Note 19 - Business Acquisition and Unaudited Pro Forma Information

12 Months Ended

Dec. 31, 2012

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 19 - Business 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 acquisition was accounted as a business combination in accordance with ASC Topic 805 “Business Combination.”

According to ASC Topic 805, the allocation of Diamond Bar’s purchase price among assets acquired and liabilities assumed is based on estimates of the fair values. Under purchase method of accounting, the total purchase price is allocated to tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values with the excess changed to goodwill.

In accordance with SEC regulation S-X Rule 3-05, Diamond Bar was not a significant subsidiary as of the acquisition date. Therefore, no separate audited financial statements are presented.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:

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

The results of operations of Diamond Bar for the period from acquisition date to December 31, 2011, are consolidated into the Company’s consolidated financial statements for the year ended December 31, 2011. The following unaudited pro forma consolidated results of operations of Nova LifeStyle and Diamond Bar for the year ended December 31, 2011, presents the operations of Nova LifeStyle and Diamond Bar as if the acquisition of Diamond Bar occurred on January 1, 2011. 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.

	(Unaudited)
Net sales	$	47,710,088

Net income	$	5,250,294

Basic weighted average shares outstanding		14,506,915
Diluted weighted average shares outstanding		14,697,206

Basic net earnings per share	$	0.36
Diluted net earnings per share	$	0.36