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Nova LifeStyle Reports First Quarter 2017 Financial Results

LOS ANGELES, May 15, 2017 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (NASDAQ:NVFY), a U.S. based fast-growing, innovative designer, manufacturer and distributor of modern LifeStyle furniture, today announced financial results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights:

  • First quarter Net Sales were $18.1 million compared to $22.5 million in the prior year period.
  • Gross profit for the first quarter was $2.7 million, compared to $3.6 million in the prior year period.      
  • First quarter Gross Margin was 15.0%, compared to 16.0% in the prior year period. 

Operational Overview

Product Category
Nova LifeStyle’s largest selling product categories in the three months ended March 31, 2017 were sofas, beds and coffee tables, which accounted for approximately 80%, 11% and 5% of sales, respectively. This was compared to the prior year period where the Company’s largest selling product categories were sofas, dining tables and cabinets which accounted for approximately 59%, 9% and 6% of sales respectively.

In order to drive growth, the Company is focused on the adoption of new image standards along with continued expansion of its product lines.  The Company intends to pursue more opportunities associated with Blockchain technology, while simultaneously exploring new ways to grow the furniture business.

/EIN News/ -- Geographic Breakdown
North America
Sales to North America were $12.5 million in the three months ended March 31, 2017, a decrease of 27% from $17.2 million in the same period of 2016, driven by an aggressive change in the product mix.  As a percentage of total revenue, North American sales remain the largest for Nova LifeStyle at 69.4%.

Asia
Sales to Asia, excluding China and Hong Kong, overall sales increased by 80% to $815,071 in the three months ended March 31, 2017, as compared to $452,780 in the same period of 2016.

Australia
Sales to Australia increased to $2.5 million in the three months ended March 31, 2017, an increase of 216% from $774,155 in the same period of 2016. This was primarily driven by an increase in sales orders from new customers in that region.

Geographical distribution of sales is set out as follows:

(US$ in millions) For three months ended March 31,
    2017
  2016
    Sales   % of Total    Sales   % of Total 
North America   12,529,632   69.4 %   17,223,375   76.7 %
Asia**   815,071   4.5 %   452,780   2.0 %
Europe   2,262,865   12.5 %   3,898,885   17.4 %
Australia   2,449,454   13.6 %   774,155   3.4 %
Hong Kong   -   0.0 %   19,683   0.1 %
Other countries   -   0.0 %   100,129   0.4 %
  $  18,057,022       $  22,469,007      

Balance Sheet and Cash Flow Highlights

  • Working capital at March 31, 2017 was $57.7 million, compared to $58.4 million at December 31, 2016.
  • The current ratio at March 31, 2017 was 9.76 to 1.0.

The following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended March 31, 2017 and 2016:

    2017       2016  
Cash (used in) provided by:              
Operating activities   $ 8,759,369     $ (522,964
Investing activities     (7,587,132 )     (44,777 )
Financing activities     (3,469,690     637,230  

Net cash provided by operating activities was $8.8 million in the three months ended March 31, 2017, an increase of cash inflow of $9.3 million from $0.5 million of cash used in operating activities in the same period of 2016.  The increase in cash inflow was impacted by primarily to the collection on accounts receivable of $16.6 million during the three months ended March 31, 2017.

About Nova LifeStyle
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange listed company headquartered in California, is a fast growing, innovative designer, manufacturer 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 and 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 appealing to LifeStyle-conscious middle and upper middle-income consumers in the U.S., China, Europe, and elsewhere in the world. In November 2016, Nova LifeStyle announced entry into asset-light e-commerce and service related businesses. To learn more about Nova LifeStyle, Inc., please visit our 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.


 
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (UNAUDITED)
 
    Three Months Ended March 31,  
    2017     2016  
Net Sales   $ 18,057,022     $ 22,469,007  
                 
Cost of Sales     15,355,247       18,863,864  
                 
Gross Profit     2,701,775       3,605,143  
                 
Operating Expenses                
Selling expenses     975,002       1,584,914  
General and administrative expenses     3,025,676       1,345,297  
                 
Total Operating Expenses     4,000,678       2,930,211  
                 
(Loss) Income From Operations     (1,298,903 )     674,932  
                 
Other Income (Expenses)                
Non-operating (income) expense, net     --       12,401  
Foreign exchange transaction loss     (40 )     (1,049 )
Interest expense     (54,406 )     (72,434 )
Financial expense     (26,060 )     (28,437 )
                 
Total Other Expenses, Net     (80,506 )     (89,519 )
                 
(Loss) Income Before Income Taxes and Discontinued operations     (1,379,409 )     585,413  
                 
Income Tax (Benefit) Expense     (170,019 )     19,041  
                 
(Loss) Income From Continuing Operations     (1,209,390 )     566,372  
                 
Loss From Discontinued Operations, net of tax     --       (469,243 )
                 
Net (Loss) Income     (1,209,390 )     97,129  
                 
Other Comprehensive Income                
Foreign currency translation     --       75,628  
Comprehensive (Loss) Income   $ (1,209,390 )   $ 172,757  
                 
Basic weighted average shares outstanding     27,345,106       24,333,971  
Diluted weighted average shares outstanding     27,345,106       24,333,971  
                 
(Loss) income from continuing operations per share of common stock                
Basic   $ (0.04 )   $ 0.02  
Diluted   $ (0.04 )   $ 0.02  
                 
Income (loss) from discontinued operations per share of common stock                
Basic   $ --     $ (0.02 )
Diluted   $ --     $ (0.02 )
                 
Net (loss) income per share of common stock                
Basic   $ (0.04 )   $ 0.00  
Diluted   $ (0.04 )   $ 0.00  


   
NOVA LIFESTYLE, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016  
    March 31,   December 31,  
    2017   2016  
           
Assets          
           
Current Assets          
Cash and cash equivalents   $ 290,290   $ 2,587,743  
Accounts receivable, net     25,163,891     42,102,761  
Advance to suppliers     21,114,676     13,669,752  
Inventories     2,291,971     2,781,123  
Assignment fee receivable     --     1,250,000  
Receivable from an unrelated party     13,035,000     7,000,000  
Prepaid expenses and other receivables     2,345,289     642,891  
Taxes receivable     23,367     14,893  
               
Total Current Assets     64,264,484     70,049,163  
               
Noncurrent Assets              
Plant, property and equipment, net     163,292     171,276  
Lease deposit     43,260     43,260  
Goodwill     218,606     218,606  
Intangible assets, net     5,315,620     5,686,623  
Deferred tax asset     1,096,029     874,759  
               
Total Noncurrent Assets     6,836,807     6,994,524  
               
Total Assets   $ 71,101,291   $ 77,043,687  


   
NOVA LIFESTYLE, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016  
    March 31,   December 31,  
    2017   2016  
           
Liabilities and Stockholders' Equity          
           
Current Liabilities          
Accounts payable   $ 910,534   $ 2,368,775  
Line of credit     4,508,151     7,977,841  
Advance from customers     535,409     513,880  
Accrued liabilities and other payables     629,354     780,960  
               
Total Current Liabilities     6,583,448     11,641,456  
               
Noncurrent Liabilities              
Income tax payable     2,196,512     2,136,788  
               
Total Noncurrent Liabilities     2,196,512     2,136,788  
               
Total Liabilities     8,779,960     13,778,244  
               
Contingencies and Commitments              
               
Stockholders' Equity              
Common stock, $0.001 par value; 75,000,000 shares authorized,              
27,417,742 and 27,309,695 shares issued and outstanding;              
as of March 31, 2017 and December 31, 2016, respectively     27,418     27,309  
Additional paid-in capital     37,150,631     36,885,462  
Statutory reserves     6,241     6,241  
Retained earnings     25,137,041     26,346,431  
               
Total Stockholders' Equity     63,321,331     63,265,443  
               
Total Liabilities and Stockholders' Equity   $ 71,101,291   $ 77,043,687  


   
NOVA LIFESTYLE, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (UNAUDITED)  
    Three Months Ended March 31,  
    2017     2016  
Cash Flows From Operating Activities          
 Net income (loss) from continuing operations   $ (1,209,390 )   $ 566,372  
Adjustments to reconcile net income to net cash              
provided by (used in) operating activities:              
Depreciation and amortization     381,119       156,065  
Deferred tax benefit     (188,117 )     --  
Stock compensation expense     449,889       295,596  
Termination cost on Academic E-commerce platform   800,000       --  
Changes in bad debt allowance   324,684       (26,702 )
Changes in operating assets and liabilities:              
Accounts receivable     16,614,186       2,382,552  
Advance to suppliers     (7,444,924 )     (6,794,470 )
Inventories     489,152       70,326  
Other current assets   112,991       234,730  
Accounts payable     (1,458,241     2,065,979  
Advance from customers     21,529       633,875  
Accrued expenses and other payables     (151,606     (503,022 )
Taxes payable     18,097       11,841  
               
Net Cash Provided by (Used in) Continuing Operations   8,759,369       (906,858 )
Net Cash Provided by Discontinued Operations     --       383,894  
Net Cash Provided by (Used in) Operating Activities   8,759,369       (522,964 )
               
               
Cash Flows From Investing Activities              
Assignment fee received     1,250,000          
Purchase of property and equipment     (2,132     (3,544 )
Advances to unrelated parties     (8,835,000 )     --  
               
Net Cash Used in Continuing Operations     (7,587,132 )     (3,544 )
Net Cash Used in Discontinued Operations     --       (41,233 )
Net Cash Used in Investing Activities     (7,587,132     (44,777 )
               
               
Cash Flows From Financing Activities              
Proceeds from line of credit and bank loan     15,469,342       10,563,074  
Repayment to line of credit and bank loan     (18,939,032 )     (10,247,496 )
               
Net Cash (Used in) Provided by Continuing Operations     (3,469,690     315,578  
Net Cash Provided by Discontinued Operations     -       321,652  
Net Cash (Used in) Provided by Financing Activities   $ (3,469,690 )   $ 637,230  


   
NOVA LIFESTYLE, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)  
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (UNAUDITED)  
   
    Three Months Ended March 31,  
    2017     2016  
                     
Effect of Exchange Rate Changes on
 Cash and Cash Equivalents
  $ --     $ 2,668  
                 
Net (decrease) increase in cash and cash equivalents     (2,297,453 )     72,157  
                 
Cash and cash equivalents, beginning of period     2,587,743       988,029  
                 
Cash and cash equivalents, end of period   $ 290,290     $ 1,060,186  
                 
Analysis of cash and cash equivalents                
Included in cash and cash equivalents per consolidated balance sheets     290,290       775,488  
Included in assets of discontinued operations     -       284,698  
                 
Cash and cash equivalents, end of period   $ 290,290     $ 1,060,186  
                 
Supplemental Disclosure of Cash Flow Information  
Continuing operations:                
Cash paid during the period for:                
Income tax payments   $ --     $ 7,200  
 Interest paid   $ 54,406     $ 72,434  
                 
Discontinued operations:                
Cash paid during the period for:                
Income tax payments   $ --     $ --  
 Interest paid   $ --     $ 42,211  
                 
Company Contact:
Investor Relations:
The Equity Group Inc.
In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
aprior@equityny.com

In China
Katherine Yao, Senior Associate
+86-10-6587-6435
kyao@equityny.com

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