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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 OR

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from ______________to_______________

 Commission
file number: 333-36259

 NOVA
LIFESTYLE, INC.

 (Exact
name of registrant as specified in its charter)

 Nevada

 90-0746568

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
 Employer

 Identification
 No.)

 6565
 E. Washington Blvd.

 Commerce,
 CA

 90040

 (Address
 of principal executive offices)

 (Zip
 Code)

 Registrant ' s
telephone number, including area code: (323) 888-9999

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, par value $0.001 per share

 NVFY

 Nasdaq
 Stock Market

 Securities
registered pursuant to Section 12(g) of the Act:

 None.

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 Yes
 No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 Yes
 No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

 Yes
 No

by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).

 Yes
 No

by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

 Yes
 No

 As
of June 30, 2023, the registrant's most recently completed second fiscal quarter, the aggregate market value of the common
stock held by non-affiliates of the registrant was approximately $ 2.34
million, based upon the closing price of the Company's common stock of $2.24 per share as reported on the same date.

 As
of April 11, 2024, there were 2,322,115 shares of common stock outstanding.

 DOCUMENTS
INCORPORATED BY REFERENCE:

 The
registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended
December 31, 2023. Portions of such definitive proxy statement are incorporated by reference into Part III of this Annual Report on Form
10-K.

 NOVA
LIFESTYLE, INC.

 Table
of Contents

 Page

 Item
 1.

 Business

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 Selected Financial Data

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures about Market Risk

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item
 10.

 Directors, Executive Officers and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal Accounting Fees and Services

 Item
 15.

 Exhibits, Financial Statement Schedules

 Financial Statements

 NOTE
ABOUT FORWARD-LOOKING STATEMENTS

 This
report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities
Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, regarding our company that include, but
are not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives
of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding
future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's
beliefs and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans,"
"predicts," "potential," "believes," "seeks," "hopes," "estimates,"
"should," "may," "will," "with a view to" and variations of these words or similar expressions
are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks,
uncertainties and assumptions that are difficult to predict.

 These
forward-looking statements involve various risks and uncertainties. Although we believe our expectations expressed in these forward-looking
statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from
our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are
generally set forth in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Our Business" and other sections in this report. You should read this report and the documents we
refer to thoroughly with the understanding that our actual future results may be materially different from and worse than what we expect.
Other sections of this report include additional factors which could adversely impact our business and financial performance.

 This
report contains statistical data we obtained from various publicly available government publications and industry-specific third-party
reports. Statistical data in these publications also include projections based on a number of assumptions. The markets for our products
may not grow at the rate projected by market data, or at all. The failure of these markets to grow at the projected rates may have a
material adverse effect on our business and the market price of our securities. In addition, the rapidly changing nature of our customers'
industries results in significant uncertainties in any projections or estimates relating to the growth prospects or future condition
of our markets. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual
results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

 Unless
otherwise indicated, information in this report concerning economic conditions and our industry is based on information from independent
industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available
information released by third party sources, as well as data from our internal research, and are based on such data and our knowledge
of our industry, which we believe to be reasonable. None of the independent industry publication market data cited in this report was
prepared on our or our affiliates' behalf.

 The
forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in
this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence
of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this
report completely and with the understanding that our actual future results may be materially different from what we expect.

 As
used in this report, "Nova LifeStyle," "Nova," the "Company," "we," "our"
and similar terms refer to Nova LifeStyle, Inc. and its subsidiaries, unless the context indicates otherwise.

 Our
functional currency is the U.S. Dollar, or USD. See Note 2 of the consolidated financial statements included herein.

 PART
I

 Item
1. Business

 Our
Company

 Nova
LifeStyle, Inc. ("Nova LifeStyle" or the "Company") is a U.S.-headquartered innovative designer and marketer
of contemporary styled residential and commercial furniture formerly known as Stevens Resources, Inc. We were incorporated in the State
of Nevada on September 9, 2009. The Company's products are marketed through wholesale and retail channels as well as various online
platforms worldwide.

 Nova
LifeStyle's family of brands includes Nova LifeStyle, Diamond Sofa ( www.diamondsofa.com) and Nova Living.

 Our
business strength lies in our abilities to quickly adapt to changing market demand and stay ahead of the latest trends in modern furniture
designs. Our customers principally consist of designers, distributors and retailers who cater to mid-level and high-end private label
home furnishings that have little product overlap within our specific furnishings products or product lines. Nova LifeStyle is constantly
seeking to integrate new sources of distribution and manufacturing that are aligned with our growth strategies, allowing us to continually
focus on growing our customer base as well as driving the expansion of our overall distribution and manufacturing relationships worldwide,
providing our customers with trendy furnishing solutions.

 We
generate the majority of our sales as a branding and marketing company with vertically integrated third-party manufacturing capabilities
for global furniture distributors and large national retailers. We have established long term relationships with our worldwide customers
by providing them with high quality, large scale and cost-effective sourcing solutions. Our worldwide logistics and delivery capabilities
provide our customers with the flexibility to select from our extensive furniture collections tailored for their respective needs. Our
experience marketing products to international customers have enabled us to fully integrate the supply scale, product delivery logistics,
marketing efficiency and design expertise to address customer demand from established markets in the North America, Central America,
South America, Asia, and the Middle East.

 Reverse
split

 On
December 18, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of December
20, 2019, at which time a 1-for-5 reverse stock split of the Company's authorized shares of common stock, par value $0.001, accompanied
by a corresponding decrease in the Company's issued and outstanding shares of common stock, was effected. On
May 22, 2023, the Company filed a Certificate of Change with the Nevada Secretary of State to effect a 1-for-5 reverse stock split,
which became effective upon filing (the "Reverse Stock Split"). As a result
of the reverse Stock Split, every 5 shares of the Company's common stock issued and outstanding immediately prior to the filing
of the Certificate of Change was consolidated into one issued and outstanding share. All stockholders who would be entitled to receive
fractional shares as a result of the Reverse Stock Split received one whole share for their fractional share interest. There was no change
in the par value of our common stock. All references to shares and per share data have been retroactively restated to reflect
such splits.

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

 Human
Capital Resources

 We
understand that our success depends on our ability to attract, train and retain our employees. We strive to attract, recruit, and retain
employees through competitive compensation and benefit programs, learning and development opportunities that support career growth and
advancement opportunities, and employee engagement initiatives that foster a strong Company culture. In addition to cash compensation,
we offer customary benefits in accordance with local regulatory requirements as well as stock options to our employees. We also recognize
the importance of keeping our employees safe. In response to the COVID-19 pandemic, we implemented changes that we determined were in
the best interest of our employees and have followed local government orders to prevent the spread of COVID-19. As of December 31, 2023,
we had 27 full time employees worldwide. Our U.S. corporate office and operations employed 24 full-time employees, our location in
Malaysia employed 3 full-time employees, respectively. We believe that relations with our employees are satisfactory.
We have no collective bargaining agreements with our employees.

 Our
History

 We
are a U.S. holding company that operates through several wholly-owned subsidiaries. We design and market residential and commercial furniture
products worldwide. Our subsidiaries include Nova Furniture Limited in the British Virgin Islands ("Nova Furniture"), Nova
Furniture Limited in Samoa ("Nova Samoa"), Diamond Bar Outdoors, Inc. ("Diamond Bar"), I Design Blockchain Technology,
Inc ("i Design"), Nova Living (M) SDN. BHD. ("Nova Malaysia") and Nova Living (HK) Group Limited ("Nova
HK"). Diamond Bar is a California corporation organized on June 15, 2000, which we acquired pursuant to a stock purchase agreement
on August 31, 2011. On April 24, 2013, we acquired all of the outstanding stock of Bright Swallow International Group Limited ("Bright
Swallow").

 On
September 23, 2016, Nova Furniture, a wholly-owned subsidiary of the Company (the "Seller"), entered into a Share Transfer
Agreement (the "Agreement") with Kuka Design Limited, an unrelated company incorporated in British Virgin Islands ("Kuka
Design BVI" or "Buyer"). Pursuant to the terms of the Agreement, the Seller sold all of the outstanding equity interests
in Nova Furniture (Dongguan) Co., Ltd. ("Nova Dongguan"), a company incorporated in China and a wholly owned subsidiary of
the Seller, to the Buyer for a total of $8,500,000 (the "Transaction"). Upon consummation of the Transaction on October 25,
2016, the Buyer became the sole owner of Nova Dongguan.

 On
November 10, 2016, Nova Furniture entered into a Trademark Assignment Agreement with Kuka Design BVI ("Assignee"). Pursuant
to the terms of the Trademark Assignment Agreement, Nova Furniture assigned the Assignee its full right to, and title in, the NOVA trademark
in China for $6,000,000.

 On
December 7, 2017, Nova LifeStyle, Inc. incorporated i Design under the laws of the State of California, USA. The purpose of i Design
is to build our own blockchain technology team. This new company will focus on application of blockchain technology in the furniture
industry, including encouraging and facilitating interactions among designers and customers, and building blockchain-powered platform
that enables designers to showcase their products including current and future furniture designs. This company is in a planning stage
and has had minimum operations to date.

 On
December 12, 2019, Nova LifeStyle, Inc. acquired Nova Malaysia which was incorporated in Malaysia on July 26, 2019. Nova Malaysia
was acquired to market and sell high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and real estate
projects in Malaysia and other regions in Southeast Asia.

 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 $2.50 million, pursuant to a formal agreement entered into on January 7, 2020. We received the payment on May
11, 2020. Operations of Bright Swallow were reported as discontinued operations in the accompanying consolidated financial statements
for all periods presented.

 Nova
Furniture Macao Commercial Offshore Limited ("Nova Macao") was organized under the laws of Macao on May 20, 2006 as a
wholly owned subsidiary of Nova Furniture. On October 14, 2020, the Macao Trade and Investment Promotion Institute approved that
Nova Macao's offshore license became invalid under the order of Repeal of Legal Regime of the Offshore Services by Macao
Special Administrative Region. Nova Macao was de-registrated and liquidated in January 2021 and its business was taken over by Nova
HK.

 On November 5, 2020, Nova LifeStyle, Inc. acquired Nova HK from unrelated
third party at cost of $1,290 which was incorporated in Hong Kong on November 6, 2019. Nova HK took over Nova Macao's business upon
its deregistration. Nova HK had minimum operations in 2021. On February 15, 2022, the Company
transferred its entire assets and business in Nova HK to Nova Malaysia. In February 2023, Nova HK was completed the process
of de-registration and liquidation. Operations of Nova HK were reported as discontinued operations in the
accompanying consolidated financial statements for all periods presented.

 Our
organizational structure as of December 31, 2023 is set forth in the diagram:

 Our
Products

 We
design and market modern residential and commercial furniture in diverse markets worldwide. Our products feature urban and contemporary
styles, combining comfort and functionality in matching furniture collections and upscale luxury pieces appealing to lifestyle-conscious
middle and upper middle-income consumers. We also sell physiotherapeutic jade mats for use in therapy clinics, hospitality, and real
estate projects in Malaysia and other regions in Southeast Asia. Many of our products are segments of multi-component furniture collections
in distinctive design styles, attractively priced in the medium and upper-medium ranges. Our product lines feature upholstered, wood
and metal-based furniture pieces. We classify our products by room, designation or series, such as living room, dining room, bedroom
and home office series, and by category or product types such as sofas, chairs, dining tables, beds, entertainment consoles, cabinets
and cupboards. Our largest selling product categories for the year ended December 31, 2023 were sofas, jade mats and beds, which accounted
for approximately 37%, 18% and 13% of sales from continuing operations, respectively. For the year ended December 31, 2022, our largest
selling product categories were sofas, beds and chairs, which accounted for approximately 41%, 15% and 11% of sales from continuing
operations, respectively. Our products are manufactured primarily from medium-density fiberboard, or MDF board, and particleboard covered
with veneers or lacquers and combined with other materials, including steel, glass, marble, leather, jade and fabrics.

 Our
product offerings consist of a mix of furnishings designed by us, and sourced from third party manufacturers that are supervised under
our rigorous quality control processes. Through market research, customer feedback, and ongoing design development, we identify the latest
trends and customer needs in target markets to develop new products, collections and brands. Our product collections are designed to
appeal to consumer preferences in specific markets. We develop both individual furniture pieces and complete furniture collections that
equip an entire home which feature matching furniture suites, providing convenient home furnishing options for lifestyle-conscious consumers.

 We introduce new collections and launch new design styles at international
furniture exhibitions or trade fairs. Our products are displayed in our showrooms. We further support our new product launches with product
brochures and online marketing campaigns. Our staff collects customer feedback and collaborates with customers worldwide to design store
and showroom layouts. In marketing materials, we highlight matching furniture collections by displaying complete and fully accessorized
whole-room settings instead of individual furniture pieces. We believe that such in-store presentations provide convenient, one-stop solutions
to customers, and thus incentivize clients to purchase an entire room of furniture from us instead of shopping for individual pieces offered
by different brands or manufacturers. Our products are mainly designed by our own designers and we also used independent designers in
the past for product design. Customer orders are filled by third party manufacturers under our direct quality control. We believe that
our products feature superior materials, attractive appearances, superb functionalities and satisfying price points generally desired
by today's middle to upper middle-income consumers worldwide.

 International
Markets

 We
have been selling products to the U.S., Canada, Honduras, Guam, Puerto Rico, Costa Rica, Colombia, Uruguay, Mexico, Cayman Islands,
Saudi Arabia, Kingdom of Saudi Arabia, Kuwait, Armenia and Middle Eastern markets under the Diamond Sofa brand and
selling our Jade Mats in Malaysia through Nova Malaysia. We believe that discretionary purchases of furniture by middle to upper
middle-income consumers will continue to increase in the furniture markets worldwide. We also believe that furniture products that
feature contemporary design styles such as ours will continue to attract significant customer demand.

 In
2023, our products were sold in 13 countries worldwide, with North America as our principal international market. Sales to North
America accounted for 79.1% and 94.2% of our total sales from continuing operations for 2023 and 2022, respectively. Sales to other
regions accounted for 20.9% and 5.8% of our total sales from continuing operations for 2023 and 2022, respectively. In 2023, via our
subsidiary, Nova Malaysia, we marketed and sold high-end physiotherapeutic jade mats for use in therapy clinics, hospitality, and
real estate projects in Malaysia. Due to the negative impact caused by COVID-19 in 2021 and 2022, we eventually sold the entire jade
mats inventory for $2.00 million in liquidation sales in June 2023 and existed from Jade Mats business. As we continue to broaden our distribution network, increase
direct sales and grow in the emerging markets, we believe that we are well positioned to respond to changing market conditions that
will allow us to take advantage of any upturns in the global and local economies of the markets that we serve.

 Our
expansion in Malaysia with health line products has also been disrupted due to COVID-19. Our initial plan was to establish showrooms
in which consumers can interact with our products. Through research, we found that consumers were becoming more self-aware about their
health and were willing to improve their lifestyles. Our showrooms were stocked and ready for local consumers to visit, however, due
to government regulations these operations have been suspended until quarantines and travel restrictions are lifted. In October 2021,
the Order was lifted for people who are fully vaccinated and our store has reopened since. We started the online sales of our jade mats products in Malaysia since
2021. In April 2022, Malaysia has reopened the border
for foreign visitors. In June 2023, everything is back to normal in Malaysia. Due to the negative
impact caused by COVID-19 from 2020 to 2022, the Company eventually sold the entire jade mats inventory for $2.00 million in liquidation
sales in June 2023 and existed from Jade Mats business.

 The furniture wholesale business faces several risks
that can impact its operations and profitability. Some common risks include: (i) Economic Instability: Fluctuations in the economy can
affect consumer spending on furniture, leading to decreased demand for products; (ii) Competition: Intense competition from other wholesalers,
retailers, and online platforms can impact market share and pricing strategies; (iii) Supply Chain Disruptions: Interruptions in the
supply chain, such as delays in shipping or shortages of raw materials or finished products, can hinder production and delivery schedules;
(iv) Changing Consumer Preferences: Shifts in consumer preferences towards sustainable, trendy, or customized furniture may require wholesalers
to adapt their product offerings; (v) Seasonal Demand: The furniture industry often experiences seasonal peaks and troughs, which can
impact cash flow and inventory management; (vi) Regulatory Challenges: Compliance with regulations related to product safety, environmental
standards, and labor practices can add complexity and costs to operations.

 In order to mitigate these risks, we will continue to diversify our product
range, build strong relationships with suppliers, closely monitor market trends, invest in technology for efficiency, and maintain a robust
risk management strategy.

 Our
global logistics and delivery capabilities provide our customers with the flexibility to select from our extensive furniture collections
to address their respective needs. We design and supply our products under our own brands. We also design and ship products for other
major brands as their OEM designer or supplier. We offer a wide selection of stand-alone furniture pieces across a variety of product
categories and approximately over 230 products developed exclusively for the international markets. We also sell products under the Diamond
Sofa brand to distributors and retailers in North America, South America, Asia and Middle East and to end-user U.S. consumers our own
online orders or through third-party shopping portals. Reflecting market demand, our research and development team works closely with
customers to timely modify our existing product designs. We also offer custom-designed styles for specific market segments.

 Sales
and Marketing

 Our
sales and marketing strategies target middle and upper middle class, urban consumers, including: (1) direct sales to the U.S. and international
customers; (2) internet sales and online marketing campaigns; and (3) participation in exhibitions and trade shows.

 We
diversify our customer base by increasing direct sales to a broad range of retailers and chain stores across the U.S. and international
markets. We plan to continue to expand our direct sales and marketing efforts in North America, and in particular the U.S., which historically
is the largest market worldwide for imported furniture. We intend to expand the "Diamond Sofa" brand and introduce new brands
for direct sales in the U.S. and international markets while continuing to offer custom-made products under private label.

 Diamond
Bar also currently sells products under the Diamond Sofa brand in the U.S. through third party shopping portals, shipping orders received
online directly to the end customer. We believe that our planned direct-to-consumer online sales and marketing strategies will increase
our sales in the U.S. by building our brand awareness and acting as an effective advertising vehicle. We also support new product collections
and brand launches with print and online advertising campaigns, participation in furniture exhibitions and by offering product brochures
and samples. We provide samples and brochures of new products for international markets to distributors and buyers, as is common in the
furniture industry.

 We gain new customers by attending many international furniture trade
shows throughout the years. During these events, we introduce new product offerings and launch new design collections. We believe this
marketing process helps us to develop and detect the latest-trends in the marketplace, allowing us to better understand the challenges
and opportunities facing distributors and buyers with whom we have long–standing customer relationships. We exhibit new products
under the "Diamond Sofa" brand during the Las Vegas Market (U.S.) and the High Point Market (U.S.) trade shows. Internationally,
we participate in trade fairs in collaboration with our customers. We plan to expand our business in the Middle East by attending several
furniture exhibitions in those markets, such as trade show in Dubai. To highlight our latest design collections, we maintain year-round
showrooms at the Company's headquarters in California as well as the High Point Market and Las Vegas Market.

 In
2022 and 2023, via our subsidiary Nova Malaysia, we marketed and sold high-end physiotherapeutic jade mats to individuals and
business companies in Malaysia.

 Suppliers
and Manufacturers

 We
source finished goods from third-party manufacturers to fulfill orders placed by customers through Diamond Bar and Nova Malaysia for
the U.S. and international markets. Our two principal suppliers of finished goods in 2023 accounted for approximately 36% of our total
purchases from continuing operations for 2023. By maintaining relationships with multiple suppliers, generally we benefit from a more
stable supply chain and better pricing. Under ordinary circumstances, if a change of suppliers is necessary, we believe that we can quickly
fulfill our requirements from other suppliers without interruptions in order fulfillment. We monitor our suppliers' ability to
meet our product needs and we participate in quality assurance activities to reinforce our high-quality standards. Our third-party manufacturing
contracts are generally of annual or shorter durations. We issue production orders to manufacturers based on individual purchase orders.
Our manufacturing relationships are non-exclusive, and we are permitted to procure products from other sources at our discretion. None
of our manufacturing contracts include production volume or purchase commitments on the part of either party. Our third-party manufacturers
are responsible for sourcing raw materials, agreeing to produce parts and finished products to our specifications. We hold our suppliers
to high quality standards and delivery deadlines. Our quality control procedures may extend to stringent requirements for raw material
suppliers.

 Currently, the factories in China
and India are in their normal operations. Shipping of products from Asia has experienced significant delays since the onset of the pandemic
and the costs of shipping from Asia have increased due to the pandemic, supply chain disruption and port congestion. In June 2022, all
the shipping and related costs from Asia have been back to normal. It is possible that our overseas' based manufacturers may experience
future suspensions of operations as a result of any resurgence or new variants of COVID-19.

 Customers

 Our
target end customer is the middle and upper middle-income consumer of residential and commercial furniture. In the U.S. and
international markets, our sales principally are to furniture distributors and retailers who in turn offer our products under their
own brands or under our Diamond Sofa brand. One customer accounted for 18% of the Company's sales and no customer accounted
for greater than 10% of our total sales from continuing operations for 2023 and 2022, respectively. We will increase direct sales to retailers and chain stores worldwide as we continue to diversify our customer base from global furniture
distributors.

 We
are focusing on establishing and growing long-term relationships with our customers. We believe that the majority of our customers view
us as a strategic long-term supplier and value the quality of our products, our timely delivery and design capabilities. We generally
negotiate renewable supplier agreements with firm pricing on our products, typically for a term of one year, as is customary in the furniture
industry, with individual orders made on standard purchase orders. In 2023, we sold products into approximately 14 countries worldwide,
with North America as our principal international market, while we expanded our sales in other regions. Sales to North America accounted
for 79.1% and 94.2% of our total sales from continuing operations for 2023 and 2022, respectively. The change was attributed principally
to our changing sales and marketing strategy to diversify international sales. Sales to other regions accounted for 20.9% and 5.8% of
our total sales from continuing operations for 2023 and 2022, respectively. We expect that a majority of our revenues will continue to
come from our sales to the U.S. and international markets. Diamond Bar has driven expansion of our
sales to the U.S., Mexico, and South America through Diamond Bar's longstanding customer relationships and distribution capabilities.
Diamond Bar's revenues accounted for 82.4% and 99.5% of our total sales from continuing operations for 2023 and 2022, respectively,
and Nova Malaysia's revenues accounted for 17.6% and 0.5% of our total sales from continuing operations for 2023 and 2022, respectively.
In addition, we anticipate increasing internet sales under the Diamond Sofa brand through third-party shopping portals and Nova Malaysia's
website. We believe that as we expand our broad network of distributors and increase direct sales, we will be better positioned to capitalize
on emerging market trends.

 We
typically used to experience stronger fourth calendar quarters as our product sales are subject to the seasonality and fluctuations typical
of the furniture industry. This industry-based seasonality was generally caused by shipping lead-times to international markets combined
with the real estate market slowdown and decrease in furniture consumption commonly experienced during the summer months in the Northern
Hemisphere markets in which the majority of our customers are located and our products sell at retail. However, due to the shipping backlog,
our fourth quarter's sales were worse than the first three quarters in 2022. We believe that consumer demand for furniture generally
reflects sensitivity to overall economic conditions, including, but not limited to, unemployment rates, housing market conditions and
consumer confidence.

 Competition

 The
furniture industry is large and highly competitive. The industry consists of many manufacturers, distributors and retailers, none of
which dominates the fragmented and diverse market. Our products principally compete in the U.S., Canada, Honduras, Guam, Puerto
Rico, Costa Rica, Colombia, Uruguay, Mexico, Cayman Islands, Saudi Arabia, Kingdom of Saudi Arabia, Kuwait, Armenia
and Malaysia and Middle Eastern markets. The primary competitive factors in these markets for our products and target consumers are
price, quality, style, marketing, functionality and availability.

 In
the U.S. and international markets, we compete against other furniture distributors and wholesalers which are mostly located in China
and other Southeast Asian countries. We also compete against traditional distributors in North America and Europe. We believe that we
have significant competitive advantages over North American and European distributors due to our superb customer service and a history
of prompt delivery of high-quality products. Our contemporary product designs have styles and functionality that are better than, or
at least comparable to, those offered by our higher-priced competitors. Our design team closely coordinates with our sales and marketing
staff to include customer feedback as part of their ongoing R&D improvement process, thus allows the Company to develop and timely
modify products to meet the changing stylistic and functional demands from our worldwide customers. We believe that our decades of product
experience and proven performance record offer competitive edges over many other suppliers. In addition to our design and logistical
capabilities, we believe that our experience from sourcing custom-made products for distributors presents significant benefits to our
customers.

 Environmental
and Regulatory Matters

 Our
operations are subject to various laws and regulations both domestically and abroad. In the U.S., federal, state and local regulations
impose standards on our workplace and our relationship with the environment. For example, the U.S. Environmental Protection Agency, Occupational
Safety and Health Administration and other federal agencies have the authority to promulgate regulations that may impact our operations.
In particular, we are subject to legislation placing restrictions on our generation, emission, treatment, storage and disposal of materials,
substances and wastes. Such legislation includes: the Toxic Substances Control Act; the Resource Conservation and Recovery Act; the Clean
Air Act; the Clean Water Act; the Safe Drinking Water Act; and the Comprehensive Environmental Response and the Compensation and Liability
Act (also known as Superfund). We are also subject to the requirements of the Consumer Product Safety Commission and the Federal Trade
Commission, in addition to regulations concerning employee health and safety matters. We believe the Company has complied with the relevant
federal, state, local and international requirements for environmental protection.

 Intellectual
Property

 We
rely on the trademark protection laws in the U.S. to protect our intellectual property and maintain our competitive position in the marketplace.
The Company and our subsidiaries currently hold two trademarks registered in the U.S. related to the "Diamond Sofa" brand.
In addition, we have registered and maintained numerous internet domain names related to our business, including "novalifestyle.com",
"novaliving.com.my" and "diamondsofa.com."

 Research
and Development

 We
believe that new product designs are important to our continued success. We actively seek to protect our product designs and brand names
under the trademark protection laws in the U.S., but the copying of a product's appearance is a common and ongoing issue in the
furniture industry as manufacturers seek to capitalize on popular designs and features by copying those of their competitors and making
subtle changes to avoid infringement claims. To remain competitive, we believe that we must constantly innovate to stay ahead of competitors.
We have developed a design process that enables us to better manage the short product life cycles for furniture designs by anticipating
and responding quickly to changing consumer preferences. Ordinarily, we strive to attend furniture exhibitions worldwide, conduct market
research and solicit customer feedback to help us identify new trends and customer needs in our target markets. We then incorporate customer
feedback into new product designs. We normally introduce new product collections annually for the U.S. and international markets. We
anticipate introducing new products under the "Diamond Sofa" brand on a quarterly basis for the U.S. market. At least annually,
we assess the marketing results for new designs in order to decide whether to continue with a particular line.

 We
use in-house designers and computer-aided modeling systems to generate design and related development work. We have used independent
designers in the past for product design, from which we built prototype furniture pieces for refinement and testing. During 2023,
Nova Malaysia spent $3.12 million on developing Virtual and Augmented reality software and AI system for potential consulting
business. The entire system is far from complete as it requires to integrate with other components in order to be functional. It is
still in development stage and not in operation. In 2023 and 2022, we invested $3.12 million and $10,917, respectively, on research and
development expense. We may increase future investments in R&D based on our growth needs.

 Furniture
Industry Regulations and Standards

 We
and our products are subject to U.S. and international regulations related to the furniture industry.

 Our
products are subject to the mandatory and voluntary furniture test standards of the U.S. and international markets in which our products
are distributed to end consumers, including those developed by the American National Standards Institute, or ANSI, Business and Institutional
Furniture Manufacturer's Association, or BIFMA, ASTM International, California Air Resources Board, or CARB, Furniture Industry
Research Association, or FIRA, and the International Organization for Standardization, or ISO. These environmental, ecological and formaldehyde
emission standards and source of origin labeling requirements are national or international, with the U.S. and European Union typically
having the strictest standards for their markets. We source products from third party manufacturers and we rely on them to meet all local
manufacturing standards.

 Employees

 As
of December 31, 2023, we had 27 full time employees worldwide. Our U.S. corporate office and operations employed 24 full-time employees,
our location in Malaysia employed 3 full-time employees, respectively. We believe that relations
with our employees are satisfactory. We have no collective bargaining agreements with our employees.

 Item
1A. Risk Factors

 Our
business and an investment in our securities are subject to a variety of risks. The following risk factors describe the most significant
events, facts or circumstances that could have a material adverse effect upon our business, financial condition, results of operations,
ability to implement our business plan and the market price for our securities. Additional risks and uncertainties that presently are
not considered material or are not known to us, and therefore are not mentioned herein, may impair our business operations. Many of these
events are outside of our control. If any of these risks actually occurs, our business, financial condition or results of operations
may be materially adversely affected. In such case, the trading price of our common stock could decline and investors in our common stock
could lose all or part of their investment.

 Risks Related to Our Business

 Changes
in economic conditions in the industries and markets served by our customers could adversely affect demand for our products.

 The
furniture industry is subject to cyclical variations in the global economy and to uncertainty regarding future economic prospects. Our
business is affected by the number of orders we are able to secure from our customers, which is determined by the level of our customers'
business activity. Our customers' level of business activity is in turn determined by the level of consumer spending in the markets
our customers serve. Economic downturns could affect discretionary consumer spending habits by decreasing the overall demand for residential
and commercial furniture. Any significant or prolonged decline of the economy or inflation in U.S., Malaysia, China or other international
markets in which our products are sold will affect disposable income and spending by consumers in these markets, and may lead to a decrease
in demand for our products. To the extent that decrease in demand for consumer products translates into a decline in the demand for residential
and commercial furniture, our sales and financial performance could be adversely affected. Any economic downturn also could negatively
impact our primary customers, furniture wholesalers, distributors and retailers, possibly resulting in a decrease in our sales or earnings.
Changes in interest rates, consumer confidence, new housing starts, existing home sales, inflation, the availability of consumer credit
and geopolitical factors could have particularly significant effects on our consolidated financial condition, results of operations and
cash flows. Any decline in economic activity and conditions in the industries and markets served by our customers and in which we operate
may reduce demand for our products and could adversely affect our financial condition and results of operations. The COVID-19 pandemic
has materially adversely impacted the global economy which in turn adversely affected the demand for our products.

 We
historically have derived a substantial part of our sales from a limited number of customers. If we lose any of these customers, or any
of these customers reduce the amount of business they do with us, our sales may be adversely affected.

 Historically,
a substantial part of our sales was attributed to a limited number of customers. But we had no sales to a customer greater than 10% of
our total sales from continuing operations for 2022 and 2021. If the demand for our products decreases in one or more of the markets
supplied by our largest customers, or if there are any material social or regulatory changes in these markets, our sales could decline
and we could lose market share, any of which could materially harm our business. We do not foresee relying on these same customers for
sales generation as we expand our business to increase our internet sales and direct sales to the U.S. and other international markets.
We cannot assure you, however, that we will be able to successfully implement these plans.

 Our
decision to move away from low margin products and to eliminate customers who generate low margin sales and that have slow payment histories
could result in a decrease in our future sales and earnings.

 As
we implement our plan to transition to high profit margin products and fast paying clients, we cannot assure that the transition will
be successful and that we will eventually develop enough new business to make up the loss of sales from the existing low margin products
and slow paying clients. If we are unable to develop enough new clients for our high profit margin products, our sales and net income
will be negatively impacted.

 If
we lose our key personnel, or are unable to attract and retain additional qualified personnel, the quality of our services may decline
and our business may be adversely affected.

 We
rely heavily on the expertise, experience and continued services of our senior management, including our Chief Executive Officer, President,
Director and Chairperson, Ms. Lam, and our Chief Financial Officer, Mr. Chuang. Loss of their services could adversely affect our ability
to achieve our business objectives. Ms. Lam and Mr. Chuang are key factors in our success at establishing relationships within the furniture
industry in the U.S. and international market and capital market because of their extensive industry and financial experience. The continued
development of our business depends upon their continued employment. We have entered into employment agreements with Ms. Lam and Mr.
Chuang that include provisions for non-competition and confidentiality.

 We
believe our future success will depend upon our ability to retain key employees and our ability to attract and retain other skilled personnel.
We cannot guarantee that any employee will remain employed by us for any period of time or that we will be able to attract, train or
retain qualified personnel in the future. Such loss of personnel could have a material adverse effect on our business and company. Furthermore,
we will need to employ additional personnel to expand our business. Qualified employees are in great demand and may be unavailable in
the time frame required to satisfy our customers' requirements. There is no assurance we will be able to attract and retain sufficient
numbers of highly skilled employees in the future. The loss of personnel or our inability to hire or retain sufficient personnel at competitive
rates could impair the growth of our business.

 We
may not be able to keep pace with competition in our industry, which could adversely affect our market share and result in a decrease
in our future sales and earnings.

 The
furniture industries in the U.S. and international markets are very competitive and fragmented. Our business is subject to risks associated
with competition from new or existing industry participants who may have more resources and better access to capital. Many of our competitors
and potential competitors may have substantially greater financial and government support, technical and marketing resources, larger
customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. Among
other things, these industry participants compete with us based upon price, quality, style, functionality and availability. We cannot
be sure we will have the resources or expertise to compete successfully in the future. Some of our competitors may also be able to provide
customers with additional benefits at lower overall costs to increase market share. We cannot be sure we will be able to match cost reductions
by our competitors or that we will be able to succeed in the face of current or future competition. Also, due to the large number of
competitors and their wide range of product offerings, we may not be able to continue to differentiate our products through value, styling
or functionality from those of our competitors. In addition, some of our customers are also performing more manufacturing services themselves.
We may face competition from our customers as they seek to become more vertically integrated. As a result, we are continually subject
to the risk of losing market share, which may lower our sales and earnings.

 We
will face different market dynamics and competition as we develop new products to expand our presence in our target markets. In some
markets, our future competitors may have greater brand recognition and broader distribution than we currently enjoy. We may not be as
successful as our competitors in generating revenues in those markets due to the lack of recognition of our brands, lack of customer
acceptance, lack of product quality history and other factors. As a result, any new expansion efforts could be more costly and less profitable
than our efforts in our existing markets. If we are not as successful as our competitors are in our target markets, our sales could decline,
our margins could be impacted negatively and we could lose market share, any of which could materially harm our business.

 We
may lose U.S. market share due to competition and our dependence on production facilities located outside the U.S., which would result
in a decrease in our future sales and earnings.

 We
compete in the U.S. market principally through our sales under the Diamond Sofa brand. The furniture industry in the U.S. is very competitive
and fragmented. We compete with many domestic U.S. and international furniture sources, including national department stores, regional
or independent specialty stores, dedicated franchises of furniture manufacturers and retailers marketing products through catalogs and
over the internet. There are few barriers to entry in the U.S. furniture market, and new competitors may enter this market at any time.
Some of our competitors have greater financial resources than we have and often offer extensively advertised and well-recognized branded
products. We may not be able to meet price competition or otherwise respond to competitive pressures in the U.S. market. We also may
not be able to continue to differentiate our products from those of our competitors in the U.S. through value, styling and functionality
because of the large number of competitors and their wide range of product offerings. Furthermore, some large furniture retailers in
the U.S. are sourcing products directly from furniture manufacturers located in China and other Southeast Asian countries instead of
through distributors like us. Over time, this practice may expand to smaller retailers in the U.S. Accordingly, we are continually subject
to the risk of losing U.S. market share, which may decrease our future sales and earnings. Because we source products from third party
manufacturers that are located outside the U.S. and we are subject to risks caused by disruption of international transportation such
as COVID-19 and other health pandemics as well as the increase of tariffs imposed by the U.S. customs. We might loss business and our
reputation might be damaged if there is delay of delivery and shipment from our suppliers.

 Failure
to anticipate or timely respond to changes in fashion and consumer preferences could adversely impact our business.

 Furniture
is a styled product and is subject to rapidly changing fashion trends and consumer preferences, as well as to increasingly shorter product
life cycles. We believe our past performance has been based on, and our future success will depend, in part, upon our ability to continue
to improve our existing products through product innovation and to develop, market and produce new products. We cannot assure you that
we will be successful in introducing, marketing and producing any new products or product innovations, or that we will develop and introduce
in a timely manner innovations in our existing products that satisfy customer needs or achieve market acceptance. Our success also depends
upon our ability to anticipate and respond in a timely manner to fashion trends related to residential and commercial furniture. If we
fail to identify and respond to these changes, our sales could decline and we could lose market share, any of which could materially
harm our business.

 If
we are unable to manage our growth, we may not be profitable.

 Our
continued success depends, in part, upon our ability to manage and expand our operations and facilities in the face of continued growth.
This planned growth includes the expansion of our internet sales and diversifying our international sales by expanding our broad network
of distributors, increasing direct sales in the U.S. and other international markets and entering emerging growth markets. The growth
in our operations has placed, and may continue to place, significant demands on our management, operational and financial infrastructure.
If we do not manage our growth effectively, the quality of our products and services could suffer, which could negatively affect our
operating results. To manage this growth effectively, we will need to continue to improve our operational, financial and management controls
and our reporting systems and procedures. We cannot assure you that we will be able to fulfill our staffing requirements for our business,
successfully train and assimilate new employees, or expand our management base and enhance our operating and financial systems. Failure
to achieve any of these goals will prevent us from managing our growth in an effective manner and could have a material adverse effect
on our business, financial condition or results of operations.

 We
may need additional capital to execute our business plan and fund operations and may not be able to obtain such capital on acceptable
terms or at all.

 In
connection with the development and expansion of our business, we may incur significant capital and operational expenses. We believe
that we can increase our sales and net income by implementing a growth strategy that focuses on (i) increasing online sales and (ii)
diversifying our international sales. We plan to increase and diversify our sales to the U.S. and international markets by establishing
new brands for the international markets and to increase our online sales presence.

 In
the event that available funds are not sufficient to meet our operating needs and our plans for expansion, we intend to pursue alternative
financing arrangements, including additional bank loans based on our good credit rating or funds raised through additional offerings
of our equity or debt, if and when we determine such offerings are required. Our ability to obtain additional capital on acceptable terms
or at all is subject to a variety of uncertainties, including:

 Investors'
 perceptions of, and demand for, companies in our industry;

 Investors'
 perceptions of, and demand for, companies sourcing from China and other Asian countries;

 Conditions
 of the U.S. and other capital markets in which we may seek to raise funds;

 Our
 future results of operations, financial condition and cash flows;

 Governmental
 regulation of foreign investment in companies in particular countries;

 Economic,
 political and other conditions in the U.S., China, and other countries; and

 Governmental
 policies relating to foreign currency.

 There
is no assurance we will be successful in locating a suitable financing transaction in a timely fashion or at all. In addition, there
is no assurance we will obtain the capital we require by any other means. Future financings through equity investments are likely to
be dilutive to our existing shareholders. Also, the terms of securities we may issue in future capital transactions may be more favorable
for our new investors. Newly-issued securities may include preferences or superior voting rights, be combined with the issuance of warrants
or other derivative securities, which may have additional
dilutive effects. Furthermore, we may incur substantial costs in pursuing future capital and financing, including investment banking
fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our
financial condition. If we cannot raise additional funds on favorable terms or at all, we may not be able to carry out all or parts of
our strategy to maintain our growth and competitiveness.

 We
may experience material disruptions to our ability to acquire sufficient inventory from third-party suppliers that could result in material
delays, quality control issues, increased costs and loss of business opportunities, which may negatively impact our sales and financial
results.

 We
rely upon our third-party suppliers to produce our products and maintain sufficient inventory to meet customer demand. A material disruption
at our suppliers' manufacturing facilities could prevent us from meeting customer demand, reduce our sales and negatively impact
our financial results. We may also experience quality control issues as we seek out new suppliers or are forced to contract with new
suppliers to meet customer demand. Any such material disruption may prevent us from shipping our products on a timely basis, reduce our
sales and market share and negatively impact our financial results. Our third-party supplier contracts are generally of annual or shorter
duration, or manufactured products are sourced on the basis of individual purchase orders. There is no assurance that we will be able
to maintain our current relationships with these parties or, if necessary, establish future arrangements with other third-party suppliers
on commercially reasonable terms. Further, while we maintain an active quality control program, we cannot assure that their manufacturing
and quality control processes will be maintained at a level sufficient to meet our inventory needs or prevent the inadvertent sale of
substandard products. While we believe that products manufactured by our current third-party suppliers could generally be procured from
alternative sources, temporary or permanent loss of services from a significant manufacturer could cause disruption in our supply chain
and operations.

 Our
dependence on foreign suppliers and our increased global operations subject us to a variety of risks and uncertainties that could impact
our operations and financial results.

 In
2022 and 2023, the majority of our products were purchased from foreign suppliers and manufacturers, predominantly in Asia. Our dependence
on foreign suppliers means that we may be affected by changes in the value of the U.S. dollar relative to other foreign currencies.
For example, any upward valuation in the Chinese yuan or any other foreign currency against the U.S. dollar may result in higher
costs to us for those goods. Declines in foreign currencies and currency exchange rates might negatively affect the profitability
and business prospects of one or more of our foreign suppliers. This, in turn, might cause such foreign vendors to demand higher
prices for products in their effort to offset any lost profits associated with any currency devaluation, delay product shipments to
us, or discontinue selling to us, any of which could ultimately reduce our sales or increase our costs.

 We,
and our foreign suppliers, are also subject to other risks and uncertainties associated with changing economic and political conditions
worldwide. These risks and uncertainties include import duties and quotas, compliance with anti-dumping regulations, port congestion,
supply chain disruption, work stoppages, economic uncertainties and adverse economic conditions (including inflation and recession),
government regulations, employment and labor matters, wars and fears of war, political unrest, natural disasters, public health issues,
regulations to address climate change and other trade restrictions. We cannot predict whether any of the countries from which our raw
materials or products are sourced, or in which our products are currently manufactured or may be manufactured in the future, will be
subject to trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any such restrictions.
Any event causing a disruption or delay of imports from foreign suppliers, including labor disputes resulting in work disruption, the
imposition of additional import restrictions, restrictions on the transfer of funds and/or increased tariffs or quotas, or both, could
increase the cost, reduce the supply of merchandise available to us, or result in excess inventory if merchandise is received after the
planned or appropriate selling season, all of which could adversely affect our business, financial condition and operating results.

 A
delay in getting non-U.S.-sourced products through port operations and customs in a timely manner could result in reduced sales, canceled
sales orders and unanticipated inventory accumulation.

 Our
business depends on our ability to source and distribute products in a timely manner. As a result, we rely on the free flow of goods
through open and operational ports worldwide. Supply chain disruption and port congestions caused by COVID-19 have caused delay of shipment
and delivery of our products. Any disruptions at ports create significant risks for our business, particularly if work slowdowns, quarantines,
lockdowns, strikes or other disruptions occur during our peak importing seasons. Any of these factors could result in reduced sales,
canceled sales orders and unanticipated inventory accumulation and have a material adverse effect on our operating results, financial
position and cash flows.

 Increases
in income tax rates, changes in income tax laws or disagreements with tax authorities could adversely affect our business, financial
condition or results of operations.

 We
are subject to income taxes in the United States and in certain foreign jurisdictions in which we operate. Increases in income tax rates
or other changes in income tax laws that apply to our business could reduce our after-tax income from such jurisdiction and could adversely
affect our business, financial condition or results of operations. In addition, the United States and many of the other countries in
which our products are distributed or sold, including countries in which we have significant operations, have recently made or are actively
considering changes to existing tax laws.

 In
October 2018, the Macao Legislative Assembly has approved a bill revoking the current offshore law, to abolish the relevant
legislation on the Macao offshore business regime. Starting on January 1, 2021, the exemptions of stamp duty, professional tax (for
individuals) and complementary tax (for corporations) will no longer be available to these offshore institutions. On October 14,
2020, the Macao Trade and Investment Promotion Institute approved that Nova Macao's offshore license became invalid under the
order of Repeal of Legal Regime of the Offshore Services by Macao Special Administrative Region. Nova Macao was de-registered and
liquidated in January 2021 and its business was taken over by Nova HK. In February 2022, Nova HK also entered into a de-registration
and liquidation process and all of Nova HK's inventory was transferred to Nova Malaysia on February 15, 2022. In February 2023, Nova HK completed the process of de-registration and liquidation.

 Additional
changes in the U.S. tax regime or in how U.S. multinational corporations are taxed on foreign earnings, including changes in how existing
tax laws are interpreted or enforced, could adversely affect our business, financial condition or results of operations.

 We
are also subject to regular reviews, examinations and audits by the IRS and other taxing authorities with respect to income and non-income
based taxes both within and outside the United States. Economic and political pressures to increase tax revenues in jurisdictions in
which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and
the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in
an adverse impact on our business, financial condition or results of operations. In addition, in connection with the Organization for
Economic Co-operation and Development Base Erosion and Profit Shifting project, companies are required to disclose more information to
tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries.

 We
are subject to warranty claims for our products, which could result in unexpected expense.

 Many
of our products carry warranties for defects in quality and workmanship. Historically, the amount for return of products, the discount
provided to the customers due to defects and cost for the replacement parts has been immaterial. However, we may experience significant
expense as the result of future product quality issues, product recalls or product liability claims which may have a material adverse
effect on our business. The actual costs of servicing future warranty claims may exceed our expectations and have a material adverse
effect on our results of operations, financial condition and cash flows.

 We
are subject to periodic litigation, product liability risk and other regulatory proceedings, which could result in unexpected expense
of time and resources.

 From
time to time, we may be a defendant in lawsuits and regulatory actions relating to our business. Due to the inherent uncertainties of
litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome
could have a material adverse effect on our business, financial condition and results of operations. In addition, any significant litigation,
regardless of its merits, could divert management's attention from our operations and may result in substantial legal costs. The
Company has been named in a putative securities class action case and two derivatives cases, details See Item 3 Legal Proceedings.
 While the Company believes it has adequate defenses, the defense of those cases are costly and could significantly divert
management attention from its business.

 We
may not be able to protect our product designs and other proprietary rights adequately, which could adversely affect our competitive
position and reduce the value of our products and brands, and litigation to protect our intellectual property rights may be costly.

 We
attempt to strengthen and differentiate our product portfolio by developing new and innovative brands and product designs and functionality.
As a result, our trademarks and other intellectual property rights are important assets to our business. Our success will depend in part
on our ability to obtain and protect our products, methods, processes and other technologies, to preserve our trade secrets, and to operate
without infringing on the proprietary rights of third parties in China, the U.S. and other international markets. Despite our efforts,
any of the following may reduce the value of our owned and used intellectual property:

 Issued
 and trademarks that we own or have the right to use may not provide us with any competitive advantages;

 Our
 efforts to protect our proprietary rights may not be effective in preventing misappropriation of our intellectual property or that
 of those from whom we license our rights to use;

 Our
 efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior
 to those we use or develop; or

 Another
 party may obtain a blocking patent and we or our licensors would need to either obtain a license or design around the patent in order
 to continue to offer the contested feature or service in our products.

 Effective
protection of intellectual property rights may be unavailable or limited in China or certain other countries. Policing the unauthorized
use of our proprietary technology can be difficult and expensive. Litigation might be necessary to protect our intellectual property
rights, which may be costly and may divert our management's attention away from our core business. Furthermore, there is no guarantee
that litigation would result in an outcome favorable to us. If we are unable to protect our proprietary rights adequately, it would have
a negative impact on our operations.

 We,
or the owners of the intellectual property rights licensed to us, may be subject to claims that we or such licensors have infringed the
proprietary rights of others, which could require us and our licensors to obtain a license or change designs.

 Although
we do not believe any of our products infringe upon the proprietary rights of others, there is no assurance that infringement or invalidity
claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against us or those from
whom we have licenses or that any such assertions or prosecutions will not have a material adverse effect on our business. Regardless
of whether any such claims are valid or can be asserted successfully, defending against such claims could cause us to incur significant
costs and could divert resources away from our other activities. In addition, assertion of infringement claims could result in injunctions
that prevent us from distributing our products. If any claims or actions are asserted against us or those from whom we have licenses,
we may seek to obtain a license to the intellectual property rights that are in dispute. Such a license may not be available on reasonable
terms, or at all, which could force us to change our designs.

 We
incur significant costs as a result of our operating as a public company and our management is required to devote substantial time to
compliance with the regulatory requirements placed on a public company.

 As
a public company with substantial operations, we incur significant legal, accounting and other expenses. The costs of preparing and filing
annual, quarterly and current reports, proxy statements and other information with the SEC and furnishing audited reports to shareholders
is time-consuming and costly.

 It
has also been time-consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required
by the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and this remains an ongoing process. Certain members of our management
have limited or no experience operating a company whose securities are listed on a national securities exchange or with the rules and
reporting practices required by the federal securities laws as applied to a publicly traded company. We have needed to recruit, hire,
train and retain additional financial reporting, internal control and other personnel in order to develop and implement appropriate internal
controls and reporting procedures.

 Our
ongoing investment in new products is inherently risky, and could disrupt our current operations.

 We
have invested and expect to continue to invest in new products. Our plan to market and sell high-end physiotherapeutic jade mats for
use in therapy clinics, hospitality, and real estate projects in Malaysia and other regions in Southeast Asia is a reflection of our
ongoing efforts to innovate and provide useful products in new geographical markets. Such endeavors including the investment of jade
mats in Malaysia involve significant risks and uncertainties, including insufficient revenues from such investments to offset any
new liabilities assumed and expenses associated with these new investments, inadequate return of capital on our investments,
distraction of management from current operations, and risks and competition not discovered in our due diligence and decision making
of such strategy plans could cause us to fail to realize the anticipated benefits of such investments and incur unanticipated
liabilities. Due to the negative impact caused by COVID-19 in 2021 and 2022, we eventually sold the entire jade mats inventory for
$2.00 million in liquidation sales and existed from Jade Mats business in June 2023. Because the development and investment in new
products and markets are inherently risky, no assurance can be given that such plans will be successful and will not adversely
affect our reputation, financial condition, and operating results.

 Cybersecurity incidents could disrupt business
operations, result in the loss of critical and confidential information and adversely impact our reputation and results of operations.

 Global cybersecurity threats can range from uncoordinated
individual attempts to gain unauthorized access to our information technology ("IT") systems to sophisticated and targeted
measures known as advanced persistent threats. While we employ measures to prevent, detect, address and mitigate these threats (including
access controls, data encryption, vulnerability assessments, continuous monitoring of our IT networks and systems and maintenance of backup
and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation,
destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties)
and the disruption of business operations. While no cybersecurity attack to date has had a material impact on our financial condition,
results of operations or liquidity, the threat remains and the potential consequences of a material cybersecurity incident include reputational
damage, litigation with third parties, diminution in the value of our investment in research, development and engineering, and increased
cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness and results of operations.

 If
we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately.
Any inability to report and file our financial results accurately and timely could harm our business and adversely affect the trading
price of our common stock.

 We
are required to establish and maintain internal controls over financial reporting and disclosure controls and procedures and to comply
with other requirements of the Sarbanes-Oxley Act and the rules promulgated by the SEC. Our management has concluded that our internal
control over financial reporting was effective as of December 31, 2023. See "Item 9A. Controls and Procedures." However,
our management, including our Chief Executive Officer and Chief Financial Officer, cannot guarantee that our internal controls and disclosure
controls and procedures will prevent all possible errors. Because of the inherent limitations in all control systems, no system of controls
can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent
limitations include the possibility that judgments in decision-making can be faulty and subject to simple error or mistake. Furthermore,
controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the
controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, measures
of control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

 We
are a holding company that depends on cash flow from our wholly owned subsidiaries to meet our obligations, and any inability of our
subsidiaries to pay us dividends or make other payments to us when needed could disrupt or have a negative impact on our business.

 We
are a holding company with no material assets other than the stock of our wholly owned subsidiaries, Diamond Bar, Nova Furniture, Nova
Samoa and Nova Malaysia. We rely on dividends paid by our subsidiaries for our cash needs, including the funds necessary to pay dividends
and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. If our subsidiaries
are unable to pay us dividends and make other payments to us when needed because of regulatory restrictions or otherwise, we may be materially
and adversely limited in our ability to make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise
fund and conduct our business.

 If
relations between the U.S. and China worsen, our business could be adversely affected as we have to find new suppliers and manufacturers
out of China.

 Political
tensions between the United States and China have escalated due to, among other things, trade disputes, the COVID-19 outbreak,
sanctions imposed by the U.S. Department of Treasury on certain officials of the Hong Kong Special Administrative Region and the
central government of the PRC and the executive orders issued by then U.S. President that prohibit certain transactions with certain
Chinese companies and their applications. Rising political tensions could reduce levels of trades, investments, technological
exchanges and other economic activities between the two major economies, which would have a material adverse effect on global
economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our
business, prospects, financial condition and results of operations. Controversies may arise in the future between these two
countries. These controversies also could make it more difficult for us to provide our products to our customers in the U.S. and
China. The international trade policies of China and the U.S. could adversely affect our business, and the imposition of trade
sanctions relating to imports, taxes, import duties and other charges on imports from China, including those applied specifically to
furniture products, or the imposition of taxes, import duties or other charges on exports to the U.S. could increase our costs and
decrease our earnings. Due to an increase in tariffs imposed by the U.S., some customers are seeking alternative resources instead
of China, which has negatively affected the purchase orders and our sales as we mainly resource our products from China. In order to
avoid these new tariffs, the market has shifted towards an uncertain era. The Company started to source certain of its new products
from manufacturers in India in 2020. Sales during this stage may also be impacted by this shift in behavior. The U.S. government
currently has the increased tariffs of 25% for the furniture products from China. During this time period our company will continue to seek alternatives and new
resources to increase the revenue. If and to the extent we are not able to mitigate the effects of such trade or tariff policies,
our operations may be adversely affected.

 Our
compliance with the Foreign Corrupt Practices Act may put us at a competitive disadvantage, while our failure to comply with the Foreign
Corrupt Practices Act may result in substantial penalties.

 We
are required to comply with the United States Foreign Corrupt Practices Act, or the FCPA, which prohibits U.S. companies from engaging
in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Although we inform our
personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for
which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe
penalties. Non-U.S. companies, including some of our competitors, are not subject to the provisions of the FCPA. Corruption, extortion,
bribery, pay-offs, theft and other fraudulent practices occur from time to time in Asian countries that we conduct
business. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving
our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses,
which would put us at a disadvantage.

 Risks
Related to Our Securities

 Our
shares may be delisted under the HFCA Act and related regulations if the PCAOB is unable to inspect our auditor, and the delisting of
our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

 The
Holding Foreign Companies Accountable Act was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed
audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive
years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter
trading market in the United States. On June 22, 2021, the U.S. Senate passed the AHFCA Act, which, if enacted, would amend the HFCA
Act and require the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, a legislation entitled the Consolidated Appropriations
Act, was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision
to AHFCA Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act
from three years to two, thus reducing the time period before our securities may be prohibited from trading or delisted if our auditor
is unable to meet the PCAOB inspection requirement.

 Our
financial statements contained in the annual report on Form 10-K for the year ended December 31, 2021 have been audited by Centurion ZD CPA & Co. (" Centurion
ZD"), an independent registered public accounting firm that is headquartered in Hong Kong. Centurion ZD, is a firm registered with the
PCAOB, and is required by the laws of the U.S. to undergo regular inspections by the PCAOB to assess its compliance with the laws of
the U.S. and professional standards. However, because Centurion ZD. is based in Hong Kong, a jurisdiction where the PCAOB was unable
to conduct inspections without the approval before December 2022, Centurion ZD and its audit work were not inspected independently and
fully by the PCAOB.

 On
December 16, 2021, the PCAOB issued its determinations (the "Determination") that they are unable to inspect or investigate
completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong. The Determination includes lists
of public accounting firms headquartered in mainland China and Hong Kong that the PCAOB is unable to inspect or investigate completely.
Centurion ZD is headquartered in Hong Kong and was included in the PCAOB Determinations.

 On
October 7, 2022, the Company dismissed its independent accountant, Centurion ZD. On
October 6, 2022, the Audit Committee of the Board of Directors of the Company and the Board of Directors of the Company, resolved to,
and did, cause the Company to engage WW as the Company's independent auditor for the fiscal year ending December 31, 2022. WWC
is located in the United States and has not been identified by the PCAOB as a firm that the PCAOB is unable to fully inspect and investigate.

 On
December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered
public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary.
However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will
consider the need to issue a new determination.

 If
PCAOB is unable to inspect or investigate completely our auditor, it could cause the trading in our securities to be prohibited under
the Holding Foreign Companies Accountable Act and related regulations, and as a result Nasdaq may delist our securities. If our securities
are unable to be listed on another securities exchange, such a delisting would substantially impair your ability to sell or purchase
our securities when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact
on the price of our ordinary shares. Further, new laws and regulations or changes in laws and regulations could affect our ability to
list our securities on Nasdaq, which could materially impair the market for and market price for our securities.

 The
market price for our common stock may be volatile, which could make it more difficult or impossible for an investor to sell our common
stock for a positive return on their investment.

 The
trading price of our common stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors
include, but are not limited to, our quarterly operating results or the operating results of other companies in our industry, announcements
by us or our competitors of acquisitions, new products, product improvements, commercial relationships, intellectual property, legal,
regulatory or other business developments and changes in financial estimates or recommendations by stock market analysts regarding us
or our competitors. In addition, the stock market in general, and the market for companies that became public by means of a reverse acquisition
with a public shell company in particular, has experienced extreme price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies for reasons unrelated or disproportionate to their operating performance.
These broad market fluctuations may materially affect our stock price, regardless of our operating results. Furthermore, the market for
our common stock historically has been limited and we cannot assure you that a larger market will ever be developed or maintained. Market
fluctuations and volatility, as well as general economic, market and political conditions, could reduce our market price. As a result,
these factors may make it more difficult or impossible for you to sell our common stock for a positive return on your investment.

of our common stock lack a significant trading market, which could make it more difficult for an investor to sell our common stock.

 Our
common stock is traded on The NASDAQ Stock Market LLC. However, there is no assurance that an active trading market in our common stock
will be sustained. As a result, an investor may find it more difficult to dispose of our common stock.

 If
we fail to continue to meet the listing standards of NASDAQ, our common stock may be delisted, which could have a material adverse effect
on the liquidity of our common stock.

 Our
common stock is currently listed on the Nasdaq Capital Market. The NASDAQ Stock Market LLC has requirements that a company must meet
in order to remain listed on NASDAQ. In particular, NASDAQ rules require us to maintain a minimum bid price of $1.00 per share of our
common stock. The Company was notified on January 18, 2019 that pursuant to NASDAQ Listing Rule 5810(c)(3)(A), it was afforded 180 calendar
days to regain compliance with the minimum bid price requirement and was also provided an additional 180 days grace period. On December
18, 2019, we filed a Certificate of Change with the Secretary of State of Nevada with an effective date of December 20, 2019 to effect
a 1-for-5 reverse stock split of the Company's common stock to meet the $1.00 per share minimum closing bid price requirement.
On January 9, 2020, we received a written notification from the NASDAQ Stock Market Listing Qualifications Staff indicating that the
Company has regained compliance with the $1.00 minimum closing bid price requirement for continued listing on the NASDAQ Capital Market.

 On
June 24, 2022, the Company received a letter from Nasdaq notifying the Company that, because the closing bid price for the Company's
common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer meets the minimum bid price requirement
for continued listing on Nasdaq under Nasdaq Marketplace Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share (the
"Minimum Bid Price Requirement"). T he
Company has a period of 180 calendar days from the date of notification, until December 21, 2022 (the "Compliance Period"),
to regain compliance with the Minimum Bid Price Requirement. On December 22, 2022, the Company received a written notification from the
Nasdaq indicating that the Company has been granted an additional 180 calendar day period or until June 19, 2023, to regain compliance
with the $1.00 minimum closing bid price requirement for continued listing on the NASDAQ Capital Market pursuant to NASDAQ Listing Rule.
 On May 22, 2023, we filed a Certificate of Change with the Secretary of State of Nevada to effect a 1-for-5 reverse stock
split of the Company's common stock to meet the $1.00 per share minimum closing bid price requirement. On June 8, 2023, we received
a written notification from the NASDAQ Stock Market Listing Qualifications Staff indicating that the Company has regained compliance
with the $1.00 minimum closing bid price requirement for continued listing on the NASDAQ Capital Market.

 In
addition, we may be unable to meet other applicable NASDAQ listing requirements, including maintaining minimum levels of stockholders'
equity or market values of our common stock in which case, our common stock could be delisted. If our common stock were to be delisted,
the liquidity of our common stock would be materially adversely affected and the market price of our common stock could decrease.

 Future
sales of shares of our common stock by our shareholders could cause our stock price to decline.

 Future
sales of shares of our common stock could adversely affect the prevailing market price of our stock. As of April 11, 2024, Steven Qiang
Liu, our largest shareholder and vice president of the Company, owned approximately 17.3% of our outstanding shares of common stock.
If Mr. Liu sells a large number of shares, or if we issue a large number of shares, the market price of our stock could decline. Moreover,
the perception in the public market that significant shareholders might sell shares of our stock could depress the market for our shares.
If such shareholders sell substantial amounts of our common stock in the public market, such sales could create a circumstance commonly
referred to as an "overhang," in anticipation of which the market price of our common stock could fall. The existence of
an overhang, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing
through the sale of equity or equity-related securities in the future at a time and price we deem reasonable or appropriate.

 We
may issue additional shares of our common stock or debt securities to raise capital or complete acquisitions, which would reduce the
equity interest of our shareholders.

 Our
Articles of Incorporation, as amended, authorize the issuance of up to 250,000,000 shares of common stock, par value $0.001 per
share. As of April 11, 2024, there were 247,677,855 authorized and unissued shares of our common stock available for future
issuance, based on 2,322,115 shares of our common stock issued and outstanding. Although we have no commitments as of the date of
this report to issue our securities, we may issue a substantial number of additional shares of our common stock or debt securities
to complete a business combination or to raise capital. On October 13, 2023, we renewed a shelf registration statement on Form S-3
under which we may, from time to time, sell securities in one or more offerings up to a total dollar amount of $55,000,000. The
shelf registration statement was declared effective as of October 23, 2023.

 The
issuance of additional shares of our common stock may significantly reduce the equity interest of our existing shareholders and adversely
affect prevailing market prices for our common stock.

 We
do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.

 We
do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will
depend on earnings, financial condition and other business and economic factors affecting it at such time as the Board of Directors may
consider relevant. We are a holding company that depends on cash flow from our wholly owned subsidiaries to meet our obligations, and
any inability of our subsidiaries to pay us dividends or make other payments to us when needed could disrupt or have a negative impact
on our business. Our management intends to follow a policy of retaining all of our earnings to finance the development and execution
of our strategy and the expansion of our business. If we do not pay dividends, our common stock may be less valuable because a return
on your investment will occur only if our stock price appreciates.

 Our
principal shareholders have the ability to exert significant control in matters requiring a shareholder vote and could delay, deter or
prevent a change of control in our company.

 As
of April 11, 2024, Steven Qiang Liu, our largest shareholder, owned approximately 17.3% of our outstanding shares of common stock. Mr.
Liu may exert significant influence over us, giving him the ability, among other things, to exercise significant control over the election
of all or a majority of the Board of Directors and to approve significant corporate transactions that require the shareholders'
approval. Such share ownership and control may also have the effect of delaying or preventing a future change in control, impeding a
merger, consolidation, takeover or other business combination, or discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our company. Without the consent of Mr. Liu, we could be prevented from entering into potentially beneficial
transactions if such transactions conflict with our principal shareholder's interests. As an officer of the Company, Mr. Liu owes
a fiduciary duty to our shareholders and must act in good faith in a manner he reasonably believes to be in the best interests of our
shareholders. As a shareholder, Mr. Liu is entitled to vote his shares in his own interests, which may not always be in the interests
of our shareholders.

 Provisions
in the Nevada Revised Statutes and our Amended and Restated Bylaws could make it very difficult for an investor to bring any legal actions
against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors
or officers in any such actions.

 Members
of our Board of Directors and our officers may have no liability for breaches of their fiduciary duty of care as a director or officer,
except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Amended and Restated Bylaws as authorized
by the Nevada Revised Statutes. Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not
individually liable to the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or
her capacity as a director or officer unless it is proven that (1) the director's or officer's act or failure to act constituted
a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct,
fraud or a knowing violation of law. This provision is intended to afford directors and officers protection against and to limit their
potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly,
you may be unable to prevail in a legal action against our directors or officers even if they have breached their duty of care. In addition,
our Amended and Restated Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses
resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or
officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement
they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may
adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices
for our common stock.

 Short
sellers of our stock may be manipulative and may drive down the market price of our common stock.

 Short
selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third
party with the intention of buying identical securities at a later date to return to the lender. A short seller hopes to profit from
a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as
the short seller expects to pay less in that purchase than it received in the sale. Since it is in the short seller's interest
for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations
regarding the relevant issuer, its business prospects and similar matters calculated to or which may create negative market
momentum, which may permit them to obtain profits for themselves as a result of selling the stock short. Issuers whose securities
have historically had limited trading volumes and/or have been susceptible to relatively high volatility levels can be particularly
vulnerable to such short seller attacks. On December 21, 2018, Seeking Alpha published a report that contained various false
allegations against the Company, which has driven down the market price of our common stock. The author of that article disclosed
that he had accumulated a short position in the Company's common stock prior to the publication of the article. As of December
31, 2018, the closing price of our common stock as reported on the NASDAQ Stock Market was $2.30 per share, representing a decrease of $1.55
per share compared to $3.85 per share, the closing price of our common stock as of December 20, 2018. The stock prices are all before our reverse stock splits in 2019 and 2023.

 Although
we have timely responded to the false allegations set forth in the Seeking Alpha article, we cannot assure you that false, misleading
and/or defamatory articles will not be published again in the future. The publication of any such commentary regarding us in the future
may bring about a temporary, or long term, decline in the market price of our common stock. No assurances can be made that similar declines
in the market price of our common stock will not occur in the future, in connection with such commentary by short sellers or otherwise.

 Item
1B. Unresolved Staff Comments

 Not
applicable.

 Item
1C. Cybersecurity

 Information technology (IT) is critical to many of our operating activities
and is subject to security threats and increasingly sophisticated cyber-attacks. As a result, we have policies and processes in place
to assess, identify, and manage the strategic and operational IT-related risks as an integrated part of our overall risk management system.
These risks include the risk of cyber-attacks on IT infrastructure and intellectual property, as well as on cybersecurity for our online
product offerings. The Company has adopted Risk Assessment Methodology Policy, Information Security Policy and Incident Response Plan
Policy to managing material risks from cybersecurity threats and hired IT consultant to help managing cybersecurity risks. When the Company
uses a third party service provider and shares sensitive data such service provider, it must adhere to the compliance requirements in
the Service Agreement which includes an acknowledgement that the service provider is responsible for safeguard and the security of the
sensitive data. As of date of this report, there has been no previous cybersecurity incidents, have materially affected the Company yet.
The independent director of the Board Charlie La is responsible for the oversight of risks from cybersecurity threats on behalf of the
Board. Mr. Teng Ai Leng, our IT consultant and Tawny Lam, Chief Executive Officer of the Company report to Mr. Charlie La and Board of
Directors for cybersecurity risks and incidents. Teng AI Leng has 29 years of working experience in the Information technology industry.
The Company has adopted Incident response plan policy, including Roles and Responsibilities, Incident Categories, Categories of Event,
Incident Severity, Escalation Levels, and Incident Response Life Cycle, so that the weakness, events, alerts and incidents can be appropriately
managed and escalated from IT personnel, IT consultant, Chief Executive Officer to independent director and the Board.

 Item
2. Properties

 Our
principal executive offices and those of Diamond Bar are in leased office space with showroom, distribution and warehouse space in Commerce,
California. Diamond Bar also maintains showrooms in leased space at Las Vegas Market in Nevada and High Point Market in North Carolina. Nova Malaysia is in leased office space with showroom,
service center and warehouse space in Kuala Lumpur, Malaysia.

 We
believe that our existing office and distribution facilities are adequate for current and presently foreseeable operations. In general,
our properties are well maintained, considered adequate and being utilized for their intended purposes. See Note 15 to our consolidated
financial statements contained herein, which discloses lease agreements.

 Item
3. Legal Proceedings

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

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

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

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

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

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

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

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

 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, it is expected that the stay of the derivative actions will be lifted.

 While
these derivative actions are purportedly asserted on behalf of the Company, when they are subsequently activated, it is possible that
the Company may directly incur attorneys' fees and costs in advancing the costs of defense for its current directors and officers
pursuant to contractual and legal indemnity obligations. 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.

 Item
4. Mine Safety Disclosures

 Not
applicable.

 PART
II

 Item
5. Market for Registrant ' s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Market

 Since
January 17, 2014, our common stock has been quoted on The NASDAQ Stock Market under the symbol "NVFY." On April 11,
2024, the closing price for our common stock as reported on the NASDAQ Stock Market was $2.45 per share.

 Holders
of Record

 On
April 11, 2024, there were approximately 50 holders of record based on information provided by our transfer agent.
Many of our shares of common stock are held in street or nominee name by brokers and other institutions on behalf of shareholders and
we are unable to estimate the total number of shareholders represented by these record holders.

 Dividend
Policy

 Dividends
may be declared and paid out of legally available funds at the discretion of our Board of Directors. We do not anticipate or contemplate
paying dividends on our common stock in the foreseeable future. The timing, amount and form of dividends, if any, will depend on, among
other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.
We currently intend to utilize all available funds to develop our business.

 Item
6. Selected Financial Data

 Not
required.

 Item
7. Management ' s Discussion and Analysis of Financial Condition and Results of Operations

 Safe
Harbor Declaration

 The
following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with
our consolidated financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from the results described in
or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this
Annual Report on Form 10-K, particularly under the heading " Risk Factors. "

 Overview

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

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

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

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

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

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

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

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

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

 Discontinued
Operations

 On
 February 15, 2022, we transferred entire assets and business
of Nova HK to Nova Malaysia, one of our subsidiaries. O perations of Nova HK were reported
as discontinued operations in the accompanying consolidated financial statements for all periods presented.

 Principal
Factors Affecting Our Financial Performance

 Since 2019, we have moved away from low margin products and this move
was intended to improve our gross profit margin, receivable collections and net profitability, and to increase our return on long-term
equity. We terminated sales and marketing efforts to customers that represented a high purchase volume but low profit margin, and we adjusted
our product line, which included the launch of our Summer 2023 Collection in the Las Vegas and High Point Markets, with a view to attracting
a higher-end ultimate customer. The core focus of the Company's direction today is entirely centered on product. Identifying a fashion-driven
generational shift in the general perception and consumption of furniture and being more aware of actual consumer tastes and how best
to fulfill and engage that need. Closely integrating product development alongside marketing results in appealing products that adheres
to the scope of our target demographic of decision makers in the design, staging and retail fields. A process that is continually refined
upon each release cycle, maintaining a singular, cohesive vision. In short, we have better identified our customers and how to cater to
them – in the process gaining greater traction with every product launch considerably more so on an international level than ever
previous. We believe these new strategies, will provide us with significant long term growth opportunities. Significant factors that we
believe could affect our operating results are the (i) prices of our products to our domestic and international retailer and wholesaler
customers and their markups to end consumers; (ii) general economic conditions in the U.S., Chinese, and other international markets;
and (iii) trade tariffs imposed by the United States on certain products manufactured in China; and (iv) the consequences of the COVID-19
outbreak throughout the world; and (v) high interest rate, inflation and slow- down in real estate market. We believe most of our customers
are willing to pay for our high quality and stylish products, timely delivery, and strong production capacity at price levels which we
expect will allow us to maintain a relatively high gross profit margin for our products. We do not manufacture our products, but instead
we utilize third-party manufacturers. In response to the tariffs imposed by the United States on certain products manufactured in China,
we are in the process of shifting a portion of our product manufacturing from third-party manufacturers located in China to third-party
manufacturers located in other parts of Asia, such as Vietnam, India and/or Malaysia, countries unaffected by the tariffs. Implementation
of a relocation of manufacturing (which by necessity includes an assessment of the factory's ability to deliver the quantity of
the product, in accordance with the Company's specifications, and in accordance with the Company's quality control requirements)
is time-consuming, but a portion of our manufacturing has been transitioned to Malaysia and India starting in 2020 and we expect that
more of our manufacturing will be transitioned to one or more of these venues. Some of our manufacturing will continue to be performed
in China because the intellectual know-how necessary to manufacture certain products is not generally available in other Asian countries.
Consumer preference trends favoring high quality and stylish products and lifestyle-based furniture suites should also allow us at least
to maintain our gross profit margins. The markets in North America (excluding the United States) remains challenging because such markets
are experiencing a slow-down and may be entering a recession due to high interest rate and inflation.

 Critical
Accounting Policies

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

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

 Basis
of Presentation

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

 Reverse
Split

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

 Amendments
to Articles of Incorporation

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

 Use
of Estimates

 In
preparing 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.

 Accounts
Receivable

 Our accounts receivable arises from product sales. We do not adjust
receivables for the effects of a significant financing component at contract inception if we expect to collect the receivables in one
year or less from the time of sale. We do not expect to collect receivables greater than one year from the time of sale. Our policy is
to maintain an allowance for expected credit losses on accounts receivable. We review the composition of accounts receivable and analyze
historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns
to evaluate the adequacy of these reserves. We maintained an allowance for expected credit loss of $532 and $2,914 as of December 31,
2023 and 2022, respectively. During the years ended December 31, 2023 and 2022, expected credit losses (reversal) provision from continuing
operations was ($2,382) and $1,870, respectively. During the years ended December 31, 2023 and 2022, provision for allowance for expected
credit losses from discontinued operations were $0. As of December 31, 2023, we had gross receivable of $47,530 of which none was over
90 days past due. The allowance for expected credit losses is our best estimate of the amount of expected credit losses in our existing
trade accounts receivable. We determine the allowance based on historical bad debt experience, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns.

to Suppliers

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

Taxes

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 Living (HK) Group Limited ("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 year ended December 31, 2023, the Company has calculated
its best estimate of the impact of the GILTI in its income tax provision in accordance with its understanding of the Act and guidance
available as of the date of this filing.

 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 December 31, 2023 and 2022, the accumulated undistributed earnings generated by its foreign subsidiaries were approximately
$25.4 million and $25.6 million of which substantially all was previously subject to U.S. tax, the one-time transition tax on foreign
unremitted earnings required by the Tax Act, or GILTI. Those earnings are considered to be permanently reinvested and accordingly, no
deferred tax expense is recorded for U.S. federal and state income tax or applicable withholding taxes.

 As of December 31, 2023 and 2022, unrecognized tax benefits were approximately
$0. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was $0 as of December
31, 2023 and 2022.

 A reconciliation of unrecognized tax benefits excluding interest and
penalties ("Gross UTB") for the years ended December 31, 2023 and 2022, is as follows:

 Gross
 UTB

 2023

 2022

 Balance – January 1

 $
 -

 $
 -

 Foreign exchange adjustment

 -

 -

 Balance – December 31

 -

 -

 As of December 31, 2023 and 2022, the Company had cumulatively accrued
approximately $0 for estimated interest and penalties related to unrecognized tax benefits. The Company recorded interest and penalties
related to unrecognized tax benefits as a component of income tax benefit, which totaled $0 for the years ended December
31, 2023 and 2022, respectively, related to the Company's continuing operations. The Company does not anticipate any significant
changes to its unrecognized tax benefits within the next 12 months.

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

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

 Revenue
Recognition

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

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

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

 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 our customer.

 Our
sales policy allows for the return of product within the warranty period if the product is defective and the defects are our fault. As
alternatives for the product return option, the customers have the option of asking us for a discount for products with quality issues,
or of receiving replacement parts from us at no cost. The amount of reserves for return of products, the discount provided to the customers,
and cost for the replacement parts were immaterial for the years ended December 31, 2023 and 2022.

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

Currency Translation and Transactions

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

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

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:

 sheet items, except for equity accounts

 31, 2023

 RM4.59
 to 1

 31, 2022

 RM4.40
 to 1

 statement and cash flow items

 For
 the year ended December 31, 2023

 RM4.56
 to 1

 For
 the year ended December 31, 2022

 RM4.40
 to 1

 Segment
Reporting

 ASC
Topic 280, "Segment Reporting," requires use of the "management approach" model for segment reporting. The management
approach model is based on the way a company's chief operating decision maker organizes segments within the company for making
operating decisions, assessing performance and allocating resources. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management disaggregates a company.

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

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

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

 New
Accounting Pronouncements

 Recently
Adopted Accounting Standards

 In
June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments, 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 probable, incurred loss model and
is applicable to the measurement of credit losses on financial assets measured at amortized cost basis. Am entity should apply ASU 2016-13
on a modified-retrospective transition approach that would require a cumulative-effect adjustment to the opening retained earnings in
the balance sheets as of the date of adoption. In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for trouble debt restructurings
by creditors and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally,
ASU 2022-02 requires disclosure of gross writeoffs by year of origination for receivables within the scope of Subtopic 326-20, Financial
Instruments - Credit Losses - Measured at Amortized Cost, which should be applied prospectively. Both ASU 2016-13 and ASU 2022-02 are
effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those
fiscal years. The Company adopted ASU 2016-13 and ASU 2022-02 beginning January 1, 2023. The adoption of ASU 2016-13 and ASU 2022-02
did not have any impact on our condensed consolidated financial statement presentation or disclosures.

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

 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 our 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 our condensed
consolidated financial statements.

 Recently
Issued But Not Yet Adopted Accounting Pronouncements

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

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

 Results
of Operations

 Comparison
of Years Ended December 31, 2023 and 2022

 The
following table sets forth the results of our operations for the years ended December 31, 2023 and 2022. Certain columns may not add
due to rounding.

 Years
 Ended December 31,

 2023

 2022

 $

 %
 of
 Sales

 $

 %
 of
 Sales

 Net sales

 $
 11,087,459

 $
 12,744,871

 Cost of sales

 (6,913,902
)

 %

 (20,526,484
)

 %

 Gross profit (loss)

 4,173,557

 %

 (7,781,613
)

 (61
)%

 (10,592,105
)

 (96
)%

 (8,440,738
)

 (66
)%

 Loss from operations

 (6,418,548
)

 (58
)%

 (16,222,351
)

 (127
)%

 Other expenses, net

 (573,617
)

 (5
)%

 (851,166
)

 (7
)%

 tax expenses

 (731,092
)

 (7
)%

 (2,400
)

 %

 Loss from continuing operations

 (7,723,257
)

 (70
)%

 (17,075,917
)

 (134
)%

 Loss
 from discontinued operations

 -

 -
 %

 (25,754
)

 %

 Net
 loss

 (7,723,257
)

 (70
)%

 (17,101,671
)

 (134
)%

 Net
Sales

 Net
sales from continuing operations for the year ended December 31, 2023 were $11.09 million, a decrease of 13% from $12.74 million for
2022. This decrease in net sales resulted primarily from a 33% decrease in average selling price, partially offset by a 31% increase
in sales volume. Our three largest selling product categories for the year ended December 31, 2023 were sofas, jade mats and beds, which
accounted for approximately 37%, 18% and 13% of sales from continuing operations, respectively. For the year ended December 31, 2022,
the three largest selling categories were sofas, beds and chairs, which accounted for approximately 41%, 15% and 11% of sales from continuing
operations, respectively.

 The
$1.66 million decrease in net sales from continuing operations for the year ended December 31, 2023, compared to the year of 2022, was
mainly due to decreased sales to North America and other countries. Sales to North America decreased by 27% to $8.77 million for the
year ended December 31, 2023, compared to $12.01 million for 2022, such decrease mainly due to inflation, U.S. tightening monetary policy,
reducing the purchasing power of the customers and thus making them less willing to spend in nonfood categories. Sales to other countries
decreased by $344,849 to $330,159 for the year ended December 31, 2023, from $675,008 for 2022, primarily due to less direct container
sales in other countries. However, the decrease in net sales from continuing operations was partially offset by the increase in sales
to Asia. Sales to Asia increased by $1.93 million to $1.99 million for the year ended December 31, 2023, compared to $0.06 million for
2022, such increase mainly due to our liquidation sales of the entire inventory of jade mats in Nova Malaysia for $1.95 million.

 Cost
of Sales

 Cost
of sales from continuing operations consists primarily of costs of finished goods purchased from third-party manufacturers. Total cost
of sales from continuing operations decreased by 66% to $6.91 million for the year ended December 31, 2023, compared to $20.53 million
for 2022. Cost of sales as a percentage of sales decreased to 62% for the year ended December 31, 2023, compared to 161% for 2022. The
decrease in cost of sales in dollar term and cost of sales as a percentage of sales was mainly a result of our decreased inventory write
down of $0.14 million, primarily for the products in U.S., for the year ended December 31, 2023, compared to $12.90 million of inventory
write down, primarily for the jade mats in Malaysia, for 2022.

 Moreover,
if total cost of sales from continuing operations excluded our inventory write down of $0.14 million and $12.90 million for the years
ended December 31, 2023 and 2022, respectively, total cost of sales from continuing operations would decrease by 11% to $6.77 million
for the year ended December 31, 2023, compared to $7.62 million for 2022, and cost of sales as a percentage of sales would increase to
61% for the year ended December 31, 2023, compared to 60% for 2022. The decrease in cost of sales in dollar term was mainly due to the
decrease in our net sales for the year ended December 31, 2023. The increase in cost of sales as a percentage was mainly a result of
liquidation sales of jade mats in Malaysia which came with low profit margin for the year ended December 31, 2023.

 Gross
Profit (Loss)

 Gross
profit from continuing operations was $4.17 million for the year ended December 31, 2023, compared to gross loss of $7.78 million for
2022, representing an increase in gross profit of $11.96 million. Our gross profit margin was 38% for the year ended December 31, 2023,
compared to a gross loss margin of 61% for 2022. The increase in gross profit and gross profit margin was mainly a result of our decreased
inventory write down of $0.14 million for the year ended December 31, 2023, compared to $12.90 million of inventory write down for 2022.

 Moreover,
if total cost of sales from continuing operations excluded our inventory write down of $0.14 million and $12.90 million for the years
ended December 31, 2023 and 2022, respectively, our gross profit would be $4.31 million for the year ended December 31, 2023, compared
to $5.12 million for 2022, and our gross profit margin would be 39% for the year ended December 31, 2023, compared to 40% for 2022. The
decrease in gross profit and gross profit margin was mainly a result of declining sales along with liquidation sales of jade mats for
the year ended December 31, 2023.

Expenses

 Operating expenses from continuing
operations consisted of selling, general and administrative expenses, and research and development. Operating expenses from
continuing operations were $10.59 million for the year ended December 31, 2023, compared to $8.44 million for 2022. Selling expenses
from continuing operations decreased by 16%, or $0.47 million, to $2.42 million for the year ended December 31, 2023, from $2.89
million for 2022, primarily due to decreased marketing and advertising expenses. In addition, general and administrative expenses
from continuing operations decreased by 9%, or $0.49 million, to $5.06 million for the year ended December 31, 2023, from $5.54
million for 2022, primarily due to a decrease in technology service fees and consulting fees of $0.31 million and $0.29 million,
respectively, while the decrease was partially offset by an increase in stock compensation expenses of $0.31 million. Research and
development from continuing operations increased by 28,462%, or $3.11 million to $3.12 million for the year ended December 31, 2023,
from $10,917 for 2022, primary due to we spent on virtual and augmented reality software and AI IT system for the uses of customer
consultation, virtual assistance, data analysis, product and inventory tagging and subscription services, etc.

 Other
Expenses, Net

 Other
expenses, net, from continuing operations were $573,617 for the year ended December 31, 2023, compared to $851,166 for 2022, representing
a decrease in other expenses of $277,549. The decrease in other expenses was due primarily to a decrease in foreign exchange loss of
$221,742 to $417,690 for the year ended December 31, 2023, from $639,432 for 2022. The decrease in foreign exchange loss was mainly a
result of the appreciation of U.S. dollar against Malaysian Ringgit on liquidation sales of jade mats in Malaysia as partial sales were
collected in U.S. dollars.

Tax Expenses

tax expenses from continuing operations were $0.73 million for the year ended December 31, 2023, compared to $2,400 for 2022. The
income tax expenses for 2023 were primary from Nova Malaysia. Nova Malaysia's net taxable income primarily resulted from
cancellation of debt income on debt forgiveness granted by Nova HK, which was partially offset by inventory impairment loss and net
operating loss carryovers from prior years. The income tax expenses for 2022 were primarily related to minimum California state tax
incurred from U.S. entities.

 Loss
from Continuing Operations

 As
a result of the foregoing, our loss from continuing operations was $7.72 million for the year ended December 31, 2023, compared to $17.08
million for 2022.

 Loss
from Discontinued Operations

 On
February 15, 2022, we transferred our entire assets and business in Nova HK to Nova Malaysia, one of our subsidiaries. Operations of
Nova HK were reported as discontinued operations in the accompanying consolidated financial statements for all periods presented. We
had no loss from discontinued operations for the year ended December 31, 2023 and loss of $0.03 million for the years ended December
31, 2022.

 Net
Loss

 As
a result of the foregoing, our net loss was $7.72 million for the year ended December 31, 2023, compared to $17.10 million for 2022.

 Liquidity
and Capital Resources

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

 We
rely primarily on internally generated cash flow and available working capital to support growth. We may seek additional financing in
the form of bank loans or other credit facilities or funds raised through offerings of our equity or debt, if and when we determine such
offerings are required. As of December 31, 2023, we do not have any credit facilities. We believe that our current cash and cash equivalents
and anticipated cash receipts from sales of products will be sufficient to meet our anticipated working capital requirements and capital
expenditures for the next 12 months.

 We
had net working capital of $60,057 at December 31, 2023, a decrease of $6,497,572 from net working capital of $6,557,629 at December
31, 2022. The ratio of current assets to current liabilities was 1.02-to-1 at December 31, 2023.

 The
following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2023
and 2022:

 2023

 2022

 Cash
 provided by (used in):

 activities

 $

 (1,580,247

)

 $

 (5,367,650

)

 Investing
 activities

 18,643

 (8,772

)

 Financing
 activities

 -

 -

 Net
cash used in operating activities was $1.58 million for the year ended December 31, 2023, an increase in cash inflow of $3.79 million
from $5.37 million of cash used in operating activities for 2022.

 The
increase in cash inflow was attributable primarily to (i) an increase in cash inflow of $3.41 million for inventories to $2.53 million
cash inflow for the year ended December 31, 2023, from $0.88 million cash outflow for 2022, such increase in cash inflow being mainly
due to less purchases made from our suppliers and liquidation sales of the entire inventory of jade mats in Nova Malaysia for 2023; (ii)
an increase in cash inflow of $1.69 million for other current assets to $0.51 million cash inflow for the year ended December 31, 2023,
from $1.19 million cash outflow for 2022, such increase in cash inflow being mainly a result of less prepayments to IT consulting firm
due to the completion of our virtual tour and web augmented reality development project for 2023; and (iii) an increase in cash inflow
of $0.64 million for accrued liabilities and other payables to $0.67 million cash inflow for the year ended December 31, 2023, from $0.04
million cash inflow for 2022, such increase in cash inflow being mainly due to delay the payments to our service providers. The increase
in operating cash inflow was partially offset by an increase in cash outflow of $0.76 million for advance to supplier to $0.07 million
cash outflow for the year ended December 31, 2023, from $0.69 million cash inflow for 2022, such increase in cash outflow being mainly
due to less deposits paid to our suppliers with more goods received from them for 2023.

 Net
cash provided by investing activities was $0.02 million for the year ended December 31, 2023, an increase in cash inflow of $0.03 million
from $8,772 of cash used in investing activities for 2022. For the year ended December 31, 2023, we incurred cash inflow of $0.02 million
from disposal of fixed assets. For the year ended December 31, 2022, we incurred cash outflow of $8,772 from purchase of office equipment.

 Net
cash provided by financing activities was $0 for the years ended December 31, 2023 and 2022.
During the year ended December 31, 2023, we received $0 from equity financing.

 As
of December 31, 2023, we had gross accounts receivable of $47,530 of which $28,362 was not yet past due and $19,168 was less than 90
days past due. We had an allowance for expected credit losses of $532. As of March 19, 2024, 99.7% of accounts receivable outstanding as of December 31,
2023 had been collected.

 100%
of our accounts receivable outstanding at December 31, 2022 had been collected during 2023.

 As
of December 31, 2023 and 2022, we had advances to suppliers of $93,740 and $21,173, respectively. These supplier prepayments are made
for goods before we actually receive them.

 For
a new product, the normal lead time from new product R&D, prototype, and mass production to delivery of goods from our suppliers
to us is approximately six to nine months after we make advance payments to our suppliers. For other products, the typical time is 4-6
months after our advance payment. During the COVID-19 pandemic, freight transportation of products from our international suppliers has
been delayed or suspended during the outbreak. We will consider the need for a reserve when and if a supplier fails to fulfill our orders
within the time frame as stipulated in the purchase contracts.

 As
of March 19, 2024, $57,842 or 62% of our advances to suppliers outstanding at December 31, 2023 had been delivered to us in the form of
purchases of furniture.

 Other
Long-Term Liabilities

 As
of December 31, 2023, we recorded long-term taxes payable of $0.64 million, consisting of an income tax payable of $0.64 million, primarily
arising from a one-time transition tax recognized in the fourth quarter of 2017 on our post-1986 foreign unremitted earnings, as ASC
740 specifies that tax positions for which the timing of the ultimate resolution is uncertain should be recognized as long-term liabilities.

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

 Off-Balance
Sheet Arrangements

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

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

 Item
7A. Quantitative and Qualitative Disclosures about Market Risk

 Not
required.

 Item
8. Financial Statements and Supplementary Data

 Our
financial statements, together with the report thereon, appear in a separate section of this Annual Report beginning on page F-1.

 Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

 Item
9A. Controls and Procedures

 Evaluation
of Disclosure Controls and Procedures

 We
have evaluated, under the supervision of our Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"),
the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act") as of December 31, 2023. Based on this evaluation, our CEO and CFO concluded that
as of the end of the period covered by this report, our disclosure controls and procedures were effective.

 Disclosure
controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the
SEC's rules and forms and (b) is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow
timely decisions regarding required disclosure.

 Management ' s
Report on Internal Control over Financial Reporting

 Our
management, with oversight from our audit committee, is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting includes those policies
and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on
the financial statements. In designing and evaluating internal controls, management recognizes that any internal controls, no matter
how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design
of control systems must reflect the fact that there are resource constraints and that management is required to apply its judgment in
evaluating the benefits of possible controls and procedures relative to their costs.

 Our
management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over
financial reporting as of December 31, 2023, using the criteria set forth by the Committee of Sponsoring Organizations of the Tread way
Commission (COSO) in the 2013 Internal Control-Integrated Framework. Based on this assessment, our management concluded that, as of December
31, 2023, our internal control over financial reporting was effective.

 Changes
in Internal Control over Financial Reporting

 There
have been no changes in our internal control over financial reporting that occurred during the period covered by this annual report on
Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 Item
9B. Other Information.

 Not
applicable

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 On
May 13, 2022, the SEC added us to its conclusive list of issuers identified under the HFCAA following the filing of our annual report
on Form 10-K for the year ended December 31, 2021 with the SEC on April 8, 2022, which annual report was audited by Centurion
ZD CPA & Co., a registered public accounting firm in Hong Kong that the PCAOB previously was unable to inspect or investigate
completely, because of a position taken by an authority in the foreign jurisdiction. As our business, revenues, management and control
capabilities mostly in the U.S., the Company dismissed Centurion ZD CPA & Co. as its independent
accountant on October 7, 2022, following a review process carried out by the audit committee of the Company. On October 6, 2022,
our audit committee engaged WWC, P.C. ("WWC") as the Company's independent auditor for the fiscal year ending December
31, 2022. WWC is located in the United States and has not been identified by the PCAOB as a firm that the PCAOB is unable to fully inspect
and investigate.

 Furthermore,
in August 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the People's Republic of
China, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong. PCAOB staff members conducted on-site inspections and investigations from September to November 2022.
On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered
public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary.
As a result, SEC will not provisionally or conclusively identify an issuer as a Commission-Identified Issuer if it files an annual report
with an audit report issued by a registered public accounting firm headquartered in China or Hong Kong on or after December 15, 2022,
until such time as the PCAOB issues a new determination.

 To
the extent known by the Company, the Company is not aware of and has no reason to believe that: any governmental entity in the foreign
jurisdiction in which the Company or any of its subsidiaries is incorporated or otherwise organized owns shares of any capital stock
of record of the Company; any official of the Chinese government or Hong Kong is a board member or officer of the Company or its subsidiaries;
or that the Company's articles of incorporation, as amended, contain any provisions known by the Company to include any charter
or charter provisions of the Chinese Communist Party. The Company has determined that no governmental entity in mainland China or Hong
Kong, directly or indirectly, possesses the power to direct or cause the direction of the management and policies of the Company or has
a controlling financial interest.

 PART
III

 Item
10. Directors, Executive Officers and Corporate Governance

relating to nominees for director of Nova LifeStyle, compliance with Section 16(a) of the Securities Exchange Act of 1934, and the Company's
code of ethics is set forth under the captions "Proposal 1–Election of Directors," "Section 16(a) Beneficial
Ownership Reporting Compliance," "Corporate Governance," and "Code of Ethics," respectively, in the Proxy
Statement for the 2024 Annual Meeting of Stockholders. Such information is incorporated herein by reference. The definitive Proxy Statement
will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2023.

 Item
11. Executive Compensation

required by this Item 11 relating to executive compensation and other matters is set forth under the captions "Executive Compensation,"
"Non-Employee Director Compensation," and "Corporate Governance" in the Proxy Statement referred to in Item 10
above. Such information is incorporated herein by reference.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

related to ownership of common stock of Nova LifeStyle by certain persons is set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" in the Proxy Statement referred to in Item 10 above. Such information is incorporated
herein by reference.

 Item
13. Certain Relationships and Related Transactions, and Director Independence

relating to existing or proposed relationships or transactions between Nova LifeStyle and any affiliate of Nova LifeStyle, as well as
matters related to director independence, is set forth under the caption "Certain Relationships and Related Transactions"
in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.

 Item
14. Principal Accounting Fees and Services

relating to Nova LifeStyle's principal accountant's fees and services is set forth under the caption "Principal Accountant
Fees and Services" in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.

 PART
IV

 Item
15. Exhibits, Financial Statement Schedules

 The
following documents are filed as part of or are included in this Annual Report:

 1.

 Financial
 statements listed in the Index to Financial Statements, filed as part of this Annual Report beginning on page F-1; and

 2.

 Exhibits

 Exhibit

 No.

 Description

 2.1

 Agreement and Plan of Merger by and between Stevens Resources, Inc. and Nova LifeStyle, Inc., dated June 14, 2011 (Incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 2.2

 Share Exchange Agreement and Plan of Reorganization by and between Nova Furniture Limited and Nova LifeStyle, Inc., dated June 30, 2011 (Incorporated herein by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 2.3

 Return to Treasury Agreement by and between Nova LifeStyle, Inc. and Alex Li, dated June 30, 2011 (Incorporated herein by reference to Exhibit 2.3 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 3.1

 Articles of Incorporation (Incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-163019) filed on November 10, 2009)

 3.2

 Amended and Restated Bylaws (Incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 3.3

 Certificate of Amendment to Articles of Incorporation filed with the Secretary of the State of Nevada on December 15, 2009, and effective as of September 9, 2009 (Incorporated herein by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 3.4

 Articles of Merger between Stevens Resources, Inc. and Nova LifeStyle, Inc. amending the Articles of Incorporation filed with the Secretary of State of the State of Nevada on June 14, 2011, and effective as of June 27, 2011 (Incorporated herein by reference to Exhibit 3.4 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 3.5

 Articles of Exchange of Nova Furniture Limited and Nova LifeStyle, Inc. filed with the Secretary of State of the State of Nevada on June 30, 2011 (Incorporated herein by reference to Exhibit 3.5 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 3.6

 First Amendment to the Amended and Restated Bylaws of Nova Lifestyle, Inc. (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 001-36259) filed on February 28, 2018)

 3.7

 Certificate of Change to Authorized Shares of Nova Lifestyle, Inc. (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 001-36259) filed on December 20, 2019)

 3.8

 Certificate of Change filed with the Nevada Secretary of State on May 22, 2023 (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 23, 2023)

 3.9

 Certificate of Change to the Articles of Incorporation of Nova LifeStyle Inc. filed with the Nevada Secretary of State on September 5, 2023 (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on September 6, 2023)

 4.1

 Specimen Stock Certificate (Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 4.2

 Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on July 26, 2021)

 4.3

 Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on July 26, 2021)

 4.4

 Description of Securities registered under Section 12 of the Securities Exchange Act of 1934, as amended

 10.1

 Shareholder Agreement by and between Nova Furniture Limited and St. Joyal, dated January 1, 2011 (Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 30, 2011)

 10.2#

 Form of Director Agreement (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 3, 2013)

 10.3#

 Nova LifeStyle, Inc. 2014 Omnibus Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K/A (File No. 333-163019) filed on July 10, 2014)

 10.4#

 Nova LifeStyle, Inc. Form of Restricted Stock Award Agreement (Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K/A (File No. 333-163019) filed on July 10, 2014)

 10.5#

 Employment Agreement by and between Nova Lifestyle Inc. and Thanh H. Lam dated May 8, 2018 (Incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 14, 2018)

 10.6

 Sales Representative Agreement by and between Diamond Bar Outdoors, Inc. and Tawny Lam Consulting, Inc. dated January 4, 2020 (Incorporated herein by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K filed on May 12, 2020)

 10.7

 Nova LifeStyle, Inc. 2021 Omnibus Equity Plan (Incorporated herein by reference to Annex A to the Company's Definitive Proxy on Schedule 14A filed on April 13, 2021)

 10.8

 Form of Securities Purchase Agreement dated July 23, 2021 (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 26, 2021)

 10.9#

 Employment Agreement by and between Nova Lifestyle Inc. and Jeffery Chuang dated August 11, 2021 (Incorporated herein by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K filed on April 8, 2022)

 10.10#

 Amendment to Employment Agreement by and between Nova Lifestyle Inc. and Thanh H. Lam dated December 30, 2021 (Incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K filed on April 8, 2022)

 10.11#

 Employment Agreement by and between Nova Lifestyle Inc. and Thanh H. Lam dated May 8, 2023

 10.12#

 Employment Agreement by and between Nova Lifestyle Inc. and Jeffery Chuang dated September 1, 2023

 10.13

 Sale and Purchase Agreement by and among Nova LifeStyle Inc., Nova Living (M) Sdn Bhd and Web 3.0 Sdh Bhd dated November 16, 2023(Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 22, 2023)

 10.14#

 Amendment to Employment Agreement by and between Nova Lifestyle Inc. and Jeffery Chuang dated December 22, 2023

 10.15

 Sale and Purchase Agreement by and among Nova LifeStyle Inc., Nova Living (M) Sdn Bhd and ATS Brand Sdh Bhd dated January 23, 2024 (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 26, 2024)

 14.1

 Code of Business Conduct and Ethics of Nova Lifestyle, Inc. (Incorporated herein by reference to Exhibit 14.1 to the Company's Current Report on Form 8-K (File No. 333-163019) filed on June 10, 2013)

 19.1

 Insider Trading Policy

 21.1

 Subsidiaries of the Registrant

 23.1

 Consent of WWC, P.C.

 24.1

 Power of Attorney (Included on the Signature Page of this Annual Report on Form 10-K)

 31.1

 Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2

 Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1

 Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.2

 Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.1

 Clawback Policy

 101.INS

 101.SCH

 101.CAL

 101.LAB

 101.PRE

 101.DEF

 Cover

 #
Indicates management contract or compensatory plan, contract or arrangement.

 Filed
herewith.

 Furnished
herewith.

 NOVA
LIFESTYLE, INC.

 Consolidated
Financial Statements

 Years
Ended December 31, 2023 and 2022

to Consolidated Financial Statements

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 1171)

 Consolidated
 Financial Statements

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 to F-6

 Consolidated
 Statements of Loss and Comprehensive Loss for the years ended December 31, 2023 and 2022

 Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements for the years ended December 31, 2023 and 2022

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To:

 The
 Board of Directors and Shareholders of Nova Lifestyle, Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheet of Nova Lifestyle, Inc. and subsidiaries (collectively the "Company")
as of December 31, 2023 and 2022, and the related consolidated statements of loss and comprehensive loss, stockholders' equity,
and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to
as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years
in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

 Emphasis
Matter – Going Concern

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company incurred a net loss for the years ended December 31, 2023 and 2022, and the accumulated deficit
increased from $36.71 million to $44.43 million from 2022 to 2023. These factors, raise substantial doubt about its ability to continue
as a going concern. Management's plan in regards to these matters are described in Note 1. These financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal controls over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 Critical
Audit Matter

 Critical
audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be
communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

 F- 2

 Goodwill

 We
assessed the carrying value of goodwill as a critical audit matter. As discussed in Note 2 to the consolidated financial statements,
the Company's goodwill balance was $218,606 as of December 31, 2023. The account requires challenging, subjective, and complex
judgment and assumptions regarding the estimation of future cash flows and finding the appropriate weighted average cost of capital to
determine that the balance is reasonable, properly disclosed, and not materially misstated.

 Our
principal audit procedures performed to address the goodwill impairment included the following:

 Evaluated
 management of significant assumptions and estimates which is particularly related to future revenue growth rates, capital expenditures,
 operating margins on evaluating the impact on the fair values according to the changes in the assumptions.

 Assessing
 the appropriateness of the methodology applied in estimating the fair values of the Company's goodwill and evaluating the reasonableness
 of certain ratios and assumptions used in analysis.

 Performed
 quantitative analysis by using valuation model to evaluate the fair value and test whether impairment exists.

 The
accounts relevant to this critical audit matter include the gross value of the goodwill, and related impairment expense, and the related
disclosure in the accompanying note 2 to the financial statements.

 F- 3

 Inventory
Impairment

 We
assessed the carrying value of inventory as a critical audit matter. As described in Note 4 to the consolidated financial statements,
as of December 31, 2023, the Company's inventories balance was $2,213,311, which was an amount that was quantitatively material
to the financial statements as a whole, and the account required challenging, subjective and complex judgement and assumptions in regards
to the estimation of the net realizable value of those assets to determine that the balance was reasonable, and not materially misstated.

 The
Company's inventories are stated at the lower of cost or net realizable value, with cost determined on a weighted-average basis.
The write-down of potential obsolete or slow-moving inventories is recorded based on management's assumptions about future demands
derived and market conditions. For the year ended December 31, 2023, the Company wrote down $140,131
of slow-moving inventory. Inventories have been written down to the Company's best estimate of their realizable value, which
includes consideration of various factors.

 Our
principal audit procedures performed to address the net realizable value of the inventories and related the impairment expense included
the following:

 Observing
 the physical condition of the inventories during inventory counts. Performing independent analysis of significant assumptions provided
 by management, by researching wholesale and retail market prices, gaining an understanding of demand for the product by searching
 for comparable products in the market place.

 Inquired
 with Company personnel to understand management's model of estimates on selling price and cost of completion to calculate net
 realizable value and assess the appropriateness of the methodology applied in developing those estimates.

 Performed
 quantitative analysis and recalculation on net realizable value to test if any impairment exists, and developed a range of independent
 estimates for assumptions for the valuation models and compared those estimates with those employed by management.

 The
accounts relevant to this critical audit matter include the inventories and cost of sales, and the related disclosure in the accompanying
notes 4 to the financial statements.

 WWC,
P.C.

 Certified
Public Accountants

 PCAOB
ID No. 1171

 We
have served as the Company's auditor since 2022.

 San
Mateo, California

 F- 4

 NOVA

 CONDENSED
CONSOLIDATED BALANCE SHEETS

 AS
OF DECEMBER 31, 2023 AND 2022

 2023

 2022

 Current

 Cash
 and cash equivalents

 $
 369,137

 $
 1,374,167

 Accounts
 receivable, net

 46,998

 288,478

 Advance
 to suppliers

 93,740

 21,173

 2,213,311

 4,932,642

 Prepaid

 984,934

 1,504,671

 Other
 receivables

 41,265

 79,175

 Total
 Current Assets

 3,749,385

 8,200,306

 Noncurrent

 Plant,
 property and equipment, net

 287,673

 368,624

 lease right-of-use assets, net

 1,904,349

 2,660,977

 assets, net

 8,473

 13,837

 Lease
 deposit

 69,992

 71,146

 Goodwill

 218,606

 218,606

 Total
 Noncurrent Assets

 2,489,093

 3,333,190

 Total

 $
 6,238,478

 $
 11,533,496

 F- 5

 NOVA

 CONDENSED
CONSOLIDATED BALANCE SHEETS (CONT'D)

 AS
OF DECEMBER 31, 2023 AND 2022

 2023

 2022

 Liabilities
 and Stockholders' Equity

 Current
 Liabilities

 Accounts
 payable

 $
 430,045

 $
 321,261

 lease liability, current

 701,985

 736,428

 Advance
 from customers

 306,532

 170,139

 liabilities and other payables

 1,100,661

 413,599

 tax payable

 1,150,105

 Other
 loan interest payable

 –

 Current
 liabilities of discontinued operations

 –

 –

 Total
 Current Liabilities

 3,689,328

 1,642,677

 Noncurrent
 Liabilities

 Other
 Loan

 147,428

 150,000

 lease liability, non-current

 1,262,256

 1,971,386

 tax payable

 643,112

 1,157,603

 Total
 Noncurrent Liabilities

 2,052,796

 3,278,989

 Total
 Liabilities

 5,742,124

 4,921,666

 Contingencies
 and Commitments

 -

 -

 Stockholders'
 Equity

 Common
 stock, $ 0.001 par value; 250,000,000 shares authorized, 1,917,706 shares issued and outstanding as of December 31, 2023 and 3,000,000
 shares authorized, 1,434,815 shares issued and outstanding as of December 31, 2022, respectively

 1,918

 1,440

 Additional
 paid-in capital

 44,402,821

 43,239,701

 Accumulated
 other comprehensive (loss) income

 521,425

 77,242

 Accumulated
 deficits

 ( 44,429,810
)

 ( 36,706,553
)

 Total
 Stockholders' Equity

 496,354

 6,611,830

 Total
 Liabilities and Stockholders' Equity

 $
 6,238,478

 $
 11,533,496

 F- 6

 NOVA

 CONDENSED
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 2023

 2022

 Net
 Sales

 $
 11,087,459

 $
 12,744,871

 Cost
 of Sales

 6,913,902

 20,526,484

 Gross
 (Loss) Profit

 4,173,557

 ( 7,781,613
)

 Expenses

 Selling

 2,417,479

 2,885,249

 General
 and administrative expenses

 5,056,500

 5,544,572

 Research and development

 3,118,126

 10,917

 Total
 Operating Expenses

 10,592,105

 8,440,738

 Loss
 From Operations

 ( 6,418,548
)

 ( 16,222,351
)

 Other
 Income (Expenses)

 Non-operating
 income

 19,979

 exchange transaction (loss) income

 ( 417,690
)

 ( 639,432
)

 Interest
 (expense) income, net

 ( 9,495
)

 ( 25,216
)

 Financial
 expense

 ( 166,411
)

 ( 187,068
)

 Total
 Other Expenses, Net

 ( 573,617
)

 ( 851,166
)

 Loss
 Before Income Taxes and Discontinued Operations

 ( 6,992,165
)

 ( 17,073,517
)

 Tax Expense

 ( 731,092
)

 ( 2,400
)

 Loss
 From Continuing Operations

)

 ( 17,075,917
)

 Loss
 From Discontinued Operations

 –

)

 Net
 Loss

)

)

 Other
 Comprehensive Loss

 currency translation

 444,183

 ( 304,608
)

 Net
 Loss and Comprehensive Loss

 ( 7,279,074
)

 ( 17,406,279
)

 Weighted
 average shares outstanding - Basic and Diluted

 1,556,555

 1,385,913

 Loss
 from continuing operations per share of common stock

 Basic

 $
 ( 4.96
)

 $
 ( 12.32
)

 Loss
 from discontinued operations per share of common stock

 Basic

 $
 –

 $
 ( 0.02
)

 Net
 loss per share of common stock

 Basic

 $
 ( 4.96
)

 $
 ( 12.34
)

 F- 7

 NOVA

 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 Amount

 Capital

 Reserve

 Deficits)

 Equity

 Accumulated

 Retained

 Additional

 Other

 Earnings

 Total

 Common
 stock

 Paid-in

 Comprehensive

 Statutory

 (Accumulated

 Stockholders'

 Amount

 Capital

 Reserve

 Deficits)

 Equity

 at January 1, 2022

 1,365,880

 $
 1,367

 $
 42,665,853

 $
 381,850

 $
 -

 $
 ( 19,604,882
)

 $
 23,444,188

 Stock
 issued to employees

 2,100

 13,438

 -

 -

 -

 13,440

 Stock
 issued to consultants

 41,500

 450,439

 -

 -

 -

 450,481

 Issuance
 of common stock

 28,788

 109,971

 -

 -

 -

 110,000

 currency translation loss

 -

 -

 -

 ( 304,608
)

 -

 -

 ( 304,608
)

 Net
 loss

 -

 -

 -

 -

 -

)

)

 at December 31, 2022

 1,438,268

 $
 1,440

 $
 43,239,701

 $
 77,242

 $
 -

 $
 ( 36,706,553
)

 $
 6,611,830

 1,438,268

 $
 1,440

 $
 43,239,701

 $
 77,242

 $
 -

 $
 ( 36,706,553
)

 $
 6,611,830

 Stock
 issued to employees

 2,400

 5,878

 -

 -

 -

 5,880

 Stock
 issued to consultants

 15,000

 45,985

 -

 -

 -

 46,000

 Stock
 issued to designer

 45,491

 119,918

 119,963

 Stock
 issued to IT consultants

 150,000

 317,850

 318,000

 Acquisition
 of AI IT system

 270,000

 674,730

 675,000

 Rounding
 due to 1:5 reversed stock split

 ( 3,453
)

 ( 4
)

 ( 1,241
)

 ( 1,245
)

 currency translation gain

 -

 -

 -

 444,183

 -

 -

 444,183

 Net
 loss

 -

 -

 -

 -

 -

)

)

 1,917,706

 $
 1,918

 $
 44,402,821

 $
 521,425

 $
 -

 $
 ( 44,429,810
)

 $
 496,354

 1,917,706

 $
 1,918

 $
 44,402,821

 $
 521,425

 $
 -

 $
 ( 44,429,810
)

 $
 496,354

 F- 8

 NOVA

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 2023

 2022

 Cash Flows From Operating Activities

 Net loss

 $
)

 $
)

 Net loss from discontinued operations

 -

)

 Net loss from continuing operations

)

 ( 17,075,917
)

 Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 Depreciation and amortization

 55,446

 88,285

 Amortization of operating lease right-of-use assets

 748,344

 483,563

 Write down of inventories

 140,131

 12,904,676

 Stock based compensation expense

 499,631

 573,923

 Research and development

 675,000

 -

 Changes in allowance for expected credit losses

 ( 2,382
)

 1,870

 Changes in operating assets and liabilities:

 Accounts receivable

 243,862

 ( 186,951
)

 Advance to suppliers

 ( 72,567
)

 686,091

 2,525,732

 ( 879,527
)

 Other current assets

 506,133

 ( 1,186,439
)

 Operating lease liabilities

 ( 735,151
)

 ( 586,733
)

 Accounts payable

 108,784

 ( 37,101
)

 Advance from customers

 137,172

 ( 224,237
)

 Accrued liabilities and other payables

 672,715

 35,305

 Taxes payable

 640,160

 ( 86,229
)

 Net Cash Provided by (Used in) Continuing Operations

 ( 1,580,247
)

 ( 5,489,421
)

 Net Cash Provided by Discontinued Operations

 –

 121,771

 Net Cash Used in Operating Activities

 ( 1,580,247
)

 ( 5,367,650
)

 Cash Flows From Investing Activities

 Disposal of fixed assets

 18,643

 –

 Purchase of property and equipment

 -

 ( 8,772
)

 Net Cash Used in Continuing Operations

 18,643

 ( 8,772
)

 Net Cash Used in Discontinued Operations

 –

 –

 Net Cash Used in Investing Activities

 18,643

 ( 8,772
)

 Cash Flows From Financing Activities

 Net Cash Provided by Continuing Operations

 –

 –

 Net Cash Provided by Discontinued Operations

 –

 –

 Net Cash Provided by Financing Activities

 –

 –

 Effect of Exchange Rate Changes on Cash and Cash Equivalents

 $
 556,574

 $
 474,483

 Net Decrease in Cash and Cash Equivalents

 ( 1,005,030
)

 ( 4,901,939
)

 Cash and Cash Equivalents, Beginning of Period

 1,374,167

 6,276,106

 Cash and Cash Equivalents, Ending of Period

 $
 369,137

 $
 1,374,167

 Supplemental Disclosure of Cash Flow Information

 Continuing operations:

 Cash paid during period for:

 Income tax payments

 $
 90,931

 $
 248,720

 Interest expense

 $
 6,176

 $
 5,697

 Discontinued operations:

 Cash paid during period for:

 Income tax payments

 $
 –

 $
 –

 Interest expense

 $
 –

 $
 –

 F- 9

 NOVA

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR
THE YEAR ENDED DECEMBER 31, 2023 AND 2022

 Note
1 - Organization and Description of Business

 Organization
and Business

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

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

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

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

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

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

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

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

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

 F- 10

 Going
Concern

 The
accompanying consolidated financial statements have been prepared on a going concern basis and following GAAP in the U.S. The going
concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements
are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
The Company incurred a net loss of $ 7.72
million and $ 17.10
million for the years ended December 31, 2023 and 2022. The accumulated deficit of the Company was $ 44.43
million and $ 36.71
million as of December 31, 2023 and 2022. Net cash balance decreased to $ 0.37 million for the year ended December 31, 2023 from $ 1.37 million for the year ended December 31,
2022. Continuation as a going concern is dependent upon the ability of the Company to obtain the
necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and
ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at
this time and raises substantial doubt that the Company will be able to continue as a going concern.

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

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

 Note
2 - Summary of Significant Accounting Policies

 Basis
of Presentation

 The
accompanying 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 financial reporting. The audited 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.

 Reverse
split

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

 Amendments
to Articles of Incorporation

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

 F- 11

 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 expected credit losses, valuation of inventories, the valuation
of stock-based compensation, income taxes and unrecognized tax benefits, valuation allowance for deferred tax assets, assumptions used
in assessing impairment of long-lived assets and goodwill, and loss contingencies. Actual results could differ from those estimates.

 Business
Combination

 For
a business combination, the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recognized at
the acquisition date and measured at their fair values as of that date. In a business combination achieved in stages, the identifiable
assets and liabilities, as well as the noncontrolling interest in the acquiree, are recognized at the full amounts of their fair values.
In a bargain purchase in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of
the consideration transferred plus any noncontrolling interest in the acquiree, that excess in earnings is recognized as a gain attributable
to the acquirer.

 Deferred
tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values
of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification ("ASC")
Topic 740-10.

 Goodwill

 Goodwill
is the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses
acquired. In accordance with ASC Topic 350, "Intangibles-Goodwill and Other," goodwill is not amortized but is tested for
impairment, annually or more frequently when circumstances indicate a possible impairment may exist. Impairment testing is performed
at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its
fair value, with the fair value of the reporting unit determined using discounted cash flow ("DCF") analysis. A number of
significant assumptions and estimates are involved in the application of the DCF analysis to forecast operating cash flows, including
the discount rate, the internal rate of return and projections of realizations and costs to produce. Management considers historical
experience and all available information at the time the fair values of its reporting units are estimated.

 ASC
Topic 350 also permits an entity to first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood
of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If it is more
likely than not that the fair value of a reporting unit is less than its carrying amount, then the 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 December 31, 2023 and
2022, the Company concluded there was no impairment of goodwill of Diamond Bar.

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

 Cash
and Cash Equivalents

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

 F- 12

 Accounts
Receivable

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

 The
Company's policy is to maintain an allowance for expected credit losses on accounts receivable. Management reviews the composition
of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends
and changes in customer payment patterns to evaluate the adequacy of these reserves. An analysis of the allowance for expected credit losses accounts
is as follows:

 Schedule of Allowance for Credit Losses

 $
 2,914

 (Reversal)
 Provision for the year

 ( 2,382
)

 $

 The
expected credit losses (reversal) provision for the years ended December 31, 2023 and 2022 was ($ 2,382) and $ 1,870, respectively. During the years
ended December 31, 2023 and 2022, provision for allowance for expected credit loss from discontinued operations
were $ 0.

to Suppliers

to suppliers represent amounts paid to suppliers in advance for goods that are yet to be delivered and from which future economic benefits
are expected to flow to the Company within the normal operating cycle. Based on its historical record and in normal circumstances, the
Company receives goods within 4 to 6 months from the date the advance payment is made. During the year ended December 31, 2023 and 2022,
no provision was made on advances to suppliers.

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 year
ended December 31, 2023 and 2022, the Company wrote down $ 140,131
and $ 12.90 million of slow-moving inventory. The inventory write-down is included in "Cost
of Sales" from continuing operations in the consolidated statements of comprehensive income. There were no write-downs of inventories
from the Company's discontinued operations for the year ended December 31, 2023 and 2022.

 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

 - 10 years

 Decoration
 and renovation

 - 10 years

 Impairment
of Long-Lived Assets

 Long-lived
assets, which include property, plant and equipment and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.

 Recoverability
of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows,
an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair
value is generally determined using the asset's expected future discounted cash flows or market value, if readily determinable.

 F- 13

 The
Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset's carrying
amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, "Impairment
or Disposal of Long-Lived Assets." ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against
the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable,
an impairment charge is measured as the amount by which the carrying amount of the asset group asset group exceeds its fair value based
on discounted cash flow analysis or appraisals. There was no impairment of long-lived assets for the years ended December
31, 2023 and 2022.

 Research
and Development

 Research
and development costs are related primarily to the Company designing and testing its new products during the development stage. In
addition, d uring 2023, the Company has been developing Virtual and Augmented reality software and AI system for potential
consulting business. The entire system is far from complete as it requires to integrate with other components in order to be
functional. It is still in development stage and not in operation. Research and development costs are recognized in general and
administrative expenses and expensed as incurred. Research and development expenses from continuing operations were $ 3.12
million and $ 10,917
for the years ended December 31, 2023 and 2022, respectively. Research and development expenses from discontinued operations were
$ 0
for the year ended December 31, 2023 and 2022, respectively.

Taxes

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 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 Living (HK) Group Limited ("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 year ended December 31, 2023, the Company has calculated its best estimate of the impact of the GILTI in its
income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing.

 F- 14

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

 As
of December 31, 2023 and 2022, unrecognized tax benefits were approximately $ 0. The total amount of unrecognized tax benefits that, if
recognized, would favorably affect the effective tax rate was $ 0 as of December 31, 2023 and 2022.

 A
reconciliation of unrecognized tax benefits excluding interest and penalties ("Gross UTB") for the year ended December 31,
2023 and 2022, is as follows:

 Schedule of Unrecognized Tax Benefits

 Gross
 UTB

 2023

 2022

 – January 1

 exchange adjustment

 – December 31

 $

 -

 $

 -

 At
December 31, 2023 and 2022, the Company had cumulatively accrued approximately $ 0 for estimated interest and penalties related
to unrecognized tax benefits. The Company recorded interest and penalties related to unrecognized tax benefits as a component of income
tax benefit, which totaled $ 0 and $ 0 for the years ended December 31, 2023 and 2022, respectively, related to the Company's continuing
operations. The Company does not anticipate any significant changes to its unrecognized tax benefits within the next 12 months.

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

 Revenue
Recognition

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

 F- 15

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

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

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

 The
Company's sales policy allows for product returns within the warranty period if the product is defective and the defects are the
Company's fault. As alternatives to the product return option, the customers have the option of requesting a discount from the
Company for products with quality issues or of receiving replacement parts from the Company at no cost. The amount for product returns,
the discount provided to the Company's customers, and the costs for replacement parts were immaterial for the years ended December
31, 2023 and 2022.

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

 Cost
of Sales

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

 Shipping
and Handling Costs

 Shipping
and handling costs related to delivery of finished goods are included in selling expenses. During the years ended December 31, 2023
and 2022, shipping and handling costs were 1,682
and $ 2,096,
respectively. During the years ended December 31,
2023 and 2022, shipping and handling costs from discontinued operations were $ 0.

 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 $ 1,053,197 and
$ 1,213,836 for the years ended December 31, 2023 and 2022, respectively. During
the years ended December 31, 2023 and 2022, advertising expense from discontinued operation were $ 0.

 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.

 F- 16

 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 years ended December 31, 2023 and
2022:

 Schedule of Reconciliations of Basic and Diluted Loss Per Share

 2023

 2022

 Net
 loss from continuing operations

 $
)

 $
 ( 17,075,917
)

 Net
 loss from discontinued operations

 -

)

 Net
 loss

 $
)

 $
)

 Weighted
 average shares outstanding – Basic and Diluted *

 1,556,555

 1,385,913

 Net
 loss from continuing operations per share of common stock

 Basic

 ( 4.96
)

 ( 12.32
)

 Net
 loss from discontinued operations income per share of common stock

 Basic

 -

 ( 0.02
)

 Net
 loss per share of common stock

 Basic

 $
 ( 4.96
)

 $
 ( 12.34
)

 *

 Including
 0 shares that were granted and vested but not yet issued for the years ended December 31, 2023 and 2022, respectively.

 For
the year ended December 31, 2023, 4,500 shares of unvested restricted stock, vested stock options to purchase 13,400 shares of the Company's
common stock, and 245,192 shares exercisable under warrants were excluded from the EPS calculation, as their effect were anti-dilutive.

 For
the year ended December 31, 2022, 4,500 shares of unvested restricted stock, vested stock options to purchase 134,000 shares of common
stock of the Company, and 1,225,959 shares exercisable under warrants were excluded from the EPS calculation, as their effects were anti-dilutive.

 Concentration
of Credit Risk

 Financial
instruments that potentially subject the Company to credit risk consist primarily of accounts receivable and other receivables. The
Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the
financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

 F- 17

 One
customer accounted for 18 %
of the Company's sales from continuing operations for the year ended December 31, 2023. No customer accounted for 10 %
or more of the Company's sales from continuing operations for the year ended December 31, 2022. Three customers accounted for 26 %, 23 % and 19 %
of the Company's gross accounts receivable as of December 31, 2023. Two customers accounted for 66 %
and 13 %,
respectively, of the Company's gross accounts receivable as of December 31, 2022.

 No
customer accounted for 10 % of the Company's sales from discontinued operations for the year ended December 31, 2023 and 2022.

 The
Company purchased its products from two major vendors during the years ended December 31, 2023 and 2022, respectively, accounting for
a total of 44 % for 2023 ( 26 % and 18 %)
and 42 %
for 2022 ( 21 %
and 21 %)
of the Company's purchases from continuing operations, respectively.

made to these major vendors were $ 0 as of December 31, 2023 and 2022, respectively. Accounts payable to these major vendors were $ 266,652
and $ 62,251 as of December 31, 2023 and 2022, respectively.

 No
vendor accounted for 10 % of the Company's purchases from discontinued operations for the years ended December 31, 2023 and 2022.

 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.

Currency Translation and Transactions

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

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.

 F- 18

 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

 sheet items, except for equity accounts

 31, 2023

 RM
 4.59 to 1

 31, 2022

 RM
 4.40 to 1

 Statement and cash flow items

 For
 the year ended December 31, 2023

 RM
 4.56 to 1

 For
 the year ended December 31, 2022

 RM
 4.39 to 1

 Segment
Reporting

 ASC
Topic 280, "Segment Reporting," requires use of the "management approach" model for segment reporting. The management
approach model is based on the way a company's chief operating decision maker organizes segments within the company for making
operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management disaggregates a company.

 Management
determined that the Company's operations constitute a single reportable segment in accordance with ASC 280. The Company operates
exclusively in one business and industry segment: the design and sale of furniture.

 Management
concluded that the Company had one reportable segment under ASC 280 because Diamond Bar is a furniture distributor based in California
focusing on customers in the United States, 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.

 F- 19

 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 December 31, 2023 and 2022.

 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 December 31, 2023 and 2022.

 Reclassification

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

 Recent
Accounting Pronouncements

 Recently
Adopted Accounting Standards

 In
June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments, 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 probable, incurred loss model and
is applicable to the measurement of credit losses on financial assets measured at amortized cost basis. Am entity should apply ASU 2016-13
on a modified-retrospective transition approach that would require a cumulative-effect adjustment to the opening retained earnings in
the balance sheets as of the date of adoption. In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses
(Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for trouble debt restructurings
by creditors and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally,
ASU 2022-02 requires disclosure of gross write-offs by year of origination for receivables within the scope of Subtopic 326-20, Financial
Instruments - Credit Losses - Measured at Amortized Cost, which should be applied prospectively. Both ASU 2016-13 and ASU 2022-02 are
effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those
fiscal years. The Company adopted ASU 2016-13 and ASU 2022-02 beginning January 1, 2023. The adoption of ASU 2016-13 and ASU 2022-02
did not have any material impact on our condensed consolidated financial statement presentation or disclosures.

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

 F- 20

 Recently
Issued But Not Yet Adopted Accounting Pronouncements

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

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

 Note
3 - Discontinued Operations

 On
February 15, 2022, the Company transferred its entire assets and business in Nova HK to Nova Malaysia, a subsidiary of the Company. In
February 2023, Nova HK was officially completed deregistration in Hong Kong.

 As
of December 31, 2021 and subsequently, operations of Nova HK have been reported as discontinued operations in the Company's consolidated
financial statements. Accordingly, assets, liabilities, revenues, expenses and cash flows related to Nova HK have been reclassified in
the consolidated financial statements as discontinued operations for all periods presented.

 The
following table summarizes the net assets of Nova HK at the date of disposal (February 15, 2022):

 Schedule of Discontinued Operations

 Inventory

 $

 15,029,724

 Equipment,
 net

 36,549

 Net
 assets of Nova HK upon disposal

 15,066,273

 Interest
 transferred to Nova Malaysia

 ( 15,092,027

)

 Loss
 from discontinued operations of subsidiary

 $

)

 F- 21

 The
following table presents the components of discontinued operations in relation to Nova HK reported in the consolidated statements of
operations:

 2022

 Sales

 $

 -

 Cost
 of sales

 -

 ( 3,671

)

 Other
 (expense) income, net

 ( 22,083

)

 Loss
 before income taxes

)

 tax benefit

 -

 Loss
 from discontinued operations

 $

)

 Note
4 - Inventories

 The
inventories as of December 31, 2023 and 2022 totaled $ 2,213,311 and $ 4,932,642, respectively, and consisted entirely of finished goods.

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 year
ended December 31, 2023, the Company wrote-down $ 140,131 of slow-moving inventory. The inventory
write-down is included in "Cost of Sales" in the consolidated statements of operations. For the year ended December 31, 2022,
the Company wrote-down $ 12,904,676 of slow-moving inventories from the Company's discontinued operations.

 Note
5 - Plant, Property and Equipment, Net

 As
of December 31, 2023 and 2022, plant, property and equipment consisted of the following:

 Schedule of Plant, Property and Equipment

 31,
 2023

 31,
 2022

 Computer
 and office equipment

 $
 255,352

 $
 276,567

 Decoration
 and renovation

 378,237

 392,703

 Property plant and equipment gross

 633,589

 669,270

 Less:
 accumulated depreciation

 ( 345,916
)

 ( 300,646
)

 Property plant and equipment
 net

 $
 287,673

 $
 368,624

 Depreciation
expense was $ 68,401 and $ 63,218 for the years ended December 31, 2023 and 2022, respectively. Depreciation
expense from discontinued operations was $ 0 and $ 1,107 for the years ended December 31, 2023 and 2022, respectively.

 For
years ended December 31, 2023 and 2022, the company disposed of $ 0 and $ 207,479 of office equipment and decoration and renovation, respectively.

 Note
6 – Intangible Assets

 As
of December 31, 2023 and 2022, intangible assets consisted of the following:

 Schedule of Intangible Assets

 31,
 2023

 31,
 2022

 Accounting
 software

 $
 26,800

 $
 26,800

 Less:
 accumulated amortization

 ( 18,327
)

 ( 12,963
)

 Intangible assets, net

 $
 8,473

 $
 13,837

 F- 22

 Amortization
expense was $ 5,364 and
$ 5,370 for
the years ended December 31, 2023 and 2022. Amortization of intangible assets from discontinued operations was $ 0
 for the years ended December 31, 2023 and 2022,
respectively.

 Note
7 – Advances to Suppliers

 The
Company makes advances to certain vendors for inventory purchases. The advances on inventory purchases were $ 93,740 and $ 21,173 as of
December 31, 2023 and December 31, 2022, respectively. No impairment charges were made on advances to suppliers for the years ended December
31, 2023 and 2022.

 Note
8 – Prepaid Expenses and Other Receivables

 Prepaid
expenses and other receivables consisted of the following as of December 31, 2023 and 2022:

 Schedule of Prepaid Expenses and Other Receivables

 31,
 2023

 31,
 2022

 Prepaid

 $
 984,934

 $
 1,504,671

 Other
 receivables

 41,265

 79,175

 Prepaid expenses and
 other receivables

 $
 1,026,199

 $
 1,583,846

 As
of December 31, 2023 and 2022, prepaid expenses and other receivables mainly represented prepaid insurance, refund receivable from suppliers,
prepaid advertising expense, and Celero and Cardknox account balances. On September 12, 2023, Nova Malaysia entered into an agreement
with a consulting firm to deliver consultancy service for AI Trends and Tools. Nova
Malaysia agreed to pay 5,000,000 Malaysia Ringgit ($ 1,065,235) for the service. During 2023, Nova
Malaysia paid 3,800,000 Malyaia Ringgit ($ 827,833 to the consultant and was recorded as prepaid expense.

 In
October 2022, Nova Malaysia entered into a business agreement with an I.T. firm to develop a virtual reality and augmented reality
development project and related works. The project was originally intended to be used internally to promote the sales. Nova Malaysia
agreed to pay 10,000,000 Malaysia
Ringgit ($ 2,110,640)
for developing the project. The payment would be paid as first phase for 40 %
of total payment, second phase for 20 %
of total payment, third phase for 20 %
of total payment and fourth phase for 20 %
of total payment. On April 20, 2023, the Company entered into an amended agreement to update and test the project for additional
 1,000,000
Malaysia Ringgit ($ 217,851).
On May 10, 2023, the virtual reality and augmented reality development project was completed as a prototype testing model. Up to that point, the company believes this project
could be utilized not only internally to promote sales, but also go external licensing for direct subscription in the future, which might
help the company to convert to a software or APP provider. However, it is just a part of the
ultimate software product to be functional. The ultimate software is still in development stage and not currently feasible to be
functional. The total payment to IT firm was 11,000,000
Malyaia Ringgit ($ 2,413,498)
and was recorded as research and development.

 F- 23

 Note
9 – Accrued Liabilities and Other Payables

liabilities and other payables consisted of the following as of December 31, 2023 and December 31, 2022:

 Schedule of Accrued Liabilities and Other Payables

 31,
 2023

 31,
 2022

 Other
 payables

 $
 139,722

 $
 15,225

 Salary
 payable

 7,511

 6,612

 Financed
 insurance premiums

 69,337

 71,415

 Auditing
 fee

 125,000

 85,000

 Warranty
 liability

 27,545

 38,349

 commission

 58,669

 69,592

 expenses, others

 672,877

 127,406

 Total accrued liabilities and other payable

 $
 1,100,661

 $
 413,599

 As
of December 31, 2023 and 2022, other accrued expenses mainly included legal and professional fees, utilities and unpaid operating expenses
incurred in Malaysia. Other payables represented balance on credit card, other taxes payable and 401(k) payable.

 Note
10 – Other Loans

 On
June 19, 2020, Diamond Bar was granted a U.S. Small Business Administration (SBA) loan in the aggregate amount of $ 150,000, pursuant
to the Economic Injury Disaster Loan. The Loan, which was in the form of a promissory note dated June 19, 2020, matures on June 19, 2050
and bears interest at a rate of 3.75 % per annum, payable monthly beginning 12 months from the date of the promissory note. Funds from
the Loan may only be used for working capital. The loan was secured by all tangible and intangible property of Diamond Bar. It has accumulated
interest of $ 5,580 and $ 5,697 for the years ended December 31, 2023 and 2022, respectively.

 Note
11 – Income Taxes

 Taxes
recoverable (payable) consisted of the following at December 31, 2023 and 2022:

 Schedule of Taxes Payable

 2023

 2022

 tax receivable – current

 $
 -

 $
 -

 Income tax payable - current

 ( 1,150,105

)

 ( 629

)

 tax payable – noncurrent

 $
 ( 643,112
)

 $
 ( 1,157,603
)

 As of December 31, 2023 and 2022, current tax payable
were $ 1.15 million and $ 629,
respectively. For 2023, current tax payable, $ 0.43
 million was arising from a one-time transition tax recognized in the fourth quarter of 2017 on post-1986 foreign unremitted earnings
(see below) and $ 0.72
 million was primarily resulted from Nova Malaysia's taxable income which incurred due to cancellation of debt income on
debt forgiveness granted by Nova HK, which was partially offset by inventory impairment loss and net operating loss carryovers from prior
years.

 As
of December 31, 2023 and 2022, noncurrent tax payable were $ 0.64 million and $ 1.16 million, respectively, arising from a one-time transition
tax recognized in the fourth quarter of 2017 on post-1986 foreign unremitted earnings (see below).

 The
(benefit) provision for income taxes on loss from continuing operations consisted of the following:

 Schedule of Components of Income Tax Expense (Benefit)

 2023

 2022

 Current:

 Federal

 $
 -

 $
 -

 State

 2,400

 2,400

 Hong
 Kong

 -

 -

 Malaysia

 728,692

 -

 Income Tax Expense (Benefit) Current

 731,092

 2,400

 Deferred:

 Federal

 -

 -

 State

 -

 -

 Total
 provision (benefit) for income taxes

 $
 731,092

 $
 2,400

 F- 24

 The
following is a reconciliation of the difference between the actual (benefit) provision for income taxes and the (benefit) provision computed
by applying the federal statutory rate on income before income taxes from continuing operations:

 Schedule of Effective Income Tax Rate Reconciliation

 2023

 2022

 Tax
 at federal statutory rate

 $
 ( 1,468,355
)

 $
 ( 3,585,770
)

 rate differential

 607,758

 ( 525,735
)

 ASC
 740-10 uncertain tax position

 -

 -

 Tax
 exemption

 -

 -

 Global
 Intangible Low-Taxed Income

 -

 -

 Stock
 based compensation

 66,045

 90,645

 Non-deductible Expenses

 3,767,680

 -

 Others

 ( 204,526
)

 ( 85,279
)

 Valuation
 allowance

 ( 2,037,510
)

 4,108,539

 Total
 provision (benefit) for income taxes

 $
 731,092

 $
 2,400

 The
following presents the aggregate dollar effects of the Company's tax exemption from its continuing operations:

 Schedule of Aggregate Dollar Effects of the Company's Tax Exemption

 2023

 2022

 Aggregate
 dollar effect of tax holiday

 $

 -

 $

 -

 Deferred
Tax Assets and Liabilities

 Deferred
tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets
and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to
reverse. Deferred taxes are comprised of the following:

 Schedule of Deferred Tax Assets And Liabilities

 2023

 2022

 Non-Current
 Deferred Tax Assets:

 liabilities

 $
 15,898

 $
 28,130

 Fed
 & CA amortization

 9,832

 13,511

 Stock
 compensation

 160,522

 155,111

 ASC
 842 – lease liability

 522,840

 685,136

 Inventory

 -

 6,898,892

 U.S.
 NOL

 4,213,883

 4,323,465

 Capital
 loss

 734,766

 733,461

 Charitable
 Contribution

 1,748

 1,332

 R&D
 Capitalization

 3,658

 2,063

 Interest

 3,587

 5,058

 Non-Current
 Deferred Tax Liabilities:

 Prepaid

 ( 423
)

 -

 Fed
 & CA depreciation

 ( 7,744
)

 ( 3,405
)

 ASC
 842- ROU Asset

 ( 506,280
)

 ( 673,292
)

 Net
 Non-Current Deferred Tax Assets before Valuation Allowance

 5,152,289

 12,169,462

 Less:
 Valuation Allowance

 ( 5,152,289
)

 ( 12,169,462
)

 Non-Current
 Deferred Tax Assets, Net:

 -

 -

 Total
 Deferred Assets, Net:

 $
 -

 $
 -

 Nova
LifeStyle, Inc. and Diamond Bar are subject to U.S. federal and state income taxes. Nova Furniture BVI is incorporated in the BVI. There
is no income tax for a company domiciled in the BVI. Accordingly, the Company's consolidated financial statements do not present
any income tax provision related to the BVI tax jurisdiction where Nova Furniture BVI is domiciled.

 For
U.S. Federal income tax purpose, the Company has net operating loss, or NOL carryforwards of approximately $ 13.6 million and $ 10.4 million
at December 31, 2023 and 2022, respectively. The Company has capital loss carryforwards of approximately $ 3.5 million at December 31, 2023.

 For
U.S. California income tax purpose, the Company has net operating loss, or NOL carryforwards of approximately $ 19.5 million and $ 16.2
million, at December 31, 2023 and 2022, respectively.

 F- 25

 Malaysia
has net operating loss, or NOL carryforwards of approximately $ 0
 million at December 31, 2023. The Company has
disposed prior year's inventory and utilized all prior year's NOL. The Company has approximately $ 0.73
 million income tax expense at December 31, 2023.

 Corporate
income tax in Malaysia is calculated at the statutory rate of 24 % of the estimated taxable profit for the year ended December 31, 2023.

 Nova
HK has net operating loss, or NOL carryforward of approximately $ 0 and $ 0.03
million at December 31, 2023, 2022, respectively. The Company has recorded full valuation allowance against the Nova HK NOL
carryforwards. 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.

 Note
12 – 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
3, 2023, the Company renewed the lease for an additional one year term at a cost of $ 34,561. During the years ended December 31, 2023
and 2022, the Company recorded rental amounts of $ 34,561 and $ 25,921, respectively, which were included in selling expenses.

 On
January 4, 2018, the Company entered into a sales representative agreement with a consulting firm, which is owned by the President, Chief
Executive Officer and Chairperson of the Board, for sales representative service for a term of two years. On
January 4, 2020, the Company renewed the agreement for an additional two years which was amended in July 2020. If not terminated during
the first year, the agreement will continue until one party or the other terminates the agreement with 30 days written notice. The Company
agreed to compensate the consulting firm via commission at predetermined rates of the relevant sales amount. During the years ended December
31, 2023 and 2022, the Company recorded $ 321,030 and $ 392,755 as commission expense to this consulting firm, respectively.

 Note
13 – Stockholders' Equity

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

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

and Warrants issued through Private Placement

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

 F- 26

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

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

 Warrants

 The
following is a summary of the warrant activity for the year ended December 31, 2023:

 Summary of Warrant Activity

 Number
 of
 Warrants

 Average
 Exercise
 Price

 Weighted
 Average
 Remaining
 Contractual
 Term
 in Years

 Outstanding

 245,192

 $
 17.50

 4.02

 Exercisable

 245,192

 $
 17.50

 4.02

 Granted

 -

 -

 -

 Exercised
 / surrendered

 -

 -

 -

 Expired

 -

 -

 -

 Outstanding

 245,192

 $
 17.50

 3.02

 Exercisable

 245,192

 $
 17.50

 3.02

Issued to Consultants

 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 -year term. The Company agreed to grant the consultant 20,000 shares of the Company's common stock, 10,000 shares
issued before the end of November 2021 and remaining 10,000 shares were issued on the one-year anniversary of the agreement. The fair
value of the 20,000 shares was $ 236,000, which was calculated based on the stock price of $ 11.80 per share on November 2, 2021 and has
been amortized over the service term. The shares were issued pursuant to Nova Lifestyle, Inc. 2021 Omnibus Equity Plan (the "2021
Plan"). During the years ended December 31, 2023 and 2022, the Company charged
$ 0 and $ 197,205 to operations as consulting expenses.

 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 -year term. The Company agreed to grant the consultant
 20,000 shares of the Company's common stock, 10,000 shares issued before the end of November 2021 and remaining 10,000 shares were
issued on the one-year anniversary of the agreement. The fair value of the 20,000 shares was $ 236,000, which was calculated based on
the stock price of $ 11.80 per share on November 2, 2021 and is being amortized over the service term. The shares were issued pursuant
to the 2021 Plan. During the years ended December 31, 2023 and 2022, the Company charged $ 0 and $ 197,205 to operations as consulting
expenses.

 F- 27

 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 -year term. The Company agreed to grant the consultant 4,000 shares of the Company's common stock, vesting
 25 % on February 15, 2022, 25 % on May 15, 2022, 25 % on August 15, 2022 and 25 % on November 15, 2022. The fair value of the 4,000 shares
was $ 46,600, which was calculated based on the stock price of $ 11.65 per share on November 16, 2021 and have been amortized over the
service term. The shares were issued pursuant to the 2021 Plan. During the years ended December 31, 2023 and 2022, the Company charged
$ 0 and $ 40,727 to operations as consulting expenses.

 On
January 28, 2022, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development
effective on February 1, 2022 for twelve months. The Company shall pay the designer $ 10,000 per month starting from February 1, 2022
for twelve months, in the form of the Company's Common Stock, calculated based on the closing stock price on the first trading
day of the corresponding month. The shares were issued pursuant to the 2021 Plan. During
the years ended December 31, 2023 and 2022, the Company issued 4,347 and 131,444 shares to the designer and charged $ 10,000 and $ 110,000,
respectively to operations as designer fee.

 On
July 1, 2022, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on
July 1, 2022 for a one -year
term. The Company agreed to grant the consultant 10,000
shares of the Company's common stock, vesting 25 %
on July 1, 2022, 25 %
on October 1, 2022, 25 %
on January 1, 2023 and 25 %
on April 1, 2023. The fair value of the 10,000
shares was $ 36,000,
which was calculated based on the stock price of $ 3.60
per share on July 1, 2022 and has been amortized over the service term. The shares were issued pursuant to the 2021 Plan. During the
years ended December 31, 2023 and 2022, the Company charged $ 18,000
and $ 18,000 to operations as consulting expenses, respectively.

 On
November 16, 2022, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on
November 16, 2022 for a one -year term. The Company agreed to grant the consultant 10,000 shares of the Company's common stock,
vesting 25 % on February 15, 2023, 25 % on May 15, 2023, 25 % on August 15, 2023 and 25 % on November 15, 2023. The fair value of the 10,000
shares was $ 28,000, which was calculated based on the stock price of $ 2.80 per share on November 16, 2022. The shares were issued pursuant
to the 2021 Plan. During the year ended December 31, 2023 and 2022, the Company charged $ 28,000 and $ 0, respectively, to operations as
consulting expenses.

 On
January 28, 2023, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development
effective on February 1, 2023 for twelve months. The Company shall pay the designer $ 10,000 per month starting from February 1, 2023
for twelve months, in the form of the Company's Common Stock, calculated based on the closing stock price on the first trading
day of the corresponding month. The shares were issued pursuant to the 2021 Plan. During
the years ended December 31, 2023, the company issued 41,144 shares to the designer and charged $ 110,000 to operations as designer fee.

 On
July 3, 2023, the Company entered into an IT consulting service agreement with three consultants for analyzing the Company's IT
infrastructure and system effective on July 3, 2023 for twelve months. The Company agreed to grant
the consultant 300,000 shares of the Company's common stock, vesting 25 % on July 3, 2023, 25 % on October 3, 2023, 25 % on January
3, 2024 and 25 % on April 3, 2024. The fair value of the 300,000 shares was $ 636,000, which was calculated based on the stock price of
$ 2.12 per share on July 3, 2023. The shares were issued pursuant to the 2021 Plan. During the year ended December 31, 2023, the Company
charged $ 318,000 to operations as consulting expenses.

 On
November 9, 2023, the Company entered into a consulting agreement with a consultant for consulting and strategy services effective on
November 16, 2023 for a one -year term. The Company agreed to grant the consultant 50,000 shares of the Company's common stock,
vesting 25 % on February 15, 2024, 25 % on May 15, 2024, 25 % on August 15, 2024 and 25 % on November 15, 2024. The fair value of the 50,000
shares was $ 117,500, which was calculated based on the stock price of $ 2.35 per share on November 16, 2023. The shares were issued pursuant
to the 2021 Plan. During the year ended December 31, 2023, the Company charged $ 14,808 to operations as consulting expenses.

 On November 16, 2023, Nova Malaysia entered into an
agreement with an IT consulting firm to acquire an Artificial Intelligent IT System for $ 675,000. The Company agreed to issue 270,000
shares of common stocks at the price of $ 2.50 per share which was in equivalent to $ 675,000 ( 3,161,970 in Malaysia Ringgit on November
16, 2023) to the IT consulting firm. Artificial Intelligent IT System is just a part of the ultimate
software product. The ultimate software is still in developing stage and not feasible to be functional. During the year ended December
31, 2023, the Company recorded $ 675,000 as research and development expense.

 F- 28

and Options Issued to Independent Directors

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

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

Issued to Employees

 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 1,200 restricted Stock Units to the officer pursuant to the Company's
 2021 Omnibus Equity Plan. The fair value of these shares was $ 13,200, which was calculated based
on the stock price of $ 11.00 per share on November 11, 2021, the date the award was determined by the Compensation Committee of the Board
of Directors, vesting 25 % on November 10, 2021, 25 % on March 31, 2022, 25 % on June 30, 2022 and 25 % on September 30, 2022. During the
years ended December 31, 2022, the Company amortized $ 11,501 to operations as stock compensation expense.

 On
November 11, 2022, the Company extended an employment agreement with the Company's Corporate Secretary for a term of one year
effective from November 14, 2022. The Company agreed to grant an award of 1,200
restricted Stock Units to the officer pursuant to the Company's 2021
Omnibus Equity Plan. The fair value of these shares was $ 3,540,
which was calculated based on the stock price of $ 2.95
per share on November 11, 2022, the date the award was determined by the Compensation Committee of the Board of Directors, vesting 25 %
on November 11, 2022, 25 %
on March 31, 2023, 25 %
on June 30, 2023 and 25 %
on September 30, 2023. During the year ended December 31, 2023 and 2022, the Company record $ 2,665
and $ 885 to operations as stock compensation expense, respectively.

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

 Options
Issued to Employees

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

 F- 29

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

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

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

 As
of December 31, 2023, unrecognized share-based compensation expense was $ 455,175.

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

 Schedule of Stock Option Activity

 Number
 of

 Average
 Exercise
 Price
 per Share

 Weighted
 Average
 Remaining
 Contractual
 Term
 in Years

 Outstanding

 26,800

 $
 22.90

 1.33

 Exercisable

 26,800

 22.90

 1.33

 Granted

 -

 -

 -

 Exercised

 -

 -

 -

 Forfeited

 13,400

 31.25

 -

 Outstanding

 13,400

 14.55

 0.82

 Exercisable

 13,400

 14.55

 0.82

 (1)

 The
intrinsic value of the stock options at December 31, 2023 is the amount by which the market value of the Company's common stock
of $ 3.77 as of December 29, 2023 exceeds the average exercise price of the option. As of December 31, 2023, the intrinsic value of the
outstanding and exercisable stock options was $ 0.

 Note
14 – Geographical Analysis

 Geographical
distribution of sales consisted of the following for the years ended December 31, 2023 and 2022:

 Schedule of Revenue by Geographic Areas

 2023

 2022

 Geographical Areas

 North America

 $
 8,772,170

 $
 12,009,384

 Asia

 1,985,130

 60,479

 Other countries

 330,159

 675,008

 Revenues

 $
 11,087,459

 $
 12,744,871

 F- 30

 Geographical
location of identifiable long-lived assets as of December 31, 2023 and December 31, 2022:

 Schedule of Long-lived Assets by Geographic Areas

 2023

 2022

 Geographical
 Areas

 North
 America

 $
 1,873,623

 $
 2,502,010

 Asia

 318,398

 531,703

 Total

 $
 2,192,021

 $
 3,033,713

 Note
15 – Lease

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

 The
Company has entered into several lease agreements for office and warehouse space in Commerce, California and showroom space in Las Vegas,
Nevada and High Point, North Carolina (see Note 12) on monthly or annual terms.

 On
July 15, 2019, Nova Malaysia entered into a sublease agreement for warehouse space with a two -year
term, expiring on July
14, 2021. The initial
monthly rental payment was 20,000
 Malaysia Ringgit ($ 4,547)
and was increased to 35,000
 Malaysia Ringgit ($ 7,958)
effective August 1, 2020. On July 15, 2021, Nova Malaysia extended the lease for another two
years with an expiration
date of July
31, 2023. Nova Malaysia
did not extend this lease after July 31, 2023.

 On
October 29, 2019, Nova Malaysia entered into a lease agreement for a showroom with a two -year term, commencing on December 1, 2019 and
expiring on November 30, 2021. On November 26, 2021, Nova Malaysia extended the lease to November 30, 2022 with an option for renewal
for another term of 24 months. On October 4, 2022, Nova Malaysia renewed the lease for two years to November 30, 2024. The monthly rental
payment is 9,280 Malaysia Ringgit ($ 2,110).

 On
August 20, 2020, Nova Malaysia entered into a sublease agreement for an office and service center with a two -year term, commencing on
September 1, 2020 and expiring on August 31, 2022. On July 29, 2022, Nova Malaysia extended the lease for another two years with an expiration
date of August 31, 2024. The monthly rental payment is 30,000 Malaysia Ringgit ($ 6,821).

lease expense for the years ended December 31, 2023 and 2022 was as follows:

 Schedule of Lease Cost

 2023

 2022

 lease cost – straight line

 $
 831,262

 $
 880,590

 The
following is a schedule, by years, of maturities of operating lease liabilities as of December 31, 2023:

 Schedule of Operating Lease Liability Maturity

 Leases

 2024

 $

 755,243

 2025

 701,142

 2026

 598,820

 Thereafter

 Total
 undiscounted cash flows

 2,055,205

 Less:
 imputed interest

 ( 90,963

)

 Present
 value of lease liabilities

 1,964,242

 F- 31

 Lease
Term and Discount Rate

 Schedule of Lease Term and Discount Rate

 31, 2023

 Weighted-average
 remaining lease term – years

 leases – USA

 2.84

 leases – Malaysia

 0.69

 Weighted-average
 discount rate (%)

 leases – USA

 3.36

 %

 leases – Malaysia

 5.21

 %

 Supplemental
cash flow information related to leases where the Company was the lessee for the years ended December 31, 2023 and 2022 was as follows:

 Schedule of Supplemental Cash Flow Information Related to Leases

 2023

 2022

 cash outflows from operating leases

 $
 814,230

 $
 844,309

 Note
16 – Commitments and Contingencies

 Legal
Proceedings

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

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

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

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

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

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

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

 F- 32

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

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

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

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

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

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

 Note
17 – Subsequent Events

 The
Company has evaluated subsequent events through April 12, 2024, the date of the issuance of the consolidated financial statements,
and the following subsequent events have been identified.

 On
January 23, 2024, Nova LifeStyle, Inc. (the "Company"), Nova Living (M) Sdn Bhd, a wholly owned subsidiary of the Company
("Nova Malaysia") and ATS Brand Sdn Bhd ("ATS Brand"), a company incorporated in Malaysia entered into a Sale
and Purchase Agreement (the "Agreement"). Pursuant to the Agreement, the parties agree: (i) Nova Malaysia will purchase an
AI-Calculation Engine System from ATS Brand for $ 750,000 (the "Purchase Price") and (ii) the Purchase Price shall be paid
in 300,000 shares of common stock ("Shares") of the Company at $ 2.5 per share. The AI-Calculation Engine includes Commission
Management Calculation Module, Compiled and Encrypted Calculation Engine, Membership Module, Sales Module and Maintenance and Support,
etc. The Shares will be issued pursuant to the exemption from registration provided by Regulation S promulgated under the Securities
Act of 1933, as amended.

 On
January 28, 2024, the Company entered into an advisory service agreement with a designer for advising furniture design concept and development
effective on February 1, 2024 for twelve months. The Company shall pay the designer $ 10,000 per month starting from February 1, 2024
for twelve months, in the form of the Company's Common Stock, calculated based on the closing stock price on the first trading
day of the corresponding month. The shares were issued pursuant to the 2021 Plan.

 On
February 2024, the Company entered into a loan agreement in the aggregate amount of $ 200,000 with an unrelated third party. The loan
was in the form of a promissory note dated on February 21, 2024, matures on February 20, 2025, and bears interest at a rate of 8.5 % per
annum.

 On March 1, 2024, Nova Malaysia entered into a consulting agreement with a consultant for IT system related maintenance
and services effective on March 1, 2024 for a one-year term. The Company agreed to grant the consultant 100,000 shares of the Company's
common stock, vesting 25 % on March 1, 2024, 25 % on June 1, 2024, 25 % on September 1, 2024 and 25 % on December 1, 2024. The fair value
of the 100,000 shares was $ 163,000, which was calculated based on the stock price of $ 1.63 per share on March 1, 2024. The shares were
issued pursuant to the 2023 Omnibus Long-Term Incentive Plan.

 F- 33

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 NOVA
 LIFESTYLE, INC.

 (Registrant)

 Date:

 By:

 /s/
 Thanh H. Lam

 Thanh
 H. Lam

 Chairperson
 and Chief Executive Officer

 (Principal
 Executive Officer)

 Power
of Attorney

 KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thanh H. Lam and Jeffery Chuang,
jointly and severally, his or her attorneys-in-fact, with the power of substitution, for him or her in any and all capacities, to sign
any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute
or substitutes, may do or cause to be done by virtue hereof.

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Thanh H. Lam

 Chief
 Executive Officer, President, Director and Chairperson

 Thanh
 H. Lam

 (Principal
 Executive Officer)

 /s/
 Jeffery Chuang

 Chief
 Financial Officer

 Jeffery
 Chuang

 (Principal
 Financial and Accounting Officer)

 /s/
 Min Su

 Director

 Min
 Su

 /s/
 Ming-Cherng Sky Tsai

 Director

 Ming-Cherng
 Sky Tsai

 /s/
 Umesh Patel

 Director

 Umesh
 Patel

 /s/
 Huy P. La

 Director

 Huy
 P. La