Nova LifeStyle Announces Third Quarter 2018 Financial Results

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 Commentary
Tawny 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 LifeStyle
Nova 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 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.

Company Contact:
Investor Relations:
The Equity Group Inc.
In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
[email protected]

 
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
September 30,
  Three Months Ended
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 (Loss)$2,526,293  $2,304,709  $(492,033) $2,956,633 
                
                
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 30, 2018  December 31, 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 30, 2018  December 31, 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
as of September 30, 2018 and December 31, 2017, respectively
 28,474   28,192 
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)
 

Net decrease in cash and cash equivalents
 (4,838,768)  (1,785,706)
        
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 

Nova LifeStyle

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