Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 15, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
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 $0.001 per share | |
Trading Symbol | NVFY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,950,260 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 3,170,102 | $ 6,276,106 |
Accounts receivable, net | 389,943 | 103,397 |
Advance to suppliers | 42,802 | 707,264 |
Inventories | 12,760,772 | 17,656,175 |
Prepaid expenses | 309,359 | 406,366 |
Other receivables | 30,245 | 120,634 |
Tax receivable | 949 | 299,011 |
Total Current Assets | 16,704,172 | 25,568,953 |
Noncurrent Assets | ||
Plant, property and equipment, net | 383,408 | 510,680 |
Operating lease right-of-use assets, net | 2,720,438 | 3,158,734 |
Lease deposit | 69,729 | 72,651 |
Goodwill | 218,606 | 218,606 |
Total Noncurrent Assets | 3,392,181 | 3,960,671 |
Total Assets | 20,096,353 | 29,529,624 |
Current Liabilities | ||
Accounts payable | 928,452 | 358,362 |
Operating lease liability, current | 740,635 | 731,284 |
Advance from customers | 178,507 | 394,376 |
Accrued liabilities and other payables | 362,356 | 326,679 |
Other loan interest payable | 1,389 | 3,696 |
Total Current Liabilities | 2,211,339 | 1,814,397 |
Noncurrent Liabilities | ||
Other Loan | 150,000 | 150,000 |
Operating lease liability, non-current | 2,136,793 | 2,577,567 |
Income tax payable | 1,157,603 | 1,543,472 |
Total Noncurrent Liabilities | 3,444,396 | 4,271,039 |
Total Liabilities | 5,655,735 | 6,085,436 |
Contingencies and Commitments | ||
Stockholders’ Equity | ||
Common stock, $0.001 par value; 15,000,000 shares authorized, 6,951,049 and 6,836,742 shares issued and outstanding; as of September 30, 2022 and December 31, 2021, respectively | 6,951 | 6,837 |
Additional paid-in capital | 43,147,149 | 42,660,383 |
Accumulated other comprehensive (loss) income | (806,054) | 381,850 |
Accumulated deficits | (27,907,428) | (19,604,882) |
Total Stockholders’ Equity | 14,440,618 | 23,444,188 |
Total Liabilities and Stockholders’ Equity | $ 20,096,353 | $ 29,529,624 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 6,951,049 | 6,836,742 |
Common stock, shares outstanding | 6,951,049 | 6,836,742 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Revenue from Contract with Customer [Abstract] | |||||
Net Sales | $ 3,016,104 | $ 2,916,571 | $ 10,495,097 | $ 9,798,154 | |
Cost of Sales | 1,878,361 | 1,517,032 | 11,377,203 | 11,025,436 | |
Gross (Loss) Profit | 1,137,743 | 1,399,539 | (882,106) | (1,227,282) | |
Operating Expenses | |||||
Selling expenses | 643,206 | 1,323,903 | 2,181,750 | 2,970,745 | |
General and administrative expenses | 1,448,535 | 1,222,478 | 4,401,272 | 3,993,521 | |
Total Operating Expenses | 2,091,741 | 2,546,381 | 6,583,022 | 6,964,266 | |
Loss From Operations | (953,998) | (1,146,842) | (7,465,128) | (8,191,548) | |
Other Income (Expenses) | |||||
Non-operating income | 84 | 84 | |||
Loss on disposal of fixed assets | (36,549) | ||||
Foreign exchange transaction income (loss) | (708,169) | (1,771) | (644,525) | 32,657 | |
Interest (expense) income, net | (2,261) | (31,755) | (8,220) | (5,844) | |
Financial expense | (48,648) | (48,732) | (148,208) | (160,368) | |
Total Other Income (Expenses), Net | (758,994) | (82,258) | (837,418) | (133,555) | |
Loss Before Income Taxes | (1,712,992) | (1,229,100) | (8,302,546) | (8,325,103) | |
Income Tax Expense | (167,532) | (180,593) | |||
Net Loss | (1,712,992) | (1,396,632) | (8,302,546) | (8,505,696) | |
Other Comprehensive Loss | |||||
Foreign currency translation | (699,802) | (91,974) | (994,394) | (484,738) | |
Net Loss and Comprehensive Loss | $ (2,412,794) | $ (1,488,606) | $ (9,296,940) | $ (8,990,434) | |
Weighted average shares outstanding - Basic and Diluted | [1] | 6,932,931 | 6,399,158 | 6,885,213 | 5,870,632 |
Net loss per share of common stock | |||||
Basic and Diluted | $ (0.25) | $ (0.22) | $ (1.21) | $ (1.45) | |
[1]Including 56,779 44,279 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Statutory Reserve [Member] | Retained Earnings [Member] | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 5,596 | $ 39,766,978 | $ 798,290 | $ 6,241 | $ 351,370 | $ 40,928,475 |
Balance at beginning of period, shares at Dec. 31, 2020 | 5,596,234 | |||||
Stock issued to employees | $ 5 | 8,905 | 8,910 | |||
Stock issued to employees, shares | 4,500 | |||||
Stock issued to consultants | $ 15 | 29,685 | 29,700 | |||
Stock issued to consultants, shares | 15,000 | |||||
Forign currency translation loss | (484,738) | (484,738) | ||||
Net loss | (8,505,696) | (8,505,696) | ||||
Issuance of common stock | $ 1,114 | 2,759,859 | 2,760,973 | |||
Issuance of common stock, shares | 1,114,508 | |||||
De-registration and liquidation of Nova Macau | (6,241) | 6,241 | ||||
Balance at end of period at Sep. 30, 2021 | $ 6,730 | 42,565,427 | 313,552 | (8,148,085) | 34,737,624 | |
Balance at end of period, shares at Sep. 30, 2021 | 6,730,242 | |||||
Balance at beginning of period at Jun. 30, 2021 | $ 5,609 | 39,792,705 | 405,526 | (6,751,453) | 33,452,387 | |
Balance at beginning of period, shares at Jun. 30, 2021 | 5,609,234 | |||||
Stock issued to employees | $ 2 | 2,968 | 2,970 | |||
Stock issued to employees, shares | 1,500 | |||||
Stock issued to consultants | $ 5 | 9,895 | 9,900 | |||
Stock issued to consultants, shares | 5,000 | |||||
Forign currency translation loss | (91,974) | (91,974) | ||||
Net loss | (1,396,632) | (1,396,632) | ||||
Issuance of common stock | $ 1,114 | 2,759,859 | 2,760,973 | |||
Issuance of common stock, shares | 1,114,508 | |||||
Balance at end of period at Sep. 30, 2021 | $ 6,730 | 42,565,427 | 313,552 | (8,148,085) | 34,737,624 | |
Balance at end of period, shares at Sep. 30, 2021 | 6,730,242 | |||||
Balance at beginning of period at Dec. 31, 2021 | $ 6,837 | 42,660,383 | 381,850 | (19,604,882) | 23,444,188 | |
Balance at beginning of period, shares at Dec. 31, 2021 | 6,836,742 | |||||
Stock issued to employees | $ 5 | 9,895 | 9,900 | |||
Stock issued to employees, shares | 4,500 | |||||
Stock issued to consultants | $ 109 | 476,871 | 476,980 | |||
Stock issued to consultants, shares | 109,807 | |||||
Forign currency translation loss | (1,187,904) | (1,187,904) | ||||
Net loss | (8,302,546) | (8,302,546) | ||||
Balance at end of period at Sep. 30, 2022 | $ 6,951 | 43,147,149 | (806,054) | (27,907,428) | 14,440,618 | |
Balance at end of period, shares at Sep. 30, 2022 | 6,951,049 | |||||
Balance at beginning of period at Jun. 30, 2022 | $ 6,892 | 42,974,288 | 87,258 | (26,194,436) | 16,874,002 | |
Balance at beginning of period, shares at Jun. 30, 2022 | 6,891,313 | |||||
Stock issued to employees | $ 2 | 3,298 | 3,300 | |||
Stock issued to employees, shares | 1,500 | |||||
Stock issued to consultants | $ 57 | 169,563 | 169,620 | |||
Stock issued to consultants, shares | 58,236 | |||||
Forign currency translation loss | (893,312) | (893,312) | ||||
Net loss | (1,712,992) | (1,712,992) | ||||
Balance at end of period at Sep. 30, 2022 | $ 6,951 | $ 43,147,149 | $ (806,054) | $ (27,907,428) | $ 14,440,618 | |
Balance at end of period, shares at Sep. 30, 2022 | 6,951,049 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows From Operating Activities | ||
Net loss | $ (8,302,546) | $ (8,505,696) |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 62,110 | 62,055 |
Amortization of operating lease right-of-use assets | 632,766 | 380,178 |
Loss on disposal of fixed assets | 36,549 | |
Write down of inventories | 5,169,347 | 5,526,307 |
Stock based compensation expense | 486,880 | 38,610 |
Changes in bad debt allowance | 2,376 | (3,328) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (295,163) | 332,870 |
Advance to suppliers | 664,462 | 56,440 |
Inventories | (1,706,482) | (491,056) |
Other current assets | 175,225 | (387,526) |
Operating lease liabilities | (632,766) | (348,917) |
Accounts payable | 570,090 | (27,270) |
Advance from customers | (215,869) | 137,243 |
Accrued liabilities and other payables | (12,731) | 171,218 |
Taxes payable | (87,807) | (70,473) |
Net Cash Used in Operating Activities | (3,453,559) | (3,129,345) |
Cash Flows From Investing Activities | ||
Purchase of property and equipment | (5,771) | (155,156) |
Net Cash Used in Investing Activities | (5,771) | (155,156) |
Cash Flows From Financing Activities | ||
Proceeds from equity financing, net | 2,760,973 | |
Net Cash Provided by Financing Activities | 2,760,973 | |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 353,326 | (342,380) |
Net decrease in cash and cash equivalents | (3,106,004) | (865,908) |
Cash and cash equivalents, beginning of period | 6,276,106 | 8,744,784 |
Cash and cash equivalents, ending of period | 3,170,102 | 7,878,876 |
Supplemental Disclosure of Cash Flow Information | ||
Income tax payments | 247,898 | 251,067 |
Interest expense | $ 9,016 | $ 4,801 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
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 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”), 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 two 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-registered and liquidated in January 2021. 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 new 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 September 30, 2022. 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 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 . The “Company” and “Nova” collectively refer to Nova LifeStyle, the U.S. parent, and its subsidiaries, Nova Furniture, Nova Samoa, Nova Macao, Diamond Bar, i Design, Nova HK and Nova Malaysia. COVID-19 Beginning in 2020, a strain of novel coronavirus (“COVID-19”) has spread globally and, at this point, the Company’s operations has been adversely impacted by the COVID-19 pandemic. In particular, Nova Malaysia had not been able to operate in normal condition due to Malaysian government’s shut down orders which resulted in sales lagging and slow-moving inventories. The Company’s two showrooms in Kuala Lumpur were closed from March 2020 to May 2020 and closed again from August 2020 to March 5, 2021. Malaysia government imposed a new nationwide lockdown on May 12, 2021 until early June 2021, then the lockdown was extended to early October 2021. In October 2021, Malaysia government lifted lockdown order for people fully vaccinated against COVID-19 and our store has been reopened since then. In April 2022, Malaysia has also reopened the border for foreign visitors. However, COVID-19 in Malaysia increased financial vulnerability for those affected households and business, which contributed to significant decrease of sales and risk of continuous sluggish sales. As a result, we further lowered the estimated sales quantities of the inventories during the interim review. The Company expects that the impact of the COVID-19 outbreak on the United States , Malaysia In 2022, there have been outbreaks of the Omicron variant of the COVID-19 in Hong Kong and many other cities in China, along with travel restrictions, mandatory COVID-19 tests, quarantine requirements and/or temporary closure of office buildings and facilities imposed by local governments. Although our suppliers in China have not been materially and negatively impacted by such outbreaks, the government authorities may issue new orders of office closure, travel and transportation restrictions in China due to the resurgence of the COVID-19 and outbreak of new variants, which could cause the delay of the delivery from our suppliers in China. The extent of the impact of the COVID-19 pandemic that will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify, as the actions that the Company, other businesses and governments may take to contain the spread of COVID-19 continue to evolve. Shipping of products from Asia has experienced significant delays since the onset of the pandemic and the costs of shipping from Asia have increased since the onset; and we have experienced and may continue to experience shipping disruptions in the future. Because of the significant uncertainties surrounding the COVID-19 pandemic, the extent of the future business interruption and the related financial impact cannot be reasonably estimated at this time. The severity of the impact of the COVID-19 pandemic on the Company’s business will continue to depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the new variants of COVID-19, the efficacy and distribution of COVID-19 vaccines and the extent and severity of the impact on the global supply chain and the Company’s customers, service providers and suppliers, all of which are uncertain and cannot be reasonably predicted at this time. As of the date of issuance of the Company’s financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition, liquidity or results of operations is uncertain. The Company is monitoring and assessing the evolving situation closely and evaluating its potential exposure. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 condensed consolidated financial information as of September 30, 2022 and for the nine months and three months ended September 30, 2022 and 2021 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, previously filed with the SEC on April 8, 2022. 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 condensed consolidated financial position as of September 30, 2022, its interim condensed consolidated results of operations and cash flows for the nine months and three months ended September 30, 2022 and 2021, 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. Use of Estimates In preparing consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the dates of the 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. The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, supply chain disruption, depress demand for the Company’s products, and adversely impact its results of operations. During the nine months ended September 30, 2022, the Company continued to face increasing uncertainties around its estimates of revenue collectability, accounts receivable credit losses and valuation of inventories. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes will be 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 two-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 two-step goodwill impairment test for the Diamond Bar reporting unit. Accordingly, as of September 30, 2022 and December 31, 2021, the Company concluded there was no 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. 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 potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. An analysis of the allowance for doubtful accounts is as follows: Schedule of Allowance for Doubtful Accounts Balance at January 1, 2022 $ 1,044 Provision for the period 2,376 Balance at September 30, 2022 $ 3,420 The bad debts provision (reversal) for the nine months ended September 30, 2022 and 2021 was $ 2,376 ($3,328) 1,316 262 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. Due to the COVID-19 pandemic, freight transportation of products from the Company’s international suppliers has been delayed or suspended during the outbreak. 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. Plant, Property and Equipment Plant, property, 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: Schedule of Plant, Property and Equipment Estimated Lives Under Straight-line Method Computer and office equipment 5 10 Decoration and renovation 5 10 Impairment of Long-Lived Assets Long-lived assets, which include property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. 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 Research and Development Research and development costs are related primarily to the Company designing and testing its new products during the development stage. Research and development costs are recognized in general and administrative expenses and expensed as incurred. Research and development expenses were $ 10,328 110,251 660 105,460 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 nine months and three months ended September 30, 2022 is $ 0 180,593 167,532 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%. Nova HK is incorporated in Hong Kong and is subject to Hong Kong income taxes at the statutory rate of 16.5%. In February 2022, Nova HK was deregistered. 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 quarter ended September 30, 2022, 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. As of September 30, 2022 and December 31, 2021, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately $ 26.7 As of September 30, 2022, unrecognized tax benefits were approximately $ 0 0 900 900 A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the nine months ended September 30, 2022 and 2021, is as follows: Schedule of Unrecognized Tax Benefits Gross UTB 2022 2021 Balance – January 1 and September 30 $ - 935 At September 30, 2022 and December 31, 2021, the Company had cumulatively accrued approximately $ 0 0 21 and $ 0 7 . 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 2018-2021 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 ASU No. 2014-09: (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 delivery 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 nine months and three months ended September 30, 2022 and 2021. 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 nine months ended September 30, 2022 and 2021, shipping and handling costs were $ 1,398 4,524 1,222 1,585 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 $ 857,548 1,122,959 237,875 299,012 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 nine months and three months ended September 30, 2022 and 2021: Schedule of Reconciliation of Basic and Diluted Loss Per Share 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Net loss $ (8,302,546 ) $ (8,505,696 ) $ (1,712,992 ) $ (1,396,632 ) Weighted average shares outstanding – Basic and Diluted * * 6,885,213 5,870,632 6,932,931 6,399,158 Net loss per share of common stock Basic and Diluted $ (1.21 ) $ (1.45 ) $ (0.25 ) $ (0.22 ) * Including 56,779 44,279 For the nine months and three months ended September 30, 2022, 1,225,959 142,500 134,000 For the nine months and three months ended September 30, 2021, 1,225,959 5,000 340,500 Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. No customer accounted for 10 10 15 64 13 22 19 14 14 The Company purchased its products from two and three major vendors during the nine months ended September 30, 2022 and 2021, respectively, accounting for a total of 45 23 22 56 25 18 13 The Company purchased its products from three major vendors during the three months ended September 30, 2022 and 2021, accounting for a total of 62 25 25 12 56 21 18 17 Advances made to these vendors were $ 8,899 307,718 219,097 125,636 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 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. 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 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, Nova HK 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 September 30, 2022 RM 4.64 1 December 31, 2021 RM 4.18 1 Income Statement and cash flow items For the nine months ended September 30, 2022 RM 4.34 1 For the nine months ended September 30, 2021 RM 4.13 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, Nova HK was a furniture distributor based in Hong Kong focusing on international customers, 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, Nova HK and Nova Malaysia as one entity for making business decisions. 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 September 30, 2022 and December 31, 2021. The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the consolidated balance sheets at September 30, 2022 and December 31, 2021. Reclassification Certain prior period accounts have been reclassified in conformity with current period’s presentation. Recent Accounting Pronouncements Recently Adopted Accounting Standards In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 3 - Inventories The inventories as of September 30, 2022 and December 31, 2021 totaled $ 12,760,772 17,656,175 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 nine months and three months ended September 30, 2022, the Company wrote-down $ 5,169,347 50,293 of slow-moving inventory, respectively. The inventory write-down is included in “Cost of Sales” in the consolidated statements of operations. For the nine months and three months ended September 30, 2021, the Company wrote-down $ 5,526,307 0 |
Plant, Property and Equipment,
Plant, Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Plant, Property and Equipment, Net | Note 4 - Plant, Property and Equipment, Net As of September 30, 2022 and December 31, 2021, plant, property and equipment consisted of the following: Schedule of Plant, Property and Equipment September 30, 2022 December 31, 2021 Computer and office equipment $ 429,215 $ 474,196 Decoration and renovation 450,401 487,002 Property plant and equipment gross 879,616 961,198 Less: accumulated depreciation (496,208 ) (450,518 ) Property plant and equipment net $ 383,408 $ 510,680 Depreciation expense was $ 62,110 62,055 19,949 23,529 |
Advances to Suppliers
Advances to Suppliers | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Advances to Suppliers | Note 5 - Advances to Suppliers The Company makes advances to certain vendors for inventory purchases. The advances on inventory purchases were $ 42,802 707,264 |
Prepaid Expenses and Other Rece
Prepaid Expenses and Other Receivables | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses And Other Receivables | |
Prepaid Expenses and Other Receivables | Note 6 - Prepaid Expenses and Other Receivables Prepaid expenses and other receivables consisted of the following as of September 30 2022 and December 31, 2021: Schedule of Prepaid Expenses and Other Receivables September 30, 2022 December 31, 2021 Prepaid expenses $ 309,359 $ 406,366 Other receivables 30,245 120,634 Prepaid expenses and other receivable $ 339,604 $ 527,000 As of September 30, 2022 and December 31, 2021, prepaid expenses and other receivables mainly represented prepaid insurance, prepaid advertising expense, and Celero and Cardknox account balances. |
Accrued Liabilities and Other P
Accrued Liabilities and Other Payables | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities and Other Payables | Note 7 - Accrued Liabilities and Other Payables Accrued liabilities and other payables consisted of the following as of September 30, 2022 and December 31, 2021: Schedule of Accrued Liabilities and Other Payables September 30, 2022 December 31, 2021 Other payables $ 6,493 $ 6,893 Salary payable 6,442 6,231 Financed insurance premiums 141,945 134,173 Accrued auditing 20,000 - Accrued commission 85,221 66,507 Accrued expenses, others 102,255 112,875 Total accrued liabilities and other payable $ 362,356 $ 326,679 As of September 30, 2022 and December 31, 2021, other accrued expenses mainly included legal and professional fees, utilities and unpaid operating expenses incurred in Malaysia. Other payables represented other taxes payable and 401(k) payable. |
Other Loans
Other Loans | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Other Loans | Note 8 - Other Loans On May 4, 2020, the Company received loan proceeds in the amount of approximately $ 139,802 The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. On June 5, 2020, Congress passed a new law that allowed current PPP borrowers to choose to extend the eight-week period to 24 weeks to use the funds, but which cannot be extended beyond December 31, 2020. On May 5, 2020, Diamond Bar was granted a loan from Cathay Bank in the aggregate amount of $ 176,294 May 5, 2022 1.00 Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On June 19, 2020, Diamond Bar was granted a U.S. Small Business Administration (SBA) loan in the aggregate amount of $ 150,000 June 18, 2050 3.75 payable monthly beginning 12 months from the date of the promissory note. 4,272 4,328 1,433 1,461 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9- 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 1, 2022, the Company renewed the lease for an additional one year term at a cost of $ 34,562 . During the nine months ended September 30, 2022 and 2021, the Company recorded 17,281 and $ 34,561 , respectively, which were included in selling expenses; and rental amounts of $ 8,641 17,280 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 314,163 304,958 88,149 93,156 In September 2021, Nova Malaysia entered into a consultancy agreement with an I.T. firm whose sole shareholder was a director of Nova Macao to provide E-Commerce Web Application Setup, E-Commerce Essentials Implementation, E-Commerce UIUX and other related services. During the nine and three months ended September 30, 2022, the Company recorded $ 317,152 29,181 |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 10- 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 3,000,000 3,000,000 Shares and Warrants issued through Private Placement On July 23, 2021, the Company conducted a registered direct offering of 1,114,508 1,114,508 2.80 3.50 are 3,120,622 2,760,000 In conjunction with this offering, the Company issued warrants to purchase 111,451 3.50 ave 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 5.5 107 0.71 0 2,018,597 Warrants The following is a summary of the warrant activity for the nine months ended September 30, 2022: Summary of Warrant Activity Number of Warrants Average Exercise Price Weighted Average Remaining Contractual Term in Years Outstanding at January 1, 2022 1,225,959 $ 3.50 5.02 Exercisable at January 1, 2022 - $ - - Granted - - - Exercised / surrendered - - - Expired - - - Outstanding at September 30, 2022 1,225,959 $ 3.50 4.27 Exercisable at September 30, 2022 1,225,959 $ 3.50 4.27 Shares Issued to Consultants On November 16, 2020, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on November 16, 2020 for a one 20,000 25 25 25 25 20,000 39,600 1.98 29,700 9,900 On November 2, 2021, the Company entered into an information technology consulting agreement with a consultant for analyzing and developing the Company’s information technology infrastructure and system, and related general business advisory services effective on November 2, 2021 for a one 100,000 50,000 50,000 100,000 236,000 2.36 176,515 59,485 On November 2, 2021, the Company entered into a marketing consulting agreement with a consultant for developing branding and marketing strategies, analyzing and evaluating consumer data services effective on November 2, 2021 for a one 100,000 50,000 50,000 100,000 236,000 2.36 176,515 59,485 On November 11, 2021, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on November 16, 2021 for a one 20,000 25 25 25 25 20,000 46,600 2.33 34,950 11,650 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 10,000 The shares were issued pursuant to the 2021 Plan. 82,306 40,735 80,000 30,000 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 50,000 25 25 25 25 50,000 36,000 0.72 9,000 Shares and Options Issued to Independent Directors 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 60,000 2.80 5 25 25 25 25 ten years 87 1.60 0 60,000 114,740 Shares Issued to Employees On November 10, 2020, the Company extended an employment agreement with the Company’s Corporate Secretary for a term of one year effective from November 14, 2020. The Company agreed to grant an award of 6,000 11,880 1.98 25 25 25 25 8,910 2,970 On November 11, 2021, the Company extended an employment agreement with the Company’s Corporate Secretary for a term of one year effective from November 14, 2021. The Company agreed to grant an award of 6,000 Company’s 2021 Omnibus Equity Plan. The fair value of these shares was $ 13,200 2.20 25 25 25 25 9,900 3,300 Options Issued to Employees 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 7,000 3.85 re, with a term of 5 pursuant to the Company’s 2014 Omnibus Long-Term Incentive Plan. Fifty percent ( 50 50 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 the following assumptions: estimated life of five years 87 1.49 0 7,000 18,318 As of September 30, 2022, unrecognized share-based compensation expense was $ 114,159 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, 2022 340,500 $ 5.97 1.32 Exercisable at January 1, 2022 340,500 5.97 1.32 Granted - - - Exercised - - - Forfeited 206,500 6.87 - Outstanding at September 30, 2022 134,000 4.58 1.58 Exercisable at September 30, 2022 134,000 5.97 0.82 (1) The intrinsic value of the stock options at September 30, 2022 is the amount by which the market value of the Company’s common stock of $ 0.74 0 |
Geographical Analysis
Geographical Analysis | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Geographical Analysis | Note 11 - Geographical Analysis Geographical distribution of sales consisted of the following for the nine months and three months ended September 30, 2022 and 2021: Schedule of Revenue From External Customers by Geographic Area 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Geographical Areas North America $ 9,863,167 $ 9,237,435 $ 2,766,486 $ 2,850,262 Asia (excluding China) 61,247 248,118 (1,034 ) (2,028 ) Other countries 570,683 312,601 250,652 68,337 Revenues $ 10,495,097 $ 9,798,154 $ 3,016,104 $ 2,916,571 Geographical location of identifiable long-lived assets as of September 30, 2022 and December 31, 2021: Schedule of Long-lived Assets by Geographic Areas September 30, 2022 December 31, 2021 Geographical Areas North America $ 2,548,487 $ 2,986,290 Asia 555,359 683,124 Assets $ 3,103,846 $ 3,669,414 |
Lease
Lease | 9 Months Ended |
Sep. 30, 2022 | |
Lease | |
Lease | Note 12- 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 October 31, 2018 six years three years October 31, 2021 five years October 31, 2026 42,000 3 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 9) on monthly or annual terms. On July 15, 2019, Nova Malaysia entered into a sublease agreement for warehouse space with a two July 14, 2021 20,000 4,608 35,000 8,065 two years July 31, 2023 On October 29, 2019, Nova Malaysia entered into a lease agreement for a showroom with a two November 30, 2021 November 30, 2022 24 9,280 2,138 On August 20, 2020, Nova Malaysia entered into a sublease agreement for an office and service center with a two August 31, 2022 30,000 6,912 Operating lease expense for the nine months and three months ended September 30, 2022 and 2021 was as follows: Schedule of Lease Cost 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Operating lease cost – straight line $ 640,430 $ 603,764 $ 213,477 $ 203,388 The following is a schedule, by years, of maturities of operating lease liabilities as of September 30, 2022: Schedule of Operating Lease Liability Maturity Operating Leases 2022 (remainder) $ 210,874 2023 807,868 2024 754,510 2025 701,142 Thereafter 598,820 Total undiscounted cash flows 3,073,214 Lease Term and Discount Rate September 30, 2022 Weighted-average remaining lease term - years Operating leases - USA 4.09 Operating leases - Malaysia 1.63 Weighted-average discount rate (%) Operating leases - USA 3.25 % Operating leases - Malaysia 4.66 % Supplemental cash flow information related to leases where the Company was the lessee for the nine months ended September 30, 2022 and 2021 was as follows: Schedule of Supplemental Cash Flow Information Related to Leases 2022 2021 Operating cash outflows from operating leases $ 632,766 $ 210,922 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13 - Commitments and Contingencies Legal Proceedings On December 28, 2018, a federal putative class action complaint was filed by George Barney 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”). Richard Deutner and ITENT EDV were subsequently appointed as lead plaintiffs and, on June 18, 2019, filed an Amended Complaint Plaintiffs seek to represent a class of entities acquiring Nova’s stock from December 3, 2015 through December 20, 2018. They claim that during this period the Company: (1) overstated its purported strategic alliance with a customer in China to operate as lead designer and manufacturer for all furnishings in its planned $460 million senior care center in China; and (2) inflated sales in 2016 and 2017 by recognizing significant sales to two allegedly non-existent customers. Seeking Alpha On March 8, 2022, the parties to the Barney Action filed a Stipulation of Settlement (“Settlement”) with the Court. Under the terms of the Settlement, and without admitting to any wrongdoing, fault, or liability, the Company agreed to a payment of $ 750,000 750,000 By Memorandum Opinion and Order dated August 29, 2022, the Court denied the Barney On March 8, 2019, in the United States District Court for the Central District of California, 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 Barney On May 15, 2019, Wilson Samuels (the “Samuels Action”) filed a 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 settlement of the Barney action, the derivative actions will be activated. The parties disagree as to when that will occur. Defendants have asserted that the Action must remained stayed until the final disposition of the Barney Action, meaning, the Court’s final approval of the Settlement. Plaintiff’s position is that the Court should lift the stay because the class action plaintiffs agreed to settle the case. The Court has yet to address this issue. 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. 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. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 - Subsequent Events The Company has evaluated subsequent events through November 18, 2022, |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 condensed consolidated financial information as of September 30, 2022 and for the nine months and three months ended September 30, 2022 and 2021 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, previously filed with the SEC on April 8, 2022. 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 condensed consolidated financial position as of September 30, 2022, its interim condensed consolidated results of operations and cash flows for the nine months and three months ended September 30, 2022 and 2021, 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. |
Use of Estimates | Use of Estimates In preparing consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the dates of the 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. The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, supply chain disruption, depress demand for the Company’s products, and adversely impact its results of operations. During the nine months ended September 30, 2022, the Company continued to face increasing uncertainties around its estimates of revenue collectability, accounts receivable credit losses and valuation of inventories. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes will be |
Business Combination | 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 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 two-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 two-step goodwill impairment test for the Diamond Bar reporting unit. Accordingly, as of September 30, 2022 and December 31, 2021, the Company concluded there was no |
Cash and Cash Equivalents | 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. |
Accounts Receivable | 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 potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. An analysis of the allowance for doubtful accounts is as follows: Schedule of Allowance for Doubtful Accounts Balance at January 1, 2022 $ 1,044 Provision for the period 2,376 Balance at September 30, 2022 $ 3,420 The bad debts provision (reversal) for the nine months ended September 30, 2022 and 2021 was $ 2,376 ($3,328) 1,316 262 |
Advances to Suppliers | 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. Due to the COVID-19 pandemic, freight transportation of products from the Company’s international suppliers has been delayed or suspended during the outbreak. |
Inventories | 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. |
Plant, Property and Equipment | Plant, Property and Equipment Plant, property, 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: Schedule of Plant, Property and Equipment Estimated Lives Under Straight-line Method Computer and office equipment 5 10 Decoration and renovation 5 10 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, which include property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. 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 |
Research and Development | Research and Development Research and development costs are related primarily to the Company designing and testing its new products during the development stage. Research and development costs are recognized in general and administrative expenses and expensed as incurred. Research and development expenses were $ 10,328 110,251 660 105,460 |
Income Taxes | 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 nine months and three months ended September 30, 2022 is $ 0 180,593 167,532 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%. Nova HK is incorporated in Hong Kong and is subject to Hong Kong income taxes at the statutory rate of 16.5%. In February 2022, Nova HK was deregistered. 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 quarter ended September 30, 2022, 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. As of September 30, 2022 and December 31, 2021, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately $ 26.7 As of September 30, 2022, unrecognized tax benefits were approximately $ 0 0 900 900 A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the nine months ended September 30, 2022 and 2021, is as follows: Schedule of Unrecognized Tax Benefits Gross UTB 2022 2021 Balance – January 1 and September 30 $ - 935 At September 30, 2022 and December 31, 2021, the Company had cumulatively accrued approximately $ 0 0 21 and $ 0 7 . 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 2018-2021 remain open to examination by tax authorities in the U.S. |
Revenue Recognition | 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 ASU No. 2014-09: (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 delivery 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 nine months and three months ended September 30, 2022 and 2021. |
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 Shipping and handling costs related to delivery of finished goods are included in selling expenses. During the nine months ended September 30, 2022 and 2021, shipping and handling costs were $ 1,398 4,524 1,222 1,585 |
Advertising | 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 $ 857,548 1,122,959 237,875 299,012 |
Share-based Compensation | 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) | 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 nine months and three months ended September 30, 2022 and 2021: Schedule of Reconciliation of Basic and Diluted Loss Per Share 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Net loss $ (8,302,546 ) $ (8,505,696 ) $ (1,712,992 ) $ (1,396,632 ) Weighted average shares outstanding – Basic and Diluted * * 6,885,213 5,870,632 6,932,931 6,399,158 Net loss per share of common stock Basic and Diluted $ (1.21 ) $ (1.45 ) $ (0.25 ) $ (0.22 ) * Including 56,779 44,279 For the nine months and three months ended September 30, 2022, 1,225,959 142,500 134,000 For the nine months and three months ended September 30, 2021, 1,225,959 5,000 340,500 |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. No customer accounted for 10 10 15 64 13 22 19 14 14 The Company purchased its products from two and three major vendors during the nine months ended September 30, 2022 and 2021, respectively, accounting for a total of 45 23 22 56 25 18 13 The Company purchased its products from three major vendors during the three months ended September 30, 2022 and 2021, accounting for a total of 62 25 25 12 56 21 18 17 Advances made to these vendors were $ 8,899 307,718 219,097 125,636 |
Fair Value of Financial Instruments | 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 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. 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 | Foreign Currency Translation and Transactions The 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, Nova HK 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 September 30, 2022 RM 4.64 1 December 31, 2021 RM 4.18 1 Income Statement and cash flow items For the nine months ended September 30, 2022 RM 4.34 1 For the nine months ended September 30, 2021 RM 4.13 1 |
Segment Reporting | 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, Nova HK was a furniture distributor based in Hong Kong focusing on international customers, 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, Nova HK and Nova Malaysia as one entity for making business decisions. 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 | 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 September 30, 2022 and December 31, 2021. The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the consolidated balance sheets at September 30, 2022 and December 31, 2021. 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 In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company applied the new standard beginning January 1, 2022. The adoption of the new standard did not have any impact on the Company’s condensed consolidated financial statement presentation or disclosures. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This update is effective for annual periods beginning after December 15, 2021, and early application is permitted. This guidance should be applied either prospectively to all transactions that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or retrospectively to those transactions. The Company adopted ASU 2021-10 beginning January 1, 2022. The adoption of ASU 2021-10 did not have any impact on the Company’s condensed consolidated financial statements. Recently Issued But Not Yet Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. As a smaller reporting company, ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. In March 2022, the FASB issued ASU 2022-02, Topic 326. The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. This ASU is effective for periods beginning after December 15, 2022. The Company is currently evaluating the impact that the adoption of ASU 2016-13 and ASU 2022-02 will have on its condensed consolidated financial statement presentations and disclosures. In January 2017, the FASB issued ASU No. 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). Adoption of the ASUs is on a modified retrospective basis. As the Company qualifies as 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Allowance for Doubtful Accounts | Schedule of Allowance for Doubtful Accounts Balance at January 1, 2022 $ 1,044 Provision for the period 2,376 Balance at September 30, 2022 $ 3,420 |
Schedule of Plant, Property and Equipment Estimated Lives Under Straight-line Method | Schedule of Plant, Property and Equipment Estimated Lives Under Straight-line Method Computer and office equipment 5 10 Decoration and renovation 5 10 |
Schedule of Unrecognized Tax Benefits | A reconciliation of unrecognized tax benefits excluding interest and penalties (“Gross UTB”) for the nine months ended September 30, 2022 and 2021, is as follows: Schedule of Unrecognized Tax Benefits Gross UTB 2022 2021 Balance – January 1 and September 30 $ - 935 |
Schedule of Reconciliation of Basic and Diluted Loss Per Share | The following table presents a reconciliation of basic and diluted loss per share for the nine months and three months ended September 30, 2022 and 2021: Schedule of Reconciliation of Basic and Diluted Loss Per Share 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Net loss $ (8,302,546 ) $ (8,505,696 ) $ (1,712,992 ) $ (1,396,632 ) Weighted average shares outstanding – Basic and Diluted * * 6,885,213 5,870,632 6,932,931 6,399,158 Net loss per share of common stock Basic and Diluted $ (1.21 ) $ (1.45 ) $ (0.25 ) $ (0.22 ) * Including 56,779 44,279 |
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 September 30, 2022 RM 4.64 1 December 31, 2021 RM 4.18 1 Income Statement and cash flow items For the nine months ended September 30, 2022 RM 4.34 1 For the nine months ended September 30, 2021 RM 4.13 1 |
Plant, Property and Equipment_2
Plant, Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Plant, Property and Equipment | As of September 30, 2022 and December 31, 2021, plant, property and equipment consisted of the following: Schedule of Plant, Property and Equipment September 30, 2022 December 31, 2021 Computer and office equipment $ 429,215 $ 474,196 Decoration and renovation 450,401 487,002 Property plant and equipment gross 879,616 961,198 Less: accumulated depreciation (496,208 ) (450,518 ) Property plant and equipment net $ 383,408 $ 510,680 |
Prepaid Expenses and Other Re_2
Prepaid Expenses and Other Receivables (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses And Other Receivables | |
Schedule of Prepaid Expenses and Other Receivables | Prepaid expenses and other receivables consisted of the following as of September 30 2022 and December 31, 2021: Schedule of Prepaid Expenses and Other Receivables September 30, 2022 December 31, 2021 Prepaid expenses $ 309,359 $ 406,366 Other receivables 30,245 120,634 Prepaid expenses and other receivable $ 339,604 $ 527,000 |
Accrued Liabilities and Other_2
Accrued Liabilities and Other Payables (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities and Other Payables | Accrued liabilities and other payables consisted of the following as of September 30, 2022 and December 31, 2021: Schedule of Accrued Liabilities and Other Payables September 30, 2022 December 31, 2021 Other payables $ 6,493 $ 6,893 Salary payable 6,442 6,231 Financed insurance premiums 141,945 134,173 Accrued auditing 20,000 - Accrued commission 85,221 66,507 Accrued expenses, others 102,255 112,875 Total accrued liabilities and other payable $ 362,356 $ 326,679 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Summary of Warrant Activity | The following is a summary of the warrant activity for the nine months ended September 30, 2022: Summary of Warrant Activity Number of Warrants Average Exercise Price Weighted Average Remaining Contractual Term in Years Outstanding at January 1, 2022 1,225,959 $ 3.50 5.02 Exercisable at January 1, 2022 - $ - - Granted - - - Exercised / surrendered - - - Expired - - - Outstanding at September 30, 2022 1,225,959 $ 3.50 4.27 Exercisable at September 30, 2022 1,225,959 $ 3.50 4.27 |
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, 2022 340,500 $ 5.97 1.32 Exercisable at January 1, 2022 340,500 5.97 1.32 Granted - - - Exercised - - - Forfeited 206,500 6.87 - Outstanding at September 30, 2022 134,000 4.58 1.58 Exercisable at September 30, 2022 134,000 5.97 0.82 (1) The intrinsic value of the stock options at September 30, 2022 is the amount by which the market value of the Company’s common stock of $ 0.74 0 |
Geographical Analysis (Tables)
Geographical Analysis (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Revenue From External Customers by Geographic Area | Geographical distribution of sales consisted of the following for the nine months and three months ended September 30, 2022 and 2021: Schedule of Revenue From External Customers by Geographic Area 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Geographical Areas North America $ 9,863,167 $ 9,237,435 $ 2,766,486 $ 2,850,262 Asia (excluding China) 61,247 248,118 (1,034 ) (2,028 ) Other countries 570,683 312,601 250,652 68,337 Revenues $ 10,495,097 $ 9,798,154 $ 3,016,104 $ 2,916,571 |
Schedule of Long-lived Assets by Geographic Areas | Geographical location of identifiable long-lived assets as of September 30, 2022 and December 31, 2021: Schedule of Long-lived Assets by Geographic Areas September 30, 2022 December 31, 2021 Geographical Areas North America $ 2,548,487 $ 2,986,290 Asia 555,359 683,124 Assets $ 3,103,846 $ 3,669,414 |
Lease (Tables)
Lease (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Lease | |
Schedule of Lease Cost | Operating lease expense for the nine months and three months ended September 30, 2022 and 2021 was as follows: Schedule of Lease Cost 2022 2021 2022 2021 Nine Months Ended September 30, Three Months Ended September 30, 2022 2021 2022 2021 Operating lease cost – straight line $ 640,430 $ 603,764 $ 213,477 $ 203,388 September 30, 2022 Weighted-average remaining lease term - years Operating leases - USA 4.09 Operating leases - Malaysia 1.63 Weighted-average discount rate (%) Operating leases - USA 3.25 % Operating leases - Malaysia 4.66 % |
Schedule of Operating Lease Liability Maturity | The following is a schedule, by years, of maturities of operating lease liabilities as of September 30, 2022: Schedule of Operating Lease Liability Maturity Operating Leases 2022 (remainder) $ 210,874 2023 807,868 2024 754,510 2025 701,142 Thereafter 598,820 Total undiscounted cash flows 3,073,214 |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases where the Company was the lessee for the nine months ended September 30, 2022 and 2021 was as follows: Schedule of Supplemental Cash Flow Information Related to Leases 2022 2021 Operating cash outflows from operating leases $ 632,766 $ 210,922 |
Organization and Description _2
Organization and Description of Business (Details Narrative) - USD ($) | Nov. 05, 2020 | Jan. 07, 2020 |
Restructuring Cost and Reserve [Line Items] | ||
Cash consideration amount | $ 2,500,000 | |
Nova HK [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Payments to acquire businesses gross | $ 1,290 |
Schedule of Allowance for Doubt
Schedule of Allowance for Doubtful Accounts (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||||
Accounts receivable allowance for credit loss | $ 1,044 | |||
Reversal | $ 1,316 | $ 262 | 2,376 | $ (3,328) |
Accounts receivable allowance for credit loss | $ 3,420 | $ 3,420 |
Schedule of Plant, Property and
Schedule of Plant, Property and Equipment Estimated Lives Under Straight-line Method (Details) | 9 Months Ended |
Sep. 30, 2022 | |
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 Be
Schedule of Unrecognized Tax Benefits (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Accounting Policies [Abstract] | ||
Balance | $ 935 |
Schedule of Reconciliation of B
Schedule of Reconciliation of Basic and Diluted Loss Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Accounting Policies [Abstract] | |||||
Net loss | $ (1,712,992) | $ (1,396,632) | $ (8,302,546) | $ (8,505,696) | |
Weighted average shares outstanding – Basic and Diluted * | [1] | 6,932,931 | 6,399,158 | 6,885,213 | 5,870,632 |
Basic and Diluted | $ (0.25) | $ (0.22) | $ (1.21) | $ (1.45) | |
[1]Including 56,779 44,279 |
Schedule of Reconciliation of_2
Schedule of Reconciliation of Basic and Diluted Loss Per Share (Details) (Parenthetical) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||
Number of shares period increase decrease | 56,779 | 44,279 |
Schedule of Exchange Rates (Det
Schedule of Exchange Rates (Details) - Malaysia, Ringgits [Member] | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Minimum [Member] | Income Statement and Cash Flows Items [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Exchange rates | 4.34 | 4.13 | |
Maximum [Member] | Income Statement and Cash Flows Items [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Exchange rates | 1 | 1 | |
Balance Sheet Items [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Exchange rates | 4.64 | 4.18 | |
Balance Sheet Items [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Exchange rates | 1 | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Product Information [Line Items] | |||||
Provision for doubtful accounts | $ 1,316 | $ 262 | $ 2,376 | $ (3,328) | |
Impairment of long-lived assets | 0 | 0 | 0 | 0 | |
Research and development expense | 660 | 105,460 | 10,328 | 110,251 | |
Income Tax Expense | 167,532 | 180,593 | |||
Deferred Tax Liability Not Recognized, Amount of Unrecognized Deferred Tax Liability, Undistributed Earnings of Foreign Subsidiaries | 26,700,000 | 26,700,000 | $ 26,700,000 | ||
Unrecognized tax benefits | 935 | 935 | |||
Unrecognized tax benefits affect the effective tax rate | 0 | 900 | 0 | 900 | |
Income tax penalties and interest accrued | 0 | 0 | $ 0 | ||
Income tax penalties and interest | 0 | 7 | 0 | 21 | |
Advertising expense | $ 237,875 | $ 299,012 | $ 857,548 | $ 1,122,959 | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | No Customer [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 10% | 10% | 10% | 10% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 15% | 22% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customer [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 64% | 19% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Customer [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 13% | 14% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Customer [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 14% | ||||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Advances made to suppliers | $ 8,899 | $ 8,899 | $ 307,718 | ||
Accounts payable to suppliers | $ 219,097 | $ 219,097 | 125,636 | ||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Two Vendors [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 45% | ||||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor One [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 25% | 21% | 23% | 25% | |
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor Two [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 25% | 18% | 22% | 18% | |
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Three Vendors [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 62% | 56% | 56% | ||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor Three [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 12% | 17% | 13% | ||
Warrant [Member] | |||||
Product Information [Line Items] | |||||
Earnings per share, amount | 1,225,959 | 1,225,959 | 1,225,959 | 1,225,959 | |
Restricted Stock [Member] | |||||
Product Information [Line Items] | |||||
Earnings per share, amount | 142,500 | 5,000 | 142,500 | 5,000 | |
Share-Based Payment Arrangement, Option [Member] | |||||
Product Information [Line Items] | |||||
Earnings per share, amount | 134,000 | 340,500 | 134,000 | 340,500 | |
Shipping and Handling [Member] | |||||
Product Information [Line Items] | |||||
Costs and expenses | $ 1,222 | $ 1,585 | $ 1,398 | $ 4,524 | |
Diamond Bar Outdoors, Inc [Member] | |||||
Product Information [Line Items] | |||||
Goodwill, Impairment Loss | $ 0 | $ 0 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |||||
Inventory net | $ 12,760,772 | $ 12,760,772 | $ 17,656,175 | ||
Inventory write-down | $ 50,293 | $ 0 | $ 5,169,347 | $ 5,526,307 |
Schedule of Plant, Property a_2
Schedule of Plant, Property and Equipment (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | $ 879,616 | $ 961,198 |
Less: accumulated depreciation | (496,208) | (450,518) |
Property plant and equipment net | 383,408 | 510,680 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | 429,215 | 474,196 |
Decoration and Renovation [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | $ 450,401 | $ 487,002 |
Plant, Property and Equipment_3
Plant, Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 19,949 | $ 23,529 | $ 62,110 | $ 62,055 |
Advances to Suppliers (Details
Advances to Suppliers (Details Narrative) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Advance to suppliers | $ 42,802 | $ 707,264 |
Schedule of Prepaid Expenses an
Schedule of Prepaid Expenses and Other Receivables (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Prepaid Expenses And Other Receivables | ||
Prepaid expenses | $ 309,359 | $ 406,366 |
Other receivables | 30,245 | 120,634 |
Prepaid expenses and other receivable | $ 339,604 | $ 527,000 |
Schedule of Accrued Liabilities
Schedule of Accrued Liabilities and Other Payables (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Other payables | $ 6,493 | $ 6,893 |
Salary payable | 6,442 | 6,231 |
Financed insurance premiums | 141,945 | 134,173 |
Accrued auditing | 20,000 | |
Accrued commission | 85,221 | 66,507 |
Accrued expenses, others | 102,255 | 112,875 |
Total accrued liabilities and other payable | $ 362,356 | $ 326,679 |
Other Loans (Details Narrative)
Other Loans (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Jun. 19, 2020 | May 05, 2020 | May 04, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Short-Term Debt [Line Items] | |||||||
Proceeds from loans | $ 139,802 | ||||||
Debt instrument, description | The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. On June 5, 2020, Congress passed a new law that allowed current PPP borrowers to choose to extend the eight-week period to 24 weeks to use the funds, but which cannot be extended beyond December 31, 2020. | ||||||
Cathay Bank [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Proceeds from loans | $ 176,294 | ||||||
Debt instrument, description | Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. | ||||||
Debt instrument, maturity date | May 05, 2022 | ||||||
Interest rate percentage | 1% | ||||||
SBA Loan [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Proceeds from loans | $ 150,000 | ||||||
Debt instrument, description | payable monthly beginning 12 months from the date of the promissory note. | ||||||
Debt instrument, maturity date | Jun. 18, 2050 | ||||||
Interest rate percentage | 3.75% | ||||||
Accumulated interest | $ 4,272 | $ 4,328 | |||||
Interest Expense, Debt | $ 1,433 | $ 1,461 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Apr. 01, 2022 | Jan. 04, 2020 | Jan. 04, 2018 | Sep. 30, 2011 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Research and development expense | $ 660 | $ 105,460 | $ 10,328 | $ 110,251 | ||||
Sales Representative Agreement [Member] | ||||||||
Consulting agreement term | 2 years | 2 years | ||||||
Commission expense | 88,149 | 93,156 | 314,163 | 304,958 | ||||
Consultancy Agreement [Member] | ||||||||
Research and development expense | 29,181 | 317,152 | ||||||
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 | $ 34,562 | |||||||
Payments of rent | $ 8,641 | $ 17,280 | $ 17,281 | $ 34,561 |
Summary of Warrant Activity (De
Summary of Warrant Activity (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Equity [Abstract] | |
Number of warrants, outstanding | 1,225,959 |
Weighted average exercise price of warrant outstanding | $ / shares | $ 3.50 |
Weighted average remaining contractual term, Beginning balance | 5 years 7 days |
Warrants excercisable | |
Number of warrants, granted | |
Number of warrants, exercised/ surrendered | |
Number of warrants, expired | |
Number of warrants, outstanding | 1,225,959 |
Weighted average exercise price of warrant outstanding | $ / shares | $ 3.50 |
Weighted average remaining contractual term, Ending balance | 4 years 3 months 7 days |
Number of warrants, exercisable | 1,225,959 |
Weighted average exercise price of warrant exercisable | $ / shares | $ 3.50 |
Weighted average remaining contractual term, Exercisable | 4 years 3 months 7 days |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Equity [Abstract] | |
Number of Options, outstanding at Beginning | 340,500 |
Weighted Average Exercise Price per share, outstanding | $ / shares | $ 5.97 |
Weighted Average Remaining Contractual Term Beginning balance | 1 year 3 months 25 days |
Number of Options, Exercisable Outstanding at beginning | 340,500 |
Weighted average exercise price per share, exercisable | $ / shares | $ 5.97 |
Weighted average exercise price per share, exercisable | 1 year 3 months 25 days |
Number of Options, Granted | |
Number of Options, Exercised | |
Number of Options, Forfeited | 206,500 |
Weighted average exercise price per share,forfeited | $ / shares | $ 6.87 |
Number of Options, outstanding at ending | 134,000 |
Weighted Average Exercise Price per share, outstanding | $ / shares | $ 4.58 |
Weighted Average Exercise Price per share, outstanding | 1 year 6 months 29 days |
Number of Options, Exercisable Outstanding at Ending | 134,000 |
Weighted average exercise price per share, exercisable ,ending | $ / shares | $ 5.97 |
Weighted Average Remaining Contractual Term, Exercisable, Ending | 9 months 25 days |
Schedule of Stock Option Acti_2
Schedule of Stock Option Activity (Details) (Parenthetical) | Sep. 30, 2022 USD ($) $ / shares |
Equity [Abstract] | |
Intrinsic value of stock options | $ / shares | $ 0.74 |
Stock options outstanding intrinsic value | $ 0 |
Stock options exercisable intrinsic value | $ 0 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||
Apr. 01, 2023 | Jan. 01, 2023 | Nov. 15, 2022 | Oct. 01, 2022 | Sep. 30, 2022 | Aug. 15, 2022 | Jul. 02, 2022 | Jul. 02, 2022 | Jun. 30, 2022 | May 15, 2022 | Mar. 31, 2022 | Feb. 15, 2022 | Jan. 28, 2022 | Nov. 30, 2021 | Nov. 15, 2021 | Nov. 11, 2021 | Nov. 10, 2021 | Nov. 02, 2021 | Sep. 30, 2021 | Aug. 15, 2021 | Jul. 23, 2021 | Jun. 30, 2021 | May 15, 2021 | Mar. 31, 2021 | Feb. 15, 2021 | Nov. 16, 2020 | Nov. 10, 2020 | Aug. 31, 2020 | May 31, 2020 | Feb. 28, 2020 | Nov. 30, 2019 | Nov. 04, 2019 | Aug. 12, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Nov. 16, 2021 | Jun. 16, 2021 | Apr. 12, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Proceeds from offering, gross | $ 2,760,973 | $ 2,760,973 | ||||||||||||||||||||||||||||||||||||||
Stock issued to consultants | $ 169,620 | 9,900 | $ 476,980 | 29,700 | ||||||||||||||||||||||||||||||||||||
Options to purchase shares of common stock | ||||||||||||||||||||||||||||||||||||||||
Weighted average remaining contractual term | 1 year 3 months 25 days | |||||||||||||||||||||||||||||||||||||||
Chief Financial Officer [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Expected term | 5 years | |||||||||||||||||||||||||||||||||||||||
Expected volatility rate | 87% | |||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 1.49% | |||||||||||||||||||||||||||||||||||||||
Expected dividend rate | 0% | |||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 50% | |||||||||||||||||||||||||||||||||||||||
Options to purchase shares of common stock | 7,000 | |||||||||||||||||||||||||||||||||||||||
Weighted average exercise price | $ 3.85 | |||||||||||||||||||||||||||||||||||||||
Fair value of stock options, shares | 7,000 | |||||||||||||||||||||||||||||||||||||||
Weighted average remaining contractual term | 5 years | |||||||||||||||||||||||||||||||||||||||
Fair value of stock options | $ 18,318 | |||||||||||||||||||||||||||||||||||||||
Un-recognized stock based compensation expense | $ 114,159 | 114,159 | $ 114,159 | |||||||||||||||||||||||||||||||||||||
Consulting agreement [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 20,000 | |||||||||||||||||||||||||||||||||||||||
Proceeds from offering, gross | $ 39,600 | |||||||||||||||||||||||||||||||||||||||
Consulting agreement term | 1 year | |||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 25% | 25% | 25% | 25% | ||||||||||||||||||||||||||||||||||||
Share price per share | $ 1.98 | |||||||||||||||||||||||||||||||||||||||
Consulting expense amount | $ 9,900 | $ 29,700 | ||||||||||||||||||||||||||||||||||||||
Information Technology Consulting Agreement [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 50,000 | 100,000 | ||||||||||||||||||||||||||||||||||||||
Consulting agreement term | 1 year | |||||||||||||||||||||||||||||||||||||||
Share price per share | $ 2.36 | |||||||||||||||||||||||||||||||||||||||
Consulting expense amount | 59,485 | 176,515 | ||||||||||||||||||||||||||||||||||||||
Stock issued to consultants, shares | 100,000 | |||||||||||||||||||||||||||||||||||||||
Stock issued to consultants | $ 236,000 | |||||||||||||||||||||||||||||||||||||||
Information Technology Consulting Agreement [Member] | One Year Anniversary [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Number of shares | 50,000 | |||||||||||||||||||||||||||||||||||||||
Marketing Consulting Agreement [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 50,000 | 100,000 | ||||||||||||||||||||||||||||||||||||||
Consulting agreement term | 1 year | |||||||||||||||||||||||||||||||||||||||
Share price per share | $ 2.36 | |||||||||||||||||||||||||||||||||||||||
Consulting expense amount | 59,485 | 176,515 | ||||||||||||||||||||||||||||||||||||||
Stock issued to consultants, shares | 100,000 | |||||||||||||||||||||||||||||||||||||||
Stock issued to consultants | $ 236,000 | |||||||||||||||||||||||||||||||||||||||
Marketing Consulting Agreement [Member] | One Year Anniversary [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Number of shares | 50,000 | |||||||||||||||||||||||||||||||||||||||
Consulting Agreement One [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 20,000 | |||||||||||||||||||||||||||||||||||||||
Consulting agreement term | 1 year | |||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 25% | 25% | 25% | 25% | ||||||||||||||||||||||||||||||||||||
Share price per share | $ 2.33 | |||||||||||||||||||||||||||||||||||||||
Consulting expense amount | $ 11,650 | $ 34,950 | ||||||||||||||||||||||||||||||||||||||
Stock issued to consultants, shares | 20,000 | |||||||||||||||||||||||||||||||||||||||
Stock issued to consultants | $ 46,600 | |||||||||||||||||||||||||||||||||||||||
Advisory Service Agreement Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 40,735 | 82,306 | ||||||||||||||||||||||||||||||||||||||
Consulting agreement term | 12 months | |||||||||||||||||||||||||||||||||||||||
Payment to advisory fee | $ 10,000 | |||||||||||||||||||||||||||||||||||||||
Designer fee | $ 30,000 | $ 80,000 | ||||||||||||||||||||||||||||||||||||||
Consulting Agreement Two [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 50,000 | |||||||||||||||||||||||||||||||||||||||
Consulting agreement term | 1 year | |||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 25% | 25% | 25% | 25% | ||||||||||||||||||||||||||||||||||||
Share price per share | $ 0.72 | $ 0.72 | ||||||||||||||||||||||||||||||||||||||
Consulting expense amount | 9,000 | 9,000 | ||||||||||||||||||||||||||||||||||||||
Stock issued to consultants, shares | 50,000 | |||||||||||||||||||||||||||||||||||||||
Stock issued to consultants | $ 36,000 | |||||||||||||||||||||||||||||||||||||||
Employement Agreement [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 25% | 25% | 25% | 25% | ||||||||||||||||||||||||||||||||||||
Share price per share | $ 1.98 | |||||||||||||||||||||||||||||||||||||||
Consulting expense amount | 2,970 | 8,910 | ||||||||||||||||||||||||||||||||||||||
Restricted stock award, gross | 6,000 | |||||||||||||||||||||||||||||||||||||||
Stock issued during period, value, restricted stock award, gross | $ 11,880 | |||||||||||||||||||||||||||||||||||||||
Employement Agreement One [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 25% | 25% | 25% | 25% | ||||||||||||||||||||||||||||||||||||
Share price per share | $ 2.20 | |||||||||||||||||||||||||||||||||||||||
Consulting expense amount | $ 3,300 | $ 9,900 | ||||||||||||||||||||||||||||||||||||||
Restricted stock award, gross | 6,000 | |||||||||||||||||||||||||||||||||||||||
Stock issued during period, value, restricted stock award, gross | $ 13,200 | |||||||||||||||||||||||||||||||||||||||
Six Month Anniversary [Member] | Chief Financial Officer [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 50% | |||||||||||||||||||||||||||||||||||||||
Private Placement [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Stock issued | 1,114,508 | |||||||||||||||||||||||||||||||||||||||
Number of warrants to purchase common stock | 1,114,508 | |||||||||||||||||||||||||||||||||||||||
Warrants to purchase price per share | $ 2.80 | |||||||||||||||||||||||||||||||||||||||
Warrants to purchase price per share | $ 3.50 | |||||||||||||||||||||||||||||||||||||||
Proceeds from offering, gross | $ 3,120,622 | |||||||||||||||||||||||||||||||||||||||
Proceeds from offering, net | $ 2,760,000 | |||||||||||||||||||||||||||||||||||||||
Private Placement [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Expected term | 5 years 6 months | |||||||||||||||||||||||||||||||||||||||
Expected volatility rate | 107% | |||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 0.71% | |||||||||||||||||||||||||||||||||||||||
Expected dividend rate | 0% | |||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 2,018,597 | |||||||||||||||||||||||||||||||||||||||
Placement Agent [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Number of warrants to purchase common stock | 111,451 | |||||||||||||||||||||||||||||||||||||||
Warrants to purchase price per share | $ 3.50 | |||||||||||||||||||||||||||||||||||||||
2021 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Shares authorized | 3,000,000 | 3,000,000 | ||||||||||||||||||||||||||||||||||||||
2014 Omnibus Long-Term Incentive Plan [Member] | ||||||||||||||||||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||||
Expected term | 10 years | |||||||||||||||||||||||||||||||||||||||
Expected volatility rate | 87% | |||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 1.60% | |||||||||||||||||||||||||||||||||||||||
Expected dividend rate | 0% | |||||||||||||||||||||||||||||||||||||||
Vesting rights percentage | 25% | 25% | 25% | 25% | ||||||||||||||||||||||||||||||||||||
Options to purchase shares of common stock | 60,000 | |||||||||||||||||||||||||||||||||||||||
Weighted average exercise price | $ 2.80 | |||||||||||||||||||||||||||||||||||||||
Options term | 5 years | |||||||||||||||||||||||||||||||||||||||
Fair value of stock options, shares | 60,000 | |||||||||||||||||||||||||||||||||||||||
Grant date fair value | $ 114,740 |
Schedule of Revenue From Extern
Schedule of Revenue From External Customers by Geographic Area (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 3,016,104 | $ 2,916,571 | $ 10,495,097 | $ 9,798,154 |
North America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 2,766,486 | 2,850,262 | 9,863,167 | 9,237,435 |
Asia Excluding China [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | (1,034) | (2,028) | 61,247 | 248,118 |
Other Countries [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 250,652 | $ 68,337 | $ 570,683 | $ 312,601 |
Schedule of Long-lived Assets b
Schedule of Long-lived Assets by Geographic Areas (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | $ 3,103,846 | $ 3,669,414 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | 2,548,487 | 2,986,290 |
Asia [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | $ 555,359 | $ 683,124 |
Schedule of Lease Cost (Details
Schedule of Lease Cost (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating lease cost – straight line | $ 213,477 | $ 203,388 | $ 640,430 | $ 603,764 |
UNITED STATES | ||||
Weighted-average remaining lease term - years | 4 years 1 month 2 days | 4 years 1 month 2 days | ||
Weighted-average discount rate | 3.25% | 3.25% | ||
MALAYSIA | ||||
Weighted-average remaining lease term - years | 1 year 7 months 17 days | 1 year 7 months 17 days | ||
Weighted-average discount rate | 4.66% | 4.66% |
Schedule of Operating Lease Lia
Schedule of Operating Lease Liability Maturity (Details) | Sep. 30, 2022 USD ($) |
Lease | |
2022 (remainder) | $ 210,874 |
2023 | 807,868 |
2024 | 754,510 |
2025 | 701,142 |
Thereafter | 598,820 |
Total undiscounted cash flows | $ 3,073,214 |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Lease | ||
Operating cash outflows from operating leases | $ 632,766 | $ 210,922 |
Lease (Details Narrative)
Lease (Details Narrative) | Nov. 26, 2021 | Oct. 15, 2021 | Jul. 15, 2021 | Aug. 20, 2020 USD ($) | Aug. 20, 2020 MYR (RM) | Aug. 01, 2020 USD ($) | Aug. 01, 2020 MYR (RM) | Oct. 29, 2019 USD ($) | Oct. 29, 2019 MYR (RM) | Jul. 15, 2019 USD ($) | 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 | 2 years | 5 years | ||||||||||
Lease expiration date | Nov. 30, 2022 | Oct. 31, 2026 | Nov. 30, 2021 | Nov. 30, 2021 | Oct. 31, 2021 | Oct. 31, 2018 | |||||||
Extended term | 24 months | 5 years | 3 years | 6 years | |||||||||
Rental payment | $ 2,138 | RM 9,280 | $ 42,000 | ||||||||||
Operating lease annual rent expense increase | 3% | ||||||||||||
Sub Lease Agreement [Member] | |||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||
Term of contract | 2 years | 2 years | 2 years | 2 years | |||||||||
Lease expiration date | Jul. 31, 2023 | Aug. 31, 2022 | Aug. 31, 2022 | Jul. 14, 2021 | Jul. 14, 2021 | ||||||||
Extended term | 2 years | ||||||||||||
Rental payment | $ 6,912 | RM 30,000 | $ 8,065 | RM 35,000 | $ 4,608 | RM 20,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Mar. 08, 2022 | Dec. 28, 2018 |
Malpractice Insurance [Line Items] | ||
Loss contingency, allegations | On December 28, 2018, a federal putative class action complaint was filed by George Barney 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”). Richard Deutner and ITENT EDV were subsequently appointed as lead plaintiffs and, on June 18, 2019, filed an Amended Complaint | |
Plaintiffs description | Plaintiffs seek to represent a class of entities acquiring Nova’s stock from December 3, 2015 through December 20, 2018. They claim that during this period the Company: (1) overstated its purported strategic alliance with a customer in China to operate as lead designer and manufacturer for all furnishings in its planned $460 million senior care center in China; and (2) inflated sales in 2016 and 2017 by recognizing significant sales to two allegedly non-existent customers. | |
Litigation settlement, expense | $ 750,000 | |
Directors and Officers Liability Insurance [Member] | ||
Malpractice Insurance [Line Items] | ||
Retention payable, due in remainder of fiscal year | $ 750,000 |