x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
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OR
|
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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90-0746568
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(State or other jurisdiction of incorporation
or organization)
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(IRS Employer Identification No.)
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6541 E. Washington Blvd. Commerce, CA
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90040
|
|
(Address of principal executive offices)
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(Zip Code)
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(323) 888-9999
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(Registrant’s telephone number, including area code)
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller reporting company x
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(do not check if a smaller reporting company)
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Page
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||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
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1
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1
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||
3
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4
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6
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||
Item 2.
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21
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Item 3.
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29
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Item 4.
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29
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PART II. OTHER INFORMATION
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||
Item 1.
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30
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Item 1A.
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30
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Item 2.
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30
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Item 3.
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30
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Item 4.
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30
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Item 5.
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30
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Item 6.
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30
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31
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||
32
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March 31,
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December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current Assets
|
|
|
||||||
Cash and cash equivalents
|
$ | 601,247 | $ | 3,150,492 | ||||
Accounts receivable, net
|
21,539,338 | 22,387,517 | ||||||
Advance to suppliers
|
3,429,406 | 3,105,584 | ||||||
Inventories
|
2,836,270 | 3,240,721 | ||||||
Prepaid expenses and other receivables
|
86,314 | 179,713 | ||||||
Deferred tax asset
|
157,748 | 157,423 | ||||||
Total Current Assets
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28,650,323 | 32,221,450 | ||||||
Noncurrent Assets
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||||||||
Heritage and cultural assets
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129,344 | 129,002 | ||||||
Plant, property and equipment, net
|
8,441,286 | 8,551,114 | ||||||
Construction in progress
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5,623,314 | 5,374,056 | ||||||
Acquisition deposit
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4,500,000 | 3,000,000 | ||||||
Lease deposit
|
43,841 | 43,029 | ||||||
Goodwill
|
218,606 | 218,606 | ||||||
Intangible assets, net
|
1,181,918 | 1,216,092 | ||||||
Deferred tax asset, net
|
-- | -- | ||||||
Total Noncurrent Assets
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20,138,309 | 18,531,899 | ||||||
Total Assets
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$ | 48,788,632 | $ | 50,753,349 |
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Liabilities and Stockholders' Equity
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$ | 4,752,146 | $ | 7,123,534 | ||||
Line of credit
|
6,138,072 | 6,529,178 | ||||||
Advance from customers
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189,973 | 257,191 | ||||||
Accrued liabilities and other payables
|
1,126,770 | 1,495,835 | ||||||
Taxes payable
|
186,736 | 272,159 | ||||||
Total Current Liabilities
|
12,393,697 | 15,677,897 | ||||||
Noncurrent Liabilities
|
||||||||
Deferred rent payable
|
51,038 | 55,902 | ||||||
Deferred tax liability, net
|
45,375 | 45,370 | ||||||
Income tax payable
|
4,713,368 | 4,608,592 | ||||||
Total Noncurrent Liabilities
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4,809,781 | 4,709,864 | ||||||
Total Liabilities
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17,203,478 | 20,387,761 | ||||||
Contingencies and Commitments
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||||||||
Stockholders' Equity
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||||||||
Common stock, $0.001 par value; 75,000,000 shares authorized,
18,539,541 and 18,536,567 shares issued and outstanding |
18,540 | 18,537 | ||||||
Additional paid-in capital
|
19,112,333 | 19,107,845 | ||||||
Subscription receivable
|
(1,950,000 | ) | (1,950,000 | ) | ||||
Statutory reserves
|
6,241 | 6,241 | ||||||
Accumulated other comprehensive income
|
2,213,254 | 2,176,646 | ||||||
Retained earnings
|
12,184,786 | 11,006,319 | ||||||
Total Stockholders' Equity
|
31,585,154 | 30,365,588 | ||||||
Total Liabilities and Stockholders' Equity
|
$ | 48,788,632 | $ | 50,753,349 |
Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Net Sales
|
$ | 14,996,951 | $ | 10,999,254 | ||||
Cost of Sales
|
11,750,848 | 7,988,979 | ||||||
Gross Profit
|
3,246,103 | 3,010,275 | ||||||
Operating Expenses
|
||||||||
Selling expenses
|
721,796 | 689,907 | ||||||
General and administrative expenses
|
1,044,959 | 1,051,215 | ||||||
Loss on disposal of plant, property and equipment
|
-- | 123,775 | ||||||
Total Operating Expenses
|
1,766,755 | 1,864,897 | ||||||
Income From Operations
|
1,479,348 | 1,145,378 | ||||||
Other Income (Expenses)
|
||||||||
Non-operating income (expense)
|
(21,100 | ) | 2,299 | |||||
Foreign exchange transaction gain
|
-- | 8,312 | ||||||
Interest expense
|
(74,397 | ) | -- | |||||
Financial expense
|
(29,330 | ) | (10,812 | ) | ||||
Total Other Expenses, Net
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(124,827 | ) | (201 | ) | ||||
Income Before Income Tax
|
1,354,521 | 1,145,177 | ||||||
Income Tax Expense
|
176,054 | 166,515 | ||||||
Net Income
|
1,178,467 | 978,662 | ||||||
Other Comprehensive Income
|
||||||||
Foreign currency translation
|
36,608 | 12,845 | ||||||
Comprehensive Income
|
$ | 1,215,075 | $ | 991,507 | ||||
Basic weighted average shares outstanding
|
18,536,699 | 18,377,031 | ||||||
Diluted weighted average shares outstanding
|
18,638,283 | 18,691,250 | ||||||
Basic net earnings per share
|
$ | 0.06 | $ | 0.05 | ||||
Diluted net earnings per share
|
$ | 0.06 | $ | 0.05 |
Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Cash Flows From Operating Activities
|
||||||||
Net Income
|
$ | 1,178,467 | $ | 978,662 | ||||
Adjustments to reconcile net income to net cash
used in operating activities:
|
||||||||
Depreciation and amortization
|
230,283 | 191,302 | ||||||
Stock compensation expense
|
34,375 | -- | ||||||
Loss on fixed assets disposal
|
-- | 123,775 | ||||||
Bad debt allowance
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(2,302 | ) | -- | |||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
865,275 | 197,775 | ||||||
Accounts receivable - related party
|
-- | 28,289 | ||||||
Advance to suppliers
|
(321,935 | ) | 93,802 | |||||
Inventories
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408,404 | 86,819 | ||||||
Other current assets
|
58,393 | (77,075 | ) | |||||
Accounts payable
|
(2,380,947 | ) | (4,310,158 | ) | ||||
Advance from customers
|
(67,670 | ) | 28,001 | |||||
Accrued expenses and other payables
|
(369,397 | ) | (61,333 | ) | ||||
Deferred rent payable
|
(5,004 | ) | 3,390 | |||||
Taxes payable
|
9,190 | 228,651 | ||||||
|
||||||||
Net Cash Used in Operating Activities
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(362,868 | ) | (2,488,100 | ) | ||||
Cash Flows From Investing Activities
|
||||||||
Deposit on acquisition of Bright Swallow Int'l Group Ltd.
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(1,500,000 | ) | -- | |||||
Cash received from fixed assets disposal
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-- | 8,369 | ||||||
Acquisition of intangible asset
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-- | (150,617 | ) | |||||
Purchase of property and equipment
|
(61,771 | ) | (78,841 | ) | ||||
Construction in progress
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(234,668 | ) | (30,785 | ) | ||||
Net Cash Used in Investing Activities
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(1,796,439 | ) | (251,874 | ) | ||||
|
||||||||
Cash Flows From Financing Activities
|
||||||||
Repayment from related parties
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(1,987 | ) | -- | |||||
Proceed from line of credit and bank loan
|
3,710,000 | |||||||
Repayment on line of credit and bank loan
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(4,104,164 | ) | -- | |||||
Cash proceeds from private placement, net
|
-- | 1,753,849 | ||||||
Payment for note payable
|
-- | 203,351 | ||||||
Cash received from warrants exercised
|
5,948 | 142,600 | ||||||
Net Cash (used in) Provided by Financing Activities
|
$ | (390,203 | ) | $ | 2,099,800 |
Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Effect of Exchange Rate Changes on
Cash and Cash Equivalents
|
$ | 265 | $ | (995 | ) | |||
Net decrease in cash and cash equivalents
|
(2,549,245 | ) | (641,169 | ) | ||||
Cash and cash equivalents, beginning of period
|
3,150,492 | 2,505,179 | ||||||
Cash and cash equivalents, ending of period
|
$ | 601,247 | $ | 1,864,010 | ||||
Supplemental Disclosure of Cash Flow Information
|
||||||||
Cash paid during the period for:
|
||||||||
Income tax payments
|
$ | 150,520 | $ | 30,052 | ||||
Interest expense
|
$ | 68,319 | $ | -- | ||||
Supplemental Disclosure of Non-Cash Financing Activities
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||||||||
Payable for acquisition of land use rights
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$ | -- | $ | 389,241 |
Building and workshops
|
20 years
|
Computer and office equipment
|
5 years
|
Museum decoration and renovation
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10 years
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Machinery
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10 years
|
Autos
|
5 years
|
Gross UTB
|
||||
Beginning Balance – January 1, 2013
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$
|
4,010,657
|
||
Increase in unrecorded tax benefits taken in 2013
|
13,949
|
|||
Exchange rate adjustment – 2013
|
10,641
|
|||
Ending Balance – March 31, 2013
|
$
|
4,035,247
|
Three Months Ended March 31, | ||||||||
2013
|
2012
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Net income
|
$
|
1,178,467
|
$
|
978,662
|
||||
Weighted average shares outstanding – basic
|
18,536,699
|
18,377,031
|
||||||
Effect of dilutive securities:
|
||||||||
Unexercised warrants
|
101,584
|
314,219
|
||||||
Weighted average shares outstanding – diluted
|
18,638,283
|
18,691,250
|
||||||
Earnings (loss) per share – basic
|
$
|
0.06
|
$
|
0.05
|
||||
Earnings (loss) per share – diluted
|
$
|
0.06
|
$
|
0.05
|
·
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Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
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·
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Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
·
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Raw material
|
$
|
298,025
|
$
|
369,642
|
||||
Work in progress
|
472,170
|
832,270
|
||||||
Finished goods
|
2,066,075
|
2,038,809
|
||||||
$
|
2,836,270
|
$
|
3,240,721
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Building and workshops
|
$
|
7,445,811
|
$
|
7,426,146
|
||||
Office equipment
|
587,354
|
581,227
|
||||||
Autos
|
310,013
|
309,195
|
||||||
Machinery
|
3,160,046
|
3,100,756
|
||||||
Museum decoration and renovation
|
555,333
|
548,497
|
||||||
Less: accumulated depreciation
|
(3,617,271
|
)
|
(3,414,707
|
)
|
||||
$
|
8,441,286
|
$
|
8,551,114
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Land use right
|
$
|
1,117,483
|
$
|
1,114,532
|
||||
Customer relationship
|
50,000
|
50,000
|
||||||
Trademark
|
200,000
|
200,000
|
||||||
Less: accumulated amortization
|
(185,565
|
)
|
(148,440
|
)
|
||||
$
|
1,181,918
|
$
|
1,216,092
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Prepaid expenses
|
$
|
62,343
|
$
|
111,521
|
||||
Other receivables
|
23,971
|
68,192
|
||||||
Total
|
$
|
86,314
|
$
|
179,713
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Other payables
|
$
|
83,418
|
$
|
89,982
|
||||
Interest payable
|
1,641
|
-
|
||||||
Salary payable
|
559,738
|
961,669
|
||||||
Franchising subsidy
|
179,716
|
179,786
|
||||||
Accrued expenses
|
302,257
|
264,398
|
||||||
Total
|
$
|
1,126,770
|
$
|
1,495,835
|
Number of
Warrants
|
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term in Years
|
||||||||||
Outstanding at January 1, 2013
|
983,280
|
$
|
2.39
|
1.69
|
||||||||
Exercisable at January 1, 2013
|
983,280
|
$
|
2.39
|
1.69
|
||||||||
Granted
|
||||||||||||
Exercised
|
2,974
|
2.00
|
-
|
|||||||||
Forfeited
|
-
|
-
|
-
|
|||||||||
Expired
|
-
|
-
|
-
|
|||||||||
Outstanding at March 31, 2013
|
980,306
|
2.40
|
1.44
|
|||||||||
Exercisable at March 31, 2013
|
980,306
|
2.40
|
1.44
|
March 31,
|
March 31,
|
|||||||
Geographical Areas
|
2013
|
2012
|
||||||
(Unaudited)
|
(Unaudited)
|
|||||||
China*
|
$
|
3,218,490
|
$
|
2,754,654
|
||||
North America
|
7,880,892
|
4,716,163
|
||||||
Asia**
|
455,321
|
81,966
|
||||||
Europe
|
3,272,538
|
2,636,542
|
||||||
Australia
|
74,127
|
128,717
|
||||||
Hong Kong
|
95,583
|
339,010
|
||||||
Other countries
|
-
|
342,202
|
||||||
$
|
14,996,951
|
$
|
10,999,254
|
* excluding Hong Kong
|
** excluding China
|
Year
|
Amount
|
|||
2013
|
$
|
166,000
|
Cash
|
$
|
191,810
|
||
Accounts receivable
|
1,629,427
|
|||
Other receivable
|
300,000
|
|||
Customer relationship
|
6,800,058
|
|||
Accounts payable
|
(1,921,295
|
)
|
||
Net Assets acquired.
|
7,000,000
|
|||
Gain from bargain purchase
|
(500,000)
|
|||
Purchase price
|
$
|
6,500,000
|
For the three months ended March 31,
|
||||||||
2013
|
2012
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Net sales
|
$ | 17,397,568 | $ | 14,160,917 | ||||
Net income
|
$ | 1,386,514 | $ | 1,734,988 | * | |||
Basic weighted average shares outstanding
|
18,536,699 | 18,377,031 | ||||||
Diluted weighted average shares outstanding
|
18,638,283 | 18,691,250 | ||||||
Basic net earnings per share
|
$ | 0.07 | $ | 0.09 | ||||
Diluted net earnings per share
|
$ | 0.07 | $ | 0.09 |
Three Months Ended March 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
$
|
% of Sales
|
$
|
% of Sales
|
|||||||||||||
Net sales
|
14,996,951
|
10,999,254
|
||||||||||||||
Cost of sales
|
11,750,848
|
78
|
%
|
7,988,979
|
73
|
%
|
||||||||||
Gross profit
|
3,246,103
|
22
|
%
|
3,010,275
|
27
|
%
|
||||||||||
Operating expenses
|
1,766,755
|
12
|
%
|
1,864,897
|
17
|
%
|
||||||||||
Income from operations
|
1,479,348
|
10
|
%
|
1,145,378
|
10
|
%
|
||||||||||
Other income (expenses), net
|
(124,827
|
)
|
(1)
|
%
|
(201
|
)
|
-
|
%
|
||||||||
Income tax expense
|
176,054
|
1
|
%
|
166,515
|
1
|
%
|
||||||||||
Net income
|
1,178,467
|
8
|
%
|
978,662
|
9
|
%
|
2013
|
2012
|
|||||||
Cash (used in) provided by:
|
||||||||
Operating activities
|
$
|
(362,868
|
)
|
$
|
(2,488,100)
|
|||
Investing activities
|
(1,796,439
|
)
|
(251,874
|
)
|
||||
Financing activities
|
(390,203
|
)
|
2,099,800
|
NOVA LIFESTYLE, INC.
|
||
(Registrant)
|
||
Date: May 14, 2013
|
By:
|
/s/ Ya Ming Wong
|
Ya Ming Wong
Chief Executive Officer
(Principal Executive Officer)
|
||
Date: May 14, 2013
|
/s/ Yuen Ching Ho
|
|
Yuen Ching Ho
Chief Financial Officer
(Principal Accounting Officer)
|
Exhibit No.
|
Document Description
|
|
10.1
|
Stock Acquisition Agreement, dated March 22, 2013, by and between the Company, Zhu Wei and Bright Swallow International Group Limited (Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 333-163019) filed on March 26, 2013)
|
|
31.1 †
|
||
31.2 †
|
||
32.1 ‡
|
||
32.2 ‡
|
||
101.INS‡
|
XBRL Instance Document
|
|
101.SCH‡
|
XBRL Schema Document
|
|
101.CAL‡
|
XBRL Calculation Linkbase Document
|
|
101.DEF‡
|
XBRL Definition Linkbase Document
|
|
101.LAB‡
|
XBRL Label Linkbase Document
|
|
101.PRE‡
|
XBRL Presentation Linkbase Document
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2013, of Nova Lifestyle, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 14, 2013
|
By:
|
/s/ Ya Ming Wong
|
Ya Ming Wong
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2013, of Nova Lifestyle, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 14, 2013
|
By:
|
/s/ Yuen Ching Ho
|
Yuen Ching Ho
Chief Financial Officer
(Principal Financial Officer)
|
Date: May 14, 2013
|
By:
|
/s/ Ya Ming Wong
|
Ya Ming Wong
Chief Executive Officer
|
Date: May 14, 2013
|
By:
|
/s/ Yuen Ching Ho
|
Yuen Ching Ho
Chief Financial Officer (Principal Accounting Officer)
|
Note 2 - Summary of Significant Accounting Policies (Detail) - Schedule of Unrecognized Tax Benefits Roll Forward (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Balance | $ 4,010,657 | $ 4,000,000 |
Increase in unrecorded tax benefits taken in 2013 | 13,949 | |
Exchange rate adjustment – 2013 | 10,641 | |
Balance | $ 4,035,247 | $ 4,000,000 |
Note 14 - Due From Factor (Detail)
|
12 Months Ended |
---|---|
Dec. 31, 2012
|
|
Factoring fee, percentage | 1.50% |
Note 8 - Prepaid Expenses and Other Receivables (Detail) - Schedule of Other Curnet Assets (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Prepaid expenses | $ 62,343 | $ 111,521 |
Other receivables | 23,971 | 68,192 |
Total | $ 86,314 | $ 179,713 |
Note 15 - Stockholders' Equity (Detail) (USD $)
|
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Dec. 31, 2012
Investor Relations Contract [Member]
|
|
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 100,000 | ||
Investor relation contract, total service period | 24 months | ||
Stock Issued During Period, Shares, Issued for Services | 50,000 | ||
Equity Issuance, Per Share Amount (in Dollars per share) | $ 2.75 | ||
Share-based Compensation (in Dollars) | $ 34,375 | $ 0 | $ 34,375 |
Investor relations contract, shares to be issued | 50,000 | ||
Investor Relation Contract, Stock to Be Issued, Issuance Date Description | within 180 business days of the contract signing date |
Note 7 - Intangible Assets (Detail)
|
3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
USD ($)
|
Mar. 31, 2012
USD ($)
|
Dec. 31, 2011
Customer Relationships [Member]
USD ($)
|
Dec. 31, 2011
Trademarks [Member]
|
Mar. 31, 2013
Maximum [Member]
Customer Relationships [Member]
|
Dec. 31, 2012
Maximum [Member]
Trademarks [Member]
|
Mar. 31, 2013
Minimum [Member]
Customer Relationships [Member]
|
Dec. 31, 2012
Minimum [Member]
Trademarks [Member]
|
Mar. 31, 2013
Land Use Right, Acquired in 2004 [Member]
|
Dec. 31, 2012
Land Use Right Acquired February 28, 2012 [Member]
USD ($)
|
Dec. 31, 2012
Land Use Right Acquired February 28, 2012 [Member]
CNY
|
Mar. 31, 2013
Customer Relationships [Member]
|
Mar. 31, 2013
Trademarks [Member]
|
Dec. 31, 2011
Trademarks [Member]
USD ($)
|
|
Finite-Lived Intangible Asset, Useful Life | 10 years | 10 years | 5 years | 5 years | 50 years | 50 years | 50 years | |||||||
Finite-Lived Intangible Assets, Amortization Method | straight-line basis for 50 years | straight-line basis for 50 years | straight-line basis for 50 years | straight-line method | straight-line method | |||||||||
Payments to Acquire Intangible Assets | $ 0 | $ 150,617 | $ 200,000 | $ 536,193 | 3,400,000 | $ 200,000 | ||||||||
Land Use Rights Acquired, Annual Fee, Payment Description | required to pay an annual amount at RMB 800 per mu (or 666.67 square meters) for a total of 60 mu (or 40,000 square meters) starting from 2003 for 60 years. The payment increases 10% every 5 years. | In addition, the Company is required to pay an annual fee at $240 per MU (total 17.97 MU for the land) from the second year after commencement of the land filling for 60 years for a total of approximately $333,000 (RMB 2.1 million). The payment will be made annually with a 5% increase every 5 years. | In addition, the Company is required to pay an annual fee at $240 per MU (total 17.97 MU for the land) from the second year after commencement of the land filling for 60 years for a total of approximately $333,000 (RMB 2.1 million). The payment will be made annually with a 5% increase every 5 years. | |||||||||||
Other Finite-Lived Intangible Assets, Gross | 50,000 | |||||||||||||
Number of trademarks acquired | 2 | |||||||||||||
Amortization of Intangible Assets | 36,829 | 2,738 | ||||||||||||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 65,510 | |||||||||||||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 65,510 | |||||||||||||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 65,510 | |||||||||||||
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 64,260 | |||||||||||||
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 20,510 |
Note 17 - Geographical Sales (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
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Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block] | Geographical distribution of sales consisted of the following for the three months ended March 31, 2013 and 2012:
|
Note 16 - Statutory Reserves (Detail) (USD $)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Number of statutory reserve accounts | 1 | |
Statutory reserve, after income percentage | 10.00% | |
Statutory reserve, percentage of registered capital | 50.00% | |
Statutory reserve, percentage of registered capital minimum | 25.00% | |
Statutory Equity Reserves (in Dollars) | $ 6,241 | $ 6,241 |
Common welfare fund, voluntary contribution | 5% to 10% |
Accounting Policies, by Policy (Policies)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
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Basis of Accounting, Policy [Policy Text Block] | Basis
of Presentation
The
condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States of America (“U.S.
GAAP”). The condensed consolidated financial statements
include the financial statements of the Company and its
subsidiaries. All significant inter-company transactions and
balances have been eliminated in consolidation.
The
interim condensed consolidated financial information as of
March 31, 2013 and for the three month periods ended March
31, 2013 and 2012 have been prepared without audit, pursuant
to the rules and regulations of the SEC. Certain information
and footnote disclosures, which are normally included in
consolidated financial statements prepared in accordance with
U.S. GAAP have not been included. The interim condensed
consolidated financial information should be read in
conjunction with the Financial Statements and the notes
thereto, included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2012,
previously filed with the SEC on April 1, 2013.
In
the opinion of management, all adjustments (which include
normal recurring adjustments) necessary to present a fair
statement of the Company’s interim condensed
consolidated financial position as of March 31, 2013 its
interim condensed consolidated results of operations and cash
flows for the three month periods ended March 31, 2013 and
2012, as applicable, have been made. The interim results of
operations are not necessarily indicative of the operating
results for the full fiscal year or any future
periods. |
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Use of Estimates, Policy [Policy Text Block] | Use
of Estimates
In
preparing consolidated financial statements in conformity
with U.S. GAAP, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the
dates of the consolidated financial statements, as well as
the reported amounts of revenues and expenses during the
reporting period. Significant estimates, required by
management, include the allowance for bad debt, valuation
of inventories and recoverability of long-lived assets and
goodwill. Actual results could differ from those
estimates. |
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Business Combinations Policy [Policy Text Block] | Business
Combination
For
a business combination, the assets acquired, the
liabilities assumed and any noncontrolling interest in the
acquiree are recognized at the acquisition date, measured
at their fair values as of that date. In a business
combination achieved in stages, the identifiable assets and
liabilities, as well as the noncontrolling interest in the
acquiree, are recognized at the full amounts of their fair
values. In a bargain purchase in which the total
acquisition-date fair value of the identifiable net assets
acquired exceeds the fair value of the consideration
transferred plus any noncontrolling interest in the
acquiree that excess in earnings is recognized as a gain
attributable to the acquirer.
Deferred
tax liability and asset are recognized for the deferred tax
consequences of differences between the tax bases and the
recognized values of assets acquired and liabilities
assumed in a business combination in accordance with
Accounting Standards Codification (“ASC”) Topic
740-10. |
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Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill
Goodwill
is the excess of purchase price and related costs over the
value assigned to the net tangible and identifiable
intangible assets of businesses acquired. In accordance
with ASC Topic 350, “Intangibles-Goodwill and
Other,” goodwill is not amortized but is tested for
impairment, annually or when circumstances indicate a
possible impairment may exist. Impairment testing is
performed at a reporting unit level. An impairment loss
generally would be recognized when the carrying amount of
the reporting unit exceeds its fair value, with the fair
value of the reporting unit determined using discounted
cash flow (“DCF”) analysis. A number of
significant assumptions and estimates are involved in the
application of the DCF analysis to forecast operating cash
flows, including the discount rate, the internal rate of
return and projections of realizations and costs to
produce. Management considers historical experience and all
available information at the time the fair values of its
reporting units are estimated.
ASC
Topic 350 also permits an entity to first assess
qualitative factors to determine whether it is more likely
than not (that is, a likelihood of more than 50 percent)
that the fair value of a reporting unit is less than its
carrying amount, including goodwill. If it is more likely
than not that the fair value of a reporting unit is less
than its carrying amount, then the first step of the
two-step goodwill impairment test is required to be
performed. Performing the qualitative assessment involved
identifying the relevant drivers of fair value, evaluating
the significance of all identified relevant events and
circumstances, and weighing the factors to determine
whether it is more likely than not that the fair value of
the reporting unit is less than its carrying amount. After
evaluating and weighing all these relevant events and
circumstances, it was concluded that a positive assertion
can be made from the qualitative assessment that it is more
likely than not that the fair value of Diamond Bar is
greater than its carrying amount. As such, it is not
necessary to perform the first step of the two-step
goodwill impairment test for Diamond Bar reporting
unit. Accordingly, as of March 31, 2013 and
December 31, 2012, the Company concluded there was no
impairment of goodwill. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash
and Cash Equivalents
For
purposes of the statement of cash flows, the Company
considers all highly liquid investments with an original
maturity of three months or less to be cash
equivalents. |
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Trade and Other Accounts Receivable, Policy [Policy Text Block] | Accounts
Receivable
The
Company’s policy is to maintain an allowance for
potential credit losses on accounts receivable. Management
reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer
credit worthiness, current economic trends and changes in
customer payment patterns to evaluate the adequacy of these
reserves. Based on historical collection activity, the
Company recorded $223,983 and $226,137 as allowance for bad
debts as of March 31, 2013 and December 31, 2012,
respectively. |
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Inventory, Policy [Policy Text Block] | Inventories
Inventories
are stated at the lower of cost or market value with cost
determined on a weighted-average basis, which approximates
the first-in first-out method. Management compares the cost
of inventories with the net realizable value and an
allowance is made for writing down their inventories to
market value, if lower. The Company did not record any
provision for write-downs of inventory at March 31, 2013
and December 31, 2012. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Plant,
Property and Equipment and Construction in Progress
Plant,
property and equipment are stated at cost, net of
accumulated depreciation. Expenditures for maintenance and
repairs are expensed as incurred; additions, renewals and
improvements are capitalized. When property and equipment
are retired or otherwise disposed of, the related cost and
accumulated depreciation is removed from the
respective accounts, and any gain or loss is included
in operations. Depreciation of property and equipment is
provided using the straight-line method for substantially
all assets with 10% salvage value and estimated lives as
follows:
Depreciation
of property, plant and equipment attributable to
manufacturing activities is capitalized as part of
inventories, and expensed to cost of goods sold when
inventories are sold.
Construction
in progress represents capital expenditure in respect of
direct costs of construction or acquisition and design fees
incurred. Capitalization of these costs ceases and the
construction in progress is transferred to the appropriate
category of property, plant and equipment when
substantially all the activities necessary to prepare the
assets for their intended use are completed. Construction
in progress is not depreciated. |
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Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Impairment
of Long-Lived Assets
Long-lived
assets, which include property, plant and equipment and
intangible assets, are reviewed for impairment whenever
events or changes in circumstances indicate the carrying
amount of an asset may not be recoverable.
Recoverability
of long-lived assets to be held and used is measured by
comparing the carrying amount of an asset to the estimated
undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its
estimated undiscounted future cash flows, an impairment
charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the assets.
Fair value is generally determined using the asset’s
expected future discounted cash flows or market value, if
readily determinable. Based on its review, the Company
believes that, as of March 31, 2013 and December 31, 2012,
there were no significant impairments of its long-lived
assets except that the Company disposed of an obsolete
and unused workshop and recognized a loss of $123,775
during the three months ended March 31, 2012. |
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Research and Development Expense, Policy [Policy Text Block] | Research
and Development
Research
and development costs are related primarily to the Company
designing and testing its new products in development
stage. Research and development costs are recognized in
general and administrative expenses and expensed as
incurred. Research and development expense was $86,752
and $56,908 for the three months ended March 31, 2013 and
2012, respectively. |
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Income Tax, Policy [Policy Text Block] | Income
Taxes
In
its interim financial statements, the Company follows the
guidance in ASC 270 “Interim Reporting” and ASC
740 “Income Taxes” whereby the Company utilizes
the expected annual effective rate in determining its
income tax provision. The actual effective tax
rate of 13% for the period ended March 31, 2013 differs
from the U.S. federal statutory tax rate primarily as a
result of a tax benefit from the tax-exemption status of
Nova Macau offset by tax liability reserves from uncertain
tax positions.
Nova
Lifestyle, Inc. and Diamond Bar Outdoors, Inc. are subject to
U.S. federal and state income taxes. Nova Furniture BVI was
incorporated in the BVI. There is no income tax for a company
domiciled in the BVI. Accordingly, the Company’s
consolidated financial statements do not present any income
tax provision related to the BVI tax jurisdiction where Nova
Furniture BVI is domiciled.
Nova
Dongguan and Nova Museum are governed by the Enterprise
Income Tax Law of the People’s Republic of China (the
“PRC”), which is subject to a 25% corporate
income tax. Nova Museum is subject to a 25% corporate income
tax in the first year and allowed to apply for tax-exempt
status in the second year following its
incorporation. Nova Macao is an income tax-exempt
entity incorporated and domiciled in Macao.
During
the three months ended March 31, 2013, the Company recorded
income tax expense of approximately $176,000. During the
three months ended March 31, 2012, the Company recorded
income tax expense of approximately $167,000. The
increase in income tax expense is primarily due to the
increase in profits of Diamond Bar.
As
of March 31, 2013, unrecognized tax benefits were
approximately $4.0 million. The total amount of
unrecognized tax benefits that, if recognized, would
favorably affect the effective tax rate was $4.0 million
as of March 31, 2013. As of December 31, 2012, unrecognized
tax benefits were approximately $4.0 million. The
total amount of unrecognized tax benefits that, if
recognized, would favorably affect the effective tax rate was
$4.0 million as of March 31, 2012.
A
reconciliation of the January 1, 2013, through March 31,
2013, amount of unrecognized tax benefits excluding interest
and penalties ("Gross UTB") is as follows:
At
March 31, 2013, and December 31, 2012, the Company had
cumulatively accrued approximately $682,000 and $601,000,
respectively, for estimated interest and penalties related
to unrecognized tax benefits. The Company recorded interest
and penalties related to unrecognized tax benefits as a
component of income tax expense, which totaled
approximately $81,000 and $67,000 for the three months
ended March 31, 2013, and 2012, respectively. The Company
does not anticipate any significant changes to its
unrecognized tax benefits within the next twelve
months.
As
of March 31, 2013, aggregate undistributed earnings of
approximately $15.2 million of the Company’s PRC and
Macao subsidiaries that are available for distribution to
the Company are considered to be indefinitely reinvested,
and, accordingly, no provision has been recorded relating
to the accumulated earnings from its PRC and Macao
operation.
Nova
Dongguan is subject to taxation in the PRC. Nova
Dongguan’s PRC income tax returns are generally not
subject to examination by the tax authorities for tax years
before 2008. With a few exceptions, the tax years 2008-2012
remain open to examination by tax authorities in the PRC; the
tax years 2011-2012 for US entities remain open to
examination by tax authorities in the US. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue
Recognition
The
Company’s revenue recognition policies are in
compliance with ASC Topic 605, “Revenue
Recognition.” Sales revenue is recognized when a
formal arrangement exists, the price is fixed or
determinable, the delivery is completed and no other
significant obligations of the Company exist and
collectability is reasonably assured. No revenue is
recognized if there are significant uncertainties regarding
the recovery of the consideration due, or the possible
return of the goods. Payments received before all of the
relevant criteria for revenue recognition are recorded as
unearned revenue.
Sales
revenue represents the invoiced value of goods, net of
value-added taxes (“VAT”). All of the
Company’s products sold in China are subject to the
PRC VAT of 17% of the gross sales price. This VAT may be
offset by VAT paid by the Company on raw materials and
other materials purchased in China and included in the cost
of producing the finished product. The Company records VAT
payable and VAT receivable net of payments in the
consolidated financial statements. The VAT tax return is
filed offsetting the payables against the receivables.
Sales and purchases are recorded net of VAT collected and
paid as the Company acts as an agent for the
government. |
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Franchise Arrangements [Policy Text Block] | Franchise
Arrangements
In
2010, the Company began entering into area product
franchise agreements with franchisees who operate specialty
furniture stores carrying only Nova-branded products. The
product franchise agreement provides for the franchisee to
retail Nova-brand furniture products for a period of one
year from the date of the agreement. The franchisee is
required to pay a deposit of RMB 30,000 at the signing of
the agreement, which is used as payment for future
purchases and is deferred on the Company’s balance
sheet as a customer deposit. The franchisee is required to
guarantee a minimum purchase amount from the Company during
the contract period. The Company has the right to terminate
the agreement should the franchisee fail to meet the
minimum purchase amounts. The Company provides the
franchisee with store images and designs, signage, floor
plan product information and training. In addition,
the Company will rebate a per square meter subsidy to the
franchisee for the store build-out within six months from
the agreement date. The franchisee earns 30% of the rebate
on its initial purchase from the Company and then at a rate
of 5% of each subsequent purchase until fully refunded of
its deposit or six months from the agreement date,
whichever is earlier. At March 31, 2013 and December 31,
2012, the Company had franchising subsidy payable of
$179,716 and $179,786, respectively. In accordance with ASC
605-50, as the Company does not receive an identifiable
benefit from these rebates, the rebates are recorded as a
reduction of revenue on sales to the franchisees. |
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Cost of Sales, Policy [Policy Text Block] | Cost
of Sales
Cost
of sales consists primarily of material costs, labor costs
and related overhead that are directly attributable to the
production of the products. Write-down of inventory to
the lower of cost or net realizable value is also recorded
in the cost of sales. |
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Shipping and Handling Cost, Policy [Policy Text Block] | Shipping
and Handling Costs
Shipping
and handling costs related to delivery of finished goods
are included in selling expenses. During the three months
ended March 31, 2013 and 2012, shipping and handling costs
were $103,567 and $144,796, respectively. |
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Advertising Costs, Policy [Policy Text Block] | Advertising
Advertising
expenses consist primarily of costs of promotion and
marketing for the Company’s image and products, and
costs of direct advertising. The Company expenses all
advertising costs as incurred. Advertising expense was
$97,363 and $56,908 for the three months ended March 31,
2013 and 2012, respectively. |
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Earnings Per Share, Policy [Policy Text Block] | Earnings
per Share (EPS)
Basic
EPS is computed by dividing net income by the weighted
average number of common shares outstanding for the period.
Diluted EPS is computed similar to basic net income per
share except that the denominator is increased to include
the number of additional common shares that would have been
outstanding if all the potential common shares, warrants
and stock options had been issued and if the additional
common shares were dilutive. Diluted earnings per share are
based on the assumption that all dilutive convertible
shares and stock options and warrants were converted or
exercised. Dilution is computed by applying the treasury
stock method for the outstanding options and warrants, and
the if-converted method for the outstanding convertible
instruments. Under the treasury stock method, options and
warrants are assumed to be exercised at the beginning of
the period (or at the time of issuance, if later) and as if
funds obtained thereby were used to purchase common stock
at the average market price during the period. Under the
if-converted method, outstanding convertible instruments
are assumed to be converted into common stock at the
beginning of the period (or at the time of issuance, if
later).
The
following table presents a reconciliation of basic and
diluted earnings per share for the three months ended March
31, 2013 and 2012:
At
March 31, 2013 and December 31, 2012, the Company had no
options to purchase shares of common stock outstanding and
warrants to purchase 980,306 and 983,280 shares of common
stock were outstanding and exercisable,
respectively. For the three months ended March
31, 2013, 155,100 shares purchasable under the warrants
were excluded from EPS as their effects were anti-dilutive,
respectively. |
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to credit
risk consist primarily of accounts and other receivables.
The Company does not require collateral or other security
to support these receivables. The Company conducts periodic
reviews of the financial condition and payment practices of
its customers to minimize collection risk on accounts
receivable.
Two
major customers accounted for 30% (20% and 10% for each)
and 37% (22% and 15% for each) of the Company’s sales
for the three months ended March 31, 2013 and 2012,
respectively. Accounts receivable from these customers
amounted to $5,166,576 and $4,927,157 as of March 31, 2013
and 2012, respectively.
The
Company purchased its products from five major vendors
accounting for 70% (17%, 14%, 15%, 12%, and 12% for each)
during the three months ended March 31, 2013, and from one
major vendor accounting for 10% of the purchases during the
three months ended March 31, 2012, respectively. Accounts
payable to these vendors were $1,368,065 and $2,242,851 as
of March 31, 2013 and December 31, 2012,
respectively.
The
operations of the Company are located principally in China
and the US. Accordingly, the Company’s Chinese
subsidiaries' business, financial condition and results of
operations may be influenced by the political, economic and
legal environments in China, as well as by the general
state of the PRC economy.
The
Company’s operations in the PRC are subject to
specific considerations and significant risks not typically
associated with companies in North America and Western
Europe. These include risks associated with, among others,
the political, economic and legal environments in China and
foreign currency exchange. The Company’s results may
be adversely affected by changes in PRC government policies
with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and
rates and methods of taxation, among other things.
The
Company’s sales, purchase and expense transactions in
China and Macao are denominated in Chinese Yuan Renminbi
(“RMB”) and Macau Pataca (“MOP”)
(prior to 2011), respectively, and all of the assets and
liabilities of the Company’s subsidiaries in China
and Macao are also denominated in RMB and MOP (prior to
2011), respectively. The RMB is not freely convertible into
foreign currencies under the current law. In China, foreign
exchange transactions are required by law to be transacted
only by authorized financial institutions. Remittances in
currencies other than RMB may require certain supporting
documentation in order to affect the remittance. |
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Statement of Cash Flows Policy [Policy Text Block] | Statement
of Cash Flows
In
accordance with FASB ASC Topic 230, “Statement of
Cash Flows,” cash flows from the Company’s
operations is calculated based upon local currencies. As a
result, amounts related to assets and liabilities reported
on the statement of cash flows may not necessarily agree
with changes in the corresponding balances on the balance
sheet. |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair
Value of Financial Instruments
Some
of the Company’s financial instruments, including
cash and cash equivalents, accounts receivable, other
receivables, accounts payable, accrued liabilities and
short-term debt, have carrying amounts that approximate
their fair values due to their short maturities. ASC Topic
820, “Fair Value Measurements and Disclosures,”
requires disclosure of the fair value of financial
instruments held by the Company. ASC Topic 825,
“Financial Instruments,” defines fair value and
establishes a three-level valuation hierarchy for
disclosures of fair value measurement that enhances
disclosure requirements for fair value measures. The
carrying amounts reported in the consolidated balance
sheets for receivables and current liabilities each qualify
as financial instruments and are a reasonable estimate of
their fair values because of the short period of time
between the origination of such instruments and their
expected realization and their current market rate of
interest. The three levels of valuation hierarchy are
defined as follows:
The
Company analyzes all financial instruments with features of
both liabilities and equity under ASC Topic 480,
“Distinguishing Liabilities from Equity,” and
ASC Topic 815, “Derivatives and
Hedging.” |
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Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign
Currency Translation and Transactions
The
consolidated financial statements are presented in USD. The
functional currency of Nova LifeStyle, Nova Furniture, Nova
Macao and Diamond Bar is the United States Dollar
(“$” or “USD”). The functional
currency of Nova Dongguan and Nova Museum is RMB. The
functional currencies of the Company’s foreign
operations are translated into USD for balance sheet
accounts using the current exchange rates in effect as of
the balance sheet date and for revenue and expense accounts
using the weighted-average exchange rate during the fiscal
year. The translation adjustments are recorded as a
separate component of stockholders’ equity, captioned
“Accumulated other comprehensive income.” Gains
and losses resulting from transactions denominated in
foreign currencies are included in “Other income
(expenses)” in the consolidated statements of income
and comprehensive income. There have been no significant
fluctuations in the exchange rate for the conversion of RMB
to USD after the balance sheet date.
The
RMB to USD exchange rates in effect as of March 31, 2013
and December 31, 2012, were RMB6.2689 = USD$1.00 and
RMB6.2855 = USD$1.00, respectively. The weighted-average
RMB to USD exchange rates in effect for the three months
ended March 31, 2013 and 2012, were RMB6.2785 = USD$1.00
and RMB6.3074 = USD$1.00, respectively. The exchange rates
used in translation from RMB to USD were published by the
People’s Bank of the People’s Republic of
China. |
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Comprehensive Income, Policy [Policy Text Block] | Comprehensive
Income (Loss)
The
Company follows FASB ASC 220 “Reporting Comprehensive
Income.” Comprehensive income is comprised of net
income and all changes to the consolidated statements of
stockholders’ equity, except those due to investments
by stockholders, changes in paid-in capital and
distributions to stockholders. Comprehensive income for the
three months ended March 31, 2013 and 2012 included net
income and foreign currency translation
adjustments. |
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Segment Reporting, Policy [Policy Text Block] | Segment
Reporting
ASC
Topic 280, “Segment Reporting,” requires use of
the “management approach” model for segment
reporting. The management approach model is based on the
way a company’s management organizes segments within
the company for making operating decisions and assessing
performance. Reportable segments are based on products and
services, geography, legal structure, management structure,
or any other manner in which management disaggregates a
company.
Management
determined that the Company’s operations constitute a
single reportable segment in accordance with ASC 280. The
Company operates exclusively in one business and industry
segment: the design, manufacture and sale of furniture. All
of the Company’s long-lived assets for production are
located at its facilities in Dongguan, Guangdong Province,
China, and operate within the same environmental, safety
and quality regulations governing furniture manufacturers.
The Company established Nova Macao, and acquired Diamond
Bar for the purpose of marketing and selling the
Company’s products. As a result, management views the
business and operations of Nova Dongguan, Nova Macao and
Diamond Bar as a blended gross margin when determining
future growth, return on investment and cash flows. Nova
Museum, a non-profit organization engaged principally in
the promotion and dissemination of the culture and history
of furniture in China, has no operations or substantial
assets other than its decorations and renovation, and its
heritage and cultural assets are for the purpose of
exhibition only.
Accordingly,
management concluded that the Company had one reportable
segment under ASC 280 because: (i) the Company’s
products sold through Nova Dongguan, Nova Macao and Diamond
Bar are created with similar production processes, in the
same facilities, under the same regulatory environment and
sold to similar customers using similar distribution
systems; (ii) Diamond Bar is a U.S. furniture distributor
based in California but operates under the same senior
management of Nova Dongguan and Nova Macao, and
management views
the operations of Nova Dongguan, Nova Macao and Diamond Bar
as a whole for making business decisions; and (iii)
although Nova Museum is principally engaged in the
dissemination of the culture and history of furniture in
China, it also serves a function of promoting and marketing
the Company’s image and products by providing a
platform and channel for consumers to be exposed to the
Company and its products, it is operated under the
same management with the same resources and in the same
location as Nova Dongguan, and it is an additive and
supplemental unit to the Company’s main operations,
the manufacture and sale of furniture. |
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New Accounting Pronouncements, Policy [Policy Text Block] | New
Accounting Pronouncements
In
February 2013, the FASB issued ASU 2013-2, Comprehensive
Income (ASC Topic 220): Reporting of Amounts Reclassified Out
of Accumulated Other Comprehensive Income, the new ASU
requires entities to disclose in a single location (either on
the face of the financial statement that reports net income
or in the notes) the effects of reclassifications out of
accumulated other comprehensive income (AOCI). For items
reclassified out of AOCI and into net income in their
entirety, entities must disclose the effect of the
reclassification on each affected net income item. For AOCI
reclassification items that are not reclassified in their
entirety into net income, entities must provide a
cross-reference to other required U.S. GAAP disclosures.
There is no change in the requirement to present the
components of net income and other comprehensive income in
either a single continuous statement or two separate
consecutive statements. The
ASU does not change the items currently reported in other
comprehensive income.
For
public entities, the new disclosure requirements are
effective for annual reporting periods beginning after
December 15, 2012, and interim periods within those years
(i.e., the first quarter of 2013 for entities with calendar
year-ends). The ASU applies prospectively, and early adoption
is permitted. The adoption of this ASU did not have a
material impact to the Company’s consolidated financial
statements.
As
of March 31, 2013, there is no recently issued accounting
standards not yet adopted that would have a material effect
on the Company’s consolidated financial
statements. |
Note 10 - Accrued Liabilities and Other Payables (Detail) - Schedule of Accrued Liabilitites (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Accrued liabilities and other payables | $ 1,126,770 | $ 1,495,835 |
Other Payables [Member]
|
||
Accrued liabilities and other payables | 83,418 | 89,982 |
Interest Payable [Member]
|
||
Accrued liabilities and other payables | 1,641 | 0 |
Salary Payable [Member]
|
||
Accrued liabilities and other payables | 559,738 | 961,669 |
Franchising Subsidy [Member]
|
||
Accrued liabilities and other payables | 179,716 | 179,786 |
Accrued Expenses [Member]
|
||
Accrued liabilities and other payables | $ 302,257 | $ 264,398 |
Note 4 - Heritage and Cultural Assets (Detail) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Heritage and cultural museum assets | $ 129,344 | $ 129,002 |
Note 12 - Related Party Transactions (Detail) (USD $)
|
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Related Party Transaction, Description of Transaction | three-year renewable lease agreement | ||
Operating Leases, Rent Expense | $ 127,200 | $ 203,500 | |
Monthly Rent Expense [Member]
|
|||
Operating Leases, Rent Expense | 41,500 | ||
Rental Expense [Member]
|
|||
Operating Leases, Rent Expense | 124,500 | 140,000 | |
Diamond Bar [Member]
|
|||
Operating Leases, Rent Expense | $ 30,384 |
Note 19 - Subsequent Events (Detail) (Subsequent Event [Member], USD $)
|
0 Months Ended | 1 Months Ended |
---|---|---|
May 03, 2013
President [Member]
|
Apr. 30, 2013
|
|
Class of Warrants or Rights Exercised | 17,000 | |
Investment Warrants, Exercise Price (in Dollars per share) | $ 2.00 | |
Employment agreement, term | five years | |
Officers' Compensation (in Dollars) | $ 80,000 | |
Stock Issued During Period, Shares, Share-based Compensation, Gross | 200,000 |
Note 7 - Intangible Assets (Detail) - Schedule of Finite-Lived Intangible Assets (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Less: accumulated amortization | $ (185,565) | $ (148,440) |
1,181,918 | 1,216,092 | |
Land Use Right [Member]
|
||
Intangible assets | 1,117,483 | 1,114,532 |
Customer Relationships [Member]
|
||
Intangible assets | 50,000 | 50,000 |
Trademarks [Member]
|
||
Intangible assets | $ 200,000 | $ 200,000 |
Note 4 - Heritage and Cultural Assets
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Heritage And Cultural Assets [Text Block] |
Note
4 - Heritage and Cultural Assets
As
of March 31, 2013 and December 31, 2012, Nova Museum had
heritage and cultural assets of $129,344 and $129,002,
consisting principally of collectibles and antiques for
exhibition. Depreciation is not required to be provided on
heritage assets that have indefinite lives and no reduction
in their value with the passage of time; however, the
carrying amount of the heritage and cultural assets will be
reviewed when there is evidence of impairment in accordance
with ASC 360-10.
|
Note 19 - Subsequent Events (Detail) - Schedule of Purchase Price Allocation (Bright Swallow International Group Limited [Member], USD $)
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Bright Swallow International Group Limited [Member]
|
|
Cash | $ 191,810 |
Accounts receivable | 1,629,427 |
Other receivable | 300,000 |
Customer relationship | 6,800,058 |
Accounts payable | (1,921,295) |
Net Assets acquired. | 7,000,000 |
Gain from bargain purchase | (500,000) |
Purchase price | $ 6,500,000 |