+1 (212) 836-9606aprior@equityny.com

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED) Nine Months Ended Three Months Ended September 30, September 30, 2018 2017 2018 2017 ------------ ------------ ------------ ------------ Net Sales $ 63,159,929 $ 70,813,414 $ 16,747,827 $ 33,222,625 Cost of Sales 50,834,321 58,741,122 13,529,002 27,323,972 - ---------- - ---------- - ---------- - ---------- Gross Profit 12,325,608 12,072,292 3,218,825 5,898,653 - ---------- - ---------- - ---------- - ---------- Operating Expenses Selling expenses 2,534,436 2,690,342 853,378 1,003,906 General and administrative expenses 7,570,814 7,608,323 3,722,250 2,124,614 - ---------- - ---------- - ---------- - ---------- Total Operating Expenses 10,105,250 10,298,665 4,575,628 3,128,520 - ---------- - ---------- - ---------- - ---------- Income (Loss) From Operations 2,220,358 1,773,627 (1,356,803 ) 2,770,133 - ---------- - ---------- - ---------- - ---------- Other Income (Expenses) Non-operating expense, net 596 797 (3,486 ) -- Foreign exchange transaction loss (430 ) (324 ) 11 (94 ) Interest expense, net (92,416 ) (133,093 ) (36,630 ) (40,932 ) Financial expense (106,889 ) (86,335 ) (37,392 ) (34,508 ) - ---------- - ---------- - ---------- - ---------- Total Other Expenses, Net (199,139 ) (218,955 ) (77,497 ) (75,534 ) - ---------- - ---------- - ---------- - ---------- Income (Loss) Before Income Taxes 2,021,219 1,554,672 (1,434,300 ) 2,694,599 Income Tax Benefit (505,074 ) (750,037 ) (942,267 ) (262,034 ) - ---------- - ---------- - ---------- - ---------- Net Income (Loss) and Comprehensive Income $ 2,526,293 $ 2,304,709 $ (492,033 ) $ 2,956,633 (Loss) - ---------- - ---------- - ---------- - ---------- Basic weighted average shares outstanding 28,349,945 27,570,425 28,439,977 27,846,921 - ---------- - ---------- - ---------- - ---------- Diluted weighted average shares outstanding 28,659,655 27,704,406 28,439,977 27,980,629 - ---------- - ---------- - ---------- - ---------- Net income (loss) per share of common stock Basic $ 0.09 $ 0.08 $ (0.02 ) $ 0.11 - ---------- - ---------- - ---------- - ---------- Diluted $ 0.09 $ 0.08 $ (0.02 ) $ 0.11 - ---------- - ---------- - ---------- - ----------

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017 September December 31, 30, 2018 2017 ------------ ------------ Assets Current Assets Cash and cash equivalents $ 883,948 $ 5,722,716 Accounts receivable, net 53,718,740 54,006,513 Advance to suppliers 19,721,445 8,580,609 Inventories 5,787,459 6,374,560 Prepaid expenses and other receivables 186,400 232,935 - ---------- - ---------- Total Current Assets 80,297,992 74,917,333 - ---------- - ---------- Noncurrent Assets Plant, property and equipment, net 141,719 157,246 Lease deposit 43,260 43,260 Goodwill 218,606 218,606 Intangible assets, net 3,897,580 4,202,608 Deferred tax asset 318,961 318,961 - ---------- - ---------- Total Noncurrent Assets 4,620,126 4,940,681 - ---------- - ---------- Total Assets $ 84,918,118 $ 79,858,014 - ---------- - ----------

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS – CONTINUED SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017 September December 31, 30, 2018 2017 ------------ ------------ Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 3,449,481 $ 1,634,554 Line of credit 4,851,825 - Advance from customers 99,402 19,826 Accrued liabilities and other payables 594,536 847,756 Income tax payable 394,562 178,307 - ---------- - ---------- Total Current Liabilities 9,389,806 2,680,443 - ---------- - ---------- Noncurrent Liabilities Line of credit - 4,202,118 Income tax payable 3,579,320 4,527,849 - ---------- - ---------- Total Noncurrent Liabilities 3,579,320 8,729,967 - ---------- - ---------- Total Liabilities 12,969,126 11,410,410 - ---------- - ---------- Contingencies and Commitments Stockholders’ Equity Common stock, $0.001 par value; 75,000,000 shares authorized, 28,474,490 and 28,191,927 shares issued and outstanding 28,474 28,192 as of September 30, 2018 and December 31, 2017, respectively Additional paid-in capital 39,657,190 38,682,377 Statutory reserves 6,241 6,241 Retained earnings 32,257,087 29,730,794 - ---------- - ---------- Total Stockholders’ Equity 71,948,992 68,447,604 - ---------- - ---------- Total Liabilities and Stockholders’ Equity $ 84,918,118 $ 79,858,014 - ---------- - ----------

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED) Nine Months Ended September 30, 2018 2017 ------------- ------------- Cash Flows From Operating Activities Net income $ 2,526,293 $ 2,304,709 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 333,516 1,143,319 Deferred tax benefit -- (623,872 ) Stock compensation expense 1,004,470 1,773,537 Changes in bad debt allowance 2,298,488 203,905 Changes in operating assets and liabilities: Accounts receivable (2,010,715 ) 4,960,037 Advance to suppliers (11,140,836 ) (8,281,288 ) Inventories 587,101 (3,939,526 ) Other current assets (14,694 ) (21,452 ) Accounts payable 1,814,927 (2,206,628 ) Advance from customers 79,576 (494,582 ) Accrued liabilities and other payables (252,867 ) (54,458 ) Taxes payable (732,274 ) (126,163 ) - ----------- - ----------- Net Cash Used in Operating Activities (5,507,015 ) (5,362,462 ) - ----------- - ----------- Cash Flows From Investing Activities Assignment fee received -- 1,250,000 Purchase of property and equipment (12,960 ) (17,443 ) Advances to unrelated parties -- (8,835,000 ) Repayment from unrelated parties -- 15,835,000 - ----------- - ----------- Net Cash (Used in) Provided by Investing Activities (12,960 ) 8,232,557 - ----------- - ----------- Cash Flows From Financing Activities Proceeds from line of credit and bank loan 56,063,918 36,881,842 Repayment to line of credit and bank loan (55,414,211 ) (41,537,643 ) Proceeds from the exercise of options for common stocks 31,500 -- - ----------- - ----------- Net Cash Provided by (Used in) Financing Activities 681,207 (4,655,801 ) - ----------- - ----------- (4,838,768 ) (1,785,706 ) Net decrease in cash and cash equivalents Cash and cash equivalents, beginning of period 5,722,716 2,587,743 - ----------- - ----------- Cash and cash equivalents, ending of period $ 883,948 $ 802,037 - ----------- - ----------- Supplemental Disclosure of Cash Flow Information Cash paid during the period for: Income tax payments $ 227,200 $ -- - ----------- - ----------- Interest expense $ 87,110 $ 159,686 - ----------- - -----------

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