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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
aprior@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
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  

/EIN News/ -- Nova LifeStyle

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