Attached files
| file | filename |
|---|---|
| 8-K - Nova Lifestyle, Inc. | novalifestyle8k073013.htm |
| EX-99.2 - Nova Lifestyle, Inc. | ex99-2.htm |
| EX-99.1 - Nova Lifestyle, Inc. | ex99-1.htm |
Exhibit 99.3
NOVA LIFESTYLE, INC. AND
BRIGHT SWALLOW INTERNATIONAL GROUP LIMITED
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2013
|
NOVA
(1)
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BRIGHT SWALLOW
(2)
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Pro Forma
Adjustments
|
Pro Forma
Consolidated
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||||||||||||||
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ASSETS
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(historical)
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(historical)
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|||||||||||||||
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CURRENT ASSETS
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|||||||||||||||||
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Cash & cash equivalents
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$ | 601,247 | $ | 191,810 | $ | 793,057 | |||||||||||
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Accounts receivable, net
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21,539,338 | 1,629,427 | 23,168,765 | ||||||||||||||
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Advance to suppliers
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3,429,406 | - | 3,429,406 | ||||||||||||||
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Inventory
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2,836,270 | - | 2,836,270 | ||||||||||||||
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Prepaid expenses and other receivable
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86,314 | - | 86,314 | ||||||||||||||
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Due from shareholder
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- | 110,000 | 110,000 | ||||||||||||||
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Deferred tax asset
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157,748 | - | 157,748 | ||||||||||||||
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TOTAL CURRENT ASSETS
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28,650,323 | 1,931,237 | - | 30,581,560 | |||||||||||||
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NONCURRENT ASSETS
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|||||||||||||||||
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Heritage and cultural assets
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129,344 | - | 129,344 | ||||||||||||||
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Plant, property & equipment, net
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8,441,286 | - | 8,441,286 | ||||||||||||||
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Construction in progress
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5,623,314 | - | 5,623,314 | ||||||||||||||
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Acquisition deposit
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4,500,000 | - | 4,500,000 | ||||||||||||||
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Lease deposit
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43,841 | - | 43,841 | ||||||||||||||
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Goodwill
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218,606 | - | 808,512 | A | 1,027,118 | ||||||||||||
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Intangible assets, net
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1,181,918 | - | 5,674,220 | B, C | 6,856,138 | ||||||||||||
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Deferred tax assets
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- | - | - | ||||||||||||||
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TOTAL NONCURRENT ASSETS
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20,138,309 | - | 6,482,732 | 26,621,041 | |||||||||||||
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TOTAL ASSETS
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$ | 48,788,632 | $ | 1,931,237 | $ | 6,482,732 | $ | 57,202,601 | |||||||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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|||||||||||||||||
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CURRENT LIABILITIES
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Accounts payable
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$ | 4,752,146 | $ | 1,921,295 | $ | 6,673,441 | |||||||||||
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Line of credit
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6,138,072 | - | 6,138,072 | ||||||||||||||
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Advance from customers
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189,973 | - | 189,973 | ||||||||||||||
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Accrued liabilities and other payables
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1,126,770 | - | 1,126,770 | ||||||||||||||
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Taxes payable
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186,736 | - | 186,736 | ||||||||||||||
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TOTAL CURRENT LIABILITIES
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12,393,697 | 1,921,295 | - | 14,314,992 | |||||||||||||
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NONCURRENT LIABILITIES
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|||||||||||||||||
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Deferred rent payable
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51,038 | 51,038 | |||||||||||||||
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Deferred tax liability, net
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45,375 | 45,375 | |||||||||||||||
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Income tax payable
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4,713,368 | 508,512 | 5,221,880 | ||||||||||||||
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TOTAL NONCURRENT LIABILITIES
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4,809,781 | 508,512 | - | 5,318,293 | |||||||||||||
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TOTAL LIABILITIES
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17,203,478 | 2,429,807 | - | 19,633,285 | |||||||||||||
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SHAREHOLDER'S EQUITY
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Common stock, $0.001 par value; 75,000,000 shares authorized, 18,539,541 shares issued and outstanding as of March 31, 2013
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18,540 | 1 | (1 | ) | 18,540 | ||||||||||||
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Additional paid in capital
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19,112,333 | - | 6,500,000 | A, B | 25,612,333 | ||||||||||||
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Subscription receivable
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(1,950,000 | ) | - | (1,950,000 | ) | ||||||||||||
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Statutory reserves
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6,241 | - | 6,241 | ||||||||||||||
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Accumulated other comprehensive income
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2,213,254 | - | 2,213,254 | ||||||||||||||
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Retained earnings
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12,184,786 | (498,571 | ) | (17,267 | ) | A, C | 11,668,948 | ||||||||||
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TOTAL SHAREHOLDERS' EQUITY
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31,585,154 | (498,570 | ) | 6,482,732 | 37,569,316 | ||||||||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 48,788,632 | $ | 1,931,237 | $ | 6,482,732 | $ | 57,202,601 | |||||||||
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(1) Source: unaudited consolidated financial statements of Nova Lifestyle, Inc. for the three months ended March 31, 2013
as filed in 10Q Report filed with the SEC on May 15, 2013.
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|
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(2) Source: unaudited financial statements of Bright Swallow International Group Limited included in this Form 8-K.
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A. Allocation of the purchase price to the fair value of assets acquired and liabilities assumed. The excess of purchase price over fair value of net assets, or $808,512, is recorded as goodwill.
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B. Record the fair value assigned to intangible asset - customer relationship at acquisition date.
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C. Record amortization expense of customer relationship.
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F-1
NOVA LIFESTYLES, INC. AND
BRIGHT SWALLOW INTERNATIONAL GROUP LIMITED
PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
|
NOVA
(1)
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BRIGHT SWALLOW
(2)
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Pro forma
Adjustments
|
Pro Forma
Consolidated
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||||||||||||||
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(historical)
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(historical)
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||||||||||||||||
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Net Sales
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$ | 66,297,498 | $ | 13,703,497 | $ | 80,000,995 | |||||||||||
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Cost of Revenue
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51,572,076 | 12,569,939 | 64,142,015 | ||||||||||||||
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Gross Profit
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14,725,422 | 1,133,558 | - | 15,858,980 | |||||||||||||
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Operating expenses:
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Selling expenses
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3,158,191 | - | 3,158,191 | ||||||||||||||
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General and administrative expenses
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4,788,947 | 16,205 | $ | 412,671 | C | 5,217,823 | |||||||||||
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Loss on disposal of plant, property and equipment
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123,675 | 123,675 | |||||||||||||||
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Total operating expenses
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8,070,813 | 16,205 | 412,671 | 8,499,689 | |||||||||||||
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Income from operations
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6,654,609 | 1,117,353 | (412,671 | ) | 7,359,291 | ||||||||||||
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Non-operating income (expenses):
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|||||||||||||||||
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Non-operating income
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50,915 | 50,915 | |||||||||||||||
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Foreign exchange transaction gain (loss)
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47 | 47 | |||||||||||||||
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Bargain purchase gain
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- | - | - | ||||||||||||||
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Interest income (expense)
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(188,868 | ) | - | (188,868 | ) | ||||||||||||
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Financial expense
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(11,166 | ) | (1,740 | ) | (12,906 | ) | |||||||||||
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Total non-operating expenses
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(149,072 | ) | (1,740 | ) | - | (150,812 | ) | ||||||||||
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Income before income tax
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6,505,537 | 1,115,613 | (412,671 | ) | 7,208,479 | ||||||||||||
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Income tax
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1,071,654 | 279,000 | 1,350,654 | ||||||||||||||
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Net income
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5,433,883 | 836,613 | (412,671 | ) | 5,857,825 | ||||||||||||
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Other comprehensive item
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Foreign currency translation
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37,672 | - | - | 37,672 | |||||||||||||
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Comprehensive Income
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$ | 5,471,555 | $ | 836,613 | $ | (412,671 | ) | $ | 5,895,497 | ||||||||
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Weighted average shares outstanding
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18,530,591 | 1 | 18,530,591 | ||||||||||||||
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Diluted average shares outstanding
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18,681,448 | 18,681,448 | |||||||||||||||
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Earnings per share - basic
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$ | 0.29 | $ | 836,613.00 | $ | 0.32 | |||||||||||
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Earnings per share - diluted
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$ | 0.29 | $ | 0.31 | |||||||||||||
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(1) Source: audited financial statements of Nova Lifestyles, Inc. for the year ended December 31, 2012
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as filed in Annually Report filed with the SEC on March 31, 2013.
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(2) Source: audited financial statements of Bright Swallow International Group Limited included in this Form 8-K.
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C. Record amortization expense for customer relationship.
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F-2
NOVA LIFESTYLES, INC. AND
BRIGHT SWALLOW INTERNATIONAL GROUP LIMITED
PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2013
|
NOVA
(1)
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BRIGHT SWALLOW
(2)
|
Pro forma
Adjustments
|
Pro Forma
Consolidated
|
||||||||||||||
|
(historical)
|
(historical)
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||||||||||||||||
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Net Sales
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$ | 14,996,951 | $ | 2,400,617 | $ | 17,397,568 | |||||||||||
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Cost of Revenue
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11,750,848 | 2,192,248 | 13,943,096 | ||||||||||||||
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Gross Profit
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3,246,103 | 208,369 | - | 3,454,472 | |||||||||||||
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Operating expenses:
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|||||||||||||||||
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Selling expenses
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721,796 | - | 721,796 | ||||||||||||||
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General and administrative expenses
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1,044,959 | - | 103,168 | C | 1,148,127 | ||||||||||||
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Loss on disposal of plant, property and equipment
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- | ||||||||||||||||
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Total operating expenses
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1,766,755 | - | 103,168 | 1,869,923 | |||||||||||||
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Income from operations
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1,479,348 | 208,369 | (103,168 | ) | 1,584,549 | ||||||||||||
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Non-operating income (expenses):
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|||||||||||||||||
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Non-operating income (expense)
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(21,100 | ) | (21,100 | ) | |||||||||||||
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Interest income (expense)
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(74,397 | ) | - | (74,397 | ) | ||||||||||||
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Financial expense
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(29,330 | ) | (322 | ) | (29,652 | ) | |||||||||||
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Total non-operating expenses
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(124,827 | ) | (322 | ) | - | (125,149 | ) | ||||||||||
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Income before income tax
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1,354,521 | 208,047 | (103,168 | ) | 1,459,400 | ||||||||||||
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Income tax
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176,054 | 52,012 | 228,066 | ||||||||||||||
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Net income
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1,178,467 | 156,035 | (103,168 | ) | 1,231,334 | ||||||||||||
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Other comprehensive item
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|||||||||||||||||
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Foreign currency translation
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36,608 | - | - | 36,608 | |||||||||||||
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Comprehensive Income
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$ | 1,215,075 | $ | 156,035 | $ | (103,168 | ) | $ | 1,267,942 | ||||||||
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Weighted average shares outstanding
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18,536,699 | 18,536,699 | |||||||||||||||
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Diluted average shares outstanding
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18,638,283 | 18,638,283 | |||||||||||||||
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Earnings per share - basic
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$ | 0.06 | $ | 0.07 | |||||||||||||
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Earnings per share - diluted
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$ | 0.06 | $ | 0.07 | |||||||||||||
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(1) Source: unaudited financial statements of Nova Lifestyles, Inc. for the three months ended March 31, 2013
|
|||||||||||||||||
|
as filed in 10Q Report filed with the SEC on May 15, 2013.
|
|||||||||||||||||
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(2) Source: unaudited financial statements of Bright Swallow International Group Limited included in this Form 8-K.
|
|||||||||||||||||
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C. Record amortization expense of customer relationship.
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F-3
NOVA LIFESTYLE INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
On April 24, 2013, Nova LifeStyle Inc. (the “Company”), completed the acquisition of 100% of the equity interest in Bright Swallow International Group Limited (“Bright Swallow”), a company registered in the British Virgin Islands (“BVI”), from the sole shareholder of Bright Swallow. The stock purchase agreement of this acquisition was entered on March 22, 2013. Pursuant to the terms of the stock purchase agreement among the parties, all of the issued and outstanding shares of Bright Swallow were exchanged for a cash price of 6.5 million US Dollar, which was paid in full at the closing of the acquisition. The stock purchase agreement contained such representations, warranties, obligations and conditions as are customary for transactions of the type governed by such agreements.
As a result of the acquisition, Bright Swallow became a wholly owned subsidiary of the Company. Prior to the closing of the transaction, there were no material relationships between the Company and Bright Swallow, or any of their respective affiliates, directors or officers, or any associates of their respective officers or directors, other than in respect of the Stock Acquisition Agreement. The purchase of Bright Swallow will be accounted for as a business combination under ASC Topic 805, “Business Combinations”.
The accompanying unaudited pro forma consolidated balance sheet presents the accounts of Nova LifeStyle and Bright Swallow as if the acquisition of Bright Swallow by Nova LifeStyle occurred on March 31, 2013 for balance sheet purpose. The accompanying unaudited pro forma consolidated statements of income and comprehensive income present the accounts of Nova LifeStyle and Bright Swallow for the year ended December 31, 2012 and for the three months ended March 31, 2013, as if the acquisition occurred on January 1, 2012 and 2013, respectively. The fair values of the assets acquired and liabilities assumed at acquisition date are used for the purpose of purchase price allocation. The excess of the purchase price over the fair value of net assets, or $808,512, is recorded as goodwill.
The following adjustments would be required if the acquisition of Bright Swallow by Nova LifeStyle occurred as indicated above:
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A)
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Allocation of the net purchase price to the fair value of assets acquired and liabilities assumed. The excess of purchase price over the fair value of net assets acquired, or $808,512, is recorded as goodwill.
|
|
B)
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Record the fair value assigned to intangible asset - customer relationship at acquisition date.
|
| C) | Record amortization expenses of customer relationship |
F-4