novalife20210630

novalife20210630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-36259

NOVA LIFESTYLE, INC.

(Exact name of registrant as specified in its charter)

Nevada

90-0746568

(State or other jurisdiction of incorporation

or organization)

(IRS Employer Identification No.)

6565 E. Washington Blvd. Commerce, CA		90040
(Address of principal executive offices)		(Zip Code)

(323) 888-9999

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	NVFY	Nasdaq Stock Market

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,687,052 shares of common stock outstanding as of August 12, 2021.

Table of Contents

Nova LifeStyle, Inc.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	1
	Condensed Consolidated Statements of Loss and Comprehensive Loss for the six months and three months ended June 30, 2021 and 2020 (unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity for the six months and three months ended June 30, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements for the six months and three months ended June 30, 2021 and 2020 (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 6.	Exhibits	41

	Signatures	42

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

	June 30, 2021		December 31, 2020
	(Unaudited)
Assets

Current Assets
Cash and cash equivalents	$	5,505,149	$	8,744,784
Accounts receivable, net		159,451		514,939
Advance to suppliers		318,973		381,894
Inventories		27,164,042		32,814,520
Prepaid expenses		505,438		217,591
Other receivables		516,760		132,155
Tax receivable		478,435		489,020
Loan to unrelated party		1,234,359		-

Total Current Assets		35,882,607		43,294,903

Noncurrent Assets
Plant, property and equipment, net		556,947		453,518
Operating lease right-of-use assets, net		1,928,279		2,319,742
Lease deposit		72,843		73,801
Goodwill		218,606		218,606
Deferred tax asset		-		117,952

Total Noncurrent Assets		2,776,675		3,183,619

Total Assets	$	38,659,282	$	46,478,522

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONT’D)

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

	June 30, 2021			December 31, 2020
	(Unaudited)
Liabilities and Stockholders' Equity

Current Liabilities
Accounts payable	$	549,933		$	743,785
Operating lease liability, current		643,303			688,082
Advances from customers		258,952			266,243
Accrued liabilities and other payables		741,010			322,994
Other loan interest payable		5,167			4,179

Total Current Liabilities		2,198,365			2,025,283

Noncurrent Liabilities
Other loan		150,000			150,000
Operating lease liability, non-current		1,421,307			1,746,070
Income tax payable		1,437,223			1,628,694

Total Noncurrent Liabilities		3,008,530			3,524,764

Total Liabilities		5,206,895			5,550,047

Contingencies and Commitments

Stockholders' Equity
Common stock, $0.001 par value; 15,000,000 shares authorized, 5,609,234 and 5,596,234 shares issued and outstanding; as of June 30, 2021 and December 31, 2020, respectively		5,609			5,596
Additional paid-in capital		39,792,705			39,766,978
Statutory reserves		-			6,241
Accumulated other comprehensive income		405,526			798,290
(Accumulated deficits) Retained earnings		(6,751,453	)		351,370

Total Stockholders' Equity		33,452,387			40,928,475

Total Liabilities and Stockholders' Equity	$	38,659,282		$	46,478,522

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2021 AND 2020 (UNAUDITED)

	Six Months Ended June 30,						Three Months Ended June 30,
	2021			2020			2021			2020
	(Unaudited)						(Unaudited)

Net Sales	$	6,881,583		$	4,498,146		$	3,550,016		$	2,294,926

Cost of Sales		9,508,404			2,847,220			7,557,149			1,423,029

Gross (Loss) Profit		(2,626,821	)		1,650,926			(4,007,133	)		871,897

Operating Expenses
Selling expenses		1,646,842			577,315			878,757			259,899
General and administrative expenses		2,771,043			2,433,019			1,392,713			1,150,300

Total Operating Expenses		4,417,885			3,010,334			2,271,470			1,410,199

Loss From Operations		(7,044,706	)		(1,359,408	)		(6,278,603	)		(538,302	)

Other Income (Expenses)
Non-operating income, net		-			38,025			-			38,025
Foreign exchange transaction (loss) income		34,428			(141,536	)		(34,556	)		14,477
Interest income, net		25,911			22,262			28,301			1,437
Financial expense		(111,636	)		(62,413	)		(57,284	)		(29,673	)

Total Other (Expenses) Income		(51,297	)		(143,662	)		(63,539	)		24,266

Loss Before Income Taxes and Discontinued operations		(7,096,003	)		(1,503,070	)		(6,342,142	)		(514,036	)

Income Tax Expense		(13,061	)		(25,145	)		(3,385	)		(1,266	)

Loss From Continuing Operations		(7,109,064	)		(1,528,215	)		(6,345,527	)		(515,302	)

Loss From Discontinued Operations		-			(326,531	)		-			-

Net Loss		(7,109,064	)		(1,854,746	)		(6,345,527	)		(515,302	)

Other Comprehensive (Loss) Income
Foreign currency translation		(392,764	)		193,893			(163,917	)		35,678

Net Loss and Comprehensive Loss		(7,501,828	)		(1,660,853	)		(6,509,444	)		(479,624	)

Weighted average shares outstanding – Basic and Diluted		5,601,988			5,575,729			5,605,261			5,579,261

Loss from continuing operations per share of common stock
Basic and Diluted	$	(1.27	)	$	(0.27	)	$	(1.13	)	$	(0.09	)

Loss from discontinued operations per share of common stock
Basic and Diluted	$	-		$	(0.06	)	$	-		$	-

Net loss per share of common stock
Basic and Diluted	$	(1.27	)	$	(0.33	)	$

SEC Form 10-Q filed by Nova Lifestyle, Inc