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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.

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

Source:Nova LifeStyle, Inc.