Nova LifeStyle (NASDAQ-GM: 'NVFY') announced on August 11 that the net sales of the second quarter 2014 increased 35.3%.

Results for the second quarter ended June 30, 2014:

•Net sales were $25.9 million, an increase of 35.3% compared to the prior year period. Growth was primarily driven by a 43% increase in sales in North America, which included $2.7 million in sales from the Company's subsidiary, Bright Swallow, which was acquired in April, 2013. Sales to China increased 11% primarily due to higher sales to non-franchisees, with sales in Asia, excluding China, up more than threefold.  This was offset by a decline in sales in Europe.  The Company anticipates increasing sales and marketing to the European market as the region's economic outlook improves.

•Gross profit was $5.0 million, an increase of 29% compared to the prior year period. Gross margin was 19.2% compared to 20.1% in the prior year period, which is primarily due to strategic changes in our sales and marketing plans as we increased sourcing from third party vendors to supply our growing distribution as we increase our market share.

•Operating income was $1.5 million compared to $1.5 million in the prior year period, primarily reflecting higher general and administrative expenses including research and development expenses to advance our growth initiatives and amortization associated with the acquisition of Bright Swallow. This was partially offset by a 100 basis point improvement in selling expenses as a percentage of net sales. Overall SG&A expenses as a percentage of net sales declined by 170 basis points.

•Net income was $3.4 million, or $0.16 per diluted share, based on a weighted average diluted share count of 20.5 million shares, and included a non-cash, pre-tax gain of $2.2 million, due to the change in the fair value of warrant liability. This compares to net income of $1.2 million, or $0.06 per diluted share, on 19.1 million weighted average shares outstanding in the prior year period. The increase in the number of shares versus the prior year reflects the sale of 1.32 million shares of common stock on April 14, 2014.

Results for the first six months ended June 30, 2014:

•Net sales were $43.8 million, an increase of 28.3% compared to the prior year period. Growth was primarily driven by a 43% increase in sales in North America, which included $4.4 million in sales from the Company's subsidiary, Bright Swallow, which was acquired in April, 2013. Sales to China increased 5% primarily due to higher sales to non-franchisees, with sales in Asia, excluding China, up 144%.  This was offset by a decline in sales in Europe.

•Gross profit was $8.2 million, an increase of 15.9% compared to the prior year period. Gross margin was 18.8% compared to 20.8% in the prior year period, which is primarily due to strategic changes in our sales and marketing plans as we increased sourcing from third party vendors to supply our growing distribution as we increase our market share.

•Operating income was $2.1 million compared to $3.0 million in the prior year period, primarily reflecting higher general and administrative expenses including research and development expenses to advance our growth initiatives, higher depreciation, as well as public company costs associated with our NASDAQ listing in January, 2014. This was partially offset by a 90 basis point improvement in selling expenses as a percentage of net sales.

•Net income was $3.7 million, or $0.18 per diluted share, based on a weighted average diluted share count of 20.0 million shares, and included a non-cash, pre-tax gain of $2.2 million in the second quarter of fiscal 2014, due to the change in the fair value of warrant liability. This compares to net income of $2.4 million, or $0.13 per diluted share, on 18.9 million weighted average shares outstanding in the prior year period. The increase in the number of shares versus the prior year reflects the sale of 1.32 million shares of common stock on April 14, 2014.