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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

Company Maintains Full Year Growth Forecast; Sees Further Advances in 2013

COMMERCE, CA -- (Marketwire) -- 11/14/12 -- Nova LifeStyle, Inc. (OTCQB: STVS) (OTCBB: STVS) (website:, 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 (, 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

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.


                            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  $11,187,474

Cost 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
   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    1,959,413

Income Tax Expense         1,047,646      655,859      510,542      277,824
                         -----------  -----------  -----------  -----------

Net Income                 3,647,515    3,266,657    1,243,893    1,681,589

Other Comprehensive
Foreign 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
                         ===========  ===========  ===========  ===========

            SEPTEMBER 30, 2012 (UNAUDITED) AND DECEMBER 31, 2011

                                                September 30,  December 31,
                                                    2012           2011
                                               -------------- --------------

Current 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
                                               ============== ==============

            SEPTEMBER 30, 2012 (UNAUDITED) AND DECEMBER 31, 2011

                                               September 30,   December 31,
                                                    2012           2011
                                               -------------  -------------
Liabilities and Stockholders' Equity

Current 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 Commitments

Stockholders' 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
                                               =============  =============

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