Note 18 - Acquisition and Unaudited Pro Forma Information

9 Months Ended

Sep. 30, 2011

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 18 - Acquisition and Unaudited Pro Forma Information

On August 31, 2011, Nova Lifestyle acquired all the outstanding capital stock of Diamond Bar for $0.45 million paid in full at the closing pursuant to a stock purchase agreement entered into with the sole shareholder of Diamond Bar. Diamond Bar, doing business as Diamond Sofa, is engaged in the import, marketing and sale of furniture in the U.S. market.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. The fair values of the assets acquired and liabilities assumed at agreement date were used for the purpose of purchase price allocation. The excess of the purchase price over the fair value of the net assets acquired of $218,606 was recorded as goodwill.

Cash	$	141,231
Accounts receivable		986,145
Inventory		786,776
Property and equipment		164,913
Customer relationship		50,000
Goodwill		218,606
Accounts payable		(1,742,540	)
Other payable and accrued expenses		(138,131	)
Deferred tax liability		(17,000	)
Purchase price	$	450,000

Revenue and net income of Diamond Bar included in the consolidated income statement for the one month ended September 30, 2011, was $1,041,684 and $32,149, respectively.

The following unaudited pro forma consolidated results of operations for Nova Lifestyle and Diamond Bar for the nine and three months ended September 30, 2011 and 2010, presents the operations of Nova Lifestyle and Diamond Bar as if the acquisition of Diamond Bar occurred on January 1, 2011 and 2010. The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisition been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.

	For nine months ended September 30,				For three months ended September 30,
	2011		2010		2011		2010
Net sales	$	30,627,291	$	22,009,496	$	12,462,962	$	7,222,544
Net income	$	3,147,306	$	2,889,811	$	1,640,614	$	857,563
Basic weighted average shares outstanding		13,451,350		9,685,000		16,431,723		9,685,000
Diluted weighted average shares outstanding		13,522,150		9,685,000		16,641,815		9,685,000
Basic net earnings per share	$	0.23	$	0.30	$	0.10	$	0.09
Diluted net earnings per share	$	0.23	$	0.30	$	0.10	$	0.09