Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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, 2024

☐	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: 3,084,735 shares of common stock outstanding as of August 12, 2024.

Nova LifeStyle, Inc.

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	1
	Condensed Consolidated Statements of Loss and Comprehensive Loss for the six months and three months ended June 30, 2024 and 2023 (unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity for the six months and three months ended June 30, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements for the six months and three months ended June 30, 2024 and 2023 (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	42

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 5.	Other Information	44
Item 6.	Exhibits	44

	Signatures	45

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023

	June 30, 2024		December 31, 2023

Assets

Current Assets
Cash and cash equivalents	$	363,409	$	369,137
Accounts receivable, net		44,469		46,998
Advance to suppliers		50,793		93,740
Inventories		2,134,343		2,213,311
Prepaid expenses		1,088,677		984,934
Other receivables		30,982		41,265

Total Current Assets		3,712,673		3,749,385

Noncurrent Assets
Plant, property and equipment, net		254,098		287,673
Operating lease right-of-use assets, net		1,543,204		1,904,349
Intangible assets, net		5,791		8,473
Lease deposit		69,275		69,992
Goodwill		218,606		218,606

Total Noncurrent Assets		2,090,974		2,489,093

Total Assets	$	5,803,647	$	6,238,478

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

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NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONT’D)

AS OF JUNE 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023

	June 30, 2024			December 31, 2023

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable	$	297,764		$	430,045
Operating lease liability, current		671,988			701,985
Advance from customers		428,736			306,532
Loan from shareholder		369,159			-
Accrued liabilities and other payables		1,136,631			1,100,661
Income tax payable		1,130,865			1,150,105

Total Current Liabilities		4,035,143			3,689,328

Noncurrent Liabilities
Other Loan		145,779			147,428
Operating lease liability, non-current		931,405			1,262,256
Income tax payable		643,112			643,112

Total Noncurrent Liabilities		1,720,296			2,052,796

Total Liabilities		5,755,439			5,742,124

Contingencies and Commitments		-			-

Stockholders’ Equity
Common stock, $0.001 par value; 250,000,000 shares authorized, 2,672,427 and 1,917,706 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		2,672			1,918
Additional paid-in capital		46,062,766			44,402,821
Accumulated other comprehensive income		438,825			521,425
Accumulated deficits		(46,456,055	)		(44,429,810	)

Total Stockholders’ Equity		48,208			496,354

Total Liabilities and Stockholders’ Equity	$	5,803,647		$	6,238,478

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

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NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)

	2024			2023			2024			2023
	Six Months Ended June 30,						Three Months Ended June 30,
	2024			2023			2024			2023

Net Sales	$	5,064,926		$	6,336,994		$	2,688,533		$	4,462,429

Cost of Sales		2,853,799			4,228,352			1,493,566			3,015,089

Gross Profit		2,211,127			2,108,642			1,194,967			1,447,340

Operating Expenses
Selling expenses		964,682			1,279,607			405,212			565,093
General and administrative expenses		2,481,802			2,380,738			1,287,937			1,250,458
Research and development		750,698			10,144			(518	)		10,026

Total Operating Expenses		4,197,182			3,670,489			1,692,631			1,825,577

Loss From Operations		(1,986,055	)		(1,561,847	)		(497,664	)		(378,237	)

Other Income (Expenses)
Non-operating income		2,743			17,892			1,162			16,173
Foreign exchange transaction income (loss)		70,649			(133,661	)		(2,383	)		(128,278	)
Interest expense, net		(12,568	)		(3,231	)		(8,626	)		(1,322	)
Financial expense		(96,138	)		(77,649	)		(51,102	)		(44,517	)

Total Other Expenses, Net		(35,314	)		(196,649	)		(60,949	)		(157,944	)

Loss Before Income Taxes		(2,021,369	)		(1,758,496	)		(558,613	)		(536,181	)

Income Tax Expense		(4,876	)		(2,400	)		(4,876	)		(2,400	)

Net Loss		(2,026,245	)		(1,760,896	)		(563,489	)		(538,581	)

Other Comprehensive Loss
Foreign currency translation		(82,600	)		(99,290	)		(909	)		(96,183	)

Net Loss and Comprehensive Loss		(2,108,845	)		(1,860,186	)		(564,398	)		(634,764	)

Weighted average shares outstanding - Basic and Diluted		2,387,653			1,452,303			2,538,792			1,459,655

Net loss per share of common stock
Basic and Diluted	$	(0.85	)	$	(1.21	)	$	(0.22	)	$	(0.37	)

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

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NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)

Three Months Ended June 30, 2024

	Shares		Amount		Capital		Income			Deficits)			Equity
							Accumulated
					Additional		Other						Total
	Common stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income (Loss)			Deficits			Equity

Balance at beginning of period		2,345,179	$	2,346	$	45,407,744	$	439,734		$	(45,892,566	)	$	(42,742	)

Stock issued to employees		1,500		1		3,224		-			-			3,225

Stock issued to consultants		112,500		113		222,010		-			-			222,123

Stock issued to designer		13,248		12		29,988		-			-			30,000

Stock issued to an investor		200,000		200		399,800								400,000

Foreign currency translation loss		-		-		-		(909	)		-			(909	)

Net loss		-		-		-		-			(563,489	)		(563,489	)

Balance at end of period		2,672,427	$	2,672	$	46,062,766	$	438,825		$	(46,456,055	)	$	48,208

Three Months Ended June 30, 2023

							Accumulated
					Additional		Other						Total
	Common stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficits			Equity

Balance at beginning of period		1,438,268	$	1,449	$	43,285,295	$	74,135		$	(37,928,868	)	$	5,432,011

Stock issued to employees		300				885		-			-			885

Stock issued to consultants		5,000				16,000		-			-			16,000

Stock issued to designer		10,543		11		29,978		-			-			29,989

Fractional shares due to 1:5 stock split		10,979		10				-			-			10

Foreign currency translation loss		-		-		-		(96,183	)		-			(96,183	)

Net loss		-		-		-		-			(538,581	)		(538,581	)

Balance at end of period		1,465,090	$	1,470	$	43,332,158	$	(22,048	)	$	(38,467,449	)	$	4,844,131

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

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NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)

Six Months Ended June 30, 2024

							Accumulated
					Additional		Other						Total
	Common stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficits			Equity

Balance at beginning of period		1,917,706	$	1,918	$	44,402,821	$	521,425		$	(44,429,810	)	$	496,354

Stock issued to employees		3,000		3		6,447		-			-			6,450

Stock issued to consultants		225,000		225		444,024		-			-			444,249

Stock issued to designer		26,721		26		59,974		-			-			60,000

Acquisition of AI-Calculation Engine		300,000		300		749,700		-			-			750,000

Stock issued to an investor		200,000		200		399,800								400,000

Foreign currency translation loss		-		-		-		(82,600	)		-			(82,600	)

Net loss		-		-		-		-			(2,026,245	)		(2,026,245	)

Balance at end of period		2,672,427	$	2,672	$	46,062,766	$	438,825		$	(46,456,055	)	$	48,208

Six Months Ended June 30, 2023

							Accumulated
					Additional		Other						Total
	Common stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficits			Equity

Balance at beginning of period		1,423,836	$	1,440	$	43,239,701	$	77,242		$	(36,706,553	)	$	6,611,830
Balance		1,423,836	$	1,440	$	43,239,701	$	77,242		$	(36,706,553	)	$	6,611,830

Stock issued to employees		600				1,770		-			-			1,770

Stock issued to consultants		10,000				32,000		-			-			32,000

Stock issued to designer		19,676		20		58,687		-			-			58,707

Fractional shares due to 1:5 stock split		10,979		10				-			-			10

Foreign currency translation loss		-		-		-		(99,290	)		-			(99,290	)

Net loss		-		-		-		-			(1,760,896	)		(1,760,896	)

Balance at end of period		1,465,090	$	1,470	$	43,332,158	$	(22,048	)	$	(38,467,449	)	$	4,844,131
Balance		1,465,090	$	1,470	$	43,332,158	$	(22,048	)	$	(38,467,449	)	$	4,844,131

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

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NOVA LIFESTYLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)

	2024			2023
	Six Months Ended June 30,
	2024			2023

Cash Flows From Operating Activities
Net loss	$	(2,026,245	)	$	(1,760,896	)

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		29,691			66,812
Amortization of operating lease right-of-use assets		359,086			392,146
Write down of inventories		44,253			108,785
Stock based compensation expense		497,794			93,770
Research and development		750,000			-
Changes in allowance for expected credit losses		(83	)		(196	)
Changes in operating assets and liabilities:
Accounts receivable		2,612			(958,457	)
Advance to suppliers		42,947			(36,716	)
Inventories		34,714			2,420,468
Other current assets		(109,576	)		1,165,396
Operating lease liabilities		(358,790	)		(389,840	)
Accounts payable		(132,281	)		261,883
Advance from customers		124,889			20,905
Accrued liabilities and other payables		50,574			132,908
Taxes payable		-			(87,322	)

Net Cash provided by (Used in) Operating Activities		(690,415	)		1,429,646

Cash Flows From Investing Activities
Purchase of intangible assets		-			(2,468,582	)

Net Cash Used in Investing Activities		-			(2,468,582	)

Cash Flows From Financing Activities
Proceed from loan from a shareholder		360,000			-
Proceed from issuing common stocks		400,000			-

Net Cash Provided by Financing Activities		760,000			-


Effect of Exchange Rate Changes on Cash and Cash Equivalents	$	(75,313	)	$	106,867

Net Decrease in Cash and Cash Equivalents		(5,728	)		(932,069	)

Cash and Cash Equivalents, Beginning of Period		369,137			1,374,167

Cash and Cash Equivalents, Ending of Period	$	363,409		$	442,098

Supplemental Disclosure of Cash Flow Information

Cash paid during period for:
Income tax payments	$	4,800		$	202,288
Interest expense	$	9,368		$	3,400

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

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NOVA LIFESTYLE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2024 AND 2023 (UNAUDITED)

Note 1 - Organization and Description of Business

Organization and Business

Nova LifeStyle, Inc. (“Nova LifeStyle” or the “Company”), formerly known as Stevens Resources, Inc., was incorporated in the State of Nevada on September 9, 2009.

The Company is a U.S. holding company with no material assets other than the ownership interests of its subsidiaries through which it markets, designs and sells furniture worldwide: Nova Furniture Limited domiciled in the British Virgin Islands (“Nova Furniture”), Nova Furniture Ltd. domiciled in Samoa (“Nova Samoa”), Diamond Bar Outdoors, Inc. domiciled in California (“Diamond Bar”), i Design Blockchain Technology, Inc. domiciled in California (“i Design”) and Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova Malaysia”). The Company had three former subsidiaries Bright Swallow International Group Limited domiciled in Hong Kong (“Bright Swallow” or “BSI”) which was sold in January 2020, Nova Furniture Macao Commercial Offshore Limited domiciled in Macao (“Nova Macao”) which was de-registered and liquidated in January 2021 and Nova Living (HK) Group Limited domiciled in Hong Kong (“Nova HK”) which was de-registered and liquidated in February 2023.

Nova Macao was organized under the laws of Macao on May 20, 2006, and was a wholly owned subsidiary of Nova Furniture. Nova Macao was a trading company, importing, marketing and selling products designed and manufactured by third-party manufacturers for the international market. Diamond Bar was incorporated in California on June 15, 2000. Diamond Bar markets and sells products manufactured by third-party manufacturers under the Diamond Sofa brand to distributors and retailers principally in the U.S. market.

On December 7, 2017, Nova LifeStyle incorporated i Design Blockchain Technology, Inc. (“i Design”) under the laws of the State of California. The purpose of i Design is to build the Company’s own blockchain technology team. This company will focus on the application of blockchain technology in the furniture industry, including encouraging and facilitating interactions among designers and customers, and building a blockchain-powered platform that enables designers to showcase their products, including current and future furniture designs. This company is in the planning stage and has had minimal operations through December 31, 2023.

On December 12, 2019, Nova LifeStyle acquired Nova Malaysia at cost of $1.00 which was incorporated in Malaysia on July 26, 2019. The purpose of this acquisition was to market and sell high-end physiotherapeutic jade mats in Malaysia.

On January 7, 2020, the Company transferred its entire interest in Bright Swallow to Y-Tone (Worldwide) Limited, an unrelated third party, for cash consideration of $2,500,000, pursuant to a formal agreement entered into on January 7, 2020. The Company received the payment on May 11, 2020.

On October 14, 2020, the Macao Trade and Investment Promotion Institute invalidated licenses for offshore companies under an Order of Repeal of Legal Regime of the Offshore Services by Macao Special Administrative Region. Nova Macao then entered into a de-registration process and its business was taken over by Nova HK. Nova Macao completed the de-registration and liquidation process in January 2021.

On November 5, 2020, Nova LifeStyle acquired Nova HK at cost of $1,290 which was incorporated in Hong Kong on November 6, 2019. This company had minimal operations other than to take over the business of Nova Macao. On February 15, 2022, the Company transferred its entire assets and business in Nova HK to Nova Malaysia, a subsidiary of the Company. In February 2023, Nova HK was completed the process of de-registration and liquidation.

The “Company” and “Nova” collectively refer to Nova LifeStyle, the U.S. parent, and its subsidiaries, Nova Furniture, Nova Samoa, Diamond Bar, i Design, Nova HK and Nova Malaysia.

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Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis and following GAAP in the U.S. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company incurred a net loss of $2.03 million and $1.76 million for the six months ended June 30, 2024 and 2023, respectively; and $0.56 million and $0.54 million for the three months ended June 30, 2024 and 2023, respectively. The accumulated deficit of the Company was $46.46 million and $44.43 million as of June 30, 2024 and December 31, 2023. Net cash balance decreased to $0.36 million for the six months ended June 30, 2024 from $0.37 million for the year ended December 31, 2023. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that the Company will be able to continue as a going concern.

The Company has faced ongoing losses from operations, and significant cash outflows from cash used in operating activities in past years. The Company lacks assurance regarding its ability to achieve profitability or secure essential financing for its operations. Considering these principal conditions, the Company’s management has determined that it is probable the Company might encounter challenges in meeting its obligations within one year after the issuance of financial statements, primarily due to insufficient cash flow. Therefore, the Company must assess the probability that its plans will effectively alleviate the substantial doubt.

The Company management has the following plans to alleviate the substantial doubt: the Company will participate in four major U.S. furniture fairs every year to seek new customers to increase the Company’s sales. To augment diversified revenue streams, the Company’s subsidiary Nova Malaysia has engaged in the development of an innovative home decoration design IT software systems. Besides, in the second half of this year, the Company plans to raise money from the market to increase cash flow and investment capital in addition to the private placement during the second quarter.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The unaudited 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 unaudited condensed consolidated financial statements as of June 30, 2024 and for the six and three-month periods ended June 30, 2024 and 2023 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in condensed consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim unaudited 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, 2023, previously filed with the SEC on April 15, 2024.

In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim unaudited condensed consolidated financial position as of June 30, 2024, its interim unaudited condensed consolidated results of operations and cash flows for the six and three-month periods ended June 30, 2024 and 2023, 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.

Reverse split

On May 22, 2023, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of May 22, 2023, at which time a 1-for-5 reverse stock split of the Company’s authorized shares of common stock, par value $0.001, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”), shall be effected. All references to shares and per share data have been retroactively restated to reflect such split.

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Amendments to Articles of Incorporation

On September 5, 2023, the Company filed the Certificate of Change (the “Amendment”) with the Secretary of State for the State of Nevada to amend its Articles of Incorporation to increase the amount of authorized shares of its common stock, par value $0.001 per share, from 3,000,000 to 250,000,000. The Amendment was approved by the Company’s Board of Directors (the “Board”) on June 28, 2023 and by the shareholders at a special meeting of the Company’s shareholders held on August 31, 2023. The Amendment does not affect the rights of the Company’s shareholders and was effective immediately upon filing.

Use of Estimates

In preparing unaudited condensed 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 as of the dates of the unaudited condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include, but are not limited to, revenue recognition, the allowance for expected credit losses, valuation of inventories, the valuation of stock-based compensation, income taxes and unrecognized tax benefits, valuation allowance for deferred tax assets, assumptions used in assessing impairment of long-lived assets and goodwill, and loss contingencies. Actual results could differ from those estimates.

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 and 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 assets 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.

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 more frequently 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 single step goodwill impairment test is required to be performed. Otherwise, no further testing is required. 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 single step goodwill impairment test for the Diamond Bar reporting unit. Accordingly, as of June 30, 2024 and December 31, 2023, the Company concluded there was no impairment of goodwill of Diamond Bar.

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Intangible Assets

Intangible assets consist primarily of computer software acquired for internal use. Acquired intangible assets are initially recorded at the acquisition-date fair value. Intangible assets are amortized on a straight-line basis over their estimated useful lives and are carried at cost less accumulated amortization. The estimated useful life of computer software are generally from 5 years.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers cash, money market funds, investments in interest bearing demand deposit accounts, time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.

The Company’s cash is maintained at financial institutions in the United States of America. Deposits in these financial institutions may, from time to time, exceed the Federal Deposit Insurance Corporation (“FDIC”)’s federally insured limits. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The bank deposits exceeding the standard insurance amount will not be covered. As of June 30, 2024 and December 31, 2023, cash balances held in the banks, exceeding the standard insurance amount, are $0 and $0, respectively. The Company has not experienced any losses in accounts held in these financial institutions and believes it is not exposed to any risks on its cash held in these financial institutions.

Accounts Receivable

The Company’s accounts receivable arises from product sales. The Company does not adjust its receivables for the effects of a significant financing component at contract inception if it expects to collect the receivables in one year or less from the time of sale. The Company does not expect to collect receivables greater than one year from the time of sale.

The Company’s policy is to maintain an allowance for expected 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.

Accounts receivable consisted of the following as of the date indicated:

Schedule of Allowance for Credit Losses

	June 30, 2024			December 31, 2023

Accounts receivable	$	44,918		$	47,530
Less: allowance for credit losses		(449	)		(532	)
Total accounts receivable, net	$	44,469		$	46,998

The expected credit losses (reversal) provision for the six months ended June 30, 2024 and 2023 was ($83) and ($196), respectively; ($924) and $65 for the three months ended June 30, 2024 and 2023, respectively.

Advances to Suppliers

Advances to suppliers represent amounts paid to suppliers in advance for goods that are yet to be delivered and from which future economic benefits are expected to flow to the Company within the normal operating cycle. Based on its historical record and in normal circumstances, the Company receives goods within 4 to 6 months from the date the advance payment is made. During the six months ended June 30, 2024 and December 31, 2023, no provision was made on advances to suppliers.

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Inventories

Inventories are stated at the lower of cost and net realizable value, with cost determined on a weighted-average basis. Write-down of potential obsolete or slow moving inventories is recorded based on management’s assumptions about future demands and market conditions. For the six months ended June 30, 2024 and 2023, the Company wrote down $44,253 and $108,785 of slow-moving inventory, respectively and $5,271 and $23,113 for the three months ended June 30, 2024 and 2023, respectively. The inventory write-down is included in “Cost of Sales” in the unaudited condensed consolidated statements of loss and comprehensive loss.

Plant, Property and Equipment

Property, plant, and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. Expenditures for maintenance and repairs are expensed as incurred, while 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 no salvage value and estimated lives as follows:

Computer and office equipment	5 - 10 years
Decoration and renovation	5 - 10 years

Impairment of Long-Lived Assets

Long-lived assets, which include property, plant and equipment and operating lease right-of-use 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.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group asset group exceeds its fair value based on discounted cash flow analysis or appraisals. There was no impairment of long-lived assets for the six months ended June 30, 2024 and December 31, 2023.

Research and Development

Research and development costs are related primarily to the Company designing and testing its new products during the development stage. During 2023, the Company has been developing Virtual and Augmented reality software and AI system for potential consulting business. In addition, during the six months ended June 30, 2024, the Company acquired an IT system for AI-Calculation Engine which was integrated into our current IT system (see Note 11). The entire system is far from complete as it requires to integrate with other components in order to be functional. It is still in development stage and not in operation. Research and development costs are recognized in general and administrative expenses and expensed as incurred. Research and development expenses were $0.75 million and $10,144 for the six months ended June 30, 2024 and 2023, respectively; and ($518) and $10,026 for the three months ended June 30, 2024 and 2023, respectively.

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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 income tax expense for the six months ended June 30, 2024 and 2023 are $4,876 and $2,400, respectively; and $4,876 and $2,400 for the three months ended June 30, 2024 and 2023, respectively, are primarily related to quarter-to-date income generated from domestic and foreign operation.

Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

Under the provisions of ASC Topic 740, when tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Nova Lifestyle, Inc. and Diamond Bar are subject to U.S. federal and state income taxes. Nova Furniture BVI was incorporated in the BVI and Nova Samoa was incorporated in Samoa. There is no income tax for companies domiciled in the BVI and Samoa. Accordingly, the Company’s condensed consolidated financial statements do not present any income tax provisions related to the BVI and Samoa tax jurisdictions where Nova Furniture BVI and Nova Samoa are domiciled. Nova Malaysia is incorporated in Malaysia and is subject to Malaysia income taxes at the statutory rate of 24%.

The Tax Cuts and Jobs Act of 2017 (the “Act”) created new taxes on certain foreign-sourced earnings such as global intangible low-taxed income (“GILTI”) under IRC Section 951A, which is effective for the Company for tax years beginning after January 1, 2018. For the six months ended June 30, 2024 , the Company has calculated its best estimate of the impact of the GILTI in its income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a modified territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses (NOLs) arising in taxable years beginning after December 31, 2017.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years. While it is possible that Congress may defer, modify, or repeal this provision, potentially with retroactive effect, we have no assurance that this provision will be deferred, modified, or repealed. Furthermore, in anticipation of the new provision taking effect, we have analyzed the provision and worked with our advisors to evaluate its application to our business. Since all research and development expenditures were incurred within the U.S. and the amount is immaterial, we do not anticipate it having any material impact to our provision.

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As of June 30, 2024 and December 31, 2023, the accumulated undistributed loss generated by its foreign subsidiaries were approximately $25.2 million and $25.4 million of which substantially all was previously subject to U.S. tax, the one-time transition tax on foreign unremitted earnings required by the Tax Act, or GILTI. Those earnings are considered to be permanently reinvested and accordingly, no deferred tax expense is recorded for U.S. federal and state income tax or applicable withholding taxes.

As of June 30, 2024 and 2023, unrecognized tax benefits were approximately $0. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was $0 as of June 30, 2024 and 2023.

A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2024 and 2023, is as follows:

Schedule of Unrecognized Tax Benefits

		Gross UTB
		2024		2023

Balance – January 1 and June 30	$	-	$	-

As of June 30, 2024 and December 31, 2023, the Company had cumulatively accrued approximately $0 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 benefit, which totaled $0 and $0 for the six and three months ended June 30, 2024 and 2023, respectively, related to the Company’s continuing operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.

Nova Lifestyle and Diamond Bar are subject to U.S. federal and state income taxes and tax years 2020-2023 remain open to examination by tax authorities in the U.S.

Revenue Recognition

The Company recognizes revenues when its customers obtain control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASC-606: (i) identifies contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenues when (or as) it satisfies the performance obligation.

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, returns and rebates. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.

The Company’s sales policy allows for product returns within the warranty period if the product is defective and the defects are the Company’s fault. As alternatives to the product return option, the customers have the option of requesting a discount from the Company for products with quality issues or of receiving replacement parts from the Company at no cost. The amount for product returns, the discount provided to the Company’s customers, and the costs for replacement parts were immaterial for the six and three months ended June 30, 2024 and 2023.

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In February 2023, the Company entered into a sales contract to transfer its entire inventory of Jade Mats, with the net realized value of $1.54 million to Shopants Sdn Bhd, an unrelated third party, for cash consideration of $2.00 million. The Company agreed to deliver the Jade Mats on May 20, 2023, May 31, 2023 and June 15, 2023. On June 30, 2023, the Company delivered all the Jade Mats to Shopants Sdn Bhd and recorded as revenue accordingly.

Cost of Sales

Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers and write-downs of inventory.

Shipping and Handling Costs

Shipping and handling costs related to delivery of finished goods are included in selling expenses. During the six months ended June 30, 2024 and 2023, shipping and handling costs were $1,515 and ($555), respectively; and $859 and ($194) for the three months ended June 30, 2024 and 2023, respectively.

Advertising

Advertising expenses consist primarily of costs of promotion and marketing for the Company’s image and products, and costs of direct advertising, and are included in selling expenses. The Company expenses all advertising costs as incurred. Advertising expense was $255,875 and $619,465 for the six months ended June 30, 2024 and 2023, respectively; and $30,414 and $207,890 for the three months ended June 30, 2024 and 2023, respectively.

Share-based Compensation

The Company accounts for share-based compensation awards to officers, directors, employees, and for acquiring goods and services from nonemployees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the vesting period. The Company accounts for forfeitures when they occur.

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 pertaining to warrants, stock options, and similar instruments 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 unvested restricted stock, 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 loss per share for the six and three months ended June 30, 2024 and 2023:


	Six Months Ended June 30,						Three Months Ended June 30,
	2024			2023			2024			2023

Net loss	$	(2,026,245	)	$	(1,760,896	)		(563,489	)		(538,581	)

Weighted average shares outstanding – Basic and Diluted *		2,387,653			1,452,303			2,538,792			1,459,655

Net loss per share of common stock
Basic and Diluted	$	(0.85	)	$	(1.21	)		(0.22	)		(0.37	)

*	Including 0 shares that were granted and vested but not yet issued for the six and three months ended June 30, 2024 and 2023, respectively.

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For the six and three months ended June 30, 2024, 1,500 shares of unvested restricted stock, vested stock options to purchase 13,400 shares of the Company’s common stock, and 245,192 shares exercisable under warrants were excluded from the EPS calculation, as their effect were anti-dilutive.

For the six and three months ended June 30, 2023, 300 shares of unvested restricted stock, vested stock options to purchase 26,800 shares of common stock of the Company, and 245,192 shares exercisable under warrants were excluded from the EPS calculation, as their effects were anti-dilutive.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist primarily of accounts receivable 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.

The following table sets forth information as to the Company’s customers that accounted for 10% or more of the Company’s sales and accounts receivable for the six and three months ended June 30, 2024 and 2023.

Schedule of Concentration Credit Risk

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		2	%		19	%
B		-	%		B		-	%		30	%
C		-	%		C		-	%		-	%
D		-	%		D		-	%			%

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		1	%		-	%
B		1	%		B		1	%		-	%
C		31	%		C		45	%		77	%
D		-	%		D		-	%		16	%

No customer accounted for 10% or more of the Company’s sales for the six and three months ended June 30, 2024; and one customer accounted for 31% and 45% of the Company’s sales for the six and three months ended June 30, 2023, respectively.

Two customers accounted for 19% and 30% of the Company’s gross accounts receivable as of June 30, 2024, respectively. Two customers accounted for 77% and 16% of the Company’s gross accounts receivable as of June 30, 2023, respectively.

The following table sets forth information as to the Company’s suppliers that accounted for 10% or more of the Company’s total purchases, accounts payable and advance to suppliers for the six and three months ended June 30, 2024 and 2023.

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024		As of June 30. 2024
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		12	%		A		20	%	$	26,402		-
B		6	%		B		5	%		-		-
C		7	%		C		8	%		-		-

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023		As of June 30. 2023
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		14	%		A		7	%	$	45,859		-
B		22	%		B		27	%	$	141,849		-
C		9	%		C		12	%		-		-

The Company purchased its products from one major vendor, accounting for 12% and 20% during the six and three months ended June 30, 2024, respectively. The Company purchased its products from two major vendors during the six and three months ended June 30, 2023, respectively, accounting for a total of 36% (22% and 14%) and 39% (27% and 12%), respectively.

Advances made to these major vendors were $0 as of June 30, 2024 and June 30, 2023, respectively. Accounts payable to these major vendors were $26,402 and $187,708 as of June 30, 2024 and June 30, 2023, respectively.

Fair Value of Financial Instruments

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 condensed 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:

●	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●	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.

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The carrying value of cash, accounts receivable, advances to suppliers, other receivables, accounts payable, advance from customers, other payables and accrued liabilities approximate estimated fair values because of their short maturities.

Foreign Currency Translation and Transactions

The accompanying consolidated financial statements are presented in United States Dollar (“$” or “USD”), which is also the functional currency of Nova LifeStyle, Nova Furniture, Nova Samoa, Diamond Bar, and i Design.

The Company’s subsidiary with operations in Malaysia uses its local currency, the Malaysian Ringgit (“RM”), as its functional currency. An entity’s functional currency is the currency of the primary economic environment in which it operates, which is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements.

Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable rates of exchange in effect at that date. Gains and losses resulting from foreign currency re-measurement are included in the statements of operations.

The financial statements are presented in U.S. dollars. Assets and liabilities are translated into U.S. dollars at the current exchange rate in effect at the balance sheet date, and revenues and expenses are translated at the average of the exchange rates in effect during the reporting period. Stockholders’ equity accounts are translated using the historical exchange rates at the date the entry to stockholders’ equity was recorded, except for the change in retained earnings during the period, which is translated using the historical exchange rates used to translate each period’s income statement. Differences resulting from translating functional currencies to the reporting currency are recorded in accumulated other comprehensive income in the balance sheets.

Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:

Schedule of Exchange Rates

Balance sheet items, except for equity accounts
June 30, 2024		RM 4.72 to 1
December 31, 2023		RM 4.59 to 1

Income Statement and cash flow items
For the six months ended June 30, 2024		RM 4.73 to 1
For the six months ended June 30, 2023		RM 4.46 to 1

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 chief operating decision maker organizes segments within the company for making operating decisions assessing performance and allocating resources. 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 and sale of furniture.

Management concluded that the Company had one reportable segment under ASC 280 because Diamond Bar is a furniture distributor based in California focusing on customers in the United States and Nova Malaysia is a furniture retailer and distributor focusing on customers primarily in Malaysia. They are all operated under the same senior management of the Company, and management views the operations of Diamond Bar and Nova Malaysia as one entity for making business decisions.

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All of the Company’s long-lived assets are mainly property, plant and equipment located in the United States and Malaysia and are utilized for administrative purposes.

Net sales to customers by geographic area are determined by reference to the physical product shipment delivery locations requested by the customers. For example, if the products are delivered to a customer in the United States, the sales are recorded as generated in the United States; if the customer directs us to ship its products to China, the sales are recorded as sold in China.

Leases

The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term.

ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.

ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

The Company recognized no impairment of ROU assets as of June 30, 2024 and December 31, 2023.

The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the condensed consolidated balance sheets at June 30, 2024 and December 31, 2023.

Reclassification

Certain prior period accounts have been reclassified in conformity with current period’s presentation.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

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In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). This Update is effective for smaller reporting companies for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022, which is required to be applied prospectively from the date of adoption. The Company adopted ASU 2017-04 for its interim and annual goodwill impairment tests beginning January 1, 2023. The adoption of ASU 2017-04 did not have any impact on our unaudited condensed consolidated financial statements.

Recently Issued But Not Yet Adopted Accounting Pronouncements

In March 2023, the FASB issued ASU 2023-01, Lease (Topic 842): Common Control Arrangements, which clarifies the accounting for leasehold improvements associated with leases between entities under common control (hereinafter referred to as common control lease). ASU 2023-01 requires entities to amortize leasehold improvements associated with common control lease over the useful life to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease, and to account for any remaining leasehold improvements as a transfer between entities under common control through an adjustment to equity when the lessee no longer controls the underlying asset. This ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. An entity may apply ASU 2023-01 either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-01 will have on our unaudited condensed consolidated financial statement presentations and disclosures.

ln December 2023, the FASB issued Accounting Standards Update No.2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation,(2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3)income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual period beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its unaudited condensed consolidated financial statements and related disclosures.

The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

Note 3 - Inventories

The inventories as of June 30, 2024 and December 31, 2023 totaled $2,134,343 and $2,213,311, respectively, and consisted entirely of finished goods.

Inventories are stated at the lower of cost and net realizable value, with cost determined on a weighted-average basis. Write-down of potential obsolete or slow moving inventories is recorded based on management’s assumptions about future demands and market conditions. For the six months ended June 30, 2024 and 2023, the Company wrote-down $44,253 and $108,785 of slow-moving inventory, respectively; and $5,271 and $23,113 of slow-moving inventory for the three months ended June 30, 2024 and 2023, respectively. The inventory write-down is included in “Cost of Sales” in the unaudited condensed consolidated statements of loss and comprehensive loss.

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Note 4 - Plant, Property and Equipment, Net

As of June 30, 2024 and December 31, 2023, plant, property and equipment consisted of the following:

	June 30, 2024			December 31, 2023
Computer and office equipment	$	253,769		$	255,352
Decoration and renovation		369,334			378,237
Property plant and equipment gross		623,103			633,589
Less: accumulated depreciation		(369,005	)		(345,916	)
Property plant and equipment net	$	254,098		$	287,673

Depreciation expense was $27,009 and $36,258 for the six months ended June 30, 2024 and 2023, respectively; and $13,493 and $17,840 for the three months ended June 30, 2024 and 2023, respectively.

For six months ended June 30, 2024 and 2023, the Company disposed of $0 of office equipment and decoration and renovation, respectively.

Note 5 – Intangible Assets

As of June 30, 2024 and December 31, 2023, intangible assets consisted of the following:

Schedule of Intangible Assets

	June 30, 2024			December 31, 2023
Accounting software	$	26,800		$	26,800
Less: accumulated amortization		(21,009	)		(18,327	)
Intangible assets, net	$	5,791		$	8,473

Amortization expense was $2,682 and $30,553 for the six months ended June 30, 2024 and 2023, respectively and $1,341 and $29,212 for the three months ended June 30, 2024 and 2023, respectively.

Note 6 – Advances to Suppliers

The Company makes advances to certain vendors for inventory purchases. The advances on inventory purchases were $50,793 and $93,740 as of June 30, 2024 and December 31, 2023, respectively. No impairment charges were made on advances to suppliers for the six months ended June 30, 2024 and the twelve months ended December 31, 2023.

Note 7 – Prepaid Expenses and Other Receivables

Prepaid expenses and other receivables consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Prepaid expenses	$	1,088,677	$	984,934
Other receivables		30,982		41,265
	$	1,119,659	$	1,026,199

As of June 30, 2024 and December 31, 2023, prepaid expenses and other receivables mainly represented prepaid insurance, prepaid rent, refund receivable from suppliers, prepaid advertising expense, and Celero and Cardknox account balances.

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Note 8 – Accrued Liabilities and Other Payables

Accrued liabilities and other payables consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Other payables	$	756,514	$	139,722
Salary payable		6,804		7,511
Marketing		20,000		-
Financed insurance premiums		198,999		69,337
Auditing fee		-		125,000
Warranty liability		25,283		27,545
Accrued commission		75,989		58,669
Accrued expenses, others		53,042		672,877
	$	1,136,631	$	1,100,661

As of June 30, 2024 and December 31, 2023, other accrued expenses mainly included legal and professional fees, utilities and unpaid operating expenses incurred in Malaysia. Other payables represented balance on credit card, other taxes payable, 401(k) payable and payable for marketing, shipping, and showroom.

Note 9 – Other Loans

On June 19, 2020, Diamond Bar was granted a U.S. Small Business Administration (SBA) loan in the aggregate amount of $150,000, pursuant to the Economic Injury Disaster Loan. The Loan, which was in the form of a promissory note dated June 19, 2020, matures on June 19, 2050 and bears interest at a rate of 3.75% per annum, payable monthly beginning 12 months from the date of the promissory note. Funds from the Loan may only be used for working capital. The loan was secured by all tangible and intangible property of Diamond Bar and has accumulated interest of $2,737 and $4,386 for the six months ended June 30, 2024 and 2023, respectively; and $1,365 and $2,193 for the three months ended June 30, 2024 and 2023, respectively.

Note 10 – Related Party Transactions

On September 30, 2011, Diamond Bar leased a showroom in High Point, North Carolina from the Company’s President who is currently also the Chief Executive Officer and Chairperson of the Board. The lease is renewable and has been renewed each year since 2011. On April 10, 2024, the Company renewed the lease for an additional one year term at a cost of $41,000. During the six months ended June 30, 2024 and 2023, the Company recorded rental amounts of $18,890 and $17,280, respectively; and $10,250 and $8,640 for the three months ended June 30, 2024 and 2023, respectively, which were included in selling expenses.

On January 4, 2018, the Company entered into a sales representative agreement with a consulting firm, which is owned by the President, Chief Executive Officer and Chairperson of the Board, for sales representative service for a term of two years. On January 4, 2020, the Company renewed the agreement for an additional two years which was amended in July 2020. If not terminated during the first year, the agreement will continue until one party or the other terminates the agreement with 30 days written notice. The Company agreed to compensate the consulting firm via commission at predetermined rates of the relevant sales amount. During the six months ended June 30, 2024 and 2023, the Company recorded $153,043 and $151,911; and $87,316 and $86,381 for the three months ended June 30, 2024 and 2023 as commission expense to this consulting firm, respectively.

In February 2024, the Company entered into a loan agreement in the aggregate amount of $200,000 with a shareholder of the Company. The loan was in the form of a promissory note dated on February 21, 2024, matures on February 20, 2025, and bears interest at a rate of 8.5% per annum. The proceed of the loan is used for working capital. During the six and three months ended June 30, 2024, the Company accrued $6,141 and $4,278 as interest expense, respectively.

On April 11, 2024, the Company entered into a loan agreement in the aggregate amount of $160,000 with a shareholder of the Company. The loan was in the form of a promissory note dated on April 11, 2024, matures on April 10, 2025, and bears interest at a rate of 8.5% per annum. The proceed of the loan is used for working capital. During the six and three months ended June 30, 2024, the Company accrued $3,018 and $3,018 as interest expense, respectively.

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Note 11 – Stockholders’ Equity

On May 28, 2021, the Company’s stockholders approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) at its annual meeting. The 2021 Plan was approved by the Board of Directors of the Company on April 12, 2021 and has a total of 600,000 shares of the Company’s common stock which may be granted as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business. On June 16, 2021, the Company filed Form S-8 to register the 600,000 shares of the Company’s common stock under the 2021 Plan.

On August 31, 2023, the Company’s stockholders approved the Company’s 2023 Equity Incentive Plan (the “2023 Plan”) at its special shareholders’ meeting. The 2023 Plan was approved by the Board of Directors of the Company on June 28, 2023 and has a total of 800,000 shares of the Company’s common stock which may be granted as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business. On December 15, 2023, the Company filed Form S-8 to register the 800,000 shares of the Company’s common stock under the 2023 Plan.

On May 31, 2024, the Company’s stockholders approved the Company’s 2024 Equity Incentive Plan (the “2024 Plan”) at its special shareholders’ meeting. The 2024 Plan was approved by the Board of Directors of the Company on April 19, 2024 and has a total of 3,000,000 shares of the Company’s common stock which may be granted as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company’s business.

On April 18, 2024, the Company received written notice from the NASDAQ Stock Market (“NASDAQ”) stating that the Company does not meet the requirement of maintaining a minimum of $2,500,000 in stockholders’ equity for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(b)(1), the Company also does not meet the alternative of market value of listed securities of $35 million under NASDAQ Listing Rule 5550(b)(2) or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years under NASDAQ Listing Rule 5550(b)(3), and the Company is no longer in compliance with the NASDAQ Listing Rules.

The NASDAQ notification letter provides the Company until June 6, 2024 to submit a plan to regain compliance. If the plan is accepted, NASDAQ can grant the Company an extension up to 180 calendar days from the date of NASDAQ letter to demonstrate compliance. If NASDAQ does not accept the Company’s compliance plan, the Company will have the opportunity to appeal that decision to a Hearing Panel per NASDAQ Listing Rule 5815(a).

The Company submitted its plan of compliance on May 28, 2024 and a supplemental letter to the plan of compliance on June 20, 2024. On June 27, 2024, the Company received a notification letter from NASDAQ Listing Qualification Staff (“Staff”). Based on the review of the letters submitted by the Company, Staff has determined to grant the Company an extension until October 14, 2024 to regain compliance with the Rule and the Company must complete its initiatives and provide evidences for the compliance with the Rule as required by Nasdaq.

The Company intends to fully comply with the exception granted by the Staff and to regain the compliance on or before October 14, 2024.

On May 16, 2024, the Company entered into a Securities Purchase Agreement with an investor to sell 200,000 shares of the Company’s common stock at a purchase price of $2.00 per share for an aggregate price of $400,000 (the “Private Placement”). The Private Placement was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.

Shares and Warrants issued through Private Placement

On July 23, 2021, the Company conducted a registered direct offering of 222,902 shares of common stock. The shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (the “SEC”) on October 8, 2020 and subsequently declared effective on October 15, 2020. Additionally, the Company issued to the investors unregistered warrants to purchase up to an aggregate of 222,902 shares of common stock in a concurrent private placement. The combined purchase price for one share of common stock and a warrant to purchase one share of common stock was $14.00. The warrants have an exercise price of $17.50 per share, are exercisable beginning six-months from the date of issuance, and will expire five and a half years from the date of issuance. The offering gross proceeds were $3,120,622 before deducting placement agent’s commissions and other offering costs, and the net proceeds of the offering were approximately $2,760,000. The offering closed on July 27, 2021.

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In conjunction with this offering, the Company issued warrants to purchase 22,290 shares of common stock at an exercise price of $17.50 per share to the placement agent and its designees. The placement agent warrants are exercisable on the six-month anniversary of the issuance date. The placement agent warrants are exercisable for four and a half years from the initial exercise date. The placement agent warrants have piggy-back registration rights and have a termination date of July 23, 2026.

The warrants issued in the private placement described above are exercisable for a fixed number of shares, and are classified as equity instruments under ASC 815-40-25-10. The Company accounted for the warrants issued in the private placement based on the fair value method under ASC Topic 505, and the fair value of the warrants was calculated using the Black-Scholes model under the following assumptions: estimated life of 5.5 years, volatility of 107%, risk-free interest rate of 0.71% and dividend yield of 0%. No estimate of forfeitures was made as the Company has a short history of granting options and warrants. The fair value of the warrants issued to investors and placement agent at grant date was $2,018,597.

Warrants

The following is a summary of the warrant activity for the six months ended June 30, 2024:

Summary of Warrant Activity

	Number of Warrants		Average Exercise Price		Weighted Average Remaining Contractual Term in Years

Outstanding at January 1, 2024		245,192	$	17.50		3.02
Exercisable at January 1, 2024		245,192	$	17.50		3.02
Granted		-		-		-
Exercised / surrendered		-		-		-
Expired		-		-		-
Outstanding at June 30, 2024		245,192	$	17.50		2.52
Exercisable at June 30, 2024		245,192	$	17.50		2.52

Shares Issued to Consultants

On January 28, 2022, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development effective on February 1, 2022 for twelve months. The Company shall pay the designer $10,000 per month starting from February 1, 2022 for twelve months, in the form of the Company’s Common Stock, calculated based on the closing stock price on the first trading day of the corresponding month. The shares were issued pursuant to the 2021 Plan. During the six and three months ended June 30, 2023, the Company issued 4,748 shares to the designer and charged $10,000, respectively to operations as designer fee.

On July 1, 2022, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on July 1, 2022 for a one-year term. The Company agreed to grant the consultant 10,000 shares of the Company’s common stock, vesting 25% on July 1, 2022, 25% on October 1, 2022, 25% on January 1, 2023 and 25% on April 1, 2023. The fair value of the 10,000 shares was $36,000, which was calculated based on the stock price of $3.60 per share on July 1, 2022 and has been amortized over the service term. The shares were issued pursuant to the 2021 Plan. During the six and three months ended June 30, 2023, the Company charged $18,000 and $9,000 to operations as consulting expenses, respectively.

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On November 16, 2022, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on November 16, 2022 for a one-year term. The Company agreed to grant the consultant 10,000 shares of the Company’s common stock, vesting 25% on February 15, 2023, 25% on May 15, 2023, 25% on August 15, 2023 and 25% on November 15, 2023. The fair value of the 10,000 shares was $28,000, which was calculated based on the stock price of $2.80 per share on November 16, 2022. The shares were issued pursuant to the 2021 Plan. During the six and three months ended June 30, 2023, the Company charged $14,000 and $7,000, respectively, to operations as consulting expenses.

On January 28, 2023, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development effective on February 1, 2023 for twelve months. The Company shall pay the designer $10,000 per month starting from February 1, 2023 for twelve months, in the form of the Company’s Common Stock, calculated based on the closing stock price on the first trading day of the corresponding month. The shares were issued pursuant to the 2021 Plan. During the six months ended June 30, 2024 and 2023, the Company issued 2,645 and 15,328 shares to the designer and charged $10,000 and $50,000 to operations as designer fee, respectively. During the three months ended June 30, 2024 and 2023, the company issued 0 and 10,543 shares to the designer and charged $0 and $30,000 to operations as designer fee, respectively

On July 3, 2023, the Company entered into an IT consulting service agreement with three consultants for analyzing the Company’s IT infrastructure and system effective on July 3, 2023 for twelve months. The Company agreed to grant the consultant 300,000 shares of the Company’s common stock, vesting 25% on July 3, 2023, 25% on October 3, 2023, 25% on January 3, 2024 and 25% on April 3, 2024. The fair value of the 300,000 shares was $636,000, which was calculated based on the stock price of $2.12 per share on July 3, 2023. The shares were issued pursuant to the 2021 Plan. During the six and three months ended June 30, 2024, the Company charged $318,000 and $159,000 to operations as consulting expenses, respectively.

On November 9, 2023, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on November 16, 2023 for a one-year term. The Company agreed to grant the consultant 50,000 shares of the Company’s common stock, vesting 25% on February 15, 2024, 25% on May 15, 2024, 25% on August 15, 2024 and 25% on November 15, 2024. The fair value of the 50,000 shares was $117,500, which was calculated based on the stock price of $2.35 per share on November 16, 2023. The shares were granted pursuant to the 2021 Plan. During the six and three months ended June 30, 2024, the Company charged $58,750 and $29,375 to operations as consulting expenses, respectively.

On November 16, 2023, Nova Malaysia entered into an agreement with an IT consulting firm to acquire an Artificial Intelligent powered IT System for $675,000. The Company agreed to issue 270,000 shares of common stocks at the price of $2.50 per share which was in equivalent to $675,000 (3,161,970 in Malaysia Ringgit on November 16, 2023) to the IT consulting firm. Artificial Intelligent IT System is just a part of the ultimate software product. The ultimate software is still in developing stage and not feasible to be functional. During the six and three months ended June 30, 2023, the Company recorded $0 as research and development expense.

On January 23, 2024, Nova Malaysia entered into a purchase agreement with an IT consulting firm to acquire an AI-Calculation Engine System, which includes Commission Management Calculation Module, Compiled and Encrypted Calculation Engine, Membership Module, Sales Module and Maintenance and Support, etc. for $750,000. The Company agreed to issue 300,000 shares of common stocks at the price of $2.50 per share which was in equivalent to $750,000 (3,544,875 in Malaysia Ringgit on January 23, 2024) to the IT consulting firm. AI-Calculation Engine System is just a part of the ultimate software product. The ultimate software is still in developing stage and not feasible to be functional. During the six and three months ended June 30, 2024, the Company recorded $750,000 and $0 as research and development expense, respectively.

On January 28, 2024, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development effective on February 1, 2024 for twelve months. The Company shall pay the designer $10,000 per month starting from February 1, 2024 for twelve months, in the form of the Company’s Common Stock, calculated based on the closing stock price on the first trading day of the corresponding month. The shares were granted pursuant to the 2021 Plan. During the six and three months ended June 30, 2024, the Company issued 24,076 and 13,248 shares to the designer and charged $50,000 and $30,000 to operations as designer fee, respectively.

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On March 1, 2024, Nova Malaysia entered into a consulting agreement with a consultant for IT system related maintenance and services effective on March 1, 2024 for a one-year term. The Company agreed to grant the consultant 100,000 shares of the Company’s common stock, vesting 25% on March 1, 2024, 25% on June 1, 2024, 25% on September 1, 2024 and 25% on December 1, 2024. The fair value of the 100,000 shares was $163,000, which was calculated based on the stock price of $1.63 per share on March 1, 2024. The shares were granted pursuant to the 2023 Omnibus Long-Term Incentive Plan. During the six and three months ended June 30, 2024, the Company charged $54,594 and $13,844 to operations as consulting fee.

Shares and Options Issued to Independent Directors

On November 7, 2018 (the “Grant Date”), the Company entered into stock option agreements under the 2014 Omnibus Long-Term Incentive Plan with the three independent members of the board of directors. The Company agreed to grant the Company’s three independent directors’ options to purchase an aggregate of 12,000 shares of the Company’s common stock at an exercise price of $29.50 per shares, with a term of 5 years. Twenty-five percent (25%) of those stock options vested on November 30, 2018, 25% on will vest on February 28, 2019, 25% on May 31, 2019, and the remaining 25% will vest on August 31, 2019. The fair value of the stock options granted is estimated on the date of the grant using the Black-Scholes option pricing model (“BSOPM”) as described above. The fair value of the options was calculated using the following assumptions: estimated life of ten years, volatility of 84%, risk free interest rate of 3.07%, and dividend yield of 0%. The fair value of 60,000 stock options was $240,105 at the grant date.

On November 4, 2019, the Company entered into stock option agreements under the 2014 Omnibus Long-Term Incentive Plan with the three independent members of the board of directors. The Company agreed to grant the Company’s three independent directors options to purchase an aggregate of 12,000 shares of the Company’s common stock at an exercise price of $14.00 per share, with a term of 5 years, vesting 25% on November 30, 2019, 25% on February 28, 2020, 25% on May 31, 2020, and 25% on August 31, 2020. The fair value of the stock options granted was estimated on the date of the grant using the Black-Scholes option pricing model. The fair value of the options was calculated using the following assumptions: estimated life of ten years, volatility of 87%, risk free interest rate of 1.60%, and dividend yield of 0%. The fair value of the 12,000 stock options was $114,740 at the grant date.

Shares Issued to Employees

On November 11, 2022, the Company extended an employment agreement with the Company’s Corporate Secretary for a term of one year effective from November 14, 2022. The Company agreed to grant an award of 1,200 restricted Stock Units to the officer pursuant to the Company’s 2021 Omnibus Equity Plan. The fair value of these shares was $3,540, which was calculated based on the stock price of $2.95 per share on November 11, 2022, the date the award was determined by the Compensation Committee of the Board of Directors, vesting 25% on November 11, 2022, 25% on March 31, 2023, 25% on June 30, 2023 and 25% on September 30, 2023. During the six and three months ended June 30, 2023, the Company record $1,770 and $885 to operations as stock compensation expense.

On November 9, 2023, the Company extended an employment agreement with the Company’s Corporate Secretary for a term of one year effective from November 14, 2023. The Company agreed to grant an award of 6,000 restricted Stock Units to the officer pursuant to the Company’s 2021 Omnibus Equity Plan. The fair value of these shares was $12,900, which was calculated based on the stock price of $2.15 per share on November 9, 2023, the date the award was determined by the Compensation Committee of the Board of Directors, vesting 25% on November 9, 2023, 25% on March 31, 2024, 25% on June 30, 2024 and 25% on September 30, 2024. During the six and three months ended June 30, 2024, the Company record $6,450 and $3,225 to operations as stock compensation expense.

Options Issued to Employees

On August 24, 2018, the compensation committee of the Board approved an option grant to the Company’s Chief Financial Officer to purchase an aggregate of 1,400 shares of the Company’s common stock at an exercise price of $46.25 per share, with a term of 5 years, pursuant to the Company’s 2014 Omnibus Long-Term Incentive Plan. Fifty percent (50%) of those stock options vested immediately, and the remaining 50% vested on the six-month anniversary of the grant date.

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The fair value of the option granted to the Chief Financial Officer in 2018 was recognized as compensation expense over the vesting period of the stock option award. The fair value of the option was calculated using Black-Scholes model under the following assumptions: estimated life of five years, volatility of 84%, risk free interest rate of 2.72%, and dividend yield of 0%. The fair value of the 1,400 stock options was $43,680 at the grant date.

On August 12, 2019, the compensation committee of the Board approved an option grant to the Company’s Chief Financial Officer to purchase an aggregate of 1,400 shares of the Company’s common stock at an exercise price of $19.25 per share, with a term of 5 years, pursuant to the Company’s 2014 Omnibus Long-Term Incentive Plan. Fifty percent (50%) of those stock options vested immediately, and the remaining 50% vested on the six-month anniversary of the grant date.

The fair value of the option granted to the Chief Financial Officer in 2019 was recognized as compensation expense over the vesting period of the stock option award. The fair value of the option was calculated using Black-Scholes model under the following assumptions: estimated life of five years, volatility of 87%, risk free interest rate of 1.49%, and dividend yield of 0%. The fair value of the 1,400 stock options was $18,318 at the grant date.

As of June 30, 2024, unrecognized share-based compensation expense was $227,102.

Stock option activity under the Company’s stock-based compensation plans is shown below:

Schedule of Stock Option Activity

	Number of Shares		Average Exercise Price per Share		Weighted Average Remaining Contractual Term in Years

Outstanding at January 1, 2024		13,400	$	14.55		0.82
Exercisable at January 1, 2024		13,400		14.55		0.82

Granted		-		-		-
Exercised		-		-		-
Forfeited		-		-		-
Outstanding at June 30, 2024		13,400		14.55		0.32
Exercisable at June 30, 2024		13,400		14.55		0.32

(1)

The intrinsic value of the stock options at June 30, 2024 is the amount by which the market value of the Company’s common stock of $1.63 as of June 28, 2024 exceeds the average exercise price of the option. As of June 30, 2024, the intrinsic value of the outstanding and exercisable stock options was $0.

Note 12 – Geographical Analysis

Geographical distribution of sales consisted of the following for the six and three months ended June 30, 2024 and 2023:

Schedule of Revenue by Geographic Areas

	2024		2023		2024		2023
	Six Months Ended June 30,				Three Months ended June 30,
	2024		2023		2024		2023
Geographical Areas
North America	$	4,957,058	$	4,192,106	$	2,631,328	$	2,435,441
Asia		-		1,993,671		-		1,993,671
Other countries		107,868		151,217		57,205		33,317
Revenues	$	5,064,926	$	6,336,994	$	2,688,533	$	4,462,429

Geographical location of identifiable long-lived assets as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Geographical Areas
North America	$	1,601,636	$	1,873,623
Asia		264,942		318,398
Total	$	1,866,578	$	2,192,021

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Note 13 – Lease

On June 17, 2013, the Company entered into a lease agreement for office, warehouse, storage, and distribution space in the United States with a five year term, commencing on November 1, 2013 and expiring on October 31, 2018. The lease agreement also provided an option to extend the term for an additional six years. On April 23, 2018, the Company extended the lease for another three years with an expiration date of October 31, 2021. On October 15, 2021, the Company extended the lease for another five years with an expiration date of October 31, 2026. The initial monthly rental payment is $42,000 with an annual 3% increase.

The Company has entered into several lease agreements for office and warehouse space in Commerce, California and showroom space in Las Vegas, Nevada and High Point, North Carolina (see Note 10) on monthly or annual terms.

On July 15, 2019, Nova Malaysia entered into a sublease agreement for warehouse space with a two-year term, expiring on July 14, 2021. The initial monthly rental payment was 20,000 Malaysia Ringgit ($4,232) and was increased to 35,000 Malaysia Ringgit ($7,406) effective August 1, 2020. On July 15, 2021, Nova Malaysia extended the lease for another two years with an expiration date of July 31, 2023. Nova Malaysia did not extend this lease after July 31, 2023.

On October 29, 2019, Nova Malaysia entered into a lease agreement for a showroom with a two-year term, commencing on December 1, 2019 and expiring on November 30, 2021. On November 26, 2021, Nova Malaysia extended the lease to November 30, 2022 with an option for renewal for another term of 24 months. On October 4, 2022, Nova Malaysia renewed the lease for two years to November 30, 2024. The monthly rental payment is 9,280 Malaysia Ringgit ($1,964).

On August 20, 2020, Nova Malaysia entered into a sublease agreement for an office and service center with a two-year term, commencing on September 1, 2020 and expiring on August 31, 2022. On July 29, 2022, Nova Malaysia extended the lease for another two years with an expiration date of August 31, 2024. The monthly rental payment is 30,000 Malaysia Ringgit ($6,348).

Operating lease expense for the six months ended June 30, 2024 and 2023 was as follows:

Schedule of Lease Cost

Six Months Ended June 30,

Three Months Ended June 30,

2024

2023

2024

2023

Operating lease cost – straight line

388,830

438,981

194,389

219,296

The following is a schedule, by years, of maturities of operating lease liabilities as of June 30, 2024:

	Operating Leases
2024	$	364,617
2025		701,142
2026		598,820
Thereafter		0
Total undiscounted cash flows		1,664,579
Less: imputed interest		(61,186	)
Present value of lease liabilities		1,603,393

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Lease Term and Discount Rate

	June 30, 2024
Weighted-average remaining lease term – years
Operating leases – USA		2.34
Operating leases – Malaysia		0.23

Weighted-average discount rate (%)
Operating leases – USA		3.36	%
Operating leases – Malaysia		4.74	%

Supplemental cash flow information related to leases where the Company was the lessee for the six months ended June 30, 2024 and 2023 was as follows:

	2024		2023

Operating cash outflows from operating leases	$	388,555	$	428,818

Note 14 – Commitments and Contingencies

Legal Proceedings

The Company previously reported on a federal putative class action complaint George Barney filed against the Company and its former and current CEOs and CFOs (Thanh H. Lam, Ya Ming Wong, Jeffery Chuang and Yuen Ching Ho) in the United States District Court for the Central District of California, claiming the Company violated federal securities laws and pursuing remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 (the “Barney Action”).

That action was resolved by a January 30, 2024 Order of the Court certifying a settlement class and approving a class settlement.

In the Barney action, Company shareholders sought to assert claims on behalf of all entities purchasing stock from December 21, 2015, through December 20, 2018, under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10b-5. In support of these claims, plaintiffs alleged that defendants artificially inflated the Company’s share price by issuing a press release announcing a strategic relationship with Shanxi Winqing Senior Care Service Group, claiming in the Company’s Annual Statements on Form 10-Ks for the 2017 and 2018 fiscal years that Shanxi Winqing and Merlino Lewis LLP were among the Company’s largest customers, and reporting revenues from sales transactions with these entities. Plaintiffs claimed that Shanxi Winqing was a fictitious entity and Merlno Lewis LLP dissolved in 2013, so that the announcement of a strategic alliance was false and the reported revenues non-existent.

The Company denied these allegations and all liability. It asserted that the entities referenced in its public disclosures were actual companies and the revenues booked from those entities were genuine and actually collected. The Company alleged that no registration exists for Shanxi Winqing because the Company slightly mistranslated its Chinese name in its public disclosures. Similarly, the Company claimed to have previously sold products to Merlino Lewis LLP and failed to update its customer name when the customer restructured its business.

On March 31, 2023, the parties filed a Renewed Stipulation of Settlement (“Renewed Stipulation”) resolving all claims asserted in the matter. This Renewed Stipulation was executed and filed after the Court denied plaintiffs’ Motion to Certify a Settlement Class and Approve Class Action settlement in accordance with the parties’ original Stipulation of Settlement. The substantive terms of the settlement as they applied to the Company were not modified between the original Settlement Stipulation and the Renewed Settlement Stipulation. The Renewed Stipulation provided for the certification of a settlement class and the Company’s payment to the settlement class of $750,000. It also provided for the complete release of all claims by the settlement class against the Company and its directors, officers, and employees and the other named defendants with respect to any of the matters alleged in the litigation. The Company settled without in any manner admitting, and expressly denying, liability.

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By Order entered July 10, 2023, the Court preliminarily approved a settlement class and the proposed settlement. The settlement escrow was then funded as specified in this Order. The funding was provided through a directors and officers liability insurance policy.

The Court thereafter certified a settlement class and finally approved the settlement by Order entered January 30, 2024. The entry of this Order resolved the matter as to the Company. The settlement payment was funded through insurance.

On March 8, 2019, Jie Yuan (the “Jie Action”) filed a putative shareholder derivative lawsuit purportedly on behalf of the Company against its former and current CEOs and CFOs (Thanh H. Lam, Ya Ming Wong, Jeffery Chuang and Yuen Ching Ho) and directors (Charlie Huy La, Bin Liu, Umesh Patel, and Min Su) and vice president (Steven Qiang Liu) (collectively, the “Defendants”) seeking to recover any losses the Company sustains as a result of alleged securities violations outlined in the Seeking Alpha blog and Barney securities class action complaint. Specifically, the derivative lawsuit alleges that the Defendants caused the Company to make the alleged false and/or misleading statements giving rise to the putative securities class action. The Plaintiff also alleges that President and CEO Lam engaged in self-dealing transactions by leasing her property to Diamond Bar, a Company subsidiary, and asserts, in conclusory fashion, that Lam, former CEO and director Ya Ming Wong, former CFO and director Yuen Ching Ho, and director Umesh Patel sold securities during the period of time when the alleged false and/or misleading statements were made “with knowledge of material non-public information.”

On May 15, 2019, Wilson Samuels (the “Samuels Action”) filed a largely duplicative putative derivative complaint purportedly on behalf of the Company against the same current and former directors and officers named in the Jie Action other than Steven Qiang Liu. That action was filed in the United States District Court for the Central District of California. Samuels repeats the allegations of the Complaint in the Jie Action. Additionally, Samuels claims that, in announcing its change of auditing firms in September 2016, the Company asserted that this change was made because its existing auditor ceased auditing public companies subject to regulation in the United States without disclosing that its new auditing firm was created in a merger of three accounting firms, including a firm whose registration was revoked by the Public Company Accounting Oversight Board. Samuels also claims that the Company redeemed its stock in reliance upon the same purported fraudulent recognition of revenues claimed in the putative class action. Samuels purports to state direct claims under Sections 10(b) and 20 of the Exchange Act and SEC Rule 10b-5.

On March 3, 2020, the defendants filed motions to stay the derivative actions until the Barney Action is resolved or alternatively to dismiss on the grounds that plaintiffs’ failure to make demand upon the Board of Directors was not excused and the Complaints otherwise fail to state a claim upon which relief can be granted. By Order entered April 7, 2020, the Court granted defendants’ Motion to Stay and stayed the Jie Action until the Barney Action is resolved. The Court subsequently entered a similar Order in the Samuels Action. It also took a motion that the derivative plaintiffs filed to consolidate the proceedings and appoint lead counsel off calendar.

With the resolution of the Barney action, settlement of the action, the stay of the derivative actions will be lifted.

While these derivative actions are purportedly asserted on behalf of the Company, it is possible that the Company will incur attorneys’ fees and costs in advancing the costs of defense for its current directors and officers pursuant to contractual and legal indemnity obligations. The plaintiffs also seek to require corporate governance changes. The Company believes there is no basis to the derivative complaints and they will be vigorously defended if necessary.

Other than the above, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition or results of operations.

Note 15 – Subsequent Events

The Company has evaluated subsequent events through August 13, 2024, the date of the issuance of the interim condensed consolidated financial statements, and the following subsequent events have been identified.

On July 5, 2024, the Company, Nova Malaysia and Hong Sheng Sdn Bhd (“Hong Sheng”), a company incorporated in Malaysia entered into a Sale and Purchase Agreement (the “Agreement”). Pursuant to the Agreement, the parties agree: (i) Nova Malaysia will purchase a Nova Living DesignXperience System from Hong Sheng for $660,000 (the “Purchase Price”) and (ii) the Purchase Price shall be paid in 400,000 shares of common stock (“Shares”) of the Company at $1.65 per share. The Nova Living DesignXperience System includes Virtual Interior Design Consultation, Furniture Recommendation Generation, Realistic Rendering of Virtual Products, Testing and Quality Assurance, Documentation and Support and Deployment and Maintenance. The Shares will be issued pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.

On July 30, 2024, the Company entered into a Securities Purchase Agreement with one of our shareholders to sell 125,000 shares of the Company’s common stock at a purchase price of $1.60 per share for an aggregate price of $200,000 (the “Private Placement”). The Private Placement will be completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.

On August 7, 2024, the Company, “Nova Malaysia and VT Conceptone Sdn Bhd (“VT Conceptone”), a company incorporated in Malaysia entered into a Sale and Purchase Agreement (the “Agreement”). Pursuant to the Agreement, the parties agree: (i) Nova Malaysia will purchase a Payment IT System from VT Conceptone for $552,000 (the “Purchase Price”) and (ii) the Purchase Price shall be paid in 460,000 shares of common stock (“Shares”) of the Company at $1.20 per share. The Payment IT System includes User Registration and Management, Payment Processing, Security and Compliance, Integration and APIs, Merchant Tools, Transaction Management, Reporting and Analytics and Notification System. The Shares will be issued pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.

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CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” the negatives of such terms and other terms of similar meaning typically identify forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the heading “Risk Factors” and those listed in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10K”). The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report and in our 2023 Form 10-K. Unless the context otherwise requires, references in this report to “we,” “us,” “Nova,” “Nova Lifestyle” or the “Company” refer to Nova Lifestyle, Inc. and its subsidiaries.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor Declaration

The following discussion and analysis are based upon our financial statements as of the dates and for the periods presented in this section. You should read this discussion and analysis in conjunction with the financial statements and notes thereto found in Part I, Item 1 of this Form 10-Q and our condensed consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). All references to the second quarter and first six months of 2024 and 2023 mean the three and six-month periods ended June 30, 2024 and 2023. In addition to historical information, the following discussion and other parts of this report contain certain forward-looking information. When used in this discussion, the words, “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from projected results, due to a number of risks, uncertainties and factors beyond our control. We do not undertake to publicly update or revise any of these forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Readers also are urged to carefully review and consider our discussions regarding the various factors that affect the company’s business, which are described in this section and elsewhere in this report. For more information, see our discussion of risk factors located at Part I, Item 1A of our 2023 Form 10-K.

Overview

Nova LifeStyle, Inc. is a distributor of contemporary styled residential and commercial furniture incorporated into a dynamic marketing and sales platform offering retail as well as online selection and global purchase fulfillment. We monitor popular trends and products to create design elements that are then integrated into our product lines that can be used as both stand-alone or whole-room and home furnishing solutions. Through our global network of retailers, e-commerce platforms, stagers and hospitality providers, Nova LifeStyle also sells (through an exclusive third-party manufacturing partner) a managed variety of high quality bedding foundation components.

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Nova LifeStyle’s brand family currently includes Nova LifeStyle, Diamond Sofa (www.diamondsofa.com) and Nova Living.

Our customers principally consist of distributors and retailers with specific geographic territories that deploy middle to high end private label home furnishings which have very little competitive overlap with our specific furnishing products or product lines. Nova LifeStyle is constantly seeking to integrate new sources of distribution and manufacturing that are properly aligned with our growth strategy. This allows us to continually focus on building both our overall distribution and manufacturing relationships through a deployment of popular, as well as trend-based, furnishing solutions worldwide.

We are a U.S. holding company with no material assets in the U.S. other than the ownership interests of our wholly owned subsidiaries through which we market, design and sell residential and commercial furniture worldwide: Nova Furniture Limited domiciled in the British Virgin Islands (“Nova Furniture”), Nova Furniture Ltd. domiciled in Samoa (“Nova Samoa”), Diamond Bar Outdoors, Inc. domiciled in California (“Diamond Bar”), Nova Living (M) SDN. BHD. domiciled in Malaysia (“Nova Malaysia”) and Nova Living (HK) Group Limited domiciled in Hong Kong (“Nova HK”). The Company had three former subsidiaries Bright Swallow International Group Limited domiciled in Hong Kong (“Bright Swallow” or “BSI”) which was sold in January 2020, and Nova Furniture Macao Commercial Offshore Limited domiciled in Macao (“Nova Macao”) which was de-registration and liquidation in January 2021. In February 2022, Nova HK entered a de-registration process and transferred all its assets and business to Nova Malaysia. The process of de-registration and liquidation of Nova HK was completed in February 2023.

On December 7, 2017, we incorporated i Design Blockchain Technology, Inc. (“i Design”) under the laws of the State of California. The purpose of i Design is to build our own blockchain technology team. i Design is in the planning stage and has had minimum operations to date. On December 12, 2019, we became the sole shareholder of Nova Living (M) SDN. BHD. (“Nova Malaysia”), a company incorporated on July 26, 2019 under the laws of Malaysia. Nova Malaysia markets and sells high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and real estate projects in Malaysia and other regions in Southeast Asia.

On November 5, 2020, Nova LifeStyle, Inc. acquired Nova Living (HK) Group Limited (“Nova HK”) which was incorporated in Hong Kong on November 6, 2019. This company had minimal operations. In February 2022, Nova HK entered a de-registration process and transferred all its assets and business to Nova Malaysia. The process of de-registration and liquidation of Nova HK was completed in February 2023.

Our experience developing and marketing products for international markets has enabled us to develop the scale, logistics, marketing, manufacturing efficiencies and design expertise that serve as the foundation for us to expand aggressively into the highly attractive U.S., Canada, South America, Asia and Middle Easter markets.

In 2019, we developed a line of high-end physiotherapeutic jade mats with China-based manufacturing partners for use in therapy clinics, hospitality, and real estate projects in Asia. We launched our first flagship showroom/retail store in Kuala Lumpur, Malaysia in late 2019, which, after a COVID-19 related closing, was reopened in May 2020. On August 28, 2020, after few months reopening, Malaysia government extended Movement Control Order to prohibit the businesses to open to public until March 5, 2021 to contain the spread of COVID-19. After the re-opening on March 5, 2021, Malaysia imposed a new nationwide lockdown on May 12, 2021 until early June 2021 which was subsequently extended to early October 2021. In October 2021, the Order was lifted for people who are fully vaccinated and our store has been reopened since. In April 2022, Malaysia has reopened the border for foreign visitors. In June 2023, everything is back to normal in Malaysia. Due to the negative impact caused by COVID-19 from 2020 to 2022, the Company eventually sold the entire jade mats inventory for $2.00 million in liquidation sales in June 2023. We exited from Jade Mats business in 2023. Nova Malaysia has engaged in the development of an innovative home decoration design, showroom and payment IT software systems. We have limited experience with operations in Southeast Asia and considerable management attention and resources may be required to manage these new markets and product lines. We may be subject to additional risks including credit risk, inflation, currency exchange rate fluctuations, foreign exchange controls, import and export requirements, potentially adverse tax consequences and higher costs associated with doing business internationally.

We do not have access to a revolving credit facility. On May 4, 2020, the Company received loan proceeds in the amount of approximately $139,802 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. On May 5, 2020, Diamond Bar Outdoors Inc. (“Diamond Bar”) was granted a loan from Cathay Bank in the aggregate amount of $176,294, pursuant to the Paycheck Protection Program. On June 19, 2020, Diamond Bar was granted a U.S. Small Business Administration (SBA) loan in the aggregate amount of $150,000, pursuant to the Economic Injury Disaster Loan. In July 2021, we completed a registered direct offering of our shares of common stock and received offering gross proceeds of $3,120,622. In May 2024 and August 2024, we completed two private placements for gross proceeds of $600,000. We currently believe that our financial resources will be adequate to finance our operations in the next 12 months. However, in the event that we do need to raise capital in the future, the instability in the securities markets could adversely affect our ability to raise additional capital.

The Company intends to fully comply with the exception granted by the Staff and to regain the compliance on or before October 14, 2024.

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Principal Factors Affecting Our Financial Performance

Since 2019, we have moved away from low margin products and this move was intended to improve our gross profit margin, receivable collections and net profitability, and to increase our return on long-term equity. We terminated sales and marketing efforts to customers that represented a high purchase volume but low profit margin, and we adjusted our product line, which included the launch of our Summer 2024 Collection in the Las Vegas and High Point Markets, with a view to attracting a higher-end ultimate customer. The core focus of the Company’s direction today is entirely centered on product. Identifying a fashion-driven generational shift in the general perception and consumption of furniture and being more aware of actual consumer tastes and how best to fulfill and engage that need. Closely integrating product development alongside marketing results in appealing products that adheres to the scope of our target demographic of decision makers in the design, staging and retail fields. A process that is continually refined upon each release cycle, maintaining a singular, cohesive vision. In short, we have better identified our customers and how to cater to them – in the process gaining greater traction with every product launch considerably more so on an international level than ever previous. We believe these new strategies, will provide us with significant long term growth opportunities. Significant factors that we believe could affect our operating results are the (i) prices of our products to our domestic and international retailer and wholesaler customers and their markups to end consumers; (ii) general economic conditions in the U.S., Chinese, and other international markets; and (iii) trade tariffs imposed by the United States on certain products manufactured in China; and (iv) the recovery from the COVID-19 outbreak throughout the world; and (v) high interest rate, inflation and slow- down in real estate market. We believe most of our customers are willing to pay for our high quality and stylish products, timely delivery, and strong production capacity at price levels which we expect will allow us to maintain a relatively high gross profit margin for our products. We do not manufacture our products, but instead we utilize third-party manufacturers. In response to the tariffs imposed by the United States on certain products manufactured in China, we are in the process of shifting a portion of our product manufacturing from third-party manufacturers located in China to third-party manufacturers located in other parts of Asia, such as Vietnam, India and/or Malaysia, countries unaffected by the tariffs. Implementation of a relocation of manufacturing (which by necessity includes an assessment of the factory’s ability to deliver the quantity of the product, in accordance with the Company’s specifications, and in accordance with the Company’s quality control requirements) is time-consuming, but a portion of our manufacturing has been transitioned to Malaysia and India starting in 2020 and we expect that more of our manufacturing will be transitioned to one or more of these venues. Some of our manufacturing will continue to be performed in China because the intellectual know-how necessary to manufacture certain products is not generally available in other Asian countries. Consumer preference trends favoring high quality and stylish products and lifestyle-based furniture suites should also allow us at least to maintain our gross profit margins. The markets in North America is challenging because such markets are experiencing a slow-down and may be entering a recession due to high interest rate and inflation.

Critical Accounting Policies

While our significant accounting policies are described more fully in Note 2 to our accompanying unaudited condensed consolidated financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this Management’s Discussion and Analysis.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for Nova LifeStyle and its subsidiaries, Diamond Bar, i Design, Nova Furniture, Nova Samoa, Nova Malaysia and its former subsidiary, Nova HK.

Reverse Split

On May 22, 2023, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of May 22, 2023, at which time a 1-for-5 reverse stock split of the Company’s authorized shares of common stock, par value $0.001, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”), was effected. All references to shares and per share data have been retroactively restated to reflect such split.

Amendments to Articles of Incorporation

Use of Estimates

In preparing condensed 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 as of the dates of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include, but are not limited to, revenue recognition, the allowance for bad debt, valuation of inventories, the valuation of stock-based compensation, income taxes and unrecognized tax benefits, valuation allowance for deferred tax assets, assumptions used in assessing impairment of long-lived assets and goodwill, and loss contingencies. Actual results could differ from those estimates.

Accounts Receivable

Our accounts receivable arises from product sales. We do not adjust receivables for the effects of a significant financing component at contract inception if we expect to collect the receivables in one year or less from the time of sale. We do not expect to collect receivables greater than one year from the time of sale. Our policy is to maintain an allowance for expected credit losses on accounts receivable. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. We maintained an allowance for expected credit loss of $449 and $532 as of June 30, 2024 and December 31, 2023, respectively. During the six months ended June 30, 2024 and 2023, expected credit losses provision (reversal) was ($83) and ($196), respectively; ($924) and $65 for the three months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had gross receivable of $44,918 of which none was over 90 days past due. The allowance for expected credit losses is our best estimate of the amount of expected credit losses in our existing trade accounts receivable. We determine the allowance based on historical bad debt experience, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns.

Advances to Suppliers

Advances to suppliers represent amounts paid to suppliers in advance for goods that are yet to be delivered and from which future economic benefits are expected to flow to the Company within the normal operating cycle. Based on our historical records and in normal circumstances, we generally receive goods within 4 to 6 months from the date the advance payment is made.

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Income Taxes

Nova Lifestyle, Inc. and Diamond Bar are subject to U.S. federal and state income taxes. Nova Furniture BVI was incorporated in the BVI and Nova Samoa was incorporated in Samoa. There is no income tax for companies domiciled in the BVI and Samoa. Accordingly, the Company’s unaudited condensed consolidated financial statements do not present any income tax provisions related to the BVI and Samoa tax jurisdictions where Nova Furniture BVI and Nova Samoa are domiciled. Nova Malaysia is incorporated in Malaysia and is subject to Malaysia income taxes at the statutory rate of 24%.

The Tax Cuts and Jobs Act of 2017 (the “Act”) created new taxes on certain foreign-sourced earnings such as global intangible low-taxed income (“GILTI”) under IRC Section 951A, which is effective for the Company for tax years beginning after January 1, 2018. For the year ended December 31, 2023, the Company has calculated its best estimate of the impact of the GILTI in its income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing.

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As of June 30, 2024 and December 31, 2023, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately $25.2 million and $25.4 million of which substantially all was previously subject to U.S. tax, the one-time transition tax on foreign unremitted earnings required by the Tax Act, or GILTI. Those earnings are considered to be permanently reinvested and accordingly, no deferred tax expense is recorded for U.S. federal and state income tax or applicable withholding taxes.

A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2024 and 2023, is as follows:

		Gross UTB
		2024		2023

Balance – January 1 and June 30	$	-	$	-

At June 30, 2024 and December 31, 2023, the Company had cumulatively accrued approximately $0 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 benefit, which totaled $0 and $0 for the six and three ended June 30, 2024 and 2023, respectively, related to the Company’s continuing operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.

Nova Lifestyle and Diamond Bar are subject to U.S. federal and state income taxes and tax years 2020-2023 remain open to examination by tax authorities in the U.S.

Intangible Assets

Revenue Recognition

We recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. We recognize revenues following the five step model prescribed under ASU No. 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Revenue from product sales is recognized when the customer obtains control of our product, which typically occurs upon shipment to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.

Revenue from product sales is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers.

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Our sales policy allows for the return of product within the warranty period if the product is defective and the defects are our fault. As alternatives for the product return option, the customers have the option of asking us for a discount for products with quality issues, or of receiving replacement parts from us at no cost. The amount of reserves for return of products, the discount provided to the customers, and cost for the replacement parts were immaterial for the six and three months ended June 30, 2024 and 2023.

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses on our unaudited condensed consolidated statements of operations.

Foreign Currency Translation and Transactions

The accompanying unaudited condensed consolidated financial statements are presented in United States Dollar (“$” or “USD”), which is also the functional currency of Nova LifeStyle, Nova Furniture, Nova Samoa, Diamond Bar, and i Design.

The Company’s subsidiary with operations in Malaysia uses its local currency, Malaysian Ringgit (“RM”), as its functional currency. An entity’s functional currency is the currency of the primary economic environment in which it operates, which is normally the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements.

Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:

Balance sheet items, except for equity accounts
June 30, 2024			RM4.72 to 1
December 31, 2023			RM4.59 to 1

Income statement and cash flow items
For the six months ended June 30, 2024			RM4.73 to 1
For the six months ended June 30, 2023			RM4.46 to 1

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 chief operating decision maker organizes segments within the company for making operating decisions, assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

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We determined that our operations constitute a single reportable segment in accordance with ASC 280. We operate exclusively in one business and industry segment: the design and sale of furniture.

We concluded that we had one reportable segment under ASC 280 because Diamond Bar is a furniture distributor based in California focusing on customers in the US and Nova Malaysia is a furniture retailer and distributor focusing on customers primarily in Malaysia and Asia. Each of our subsidiaries is operated under the same senior management of our company, and we view the operations of Diamond Bar and Nova Malaysia as a whole for making business decisions. Our long-lived assets are mainly property, plant and equipment located in the United States and Malaysia for administrative purposes.

Net sales to customers by geographic area are determined by reference to the physical product shipment delivery locations requested by our customers. For example, if the products are delivered to a customer in the U.S., the sales are recorded as generated in the U.S.; if the customer directs us to ship its products to China, the sales are recorded as sold in China.

New Accounting Pronouncements

Recently Adopted Accounting Standards

Recently Issued But Not Yet Adopted Accounting Pronouncements

In March 2023, the FASB issued ASU 2023-01, Lease (Topic 842): Common Control Arrangements, which clarifies the accounting for leasehold improvements associated with leases between entities under common control (hereinafter referred to as common control lease). ASU 2023-01 requires entities to amortize leasehold improvements associated with common control lease over the useful life to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease, and to account for any remaining leasehold improvements as a transfer between entities under common control through an adjustment to equity when the lessee no longer controls the underlying asset. This ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. An entity may apply ASU 2023-01 either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-01 will have on our condensed consolidated financial statement presentations and disclosures.

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We do not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on our financial statement presentation or disclosures.

Results of Operations

Comparison of Three Months Ended June 30, 2024 and 2023

The following table sets forth the results of our operations for the three months ended June 30, 2024 and 2023. Certain columns may not add due to rounding.

	Three Months Ended June 30,
	2024						2023
	$			*% of* *Sales*			$			*% of* *Sales*
Net sales	$	2,688,533					$	4,462,429
Cost of sales		(1,493,566	)		(56	)%		(3,015,089	)		(68	)%
Gross profit (loss)		1,194,967			44	%		1,447,340			32	%
Operating expenses		(1,692,631	)		(63	)%		(1,825,577	)		(41	)%
Loss from operations		(497,664	)		(19	)%		(378,237	)		(8	)%
Other income (expenses), net		(60,949	)		(2	)%		(157,944	)		(4	)%
Income tax expenses		(4,876	)		-	%		(2,400	)		-	%
Net loss		(563,489	)		(21	)%		(538,581	)		(12	)%

Net Sales

Net sales for the three months ended June 30, 2024 were $2.69 million, a decrease of 40% from $4.46 million for the same period of 2023. This decrease in net sales resulted primarily from 69% decrease in sales volume, while partially offset by 96% increase in average selling price. Our three largest selling product categories for the three months ended June 30, 2024 were sofas, beds and coffee tables, which accounted for approximately 50%, 13% and 10% of sales, respectively. For the three months ended June 30, 2023, the three largest selling categories were jade mats, sofas and beds, which accounted for approximately 45%, 25% and 8% of sales, respectively.

The $1.77 million decrease in net sales for the three months ended June 30, 2024, compared to the same period of 2023, was mainly due to decreased sales to Asia. Sales to Asia decreased by 100% to $0 million for the three months ended June 30, 2024, compared to $1.99 million for the same period of 2023, such decrease mainly due to our liquidation sales of the entire inventory of jade mats by Nova Malaysia for $1.99 million in Malaysia during the three months ended June 30, 2023. However, the decrease in net sales was partially offset by the increase in sales to North America and other countries. Sales to North America increased by $0.20 million to $2.63 million for the three months ended June 30, 2024, from $2.44 million for the same period of 2023, primarily due to more sales order received from our customers in North America. Sales to other countries increased by $23,888 to $57,205 for the three months ended June 30, 2024, from $33,317 for the same period of 2023, primary due to more direct container sales in other countries.

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Cost of Sales

Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers. Total cost of sales decreased by 50% to $1.49 million for the three months ended June 30, 2024, compared to $3.02 million for the same period of 2023. Cost of sales as a percentage of sales decreased to 57% for the three months ended June 30, 2024, compared to 65% for the same period of 2023. The decrease in cost of sales in dollar term was mainly due to decreased net sales. The decrease in cost of sales as a percentage of sales is a result of two factors: (a) the decrease in average purchase cost; and (b) the liquidation sales of the jade mats in Malaysia which came with high cost and low profit margin during the three months ended June 30, 2023.

Gross Profit (Loss)

Gross profit was $1.19 million for the three months ended June 30, 2024, compared to $1.45 million for the same period of 2023, representing a decrease in gross profit of $0.25 million. Our gross profit margin was 44% for the three months ended June 30, 2024, compared to 32% for the same period of 2023. The decrease in gross profit and increase gross profit margin was mainly a result of the liquidation sales of the jade mats in Malaysia which came with a large amount of sales but low profit margin during the three months ended June 30, 2023.

Operating Expenses

Operating expenses consisted of selling, general and administrative expenses, and research and development. Operating expenses were $1.69 million for the three months ended June 30, 2024, compared to $1.83 million for the same period of 2023. Selling expenses decreased by 28%, or $0.16 million, to $0.41 million for the three months ended June 30, 2024, from $0.57 million for the same period of 2023, primarily due to decreased marketing and advertising expenses. On the other hand, general and administrative expenses increased by 3%, or $0.04 million, to $1.29 million for the three months ended June 30, 2024, from $1.25 million for the same period of 2023, primarily due to an increase in consulting fees of $0.04 million and stock compensation of $0.16 million, while the increase was partially offset by a decrease in insurance of $0.03 million, rent of $0.02 million, travel of $0.05 million and utilities of $0.02 million. In addition, research and development decreased by 105%, or $0.01 million to ($518) for the three months ended June 30, 2024, from $10,026 for the same period of 2023, primarily due to less research and development expenses incurred during the three months ended June 30, 2024.

Other Expenses, Net

Other expenses, net was $60,949 for the three months ended June 30, 2024, compared to other expenses, net of $157,944 for the same period of 2023, representing a decrease in other expenses of $96,995. The decrease in other expenses was due primarily to a decrease in foreign exchange loss by $125,895 to $2,383 for the three months ended June 30, 2024, from foreign exchange loss of $128,278 for the same period of 2023. The decrease in foreign exchange loss was mainly a result of the appreciation of U.S. dollar against Malaysian Ringgit on acquisition of AI-Calculation engine in U.S. dollars.

Income Tax Expenses

Income tax expenses were $4,876 and $2,400 for the three months ended June 30, 2024 and 2023, respectively due to minimum California state tax incurred in US subsidiaries.

Net Loss

As a result of the foregoing, our net loss was $0.56 million for the three months ended June 30, 2024, compared to $0.54 million for the same period of 2023.

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Comparison of Six Months Ended June 30, 2024 and 2023

The following table sets forth the results of our operations for the six months ended June 30, 2024 and 2023.

	Six Months Ended June 30,
	2024						2023
	$			% of Sales			$			% of Sales
Net sales	$	5,064,926					$	6,336,994
Cost of sales		(2,853,799	)		(56	)%		(4,228,352	)		(67	)%
Gross profit		2,211,127			44	%		2,108,642			33	%
Operating expenses		(4,197,182	)		(83	)%		(3,670,489	)		(58	)%
Loss from operations		(1,986,055	)		(39	)%		(1,561,847	)		(25	)%
Other expenses, net		(35,314	)		(1	)%		(196,649	)		(3	)%
Income tax expenses		(4,876	)		0	%		(2400	)		-	%
Net loss		(2,026,245	)		(40	)%		(1,760,896	)		(28	)%

Net Sales

Net sales for the six months ended June 30, 2024 were $5.06 million, a decrease of 20% from $6.34 million for the same period of 2023. This decrease in net sales resulted primarily from 52% decrease in sales volume, while partially offset by 65% increase in average selling price. Our three largest selling product categories for the six months ended June 30, 2024 were sofas, beds and chairs, which accounted for approximately 51%, 12% and 8% of sales, respectively. For the six months ended June 30, 2023, the three largest selling categories were jade mats, sofa and beds, which accounted for approximately 31%, 30% and 11% of sales, respectively.

The $1.27 million decrease in net sales for the six months ended June 30, 2024, compared to the same period of 2023, was mainly due to decreased sales to Asia. Sales to Asia decreased by 100% to $0 million for the six months ended June 30, 2024, compared to $1.99 million for the same period of 2023, such decrease mainly due to our liquidation sales of the entire inventory of jade mats by Nova Malaysia for $1.99 million in Malaysia during six months ended June 30, 2023. Also, sales to other countries decreased by $43,349 to $107,868 for the six months ended June 30, 2024, from $151,217 for the same period of 2023, primarily due to less direct container sales in other countries. However, the decrease in net sales in Asia and other countries was partially offset by the increase in sales to North America. Sales to North America increased by $0.76 million to $4.96 million for the six months ended June 30, 2024, from $4.19 million for the same period of 2023, primary due to more sales order received from our customers in North America.

Cost of Sales

Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers. Total cost of sales decreased by 20% to $2.85 million for the six months ended June 30, 2024, compared to $4.23 million for the same period of 2023. Cost of sales as a percentage of sales decreased to 56% for the six months ended June 30, 2024, compared to 67% for the same period of 2023. The decrease in cost of sales in dollar term was mainly due to decreased net sales. The decrease in cost of sales as a percentage of sales is a result of two factors: (a) the decrease in average purchase cost; and (b) the liquidation sales of the jade mats in Malaysia which came with high cost and low profit margin during the six months ended June 30, 2023.

Gross Profit (Loss)

Gross profit was $2.21 million for the six months ended June 30, 2024, compared to $2.11 million for the same period of 2023, representing an increase in gross profit of $0.10 million. Our gross profit margin was 44% for the six months ended June 30, 2024, compared to 33% for the same period of 2023. The increase in gross profit and gross profit margin was mainly a result of the liquidation sales of the jade mats in Malaysia which came with low profit margin during the six months ended June 30, 2023

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Operating Expenses

Operating expenses consisted of selling, general and administrative expenses, and research and development. Operating expenses were $4.20 million for the six months ended June 30, 2024, compared to $3.67 million for the same period of 2023. Selling expenses decreased by 25%, or $0.31 million, to $0.96 million for the six months ended June 30, 2024, from $1.28 million for the same period of 2023, primarily due to decreased marketing and advertising expenses. On the other hand, general and administrative expenses increased by 4%, or $0.10 million, to $2.48 million for the six months ended June 30, 2024, from $2.38 million for the same period of 2023, primarily due to an increase in stock compensation of $0.32 million, while the increase was partially offset by a decrease in payroll of $0.04 million and rent of $0.04 million. In addition, research and development increased by 7300%, or $0.74 million to $0.75 million for the six months ended June 30, 2024, from $10,144 for the same period of 2023, primary due to our spending on AI-Calculation engine which is for integrating with our AI and IT system.

Other Expenses, Net

Other expenses, net was $35,314 for the six months ended June 30, 2024, compared to other expenses, net of $196,649 for the same period of 2023, representing a decrease in other expenses of $161,335. The decrease in other expenses was due primarily to an increase in foreign exchange gain by $204,310 to $70,649 for the six months ended June 30, 2024, from foreign exchange loss of $133,661 for the same period of 2023. The increase in foreign exchange gain in 2024 from foreign exchange in 2023 loss was mainly a result of the appreciation of U.S. dollar against Malaysian Ringgit on acquisition of AI-Calculation engine in U.S. dollars during the six months ended June 30, 2024.

Income Tax Expenses

Income tax expenses were $4,876 and $2,400 for the six months ended June 30, 2024 and 2023, respectively due to minimum California state tax incurred in US subsidiaries.

Net Loss

As a result of the foregoing, our net loss was $2.03 million for the six months ended June 30, 2024, compared to $1.76 million for the same period of 2023.

Liquidity and Capital Resources

Our principal demands for liquidity are related to our efforts to increase sales and purchase inventory, and for expenditures related to sales distribution and general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to purchase of inventories and the expansion of our business, primarily through cash flow provided by operations, collections of accounts receivable, and credit facilities from banks.

We rely primarily on internally generated cash flow and available working capital to support growth. We may seek additional financing in the form of bank loans or other credit facilities or funds raised through offerings of our equity or debt, if and when we determine such offerings are required. As of June 30, 2024, we do not have any credit facilities. We believe that our current cash and cash equivalents and anticipated cash receipts from sales of products will be sufficient to meet our anticipated working capital requirements and capital expenditures for the next 12 months.

We had working capital deficit of $322,470 at June 30, 2024, a decrease of $382,527 from net working capital of $60,057 at December 31, 2023. The ratio of current assets to current liabilities was 0.92-to-1 at June 30, 2024.

The following is a summary of cash provided by or used in each of the indicated types of activities during the six months ended June 30, 2024 and 2023:

	2024			2023
Cash (used in) provided by:
Operating activities	$	(690,415	)	$	1,429,646
Investing activities		-			(2,468,582	)
Financing activities		760,000			-

Net cash used in operating activities was $0.69 million for the six months ended June 30, 2024, an increase in cash outflow by $2.12 million from $1.43 million of cash provided by operating activities for the same period of 2023.

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The increase in cash outflow was attributable primarily to (i) a decrease in cash inflow of $2.39 million for inventory to $0.03 million cash inflow for the six months ended June 30, 2024, from $2.42 million cash inflow for the same period of 2023, such decrease in cash inflow being mainly a result of less purchase were made during the six months ended June 30, 2024. (ii) an increase in cash outflow of $1.27 million for other current assets to $0.11 million cash outflow for the six months ended June 30, 2024, from $1.17 million cash inflow for the same period of 2023, such increase in cash outflow being mainly a result of more prepayments to operating expenses during the six months ended June 30, 2024. The increase in operating cash outflow was partially offset by an increase in cash inflow of $0.96 million for accounts receivable to $2,612 cash inflow for the six months ended June 30, 2024, from $0.96 million cash outflow for the same period of 2023, such increase in cash inflow being mainly due to we collected the payments from our customers in timely matter.

Net cash used in investing activities was $0 million for the six months ended June 30, 2024, a decrease in cash outflow of $2.47 million from $2.47 million of cash used in investing activities for the same period of 2023. We incurred cash outflow of $2.47 million from the virtual tour and web augmented reality experience software project during the six months ended June 30, 2023.

Net cash provided by financing activities was $0.76 million for the six months ended June 30, 2024, compared to $0 for the same period of 2023. During the six months ended June 30, 2024, we borrowed $0.36 million from a shareholder and sold 200,000 shares of common stock with the proceeds of $0.40 million for our working capital.

As of June 30, 2024, we had gross accounts receivable of $44,918 of which $21,570 was not yet past due and $23,348 was less than 90 days past due. We had an allowance for expected credit losses of $449. As of August 6, 2024, 77.1% of accounts receivable outstanding as of June 30, 2024 had been collected.

100% of our accounts receivable outstanding at December 31, 2023 had been collected during the six months ended June 30, 2024.

As of June 30, 2024 and December 31, 2023, we had advances to suppliers of $50,793 and $93,740, respectively. These supplier prepayments are made for goods before we actually receive them.

For a new product, the normal lead time from new product R&D, prototype, and mass production to delivery of goods from our suppliers to us is approximately six to nine months after we make advance payments to our suppliers. For other products, the typical time is 4-6 months after our advance payment. We will consider the need for a reserve when and if a supplier fails to fulfill our orders within the time frame as stipulated in the purchase contracts.

As of August 6, 2024, $14,914 or 29% and $93,740 or 100% of our advances to suppliers outstanding at June 30, 2024 and December 31, 2023 had been delivered to us in the form of purchases of furniture.

Other Long-Term Liabilities

As of June 30, 2024, we recorded long-term taxes payable of $0.64 million, consisting of an income tax payable of $0.64 million, primarily arising from a one-time transition tax recognized in the fourth quarter of 2017 on our post-1986 foreign unremitted earnings, as ASC 740 specifies that tax positions for which the timing of the ultimate resolution is uncertain should be recognized as long-term liabilities.

We elected to pay the one-time transition tax over the eight years commencing April 2018.

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Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders’ equity or that are not reflected in our condensed consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have evaluated, under the supervision of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of June 30, 2024. Based on this evaluation, our CEO and CFO concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during or subsequent to the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company has reported a federal putative class action complaint George Barney filed the Company and former and current CEOs and CFOs (Thanh H. Lam, Ya Ming Wong, Jeffery Chuang and Yuen Ching Ho) in the United States District Court for the Central District of California, claiming the Company violated federal securities laws and pursuing remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 (the “Barney Action”). That matter was resolved by the entry of an Order on January 30, 2024 certifying a settlement class and approving a class settlement.

In the Barney action, Company shareholders sought to assert claims on behalf of all entities purchasing stock from December 21, 2015, through December 20, 2018, under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10b-5. In support of these claims, plaintiffs alleged that defendants artificially inflated the Company’s share price by issuing a press release announcing a strategic relationship with Shanxi Winqing Senior Care Service Group, claiming in the Company’s Annual Statements on Form 10-Ks for the 2017 and 2018 fiscal years that Shanxi Winqing and Merlino Lewis LLP were among the Company’s largest customers, and reporting revenues from sales transactions with these entities. Plaintiffs claimed that Shanxi Winqing was a fictitious entity and Merlno Lewis LLP dissolved in 2013, so that the announcement of a strategic alliance was false and the reported revenues non-existent.

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On March 8, 2019, Jie Yuan (the “Jie Action”) filed a putative shareholder derivative lawsuit in the United States District Court for the Central District of California, purportedly on behalf of the Company against its former and current CEOs and CFOs (Thanh H. Lam, Ya Ming Wong, Jeffery Chuang and Yuen Ching Ho) and directors (Charlie Huy La, Bin Liu, Umesh Patel, and Min Su) and vice president (Steven Qiang Liu) (collectively, the “Defendants”) seeking to recover any losses the Company sustains as a result of alleged securities violations outlined in the Seeking Alpha blog and Barney securities class action complaint. Specifically, the derivative lawsuit alleges that the Defendants caused the Company to make the alleged false and/or misleading statements giving rise to the Barney Action. The Plaintiff also alleges that President and CEO Lam engaged in self-dealing transactions by leasing her property to Diamond Bar, a Company subsidiary, and asserts, in conclusory fashion, that Lam, former CEO and director Ya Ming Wong, former CFO and director Yuen Ching Ho, and director Umesh Patel sold securities during the period of time when the alleged false and/or misleading statements were made “with knowledge of material non-public information.”

On May 15, 2019, Wilson Samuels (the “Samuels Action”) filed a largely duplicative putative derivative complaint purportedly on behalf of the Company against the same current and former directors and officers named in the Jie Action other than Steven Qiang Liu. That action was filed in the United States District Court for the Central District of California. Samuels repeats the allegations of the Complaint in the Jie Action. Additionally, Samuels claims that, in announcing its change of auditing firms in September 2016, the Company asserted that this change was made because its existing auditor ceased auditing public companies subject to regulation in the United States without disclosing that its new auditing firm was created in a merger of three accounting firms, including a firm whose registration was revoked by the Public Company Accounting Oversight Board. Samuels also claims that the Company redeemed its stock in reliance upon the same purported fraudulent recognition of revenues claimed in the putative class action. Samuels purports to state direct claims under Sections 10(b) and 20 of the Exchange Act and SEC Rule 10b-5.

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With the settlement of the Barney action, it is expected that the stay of the derivative actions will be lifted.

While these derivative actions are purportedly asserted on behalf of the Company, when they are subsequently activated, it is possible that the Company may directly incur attorneys’ fees and costs in advancing the costs of defense for its current directors and officers pursuant to contractual and legal indemnity obligations. Plaintiffs also seek to require corporate governance changes. The Company believes there is no basis to the derivative complaints and they will be vigorously defended if necessary.

Item 1A. Risk Factors

Not Applicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 5. Other Information

Insider Trading Arrangements

During the quarterly period covered by this report, none of the Company’s directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

Item 6. Exhibits

EXHIBIT INDEX

Exhibit No.		Document Description
31.1 †		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 †		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 ‡		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by the Chief Executive Officer
32.2 ‡		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by the Chief Financial Officer

101.INS†		Inline XBRL Instance Document
101.SCH†		Inline XBRL Schema Document
101.CAL†		Inline XBRL Calculation Linkbase Document
101.DEF†		Inline XBRL Definition Linkbase Document
101.LAB†		Inline XBRL Label Linkbase Document
101.PRE†		Inline XBRL Presentation Linkbase Document
104†		Cover Page Interactive Data File (embedded within the Inline XBRL document)

† Filed herewith

‡ Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NOVA LIFESTYLE, INC.
	(Registrant)

Date: August 14, 2024	By:	/s/ Thanh H. Lam
		Thanh H. Lam Chairperson and Chief Executive Officer (Principal Executive Officer)

Date: August 14, 2024		/s/ Jeffery Chuang
		Jeffery Chuang Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, Thanh H. Lam, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2024, 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: August 14, 2024

By:

/s/ Thanh H. Lam

Thanh H. Lam

Chairperson and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffery Chuang, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2024, 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: August 14, 2024

By:

/s/ Jeffery Chuang

Jeffery Chuang

Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Nova Lifestyle, Inc. (the “Company”) for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thanh H. Lam, Chairperson and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2024

By:

/s/ Thanh H. Lam

Thanh H. Lam

Chairperson and Chief Executive Officer

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Nova Lifestyle, Inc. (the “Company”) for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffery Chuang, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2024

By:

/s/ Jeffery Chuang

Jeffery Chuang

Chief Financial Officer (Principal Financial Officer)

Cover - $ / shares	6 Months Ended
Cover - $ / shares	Jun. 30, 2024	Aug. 12, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-36259
Entity Registrant Name	NOVA LIFESTYLE, INC.
Entity Central Index Key	0001473334
Entity Tax Identification Number	90-0746568
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	6565 E. Washington Blvd
Entity Address, City or Town	Commerce
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90040
City Area Code	(323)
Local Phone Number	888-9999
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	NVFY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		3,084,735
Entity Listing, Par Value Per Share	$ 0.001

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current Assets
Cash and cash equivalents	$ 363,409	$ 369,137
Accounts receivable, net	44,469	46,998
Advance to suppliers	50,793	93,740
Inventories	2,134,343	2,213,311
Prepaid expenses	1,088,677	984,934
Other receivables	30,982	41,265
Total Current Assets	3,712,673	3,749,385
Noncurrent Assets
Plant, property and equipment, net	254,098	287,673
Operating lease right-of-use assets, net	1,543,204	1,904,349
Intangible assets, net	5,791	8,473
Lease deposit	69,275	69,992
Goodwill	218,606	218,606
Total Noncurrent Assets	2,090,974	2,489,093
Total Assets	5,803,647	6,238,478
Current Liabilities
Accounts payable	297,764	430,045
Operating lease liability, current	671,988	701,985
Advance from customers	428,736	306,532
Loan from shareholder	369,159
Accrued liabilities and other payables	1,136,631	1,100,661
Income tax payable	1,130,865	1,150,105
Total Current Liabilities	4,035,143	3,689,328
Noncurrent Liabilities
Other Loan	145,779	147,428
Operating lease liability, non-current	931,405	1,262,256
Income tax payable	643,112	643,112
Total Noncurrent Liabilities	1,720,296	2,052,796
Total Liabilities	5,755,439	5,742,124
Contingencies and Commitments
Stockholders’ Equity
Common stock, $0.001 par value; 250,000,000 shares authorized, 2,672,427 and 1,917,706 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	2,672	1,918
Additional paid-in capital	46,062,766	44,402,821
Accumulated other comprehensive income	438,825	521,425
Accumulated deficits	(46,456,055)	(44,429,810)
Total Stockholders’ Equity	48,208	496,354
Total Liabilities and Stockholders’ Equity	$ 5,803,647	$ 6,238,478

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	2,672,427	1,917,706
Common stock, shares outstanding	2,672,427	1,917,706

Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited) - USD ($)

3 Months Ended

6 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Jun. 30, 2024

Jun. 30, 2023

Income Statement [Abstract]

Net Sales

$ 2,688,533

$ 4,462,429

$ 5,064,926

$ 6,336,994

Cost of Sales

1,493,566

3,015,089

2,853,799

4,228,352

Gross Profit

1,194,967

1,447,340

2,211,127

2,108,642

Operating Expenses

Selling expenses

405,212

565,093

964,682

1,279,607

General and administrative expenses

1,287,937

1,250,458

2,481,802

2,380,738

Research and development

(518)

10,026

750,698

10,144

Total Operating Expenses

1,692,631

1,825,577

4,197,182

3,670,489

Loss From Operations

(497,664)

(378,237)

(1,986,055)

(1,561,847)

Other Income (Expenses)

Non-operating income

1,162

16,173

2,743

17,892

Foreign exchange transaction income (loss)

(2,383)

(128,278)

70,649

(133,661)

Interest expense, net

(8,626)

(1,322)

(12,568)

(3,231)

Financial expense

(51,102)

(44,517)

(96,138)

(77,649)

Total Other Expenses, Net

(60,949)

(157,944)

(35,314)

(196,649)

Loss Before Income Taxes

(558,613)

(536,181)

(2,021,369)

(1,758,496)

Income Tax Expense

(4,876)

(2,400)

(4,876)

(2,400)

Net Loss

(563,489)

(538,581)

(2,026,245)

(1,760,896)

Other Comprehensive Loss

Foreign currency translation

(909)

(96,183)

(82,600)

(99,290)

Net Loss and Comprehensive Loss

$ (564,398)

$ (634,764)

$ (2,108,845)

$ (1,860,186)

Weighted average shares outstanding - Basic

^[1]

2,538,792

1,459,655

2,387,653

1,452,303

Weighted average shares outstanding - Diluted

^[1]

2,538,792

1,459,655

2,387,653

1,452,303

Net loss per share of common stock

Basic

$ (0.22)

$ (0.37)

$ (0.85)

$ (1.21)

Diluted

$ (0.22)

$ (0.37)

$ (0.85)

$ (1.21)

[1]	Including 0 shares that were granted and vested but not yet issued for the six and three months ended June 30, 2024 and 2023, respectively.

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022	$ 1,440	$ 43,239,701	$ 77,242		$ 6,611,830
Balance, shares at Dec. 31, 2022	1,423,836
Stock issued to employees		1,770			1,770
Stock issued to employees, shares	600
Stock issued to consultants		32,000			32,000
Stock issued to consultants, shares	10,000
Stock issued to designer	$ 20	58,687			58,707
Stock issued to designer, shares	19,676
Foreign currency translation loss			(99,290)		(99,290)
Net loss					(1,760,896)
Fractional shares due to 1:5 stock split	$ 10				10
Fractional shares due to 1:5 stock split, shares	10,979
Balance at Jun. 30, 2023	$ 1,470	43,332,158	(22,048)	$ (38,467,449)	4,844,131
Balance, shares at Jun. 30, 2023	1,465,090
Balance at Mar. 31, 2023	$ 1,449	43,285,295	74,135	(37,928,868)	5,432,011
Balance, shares at Mar. 31, 2023	1,438,268
Stock issued to employees		885			885
Stock issued to employees, shares	300
Stock issued to consultants		16,000			16,000
Stock issued to consultants, shares	5,000
Stock issued to designer	$ 11	29,978			29,989
Stock issued to designer, shares	10,543
Foreign currency translation loss			(96,183)		(96,183)
Net loss				(538,581)	(538,581)
Fractional shares due to 1:5 stock split	$ 10				10
Fractional shares due to 1:5 stock split, shares	10,979
Balance at Jun. 30, 2023	$ 1,470	43,332,158	(22,048)	(38,467,449)	4,844,131
Balance, shares at Jun. 30, 2023	1,465,090
Balance at Dec. 31, 2023	$ 1,918	44,402,821	521,425		496,354
Balance, shares at Dec. 31, 2023	1,917,706
Stock issued to employees	$ 3	6,447			6,450
Stock issued to employees, shares	3,000
Stock issued to consultants	$ 225	444,024			444,249
Stock issued to consultants, shares	225,000
Stock issued to designer	$ 26	59,974			60,000
Stock issued to designer, shares	26,721
Stock issued to an investor	$ 200	399,800			400,000
Stock issued to an investor, shares	200,000
Foreign currency translation loss			(82,600)		(82,600)
Net loss					(2,026,245)
Acquisition of AI-Calculation Engine	$ 300	749,700			750,000
Acquisition of AI-Calculation Engine, shares	300,000
Balance at Jun. 30, 2024	$ 2,672	46,062,766	438,825	(46,456,055)	48,208
Balance, shares at Jun. 30, 2024	2,672,427
Balance at Mar. 31, 2024	$ 2,346	45,407,744	439,734	(45,892,566)	(42,742)
Balance, shares at Mar. 31, 2024	2,345,179
Stock issued to employees	$ 1	3,224			3,225
Stock issued to employees, shares	1,500
Stock issued to consultants	$ 113	222,010			222,123
Stock issued to consultants, shares	112,500
Stock issued to designer	$ 12	29,988			30,000
Stock issued to designer, shares	13,248
Stock issued to an investor	$ 200	399,800			400,000
Stock issued to an investor, shares	200,000
Foreign currency translation loss			(909)		(909)
Net loss				(563,489)	(563,489)
Balance at Jun. 30, 2024	$ 2,672	$ 46,062,766	$ 438,825	$ (46,456,055)	$ 48,208
Balance, shares at Jun. 30, 2024	2,672,427

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical)	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023
Statement of Stockholders' Equity [Abstract]
Stock split ratio	1:5	1:5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows From Operating Activities
Net loss	$ (2,026,245)	$ (1,760,896)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	29,691	66,812
Amortization of operating lease right-of-use assets	359,086	392,146
Write down of inventories	44,253	108,785
Stock based compensation expense	497,794	93,770
Research and development	750,000
Changes in allowance for expected credit losses	(83)	(196)
Changes in operating assets and liabilities:
Accounts receivable	2,612	(958,457)
Advance to suppliers	42,947	(36,716)
Inventories	34,714	2,420,468
Other current assets	(109,576)	1,165,396
Operating lease liabilities	(358,790)	(389,840)
Accounts payable	(132,281)	261,883
Advance from customers	124,889	20,905
Accrued liabilities and other payables	50,574	132,908
Taxes payable		(87,322)
Net Cash provided by (Used in) Operating Activities	(690,415)	1,429,646
Cash Flows From Investing Activities
Purchase of intangible assets		(2,468,582)
Net Cash Used in Investing Activities		(2,468,582)
Cash Flows From Financing Activities
Proceed from loan from a shareholder	360,000
Proceed from issuing common stocks	400,000
Net Cash Provided by Financing Activities	760,000
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(75,313)	106,867
Net Decrease in Cash and Cash Equivalents	(5,728)	(932,069)
Cash and Cash Equivalents, Beginning of Period	369,137	1,374,167
Cash and Cash Equivalents, Ending of Period	363,409	442,098
Supplemental Disclosure of Cash Flow Information
Income tax payments	4,800	202,288
Interest expense	$ 9,368	$ 3,400

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (563,489)	$ (538,581)	$ (2,026,245)	$ (1,760,896)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Organization and Description of Business

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

Note 1 - Organization and Description of Business

Organization and Business

Nova LifeStyle, Inc. (“Nova LifeStyle” or the “Company”), formerly known as Stevens Resources, Inc., was incorporated in the State of Nevada on September 9, 2009.

The “Company” and “Nova” collectively refer to Nova LifeStyle, the U.S. parent, and its subsidiaries, Nova Furniture, Nova Samoa, Diamond Bar, i Design, Nova HK and Nova Malaysia.

Going Concern

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

Reverse split

Amendments to Articles of Incorporation

Use of Estimates

Business Combination

Goodwill

Intangible Assets

Cash and Cash Equivalents

Accounts Receivable

Accounts receivable consisted of the following as of the date indicated:

Schedule of Allowance for Credit Losses

	June 30, 2024			December 31, 2023

Accounts receivable	$	44,918		$	47,530
Less: allowance for credit losses		(449	)		(532	)
Total accounts receivable, net	$	44,469		$	46,998

Advances to Suppliers

Inventories

Plant, Property and Equipment

Computer and office equipment	5 - 10 years
Decoration and renovation	5 - 10 years

Impairment of Long-Lived Assets

Research and Development

Income Taxes

A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2024 and 2023, is as follows:

Schedule of Unrecognized Tax Benefits

		Gross UTB
		2024		2023

Balance – January 1 and June 30	$	-	$	-

Nova Lifestyle and Diamond Bar are subject to U.S. federal and state income taxes and tax years 2020-2023 remain open to examination by tax authorities in the U.S.

Revenue Recognition

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.

Cost of Sales

Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers and write-downs of inventory.

Shipping and Handling Costs

Advertising

Share-based Compensation

Earnings per Share (EPS)

The following table presents a reconciliation of basic and diluted loss per share for the six and three months ended June 30, 2024 and 2023:


	Six Months Ended June 30,						Three Months Ended June 30,
	2024			2023			2024			2023

Net loss	$	(2,026,245	)	$	(1,760,896	)		(563,489	)		(538,581	)

Weighted average shares outstanding – Basic and Diluted *		2,387,653			1,452,303			2,538,792			1,459,655

Net loss per share of common stock
Basic and Diluted	$	(0.85	)	$	(1.21	)		(0.22	)		(0.37	)

*	Including 0 shares that were granted and vested but not yet issued for the six and three months ended June 30, 2024 and 2023, respectively.

Concentration of Credit Risk

Schedule of Concentration Credit Risk

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		2	%		19	%
B		-	%		B		-	%		30	%
C		-	%		C		-	%		-	%
D		-	%		D		-	%			%

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		1	%		-	%
B		1	%		B		1	%		-	%
C		31	%		C		45	%		77	%
D		-	%		D		-	%		16	%

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024		As of June 30. 2024
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		12	%		A		20	%	$	26,402		-
B		6	%		B		5	%		-		-
C		7	%		C		8	%		-		-

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023		As of June 30. 2023
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		14	%		A		7	%	$	45,859		-
B		22	%		B		27	%	$	141,849		-
C		9	%		C		12	%		-		-

Fair Value of Financial Instruments

●	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●	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.

Foreign Currency Translation and Transactions

Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:

Schedule of Exchange Rates

Balance sheet items, except for equity accounts
June 30, 2024		RM 4.72 to 1
December 31, 2023		RM 4.59 to 1

Income Statement and cash flow items
For the six months ended June 30, 2024		RM 4.73 to 1
For the six months ended June 30, 2023		RM 4.46 to 1

Segment Reporting

All of the Company’s long-lived assets are mainly property, plant and equipment located in the United States and Malaysia and are utilized for administrative purposes.

Leases

The Company recognized no impairment of ROU assets as of June 30, 2024 and December 31, 2023.

Reclassification

Certain prior period accounts have been reclassified in conformity with current period’s presentation.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

Recently Issued But Not Yet Adopted Accounting Pronouncements

Inventories

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

Inventories

Note 3 - Inventories

The inventories as of June 30, 2024 and December 31, 2023 totaled $2,134,343 and $2,213,311, respectively, and consisted entirely of finished goods.

Inventories are stated at the lower of cost and net realizable value, with cost determined on a weighted-average basis. Write-down of potential obsolete or slow moving inventories is recorded based on management’s assumptions about future demands and market conditions. For the six months ended June 30, 2024 and 2023, the Company wrote-down $44,253 and $108,785 of slow-moving inventory, respectively; and $5,271 and $23,113 of slow-moving inventory for the three months ended June 30, 2024 and 2023, respectively. The inventory write-down is included in “Cost of Sales” in the unaudited condensed consolidated statements of loss and comprehensive loss.

Plant, Property and Equipment, Net

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Plant, Property and Equipment, Net

Note 4 - Plant, Property and Equipment, Net

As of June 30, 2024 and December 31, 2023, plant, property and equipment consisted of the following:

	June 30, 2024			December 31, 2023
Computer and office equipment	$	253,769		$	255,352
Decoration and renovation		369,334			378,237
Property plant and equipment gross		623,103			633,589
Less: accumulated depreciation		(369,005	)		(345,916	)
Property plant and equipment net	$	254,098		$	287,673

Depreciation expense was $27,009 and $36,258 for the six months ended June 30, 2024 and 2023, respectively; and $13,493 and $17,840 for the three months ended June 30, 2024 and 2023, respectively.

For six months ended June 30, 2024 and 2023, the Company disposed of $0 of office equipment and decoration and renovation, respectively.

Intangible Assets

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 5 – Intangible Assets

As of June 30, 2024 and December 31, 2023, intangible assets consisted of the following:

Schedule of Intangible Assets

	June 30, 2024			December 31, 2023
Accounting software	$	26,800		$	26,800
Less: accumulated amortization		(21,009	)		(18,327	)
Intangible assets, net	$	5,791		$	8,473

Amortization expense was $2,682 and $30,553 for the six months ended June 30, 2024 and 2023, respectively and $1,341 and $29,212 for the three months ended June 30, 2024 and 2023, respectively.

Advances to Suppliers

6 Months Ended

Jun. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Advances to Suppliers

Note 6 – Advances to Suppliers

Prepaid Expenses and Other Receivables

6 Months Ended

Jun. 30, 2024

Prepaid Expenses And Other Receivables

Prepaid Expenses and Other Receivables

Note 7 – Prepaid Expenses and Other Receivables

Prepaid expenses and other receivables consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Prepaid expenses	$	1,088,677	$	984,934
Other receivables		30,982		41,265
	$	1,119,659	$	1,026,199

Accrued Liabilities and Other Payables

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Accrued Liabilities and Other Payables

Note 8 – Accrued Liabilities and Other Payables

Accrued liabilities and other payables consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Other payables	$	756,514	$	139,722
Salary payable		6,804		7,511
Marketing		20,000		-
Financed insurance premiums		198,999		69,337
Auditing fee		-		125,000
Warranty liability		25,283		27,545
Accrued commission		75,989		58,669
Accrued expenses, others		53,042		672,877
	$	1,136,631	$	1,100,661

Other Loans

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Other Loans

Note 9 – Other Loans

Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions

Note 10 – Related Party Transactions

Stockholders’ Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Stockholders’ Equity

Note 11 – Stockholders’ Equity

The Company intends to fully comply with the exception granted by the Staff and to regain the compliance on or before October 14, 2024.

Shares and Warrants issued through Private Placement

Warrants

The following is a summary of the warrant activity for the six months ended June 30, 2024:

Summary of Warrant Activity

	Number of Warrants		Average Exercise Price		Weighted Average Remaining Contractual Term in Years

Outstanding at January 1, 2024		245,192	$	17.50		3.02
Exercisable at January 1, 2024		245,192	$	17.50		3.02
Granted		-		-		-
Exercised / surrendered		-		-		-
Expired		-		-		-
Outstanding at June 30, 2024		245,192	$	17.50		2.52
Exercisable at June 30, 2024		245,192	$	17.50		2.52

Shares Issued to Consultants

Shares and Options Issued to Independent Directors

Shares Issued to Employees

Options Issued to Employees

As of June 30, 2024, unrecognized share-based compensation expense was $227,102.

Stock option activity under the Company’s stock-based compensation plans is shown below:

Schedule of Stock Option Activity

	Number of Shares		Average Exercise Price per Share		Weighted Average Remaining Contractual Term in Years

Outstanding at January 1, 2024		13,400	$	14.55		0.82
Exercisable at January 1, 2024		13,400		14.55		0.82

Granted		-		-		-
Exercised		-		-		-
Forfeited		-		-		-
Outstanding at June 30, 2024		13,400		14.55		0.32
Exercisable at June 30, 2024		13,400		14.55		0.32

(1)

Geographical Analysis

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Geographical Analysis

Note 12 – Geographical Analysis

Geographical distribution of sales consisted of the following for the six and three months ended June 30, 2024 and 2023:

Schedule of Revenue by Geographic Areas

	2024		2023		2024		2023
	Six Months Ended June 30,				Three Months ended June 30,
	2024		2023		2024		2023
Geographical Areas
North America	$	4,957,058	$	4,192,106	$	2,631,328	$	2,435,441
Asia		-		1,993,671		-		1,993,671
Other countries		107,868		151,217		57,205		33,317
Revenues	$	5,064,926	$	6,336,994	$	2,688,533	$	4,462,429

Geographical location of identifiable long-lived assets as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Geographical Areas
North America	$	1,601,636	$	1,873,623
Asia		264,942		318,398
Total	$	1,866,578	$	2,192,021

Lease

6 Months Ended

Jun. 30, 2024

Lease

Lease

Note 13 – Lease

Operating lease expense for the six months ended June 30, 2024 and 2023 was as follows:

Schedule of Lease Cost

Six Months Ended June 30,

Three Months Ended June 30,

2024

2023

2024

2023

Operating lease cost – straight line

388,830

438,981

194,389

219,296

The following is a schedule, by years, of maturities of operating lease liabilities as of June 30, 2024:

	Operating Leases
2024	$	364,617
2025		701,142
2026		598,820
Thereafter		0
Total undiscounted cash flows		1,664,579
Less: imputed interest		(61,186	)
Present value of lease liabilities		1,603,393

Lease Term and Discount Rate

	June 30, 2024
Weighted-average remaining lease term – years
Operating leases – USA		2.34
Operating leases – Malaysia		0.23

Weighted-average discount rate (%)
Operating leases – USA		3.36	%
Operating leases – Malaysia		4.74	%

Supplemental cash flow information related to leases where the Company was the lessee for the six months ended June 30, 2024 and 2023 was as follows:

	2024		2023

Operating cash outflows from operating leases	$	388,555	$	428,818

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 14 – Commitments and Contingencies

Legal Proceedings

That action was resolved by a January 30, 2024 Order of the Court certifying a settlement class and approving a class settlement.

With the resolution of the Barney action, settlement of the action, the stay of the derivative actions will be lifted.

Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Note 15 – Subsequent Events

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Reverse split

Reverse split

Amendments to Articles of Incorporation

Amendments to Articles of Incorporation

Use of Estimates

Use of Estimates

Business Combination

Business Combination

Goodwill

Goodwill

Intangible Assets

Intangible Assets

Cash and Cash Equivalents

Cash and Cash Equivalents

Accounts Receivable

Accounts Receivable

Accounts receivable consisted of the following as of the date indicated:

Schedule of Allowance for Credit Losses

	June 30, 2024			December 31, 2023

Accounts receivable	$	44,918		$	47,530
Less: allowance for credit losses		(449	)		(532	)
Total accounts receivable, net	$	44,469		$	46,998

Advances to Suppliers

Advances to Suppliers

Inventories

Inventories

Plant, Property and Equipment

Plant, Property and Equipment

Computer and office equipment	5 - 10 years
Decoration and renovation	5 - 10 years

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Research and Development

Research and Development

Income Taxes

Income Taxes

A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2024 and 2023, is as follows:

Schedule of Unrecognized Tax Benefits

		Gross UTB
		2024		2023

Balance – January 1 and June 30	$	-	$	-

Nova Lifestyle and Diamond Bar are subject to U.S. federal and state income taxes and tax years 2020-2023 remain open to examination by tax authorities in the U.S.

Revenue Recognition

Revenue Recognition

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.

Cost of Sales

Cost of Sales

Cost of sales consists primarily of costs of finished goods purchased from third-party manufacturers and write-downs of inventory.

Shipping and Handling Costs

Shipping and Handling Costs

Advertising

Advertising

Share-based Compensation

Share-based Compensation

Earnings per Share (EPS)

Earnings per Share (EPS)

The following table presents a reconciliation of basic and diluted loss per share for the six and three months ended June 30, 2024 and 2023:


	Six Months Ended June 30,						Three Months Ended June 30,
	2024			2023			2024			2023

Net loss	$	(2,026,245	)	$	(1,760,896	)		(563,489	)		(538,581	)

Weighted average shares outstanding – Basic and Diluted *		2,387,653			1,452,303			2,538,792			1,459,655

Net loss per share of common stock
Basic and Diluted	$	(0.85	)	$	(1.21	)		(0.22	)		(0.37	)

*	Including 0 shares that were granted and vested but not yet issued for the six and three months ended June 30, 2024 and 2023, respectively.

Concentration of Credit Risk

Concentration of Credit Risk

Schedule of Concentration Credit Risk

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		2	%		19	%
B		-	%		B		-	%		30	%
C		-	%		C		-	%		-	%
D		-	%		D		-	%			%

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		1	%		-	%
B		1	%		B		1	%		-	%
C		31	%		C		45	%		77	%
D		-	%		D		-	%		16	%

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024		As of June 30. 2024
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		12	%		A		20	%	$	26,402		-
B		6	%		B		5	%		-		-
C		7	%		C		8	%		-		-

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023		As of June 30. 2023
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		14	%		A		7	%	$	45,859		-
B		22	%		B		27	%	$	141,849		-
C		9	%		C		12	%		-		-

Fair Value of Financial Instruments

Fair Value of Financial Instruments

●	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●	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.

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:

Schedule of Exchange Rates

Balance sheet items, except for equity accounts
June 30, 2024		RM 4.72 to 1
December 31, 2023		RM 4.59 to 1

Income Statement and cash flow items
For the six months ended June 30, 2024		RM 4.73 to 1
For the six months ended June 30, 2023		RM 4.46 to 1

Segment Reporting

Segment Reporting

All of the Company’s long-lived assets are mainly property, plant and equipment located in the United States and Malaysia and are utilized for administrative purposes.

Leases

Leases

The Company recognized no impairment of ROU assets as of June 30, 2024 and December 31, 2023.

Reclassification

Reclassification

Certain prior period accounts have been reclassified in conformity with current period’s presentation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

Recently Issued But Not Yet Adopted Accounting Pronouncements

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of Allowance for Credit Losses

Accounts receivable consisted of the following as of the date indicated:

Schedule of Allowance for Credit Losses

	June 30, 2024			December 31, 2023

Accounts receivable	$	44,918		$	47,530
Less: allowance for credit losses		(449	)		(532	)
Total accounts receivable, net	$	44,469		$	46,998

Schedule of Plant, Property and Equipment Estimated Lives Under Straight - line Method

Computer and office equipment	5 - 10 years
Decoration and renovation	5 - 10 years

Schedule of Unrecognized Tax Benefits

A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the six months ended June 30, 2024 and 2023, is as follows:

Schedule of Unrecognized Tax Benefits

		Gross UTB
		2024		2023

Balance – January 1 and June 30	$	-	$	-

Schedule of Reconciliations of Basic and Diluted Loss Per Share

The following table presents a reconciliation of basic and diluted loss per share for the six and three months ended June 30, 2024 and 2023:


	Six Months Ended June 30,						Three Months Ended June 30,
	2024			2023			2024			2023

Net loss	$	(2,026,245	)	$	(1,760,896	)		(563,489	)		(538,581	)

Weighted average shares outstanding – Basic and Diluted *		2,387,653			1,452,303			2,538,792			1,459,655

Net loss per share of common stock
Basic and Diluted	$	(0.85	)	$	(1.21	)		(0.22	)		(0.37	)

*	Including 0 shares that were granted and vested but not yet issued for the six and three months ended June 30, 2024 and 2023, respectively.

Schedule of Concentration Credit Risk

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		2	%		19	%
B		-	%		B		-	%		30	%
C		-	%		C		-	%		-	%
D		-	%		D		-	%			%

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023
Customer	Percentage of Total Sales			Customer		Percentage of Total Sales			Percentage of accounts receivable
A		2	%		A		1	%		-	%
B		1	%		B		1	%		-	%
C		31	%		C		45	%		77	%
D		-	%		D		-	%		16	%

Six Months Ended June 30, 2024				Three Months Ended June 30, 2024					As of June 30, 2024		As of June 30. 2024
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		12	%		A		20	%	$	26,402		-
B		6	%		B		5	%		-		-
C		7	%		C		8	%		-		-

Six Months Ended June 30, 2023				Three Months Ended June 30, 2023					As of June 30, 2023		As of June 30. 2023
Supplier	Percentage of Total Purchases			Supplier		Percentage of Total Purchases			Balance of Accounts Payable		Balance of Advance to Supplier
A		14	%		A		7	%	$	45,859		-
B		22	%		B		27	%	$	141,849		-
C		9	%		C		12	%		-		-

Schedule of Exchange Rates

Translation of amounts from RM into U.S. dollars has been made at the following exchange rates:

Schedule of Exchange Rates

Balance sheet items, except for equity accounts
June 30, 2024		RM 4.72 to 1
December 31, 2023		RM 4.59 to 1

Income Statement and cash flow items
For the six months ended June 30, 2024		RM 4.73 to 1
For the six months ended June 30, 2023		RM 4.46 to 1

Plant, Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of Plant, Property and Equipment

As of June 30, 2024 and December 31, 2023, plant, property and equipment consisted of the following:

	June 30, 2024			December 31, 2023
Computer and office equipment	$	253,769		$	255,352
Decoration and renovation		369,334			378,237
Property plant and equipment gross		623,103			633,589
Less: accumulated depreciation		(369,005	)		(345,916	)
Property plant and equipment net	$	254,098		$	287,673

Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

As of June 30, 2024 and December 31, 2023, intangible assets consisted of the following:

Schedule of Intangible Assets

	June 30, 2024			December 31, 2023
Accounting software	$	26,800		$	26,800
Less: accumulated amortization		(21,009	)		(18,327	)
Intangible assets, net	$	5,791		$	8,473

Prepaid Expenses and Other Receivables (Tables)

6 Months Ended

Jun. 30, 2024

Prepaid Expenses And Other Receivables

Schedule of Prepaid Expenses and Other Receivables

Prepaid expenses and other receivables consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Prepaid expenses	$	1,088,677	$	984,934
Other receivables		30,982		41,265
	$	1,119,659	$	1,026,199

Accrued Liabilities and Other Payables (Tables)

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities and Other Payables

Accrued liabilities and other payables consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023

Other payables	$	756,514	$	139,722
Salary payable		6,804		7,511
Marketing		20,000		-
Financed insurance premiums		198,999		69,337
Auditing fee		-		125,000
Warranty liability		25,283		27,545
Accrued commission		75,989		58,669
Accrued expenses, others		53,042		672,877
	$	1,136,631	$	1,100,661

Stockholders’ Equity (Tables)

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Summary of Warrant Activity

The following is a summary of the warrant activity for the six months ended June 30, 2024:

Summary of Warrant Activity

	Number of Warrants		Average Exercise Price		Weighted Average Remaining Contractual Term in Years

Outstanding at January 1, 2024		245,192	$	17.50		3.02
Exercisable at January 1, 2024		245,192	$	17.50		3.02
Granted		-		-		-
Exercised / surrendered		-		-		-
Expired		-		-		-
Outstanding at June 30, 2024		245,192	$	17.50		2.52
Exercisable at June 30, 2024		245,192	$	17.50		2.52

Schedule of Stock Option Activity

Stock option activity under the Company’s stock-based compensation plans is shown below:

Schedule of Stock Option Activity

	Number of Shares		Average Exercise Price per Share		Weighted Average Remaining Contractual Term in Years

Outstanding at January 1, 2024		13,400	$	14.55		0.82
Exercisable at January 1, 2024		13,400		14.55		0.82

Granted		-		-		-
Exercised		-		-		-
Forfeited		-		-		-
Outstanding at June 30, 2024		13,400		14.55		0.32
Exercisable at June 30, 2024		13,400		14.55		0.32

(1)

Geographical Analysis (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of Revenue by Geographic Areas

Geographical distribution of sales consisted of the following for the six and three months ended June 30, 2024 and 2023:

Schedule of Revenue by Geographic Areas

	2024		2023		2024		2023
	Six Months Ended June 30,				Three Months ended June 30,
	2024		2023		2024		2023
Geographical Areas
North America	$	4,957,058	$	4,192,106	$	2,631,328	$	2,435,441
Asia		-		1,993,671		-		1,993,671
Other countries		107,868		151,217		57,205		33,317
Revenues	$	5,064,926	$	6,336,994	$	2,688,533	$	4,462,429

Schedule of Long-lived Assets by Geographic Areas

Geographical location of identifiable long-lived assets as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Geographical Areas
North America	$	1,601,636	$	1,873,623
Asia		264,942		318,398
Total	$	1,866,578	$	2,192,021

Lease (Tables)

6 Months Ended

Jun. 30, 2024

Lease

Schedule of Lease Cost

Operating lease expense for the six months ended June 30, 2024 and 2023 was as follows:

Schedule of Lease Cost

Six Months Ended June 30,

Three Months Ended June 30,

2024

2023

2024

2023

Operating lease cost – straight line

388,830

438,981

194,389

219,296

Schedule of Operating Lease Liability Maturity

The following is a schedule, by years, of maturities of operating lease liabilities as of June 30, 2024:

	Operating Leases
2024	$	364,617
2025		701,142
2026		598,820
Thereafter		0
Total undiscounted cash flows		1,664,579
Less: imputed interest		(61,186	)
Present value of lease liabilities		1,603,393

Schedule of Lease Term and Discount Rate

	June 30, 2024
Weighted-average remaining lease term – years
Operating leases – USA		2.34
Operating leases – Malaysia		0.23

Weighted-average discount rate (%)
Operating leases – USA		3.36	%
Operating leases – Malaysia		4.74	%

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases where the Company was the lessee for the six months ended June 30, 2024 and 2023 was as follows:

	2024		2023

Operating cash outflows from operating leases	$	388,555	$	428,818

Organization and Description of Business (Details Narrative) - USD ($)				3 Months Ended		6 Months Ended
	Nov. 05, 2020	Jan. 07, 2020	Dec. 12, 2019	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Net loss				$ 560,000	$ 540,000	$ 2,030,000.00	$ 1,760,000
Accumulated deficit				46,456,055		46,456,055		$ 44,429,810
Cash				$ 363,409		$ 363,409		$ 369,137
Formal Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cash consideration amount		$ 2,500,000
Nova Living (M) SDN. BHD [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payments to acquire businesses gross			$ 1.00
Nova HK [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payments to acquire businesses gross	$ 1,290

Schedule of Allowance for Credit Losses (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Accounts receivable	$ 44,918	$ 47,530
Less: allowance for credit losses	(449)	(532)
Total accounts receivable, net	$ 44,469	$ 46,998

Schedule of Plant, Property and Equipment Estimated Lives Under Straight - line Method (Details)	Jun. 30, 2024
Minimum [Member] \| Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years
Minimum [Member] \| Decoration and Renovation [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years
Maximum [Member] \| Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	10 years
Maximum [Member] \| Decoration and Renovation [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	10 years

Schedule of Unrecognized Tax Benefits (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023
Accounting Policies [Abstract]
Balance

Schedule of Reconciliations of Basic and Diluted Loss Per Share (Details) - USD ($)

3 Months Ended

6 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Jun. 30, 2024

Jun. 30, 2023

Accounting Policies [Abstract]

Net loss

$ (563,489)

$ (538,581)

$ (2,026,245)

$ (1,760,896)

Weighetd average shares outstanding - basic

^[1]

2,538,792

1,459,655

2,387,653

1,452,303

Weighetd average shares outstanding - diluted

^[1]

2,538,792

1,459,655

2,387,653

1,452,303

Net loss per share of common stock - basic

$ (0.22)

$ (0.37)

$ (0.85)

$ (1.21)

Net loss per share of common stock - diluted

$ (0.22)

$ (0.37)

$ (0.85)

$ (1.21)

[1]	Including 0 shares that were granted and vested but not yet issued for the six and three months ended June 30, 2024 and 2023, respectively.

Schedule of Reconciliations of Basic and Diluted Loss Per Share (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2024 shares
Accounting Policies [Abstract]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Number of Shares, Period Increase (Decrease)	0

Schedule of Concentration Credit Risk (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer A [Member]
Product Information [Line Items]
Concentration risk percentage	2.00%	1.00%	2.00%	2.00%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer B [Member]
Product Information [Line Items]
Concentration risk percentage		1.00%		1.00%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer C [Member]
Product Information [Line Items]
Concentration risk percentage		45.00%		31.00%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer D [Member]
Product Information [Line Items]
Concentration risk percentage
Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| Customer A [Member]
Product Information [Line Items]
Concentration risk percentage			19.00%
Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| Customer B [Member]
Product Information [Line Items]
Concentration risk percentage			30.00%
Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| Customer C [Member]
Product Information [Line Items]
Concentration risk percentage				77.00%
Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| Customer D [Member]
Product Information [Line Items]
Concentration risk percentage				16.00%
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Advances made to suppliers	$ 0	$ 0	$ 0	$ 0
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Supplier A [Member]
Product Information [Line Items]
Concentration risk percentage	20.00%	7.00%	12.00%	14.00%
Accounts payable	$ 26,402	$ 45,859	$ 26,402	$ 45,859
Advances made to suppliers
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Supplier B [Member]
Product Information [Line Items]
Concentration risk percentage	5.00%	27.00%	6.00%	22.00%
Accounts payable		$ 141,849		$ 141,849
Advances made to suppliers
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Supplier C [Member]
Product Information [Line Items]
Concentration risk percentage	8.00%	12.00%	7.00%	9.00%
Accounts payable
Advances made to suppliers

Schedule of Exchange Rates (Details) - MYR [Member] - Balance Sheet Items [Member]	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Minimum [Member]
Property, Plant and Equipment [Line Items]
Exchange rates at period end	4.72		4.59
Exchange rates	4.73	4.46
Maximum [Member]
Property, Plant and Equipment [Line Items]
Exchange rates at period end	1		1
Exchange rates	1	1

Summary of Significant Accounting Policies (Details Narrative)			3 Months Ended		6 Months Ended		12 Months Ended
	May 22, 2023 $ / shares	Feb. 28, 2023 USD ($)	Jun. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) shares	Dec. 31, 2023 USD ($) Segment $ / shares shares	Dec. 22, 2017	Sep. 05, 2023 $ / shares shares	Sep. 04, 2023 shares
Product Information [Line Items]
Reverse stock split	1-for-5
Common stock, par value \| $ / shares	$ 0.001		$ 0.001		$ 0.001		$ 0.001		$ 0.001
Common stock, shares authorized \| shares			250,000,000		250,000,000		250,000,000		250,000,000	3,000,000
Cash FDIC insured amount			$ 250,000		$ 250,000
Cash balances held in banks			0		0		$ 0
Provision for loan lease and other losses			(924)	$ 65	83	$ (196)
Inventory write down					44,253	108,785
Impairment of long-lived assets					0		0
Income Tax Expense (Benefit)			4,876	2,400	$ 4,876	2,400
Effective income tax rate					21.00%			35.00%
Accumulated undistributed earnings			25,200,000		$ 25,200,000		25,400,000
Unrecognized tax benefits
Unrecognized tax benefits affect the effective tax rate			0	0	0	0
Income tax penalties and interest accrued			0		0		0
Income tax penalties and interest			0	0	0	0
Inventory net			2,134,343		$ 2,134,343		$ 2,213,311
Number of reportable segment \| Segment							1
Accounts Receivable [Member] \| Customer One [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage					19.00%		77.00%
Accounts Receivable [Member] \| Customer Two [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage					30.00%		16.00%
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Advances to suppliers			0	0	$ 0	0
Cost of Goods and Service Benchmark [Member] \| Major Vendor [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Accounts payable			$ 26,402	$ 187,708	$ 26,402	$ 187,708
Restricted Stock [Member]
Product Information [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount \| shares			1,500	300	1,500	300
Share-Based Payment Arrangement, Option [Member]
Product Information [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount \| shares			13,400	26,800	13,400	26,800
Warrant [Member]
Product Information [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount \| shares			245,192	245,192	245,192	245,192
Shopants Sdn Bhd [Member]
Product Information [Line Items]
Inventory net		$ 1,540,000
Cash consideration		$ 2,000,000.00
MALAYSIA \| Foreign Tax Jurisdiction [Member]
Product Information [Line Items]
Effective income tax rate					24.00%
Continuing Operations [Member]
Product Information [Line Items]
Inventory write down			$ 5,271	$ 23,113	$ 44,253	$ 108,785
Research and development expense			518	10,026	750,000	10,144
Shipping and handling cost credits			859	194	1,515	555
Advertising expense			$ 30,414	$ 207,890	$ 255,875	$ 619,465
Continuing Operations [Member] \| Revenue Benchmark [Member] \| No Customer [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage			10.00%		10.00%
Continuing Operations [Member] \| Revenue Benchmark [Member] \| One Customer [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage				45.00%		31.00%
Continuing Operations [Member] \| Cost of Goods and Service Benchmark [Member] \| One Major Vendors [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage			20.00%		12.00%
Continuing Operations [Member] \| Cost of Goods and Service Benchmark [Member] \| Two Major Vendors [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage				39.00%		36.00%
Continuing Operations [Member] \| Cost of Goods and Service Benchmark [Member] \| Vendor One [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage				27.00%		22.00%
Continuing Operations [Member] \| Cost of Goods and Service Benchmark [Member] \| Vendor Two [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Concentration risk percentage				12.00%		14.00%

Inventories (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Inventories (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Inventory net	$ 2,134,343		$ 2,134,343		$ 2,213,311
Inventory Write-down			44,253	$ 108,785
Continuing Operations [Member]
Inventory Write-down	$ 5,271	$ 23,113	$ 44,253	$ 108,785

Schedule of Plant, Property and Equipment (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 623,103	$ 633,589
Less: accumulated depreciation	(369,005)	(345,916)
Property plant and equipment net	254,098	287,673
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	253,769	255,352
Decoration and Renovation [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 369,334	$ 378,237

Plant, Property and Equipment, Net (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Depreciation	$ 13,493	$ 17,840	$ 27,009	$ 36,258
Property plant and equipment gross	623,103		623,103		$ 633,589
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 0	$ 0	$ 0	$ 0

Schedule of Intangible Assets (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Accounting software	$ 26,800	$ 26,800
Less: accumulated amortization	(21,009)	(18,327)
Intangible assets, net	$ 5,791	$ 8,473

Intangible Assets (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Intangible Assets (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 1,341	$ 29,212	$ 2,682	$ 30,553

Advances to Suppliers (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
Advances to Suppliers (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Advance to suppliers	$ 50,793	$ 93,740
Impairment charges	$ 0	$ 0

Schedule of Prepaid Expenses and Other Receivables (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Prepaid Expenses And Other Receivables
Prepaid expenses	$ 1,088,677	$ 984,934
Other receivables	30,982	41,265
Prepaid expenses and other receivables	$ 1,119,659	$ 1,026,199

Schedule of Accrued Liabilities and Other Payables (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Other payables	$ 756,514	$ 139,722
Salary payable	6,804	7,511
Marketing	20,000
Financed insurance premiums	198,999	69,337
Auditing fee		125,000
Warranty liability	25,283	27,545
Accrued commission	75,989	58,669
Accrued expenses, others	53,042	672,877
Total accrued liabilities and other payable	$ 1,136,631	$ 1,100,661

Other Loans (Details Narrative) - SBA Loan [Member] - USD ($)		3 Months Ended		6 Months Ended
	Jun. 19, 2020	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Short-Term Debt [Line Items]
Proceeds from loans	$ 150,000
Maturity date	Jun. 19, 2050
Interest rate percentage	3.75%
Debt instrument, payment terms	payable monthly beginning 12 months from the date of the promissory note
Accumulated interest		$ 1,365	$ 2,193	$ 2,737	$ 4,386

Related Party Transactions (Details Narrative) - USD ($)							3 Months Ended		6 Months Ended
	Apr. 11, 2024	Apr. 10, 2024	Feb. 29, 2024	Jan. 04, 2020	Jan. 04, 2018	Sep. 30, 2011	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Promissory Loan [Member]
Proceeds from loans	$ 160,000		$ 200,000
Interest rate	8.50%		8.50%
Accumulated interest							$ 4,278		$ 6,141
Promissory Loan One [Member]
Accumulated interest							3,018	$ 3,018	3,018	$ 3,018
Sales Representative Agreement [Member]
Consulting agreement term				2 years	2 years
Payments for commissions							87,316	86,381	153,043	151,911
Diamond Bar Outdoors, Inc [Member]
Related party transaction description of transaction						Diamond Bar leased a showroom in High Point, North Carolina from the Company’s President who is currently also the Chief Executive Officer and Chairperson of the Board
Lessee operating lease renewal term		1 year
Lease cost		$ 41,000
Payments for rent							$ 10,250	$ 8,640	$ 18,890	$ 17,280

Summary of Warrant Activity (Details) - Warrant [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of warrants outstanding, beginning	245,192
Warrants average exercise price, beginning	$ 17.50
Weighted average remaining contractual term, Ending balance	2 years 6 months 7 days	3 years 7 days
Number of warrants, exercisable, beginning	245,192
Warrants average exercise price, exercisable, beginning	$ 17.50
Weighted average remaining contractual term, Exercisable	2 years 6 months 7 days	3 years 7 days
Number of warrants, granted
Warrants average exercise price, granted
Number of warrants, exercised/ surrendered
Warrants average exercise price, exercised/ surrendered
Number of warrants, expired
Warrants average exercise price, expired
Number of warrants outstanding, ending	245,192	245,192
Warrants average exercise price, ending	$ 17.50	$ 17.50
Number of warrants, exercisable, ending	245,192	245,192
Weighted average exercise price of warrant exercisable	$ 17.50	$ 17.50

Schedule of Stock Option Activity (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Equity [Abstract]
Number of Options, outstanding at Beginning	13,400
Weighted Average Exercise Price per share, outstanding	$ 14.55
Weighted Average Exercise Price per share, outstanding	3 months 25 days	9 months 25 days
Number of Options, Exercisable Outstanding at beginning	13,400
Weighted average exercise price per share, exercisable	$ 14.55
Weighted Average Remaining Contractual Term, Exercisable, Ending	3 months 25 days	9 months 25 days
Number of Options, Granted
Weighted average exercise price per share, granted
Number of Options, Exercised
Weighted average exercise price per share, exercised
Number of Options, Forfeited
Weighted average exercise price per share,forfeited
Number of Options, outstanding at ending	13,400	13,400
Weighted Average Exercise Price per share, outstanding	$ 14.55	$ 14.55
Number of Options, Exercisable Outstanding at Ending	13,400	13,400
Weighted average exercise price per share, exercisable ,ending	$ 14.55	$ 14.55

Schedule of Stock Option Activity (Details) (Parenthetical) - USD ($)	6 Months Ended
	Jun. 28, 2024	Jun. 30, 2024
Equity [Abstract]
Intrinsic value of stock options market value	$ 1.63
Stock options exercisable intrinsic value		$ 0

Stockholders’ Equity (Details Narrative)																																																				3 Months Ended		6 Months Ended
Stockholders’ Equity (Details Narrative)	Dec. 01, 2024	Nov. 15, 2024	Sep. 30, 2024	Sep. 01, 2024	Aug. 15, 2024	Jun. 30, 2024 USD ($)	Jun. 01, 2024	May 16, 2024 USD ($) $ / shares shares	May 15, 2024	Apr. 18, 2024	Apr. 03, 2024	Mar. 31, 2024	Mar. 01, 2024 USD ($) $ / shares shares	Feb. 15, 2024	Jan. 28, 2024 USD ($)	Jan. 23, 2024 USD ($) $ / shares shares	Jan. 23, 2024 MYR (RM) shares	Jan. 03, 2024	Nov. 16, 2023 USD ($) $ / shares shares	Nov. 16, 2023 MYR (RM) shares	Nov. 15, 2023	Nov. 09, 2023 USD ($) $ / shares shares	Oct. 03, 2023	Sep. 30, 2023	Aug. 15, 2023	Jul. 03, 2023 USD ($) $ / shares shares	Jun. 30, 2023	May 15, 2023	Apr. 01, 2023	Mar. 31, 2023	Feb. 15, 2023	Jan. 28, 2023 USD ($)	Jan. 01, 2023	Nov. 16, 2022 USD ($) $ / shares shares	Nov. 11, 2022 USD ($) $ / shares shares	Oct. 01, 2022	Jul. 01, 2022 USD ($) $ / shares shares	Jan. 28, 2022 USD ($)	Jul. 23, 2021 USD ($) $ / shares shares	Aug. 31, 2020	May 31, 2020	Feb. 28, 2020	Nov. 30, 2019	Nov. 04, 2019 USD ($) $ / shares shares	Aug. 31, 2019	Aug. 12, 2019 USD ($) $ / shares shares	May 31, 2019	Feb. 28, 2019	Nov. 30, 2018	Nov. 07, 2018 USD ($) $ / shares shares	Aug. 24, 2018 USD ($) $ / shares shares	Jun. 30, 2024 USD ($) shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) shares	May 31, 2024 shares	Dec. 15, 2023 shares	Aug. 31, 2023 shares	Jun. 16, 2021 shares	Apr. 12, 2021 shares
Subsidiary, Sale of Stock [Line Items]
Company delisting notice from NASDAQ Marketwatch, description										On April 18, 2024, the Company received written notice from the NASDAQ Stock Market (“NASDAQ”) stating that the Company does not meet the requirement of maintaining a minimum of $2,500,000 in stockholders’ equity for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(b)(1), the Company also does not meet the alternative of market value of listed securities of $35 million under NASDAQ Listing Rule 5550(b)(2) or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years under NASDAQ Listing Rule 5550(b)(3), and the Company is no longer in compliance with the NASDAQ Listing Rules.
Stock issued to consultants																																																				$ 222,123	$ 16,000	$ 444,249	$ 32,000
Research and development expense																																																				$ 0	$ 0	$ 750,000
Options granted to purchase common stock \| shares
Weighted average exercise price \| $ / shares
Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Stock issued , shares \| shares																																							222,902
Proceeds from offering, gross																																							$ 3,120,622
Number of warrants to purchase common stock \| shares																																							222,902
Warrants to purchase price per share \| $ / shares																																							$ 14.00
Warrant exercise price per share \| $ / shares																																							$ 17.50
Proceeds from offering, net																																							$ 2,760,000
Private Placement [Member] \| Warrant [Member]
Subsidiary, Sale of Stock [Line Items]
Estimated life																																																						5 years 6 months
Volatility rate																																																						107.00%
Risk free interest rate																																																						0.71%
Dividend yield																																																						0.00%
Fair value of warrants																																																						$ 2,018,597
Placement Agent [Member] \| Warrant [Member]
Subsidiary, Sale of Stock [Line Items]
Warrant exercise price per share \| $ / shares																																							$ 17.50
Number of warrants to purchase common stock \| shares																																							22,290
Advisory Service Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Consulting agreement term																																						12 months
Payment to advisory fee																																						$ 10,000
Stock issued to consultants, shares \| shares																																																				0	10,543	2,645	15,328
Stock issued to consultants																																																				$ 0	$ 30,000	$ 10,000	$ 50,000
Advisory Service Agreement One Member]
Subsidiary, Sale of Stock [Line Items]
Consulting agreement term																																12 months
Payment to advisory fee																																$ 10,000
Stock issued to consultants, shares \| shares																																																					4,748		4,748
Stock issued to consultants																																																					$ 10,000		$ 10,000
Consulting Agreement Two [Member]
Subsidiary, Sale of Stock [Line Items]
Share price per share \| $ / shares																																					$ 3.60
Consulting agreement term																																					1 year
Stock issued to consultants, shares \| shares																																					10,000
Stock issued to consultants																																					$ 36,000
Options vesting percentage																													25.00%				25.00%			25.00%	25.00%
Consulting expense																																																					9,000		18,000
Consulting Agreement Three [Member]
Subsidiary, Sale of Stock [Line Items]
Share price per share \| $ / shares																																		$ 2.80
Consulting agreement term																																		1 year
Stock issued to consultants, shares \| shares																																		10,000
Stock issued to consultants																																		$ 28,000
Options vesting percentage																					25.00%				25.00%			25.00%			25.00%
Consulting expense																																																					7,000		14,000
IT Consulting Service Agreement One [Member]
Subsidiary, Sale of Stock [Line Items]
Share price per share \| $ / shares																										$ 2.12
Consulting agreement term																										12 months
Stock issued to consultants, shares \| shares																										300,000
Options vesting percentage											25.00%							25.00%					25.00%			25.00%
Consulting expense																																																				159,000		318,000
IT Consulting Service Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Share price per share \| $ / shares																$ 2.50			$ 2.50
Stock issued to consultants, shares \| shares																300,000	300,000		270,000	270,000						300,000
Stock issued to consultants																$ 750,000	RM 3,544,875		$ 675,000	RM 3,161,970						$ 636,000
Research and development expense																$ 750,000			$ 675,000
Consulting Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Stock issued , shares \| shares																						50,000
Share price per share \| $ / shares																			$ 2.35
Consulting agreement term																						1 year
Stock issued to consultants, shares \| shares																			50,000	50,000
Stock issued to consultants																			$ 117,500
Options vesting percentage					25.00%				25.00%					25.00%
Consulting expense																																																				$ 29,375		$ 58,750
Consulting Agreement [Member] \| Forecast [Member]
Subsidiary, Sale of Stock [Line Items]
Options vesting percentage		25.00%
Advisory Service Agreement Two [Member]
Subsidiary, Sale of Stock [Line Items]
Consulting agreement term															12 months
Payment to advisory fee															$ 10,000
Stock issued to consultants, shares \| shares																																																				13,248		24,076
Stock issued to consultants																																																				$ 30,000		$ 50,000
Consulting Agreement One [Member]
Subsidiary, Sale of Stock [Line Items]
Stock issued , shares \| shares													100,000
Share price per share \| $ / shares													$ 1.63
Consulting agreement term													1 year
Stock issued to consultants, shares \| shares													100,000
Stock issued to consultants													$ 163,000
Options vesting percentage							25.00%						25.00%
Consulting expense																																																				13,844		54,594
Consulting Agreement One [Member] \| Forecast [Member]
Subsidiary, Sale of Stock [Line Items]
Options vesting percentage	25.00%			25.00%
Employement Agreement [Member] \| Restricted Stock Units (RSUs) [Member]
Subsidiary, Sale of Stock [Line Items]
Allocated share based compensation expense																																																				3,225		6,450
Employement Agreement One [Member] \| Restricted Stock Units (RSUs) [Member]
Subsidiary, Sale of Stock [Line Items]
Share price per share \| $ / shares																						$ 2.15
Options vesting percentage						25.00%						25.00%										25.00%
Restricted stock award, gross \| shares																						6,000
Stock issued during period, value, restricted stock award, gross																						$ 12,900
Employement Agreement One [Member] \| Forecast [Member] \| Restricted Stock Units (RSUs) [Member]
Subsidiary, Sale of Stock [Line Items]
Options vesting percentage			25.00%
Investor [Member] \| Securities Purchase Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Stock issued , shares \| shares								200,000
Share price per share \| $ / shares								$ 2.00
Proceeds from offering, gross								$ 400,000
Chief Financial Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Estimated life																																														5 years					5 years
Volatility rate																																														87.00%					84.00%
Risk free interest rate																																														1.49%					2.72%
Dividend yield																																														0.00%					0.00%
Options vesting percentage																																														50.00%					50.00%
Options granted to purchase common stock \| shares																																														1,400					1,400
Weighted average exercise price \| $ / shares																																														$ 19.25					$ 46.25
Option term																																														5 years					5 years
Fair value of stock options																																														$ 18,318					$ 43,680
Unrecognized share-based compensation expense						$ 227,102																																														$ 227,102		$ 227,102
Chief Financial Officer [Member] \| Six-month Anniversary [Member]
Subsidiary, Sale of Stock [Line Items]
Options vesting percentage																																														50.00%					50.00%
2021 Equity Incentive Plan [Member]
Subsidiary, Sale of Stock [Line Items]
Stock rewards granted \| shares																																																									800,000		600,000	600,000
Two Thousand Twenty Three Equity Incentive Plan [Member]
Subsidiary, Sale of Stock [Line Items]
Stock rewards granted \| shares																																																										800,000
Twenty Twenty Four Plan [Member]
Subsidiary, Sale of Stock [Line Items]
Stock rewards granted \| shares																																																								3,000,000
2014 Omnibus Long-Term Incentive Plan [Member]
Subsidiary, Sale of Stock [Line Items]
Estimated life																																												10 years						10 years
Volatility rate																																												87.00%						84.00%
Risk free interest rate																																												1.60%						3.07%
Dividend yield																																												0.00%						0.00%
Options vesting percentage																																								25.00%	25.00%	25.00%	25.00%		25.00%		25.00%	25.00%	25.00%
Options granted to purchase common stock \| shares																																												12,000						12,000
Weighted average exercise price \| $ / shares																																												$ 14.00						$ 29.50
Option term																																												5 years						5 years
Fair value of stock options, shares \| shares																																												12,000						60,000
Grant date fair value																																												$ 114,740						$ 240,105
2021 Omnibus Equity Plan [Member] \| Employement Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Share price per share \| $ / shares																																			$ 2.95
Options vesting percentage																								25.00%			25.00%			25.00%					25.00%
Restricted stock award, gross \| shares																																			1,200
Stock issued during period, value, restricted stock award, gross																																			$ 3,540
Allocated share based compensation expense																																																					$ 885		$ 1,770

Schedule of Revenue by Geographic Areas (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 2,688,533	$ 4,462,429	$ 5,064,926	$ 6,336,994
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	2,631,328	2,435,441	4,957,058	4,192,106
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues		1,993,671		1,993,671
Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 57,205	$ 33,317	$ 107,868	$ 151,217

Schedule of Long-lived Assets by Geographic Areas (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	$ 1,866,578	$ 2,192,021
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	1,601,636	1,873,623
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	$ 264,942	$ 318,398

Schedule of Lease Cost (Details) - USD ($)	3 Months Ended		6 Months Ended
Schedule of Lease Cost (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Lease
Operating lease cost – straight line	$ 194,389	$ 219,296	$ 388,830	$ 438,981

Schedule of Operating Lease Liability Maturity (Details)	Jun. 30, 2024 USD ($)
Lease
2024	$ 364,617
2025	701,142
2026	598,820
Thereafter	0
Total undiscounted cash flows	1,664,579
Less: imputed interest	(61,186)
Present value of lease liabilities	$ 1,603,393

Schedule of Lease Term and Discount Rate (Details)	Jun. 30, 2024
UNITED STATES
Weighted-average remaining lease term - years	2 years 4 months 2 days
Weighted-average discount rate	3.36%
MALAYSIA
Weighted-average remaining lease term - years	2 months 23 days
Weighted-average discount rate	4.74%

Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Lease
Operating cash outflows from operating leases	$ 388,555	$ 428,818

Lease (Details Narrative)	Oct. 04, 2022 USD ($)	Oct. 04, 2022 MYR (RM)	Jul. 29, 2022 USD ($)	Jul. 29, 2022 MYR (RM)	Nov. 26, 2021	Oct. 15, 2021	Jul. 15, 2021	Aug. 20, 2020	Aug. 01, 2020 USD ($)	Aug. 01, 2020 MYR (RM)	Oct. 29, 2019	Jul. 15, 2019 USD ($)	Jul. 15, 2019 MYR (RM)	Apr. 23, 2018	Jun. 17, 2013 USD ($)
Lease Agreement [Member]
Lessee, Lease, Description [Line Items]
Term of contract											2 years				5 years
Lease expiration date	Nov. 30, 2024	Nov. 30, 2024			Nov. 30, 2022	Oct. 31, 2026					Nov. 30, 2021			Oct. 31, 2021	Oct. 31, 2018
Extended term	2 years	2 years			24 months	5 years								3 years	6 years
Rental payment	$ 1,964	RM 9,280													$ 42,000
Operating lease annual rent expense increase															3.00%
Sub Lease Agreement [Member]
Lessee, Lease, Description [Line Items]
Term of contract								2 years				2 years	2 years
Lease expiration date			Aug. 31, 2024	Aug. 31, 2024			Jul. 31, 2023	Aug. 31, 2022				Jul. 14, 2021	Jul. 14, 2021
Extended term			2 years	2 years			2 years
Rental payment			$ 6,348	RM 30,000					$ 7,406	RM 35,000		$ 4,232	RM 20,000

Commitments and Contingencies (Details Narrative)	Mar. 31, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Litigation value	$ 750,000

Subsequent Events (Details Narrative) - USD ($)				6 Months Ended
Subsequent Events (Details Narrative) - USD ($)	Jul. 30, 2024	Jul. 08, 2024	Jul. 05, 2024	Jun. 30, 2024
Subsequent Event [Line Items]
Purchase price				$ 750,000
Sale and Purchase Agreement [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Purchase price		$ 552,000	$ 660,000
Number of shares issued for acquisition		460,000	400,000
Share price		$ 1.20	$ 1.65
Securities Purchase Agreement [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Share price	$ 1.60
Shares new issues	125,000
Shares new issues,value	$ 200,000

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