Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - Nova Lifestyle, Inc. | novalifestyle8ka010817.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of Nova LifeStyle, Inc. (the “Company”). The unaudited pro forma condensed consolidated financial statements have been prepared to illustrate the effect of the sale (the “Sale”) by the Company of Nova Furniture Ltd. in BVI (“Nova BVI”) and its subsidiaries – Nova Furniture (Dongguan) Co., Ltd. (“Nova Dongguan”), Nova Dongguan Chinese Style Furniture Museum (“Nova Museum”) and Dongguan Ding Nuo Household Products Co., Ltd. (“Nova Ding Nuo”), to Kuka Design Limited (the “Purchaser”). The Sale was completed pursuant to a Share Transfer Agreement (the “Agreement”), dated as of September 23, 2016, by and between Nova Furniture Ltd. in Samoa (“Nova Samoa”), a wholly owned subsidiary of the Company, and the Purchaser. At the closing of the Sale, the Company received from the Purchaser pursuant to the Agreement the purchase price of $8.50 million in cash.
In addition, on November 10, 2016, Nova Samoa entered into a Trademark Assignment Agreement with Kuka Design BVI. Pursuant to the terms of the Trademark Assignment Agreement, Nova Samoa agreed to assign to Kuka Design BVI its full right to, and title in, the NOVA trademark in China for $6.00 million (the “Assignment Fee”). As the result of the assignment of NOVA trademark in China, Nova Samoa and its affiliated companies, including Nova Macao, will cease to use the NOVA trademark and brand in their business in China.
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 reflects the pro forma effect as if the disposition of Nova BVI, Nova Dongguan, Nova Museum and Nova Ding Nuo had been consummated on that date. The unaudited pro forma condensed consolidated statements of operations of the Company for the year ended December 31, 2015 and nine months ended September 30, 2016 included the Company’s historical statements of operations, adjusted to reflect the pro forma effect as if disposition of Nova BVI, Nova Dongguan, Nova Museum and Nova Ding Nuo had been consummated on January 1, 2015 and 2016 (the first day of the Company's 2015 and 2016 fiscal year), respectively. The historical consolidated financial statements referred to above for the Company were included in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and Annual Report on Form 10-K for the year ended December 31, 2015. The accompanying unaudited pro forma condensed consolidated financial information and the historical consolidated financial information presented herein should be read in conjunction with the historical consolidated financial statements and notes thereto for the Company.
The unaudited pro forma condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflect transactions and events that (a) are directly attributable to the Sale, (b) are factually supportable and (c) with respect to the statements of operations, have a continuing impact on consolidated results of the Company. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated financial information does not reflect the tax consequences in any jurisdictions attributable to the Sale, and it does not reflect future events that may occur after the sale, including potential general and administrative cost savings. The unaudited pro forma condensed consolidated financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred if the disposition of Nova BVI, Nova Dongguan, Nova Museum and Nova Ding Nuo had occurred on January 1, 2015 and 2016, respectively, nor is it necessarily indicative of the Company's future operating results. The pro forma adjustments are subject to change and are based upon currently available information.
Exhibit 99.1
|
NOVA LIFESTYLE INC. AND SUBSIDIARIES
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|||||||||||||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
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|||||||||||||
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SEPTEMBER 30, 2016
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|||||||||||||
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As Reported (1)
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Pro Forma adjustments
|
Pro Forma
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|||||||||||
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ASSETS
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|||||||||||||
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CURRENT ASSETS
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|||||||||||||
|
Cash and cash equivalents
|
$
|
5,843,598
|
$
|
-
|
$
|
5,843,598
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|||||||
|
Accounts receivable, net
|
43,209,014
|
43,209,014
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|||||||||||
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Advances to suppliers
|
11,549,905
|
11,549,905
|
|||||||||||
|
Inventories
|
2,272,708
|
2,272,708
|
|||||||||||
|
Prepaid expenses and other receivables
|
1,305,327
|
1,305,327
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|||||||||||
|
Receivable from discontinued operations
|
-
|
9,000,000
|
a
|
9,000,000
|
|||||||||
|
Assets held for sale
|
25,055,319
|
(25,055,319
|
)
|
b
|
-
|
||||||||
|
Total current assets
|
89,235,871
|
(16,055,319
|
)
|
73,180,552
|
|||||||||
|
NONCURRENT ASSETS
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|||||||||||||
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Plant, property and equipment, net
|
174,133
|
174,133
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|||||||||||
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Lease deposit
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43,260
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43,260
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|||||||||||
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Goodwill
|
218,606
|
218,606
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|||||||||||
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Intangible assets, net
|
5,818,504
|
5,818,504
|
|||||||||||
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Deferred tax asset
|
61,000
|
61,000
|
|||||||||||
|
Total noncurrent assets
|
6,315,503
|
6,315,503
|
|||||||||||
|
TOTAL ASSETS
|
$
|
95,551,374
|
$
|
(16,055,319
|
)
|
$
|
79,496,055
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||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||||||||
|
CURRENT LIABILITIES
|
|||||||||||||
|
Accounts payable
|
$
|
6,354,379
|
$
|
-
|
$
|
6,354,379
|
|||||||
|
Line of credit
|
8,033,733
|
8,033,733
|
|||||||||||
|
Advances from customers
|
648,756
|
648,756
|
|||||||||||
|
Accrued liabilities and other payables
|
1,129,541
|
1,129,541
|
|||||||||||
|
Deposit received from Buyer
|
5,500,000
|
(5,500,000
|
)
|
c
|
-
|
||||||||
|
Taxes payable
|
129,644
|
129,644
|
|||||||||||
|
Liabilities held for sale
|
10,891,907
|
(10,891,907
|
)
|
b
|
-
|
||||||||
|
Total current liabilities
|
32,687,960
|
(16,391,907
|
)
|
16,296,053
|
|||||||||
|
NONCURRENT LIABILITIES
|
|||||||||||||
|
Income tax payable
|
2,075,175
|
2,075,175
|
|||||||||||
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TOTAL NONCURRENT LIABILITIES
|
2,075,175
|
2,075,175
|
|||||||||||
|
TOTAL LIABILITIES
|
34,763,135
|
(16,391,907
|
)
|
18,371,228
|
|||||||||
|
COMMITMENTS AND CONTINGENCIES
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|||||||||||||
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STOCKHOLDERS' EQUITY
|
|||||||||||||
|
Common stock
|
25,716
|
25,716
|
|||||||||||
|
Additional paid-in capital
|
33,265,136
|
33,265,136
|
|||||||||||
|
Statutory reserves
|
6,241
|
6,241
|
|||||||||||
|
Accumulated other comprehensive income
|
1,149,782
|
1,149,782
|
|||||||||||
|
Retained earnings
|
26,341,364
|
336,588
|
d
|
26,677,952
|
|||||||||
|
Total Stockholders' Equity
|
60,788,239
|
336,588
|
61,124,827
|
||||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
95,551,374
|
$
|
(16,055,319
|
)
|
$
|
79,496,055
|
||||||
|
-
|
-
|
||||||||||||
|
(1) Source: unaudited financial statements of Nova LifeStyle, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.
|
|||||||||||||
See accompanying Notes to Unaudited Consolidated Condensed Pro Form Financial Statements.
Exhibit 99.1
|
NOVA LIFESTYLE INC. AND SUBSIDIARIES
|
||||||||||||
|
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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||||||||||||
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
|
||||||||||||
|
As Reported (1)
|
Pro Forma adjustments
|
Pro Forma
|
||||||||||
|
Net sales
|
$
|
72,748,972
|
$
|
72,748,972
|
||||||||
|
Cost of sales
|
62,091,435
|
62,091,435
|
||||||||||
|
Gross profit
|
10,657,537
|
-
|
10,657,537
|
|||||||||
|
Operating expenses
|
||||||||||||
|
Selling
|
4,358,206
|
4,358,206
|
||||||||||
|
General and administrative
|
4,756,118
|
4,756,118
|
||||||||||
|
Total operating expenses
|
9,114,324
|
-
|
9,114,324
|
|||||||||
|
Income from operations
|
1,543,213
|
-
|
1,543,213
|
|||||||||
|
Other income (expenses)
|
||||||||||||
|
Non-operating income (expense), net
|
40,994
|
40,994
|
||||||||||
|
Foreign exchange transaction loss
|
(5,578
|
)
|
(5,578
|
)
|
||||||||
|
Interest expense
|
(241,202
|
)
|
(241,202
|
)
|
||||||||
|
Financial expense
|
(88,098
|
)
|
(88,098
|
)
|
||||||||
|
Total other expenses, net
|
(293,884
|
)
|
-
|
(293,884
|
)
|
|||||||
|
Income before income tax and discontinued operations
|
1,249,329
|
-
|
1,249,329
|
|||||||||
|
Income tax expense
|
60,063
|
60,063
|
||||||||||
|
Income from continuing operations
|
1,189,266
|
-
|
1,189,266
|
|||||||||
|
Loss from discontinued operations
|
(1,476,572
|
)
|
(1,476,572
|
)
|
||||||||
|
Net loss
|
$
|
(287,306
|
)
|
$
|
-
|
$
|
(287,306
|
)
|
||||
|
Basic weighted average shares outstanding
|
24,937,069
|
24,937,069
|
||||||||||
|
Diluted weighted average shares outstanding
|
24,937,069
|
24,937,069
|
||||||||||
|
Income from continuing operations per share of common stock
|
||||||||||||
|
Basic
|
$
|
0.05
|
$
|
-
|
$
|
0.05
|
||||||
|
Diluted
|
$
|
0.05
|
$
|
-
|
$
|
0.05
|
||||||
|
Loss from discontinued operations per share of common stock
|
||||||||||||
|
Basic
|
$
|
(0.06
|
)
|
$
|
-
|
$
|
(0.06
|
)
|
||||
|
Diluted
|
$
|
(0.06
|
)
|
$
|
-
|
$
|
(0.06
|
)
|
||||
|
Net loss per share of common stock
|
||||||||||||
|
Basic
|
$
|
(0.01
|
)
|
$
|
-
|
$
|
(0.01
|
)
|
||||
|
Diluted
|
$
|
(0.01
|
)
|
$
|
-
|
$
|
(0.01
|
)
|
||||
|
(1) Source: unaudited financial statements of Nova LifeStyle, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.
|
||||||||||||
See accompanying Notes to Unaudited Consolidated Condensed Pro Form Financial Statements.
Exhibit 99.1
|
NOVA LIFESTYLE INC. AND SUBSIDIARIES
|
||||||||||||
|
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
||||||||||||
|
FOR THE YEAR ENDED DECEMBER 31, 2015
|
||||||||||||
|
As Reported (1)
|
Pro Forma adjustments (e)
|
Pro Forma
|
||||||||||
|
Net sales
|
$
|
108,820,112
|
(18,876,697
|
)
|
$
|
89,943,415
|
||||||
|
Cost of sales
|
90,430,560
|
(15,765,916
|
)
|
74,664,644
|
||||||||
|
Gross profit
|
18,389,552
|
(3,110,781
|
)
|
15,278,771
|
||||||||
|
Operating expenses
|
||||||||||||
|
Selling
|
6,161,294
|
(1,529,536
|
)
|
4,631,758
|
||||||||
|
General and administrative
|
8,678,402
|
(2,661,597
|
)
|
6,016,805
|
||||||||
|
Total operating expenses
|
14,839,696
|
(4,191,133
|
)
|
10,648,563
|
||||||||
|
Income from operations
|
3,549,856
|
1,080,352
|
4,630,208
|
|||||||||
|
Other income (expenses)
|
||||||||||||
|
Non-operating income (expense), net
|
325,701
|
(282,464
|
)
|
43,237
|
||||||||
|
Foreign exchange transaction gain (loss)
|
93,797
|
(100,800
|
)
|
(7,003
|
)
|
|||||||
|
Change in fair value of warrant liability and extinguishment of warrant liability
|
(767,096
|
)
|
-
|
(767,096
|
)
|
|||||||
|
Interest expense
|
(387,477
|
)
|
111,847
|
(275,630
|
)
|
|||||||
|
Financial expense
|
(62,953
|
)
|
5,087
|
(57,866
|
)
|
|||||||
|
Total other expenses, net
|
(798,028
|
)
|
(266,330
|
)
|
(1,064,358
|
)
|
||||||
|
Income before income tax and discontinued operations
|
2,751,828
|
814,022
|
3,565,850
|
|||||||||
|
Income tax expense
|
551,586
|
(390,143
|
)
|
161,443
|
||||||||
|
Income from continuing operations
|
2,200,242
|
3,404,407
|
||||||||||
|
Loss from discontinued operations
|
(1,204,165
|
)
|
(1,204,165
|
)
|
||||||||
|
Net income
|
$
|
2,200,242
|
$
|
-
|
$
|
2,200,242
|
||||||
|
Basic weighted average shares outstanding
|
22,825,652
|
22,825,652
|
22,825,652
|
|||||||||
|
Diluted weighted average shares outstanding
|
22,825,652
|
22,825,652
|
22,825,652
|
|||||||||
|
Income from continuing operations per share of common stock
|
||||||||||||
|
Basic
|
$
|
0.10
|
$
|
-
|
$
|
0.15
|
||||||
|
Diluted
|
$
|
0.10
|
$
|
-
|
$
|
0.15
|
||||||
|
Loss from discontinued operations per share of common stock
|
||||||||||||
|
Basic
|
$
|
-
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
||||
|
Diluted
|
$
|
-
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
||||
|
Net income per share of common stock
|
||||||||||||
|
Basic
|
$
|
0.10
|
$
|
-
|
$
|
0.10
|
||||||
|
Diluted
|
$
|
0.10
|
$
|
-
|
$
|
0.10
|
||||||
|
(1) Source: audited financial statements of Nova LifeStyle, Inc. Annual Report on Form 10-K for the year ended December 31, 2015.
|
||||||||||||
See accompanying Notes to Unaudited Consolidated Condensed Pro Form Financial Statements.
Exhibit 99.1
NOVA LIFESTYLE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Description of Transaction and Basis of Presentation
The unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of the Company, which were included in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and Annual Report on Form 10-K for the year ended December 31, 2015. The unaudited pro forma condensed consolidated statements of operations reflect the sale by the Company of its subsidiaries (Nova BVI, Nova Dongguan, Nova Museum and Nova Ding Nuo) as if the sale had been consummated on January 1, 2015 and 2016 (the first day of the Company's 2015 and 2016 fiscal year), respectively. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 reflects such sale as if it had been consummated on that date.
Pro Forma Adjustments
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or the unaudited pro forma condensed consolidated statement of operations:
Condensed Consolidated Balance Sheet
|
(a)
|
To reflect anticipated receivable for remaining sales proceeds of $9.0 million, from total gross proceeds of $8.5 million for Share Transfer Agreement and $6.0 million for Trademark agreement.
|
|
(b)
|
To eliminate the assets held for sale and liabilities held for sale of disposed subsidiaries.
|
|
(c)
|
To reclassify the $5.5 million deposits received from buyer from current liability to gross proceeds received as a result of completion of the sale of the subsidiaries.
|
|
(d)
|
To reflect gain on sale of subsidiaries, before tax.
|
Condensed Consolidated Statements of Operations
|
(e)
|
To reflect elimination of historical external revenues and expenses of disposed subsidiaries.
|