UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of
the Commission Only (as permitted by Rule 14a–6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant
to §240.14a–12 |
NOVA
LIFESTYLE, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below
per Exchange Act Rules 14a–6(i)(1) and 0–11. |
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Title of each class of
securities to which transaction applies: |
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Aggregate number of securities
to which transaction applies: |
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Per unit price or other
underlying value of transaction computed pursuant to Exchange Act Rule 0–11 (set forth the amount on which the filing fee is
calculated and state how it was determined): |
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(4) |
Proposed maximum aggregate
value of transaction: |
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Total fee paid: |
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Fee paid previously with
preliminary materials. |
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Check box if any part of
the fee is offset as provided by Exchange Act Rule 0–11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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(2) |
Form, Schedule or Registration
Statement No.: |
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Filing Party: |
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Date Filed: |
NOVA
LIFESTYLE, INC.
6565
E. Washington Blvd.
Commerce,
CA 90040
April
21, 2023
Dear
Stockholder:
You
are cordially invited to attend the 2023 Annual Meeting of Stockholders of Nova LifeStyle, Inc., a Nevada corporation, to be held at
the corporate headquarters of Nova LifeStyle, Inc., located at 6565 E. Washington Blvd, Commerce, California 90040 on June 1, 2023, at
10:30 a.m. local time.
Information
regarding each of the matters to be voted on at the Annual Meeting is contained in the attached Proxy Statement and Notice of Annual
Meeting of Stockholders. We urge you to read the proxy statement carefully.
The
proxy statement and proxy card are being mailed to all stockholders of record on or about April 21, 2023.
Because
it is important that your shares be voted at the Annual Meeting, we urge you to complete, date and sign the enclosed proxy card and return
it as promptly as possible in the accompanying envelope, whether or not you plan to attend in person. Even after returning your proxy,
if you are a stockholder of record and do attend the meeting and wish to vote your shares in person, you still may do so.
Sincerely,
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/s/
Thanh H. Lam |
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Thanh H. Lam |
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President, Chief Executive Officer and Chairperson
of the Board of Directors |
NOVA
LIFESTYLE, INC.
6565
E. Washington Blvd.
Commerce,
CA 90040
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held April 21, 2023
TO
THE STOCKHOLDERS OF NOVA LIFESTYLE, INC.:
NOTICE
HEREBY IS GIVEN that the 2023 Annual Meeting of Stockholders of Nova LifeStyle, Inc., a Nevada corporation, will be held at the corporate
headquarters of Nova LifeStyle, Inc., located at 6565 E. Washington Blvd, Commerce, California 90040 on June 1, 2023, at 10:30 a.m. local
time, to consider and act upon the following:
1. |
To elect
five directors, each to serve until the 2024 Annual Meeting of Stockholders or until such person’s successor is qualified and
elected; |
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2. |
To ratify
the appointment of WWC, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2023; |
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3. |
To approve
the compensation of the named executive officers as disclosed in this Proxy Statement in a non-binding, advisory vote; and |
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4. |
To transact
such other business as properly may come before the annual meeting or any adjournments thereof. |
Stockholders
of record at the close of business on April 10, 2023 are entitled to receive notice of and to vote at the 2023 Annual Meeting and any
adjournments thereof. A complete list of these stockholders will be open for the examination of any stockholder of record at the Company’s
principal executive offices located at 6565 E. Washington Blvd, Commerce, California 90040 for a period of ten days prior to the Annual
Meeting. The list will also be available for the examination of any stockholder of record present at the Annual Meeting. The Annual Meeting
may be adjourned or postponed from time to time without notice other than by announcement at the meeting.
By
Order of the Board of Directors
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/s/
Thanh H. Lam |
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Thanh H. Lam |
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President, Chief Executive
Officer and Chairperson of the Board of Directors |
Commerce,
California
April
21, 2023
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON June 1, 2023:
WHETHER
OR NOT YOU PLAN TO ATTEND OUR 2023 ANNUAL MEETING OF STOCKHOLDERS, YOUR VOTE IS IMPORTANT. PLEASE FOLLOW THE INSTRUCTIONS IN THE PROXY
MATERIALS TO VOTE YOUR PROXY VIA THE INTERNET OR BY TELEPHONE OR REQUEST AND PROMPTLY COMPLETE, EXECUTE AND RETURN THE PROXY CARD BY
FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD. IF YOU ATTEND OUR 2023 ANNUAL MEETING OF STOCKHOLDERS, YOU MAY REVOKE YOUR PROXY AND VOTE
IN PERSON IF YOU SO DESIRE.
NOVA
LIFESTYLE, INC.
6565
E. Washington Blvd.
Commerce,
CA 90040
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
To
Be Held June 1, 2023
We
are furnishing this Proxy Statement to the stockholders of Nova LifeStyle, Inc., a Nevada corporation in connection with the solicitation,
by the Board of Directors of Nova LifeStyle, Inc. (the “Board”), of proxies to be voted at our 2023 Annual Meeting of Stockholders
to be held at the corporate headquarters of Nova LifeStyle, Inc. located at 6565 E. Washington Blvd, Commerce, California 90040 on June
1, 2023, at 10:30 a.m. local time, and at any adjournments or postponements of the meeting.
When
used in this Proxy Statement, the terms “Nova LifeStyle,” “Nova,” the “Company,” “we,”
“our” and similar terms refer to Nova LifeStyle, Inc., a Nevada corporation, and its wholly-owned subsidiaries.
You
will be eligible to vote your shares electronically via the Internet, by telephone or by mail by following the instructions in these
Proxy Materials.
This
Proxy Statement, our Annual Report on Form 10-K for fiscal year ended December 31, 2022 (the “Annual Report”), and other
proxy materials, including the Proxy Card and the Notice of Annual Meeting, are available free of charge online at www.proxyvote.com.
Directions to our 2023 Annual Meeting of Stockholders are available by calling (323) 888-9999 or by written request to Thanh H. Lam,
our Chief Executive Officer, at 6565 E. Washington Blvd., Commerce, CA 90040.
ABOUT
THE 2023 ANNUAL MEETING
General:
Date, Time and Place
We
are providing this Proxy Statement to you in connection with the solicitation, on behalf of our Board, of proxies to be voted at our
2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) or any postponement or adjournment of that meeting. The 2023
Annual Meeting will be held on June 1, 2023, at 10:30 a.m. local time at the Company’s corporate headquarters located at 6565 E.
Washington Blvd, Commerce, California 90040.
Matters
to be Considered and Voted Upon
At
the 2023 Annual Meeting, stockholders will be asked to consider and vote:
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(i) |
to
elect director nominees; |
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(ii) |
to
ratify our independent registered public accounting firm; |
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(iii) |
to
approve the compensation of the named executive officers as disclosed in this Proxy Statement in a non-binding, advisory vote; and |
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(iv) |
to
transact such other business as properly may come before the annual meeting or any adjournments thereof. |
The
Board is not aware of any matters to be brought before the meeting other than as set forth in the notice of meeting. If any other matters
properly come before the meeting, the persons named in the form of proxy or their substitutes will vote in accordance with their best
judgment on such matters.
Record
Date; Stock Outstanding and Entitled to Vote
Our
Board established April 10, 2023 as the record date. Only holders of shares of the Company’s common stock, par value $0.001 per
share, as of the record date, are entitled to notice of, and to vote at, the 2023 Annual Meeting. Each share of common stock entitles
the holder thereof to one vote per share on each matter presented to our stockholders for approval at the 2023 Annual Meeting. At the
close of business on the record date, we had 7,178,393 shares of our common stock outstanding.
Quorum;
Required Vote
A
quorum of stockholders is required for the transaction of business at the 2023 Annual Meeting. The presence of at least one-third of
all of our shares of common stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy,
will constitute a quorum at the meeting. Votes cast by proxy or in person at the 2023 Annual Meeting will be tabulated by an election
inspector appointed for the meeting and will be taken into account in determining whether or not a quorum is present. Abstentions and
broker non-votes, which occur when a broker has not received customer instructions and indicates that it does not have the discretionary
authority to vote on a particular matter on the proxy card, will be included in determining the presence of a quorum at the 2023 Annual
Meeting.
Assuming
that a quorum is present, our stockholders may take action at the annual meeting with the votes described below.
Election
of Directors. Under Nevada law and the Amended and Restated Bylaws of the Company (“Bylaws”), the affirmative vote of
a plurality of the votes cast by the holders of our shares of common stock is required to elect each director. A nominee who receives
a plurality means he or she has received more “For” votes than any other nominee for the same director’s seat. Stockholders
do not have any rights to cumulate their votes in the election of directors. Abstentions and broker non-votes will not be counted toward
a nominee’s total.
Auditor
Ratification. The affirmative vote of the holders of a majority of the votes cast by the holders of shares entitled to vote on the
proposal at the Annual Meeting, provided a quorum is present, is required to ratify the selection of WWC,
P.C. as our independent registered public accounting firm. Abstentions and broker non-votes will not be counted as votes in favor
of or against the proposal.
Non-binding
advisory vote regarding the compensation of our named executive officers. The affirmative vote of the holders of a majority of the
votes cast on the proposal at the annual meeting is required to approve the compensation of our named executive officers. Abstentions
and broker non-votes will not be counted as votes approving the compensation of our named executive officers.
Abstentions
and Broker Non-Votes
Under
applicable regulations, if a broker holds shares on your behalf, and you do not instruct your broker how to vote those shares on a matter
considered “routine,” the broker may generally vote your shares for you. A “broker non-vote” occurs when a broker
has not received voting instructions from you on a “non-routine” matter, in which case the broker does not have authority
to vote your shares with respect to such matter. Unless you provide voting instructions to a broker holding shares on your behalf, your
broker may not use discretionary authority to vote your shares on any of the matters to be considered at the 2023 Annual Meeting other
than the ratification of our independent registered public accounting firm. Please vote your proxy so your vote can be counted.
Voting
Procedure; Voting of Proxies; Revocation of Proxies
Stockholders
of Record
If
your shares are registered directly in your name with our transfer agent, Issuer Direct Corporation, you are considered the “stockholder
of record” with respect to those shares. As the stockholder of record, you may vote in person at the 2023 Annual Meeting or vote
by proxy using the accompanying proxy card. Whether or not you plan to attend the annual meeting, we urge you to vote by proxy to ensure
your vote is counted. You may still attend the 2023 Annual Meeting and vote in person even if you have already voted by proxy.
By
Internet – stockholders may vote on the internet by logging on to www.proxyvote.com and following the instructions given.
By
Telephone – stockholders may vote by calling 1-800-690-6903 (toll-free) with a touch tone telephone and following the recorded
instructions.
By
Mail – stockholders must request a paper copy of the proxy materials to receive a proxy card and follow the instructions given
for mailing. A paper copy of the proxy materials may be obtained by logging onto www.proxyvote.com and following the instructions given.
To vote using the proxy card, simply print the proxy card, complete, sign and date it and return it promptly to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, New York 11717. In the alternative, the proxy card can be mailed directly to the Company: Thanh
H. Lam, our Chief Executive Officer, located at 6565 E. Washington Blvd., Commerce, CA 90040. Our Board has selected Thanh H. Lam to
serve as proxy.
If
you vote by telephone or via the Internet, you do not need to return your proxy card. Telephone and Internet voting are available 24
hours a day and will close at 11:59 P.M. Eastern Time on May 31, 2023.
In
Person - stockholders may vote in person at the 2023 Annual Meeting. To vote in person, come to the 2023 Annual Meeting and we will
give you a ballot when you arrive. The Board recommends that you vote using one of the other voting methods, since it is not practical
for most stockholders to attend the 2023 Annual Meeting.
Shares
of our common stock represented by proxies properly voted that are received by us and are not revoked will be voted at the 2023 Annual
Meeting in accordance with the instructions contained therein.
If
instructions are not given, such proxies will be voted:
FOR
election of each nominee for director named herein,
FOR
ratification of the selection of WWC, P.C. as our independent registered public accounting
firm,
FOR
approval of the compensation of our named executive officers described in this Proxy Statement, and
FOR
such other business as properly may come before the annual meeting or any adjournments thereof.
In
addition, we reserve the right to exercise discretionary authority to vote proxies, in the manner determined by us, in our sole discretion,
on any matters brought before the 2023 Annual Meeting for which we did not receive adequate notice under the proxy rules promulgated
by the Securities and Exchange Commission (“SEC”).
Street
Name Stockholders
If
you hold your shares in “street name” through a stockbroker, bank or other nominee rather than directly in your own name,
you are considered the “beneficial owner” of such shares. Because a beneficial owner is not a stockholder of record, you
may not vote these shares in person at the 2023 Annual Meeting unless you obtain a “legal proxy” from the broker, bank or
nominee that holds your shares, giving you the right to vote those shares at the meeting. The Board recommends that you vote using one
of the other voting methods, since it is not practical for most stockholders to attend the 2023 Annual Meeting.
If
you hold your shares in “street name” through a stockbroker, bank or other nominee rather than directly in your own name,
you can most conveniently vote by telephone, Internet or mail. Please review the voting instructions on your voting instruction form.
If
you do not give instructions to your bank or brokerage firm, it will nevertheless be entitled to vote your shares in its discretion on
routine matters. However, absent your instructions, the record holder will not be permitted to vote your shares on a non-routine matter,
which are referred to as “broker non-votes”, properly brought before the meeting. Broker non-votes (shares held by brokers
that do not have discretionary authority to vote on the matter and have not received voting instructions from their clients) are not
counted or deemed to be present or represented for the purpose of determining whether stockholders have approved that proposal, but will
be counted in determining whether there is a quorum present.
Your
proxy is revocable at any time before it is voted at the 2023 Annual Meeting in any of the following three ways:
1.
You may submit another properly completed proxy bearing a later date.
2.
You may send a written notice that you are revoking your proxy to Thanh H. Lam, our Chairperson of the Board, located at 6565 E. Washington
Blvd., Commerce, CA 90040.
3.
You may attend the 2023 Annual Meeting and vote in person. However, simply attending the 2023 Annual Meeting will not, by itself, revoke
your proxy.
Dissenters’
Right of Appraisal
Under
Nevada General Corporation Law and the Company’s Articles of Incorporation, stockholders are not entitled to any appraisal or similar
rights of dissenters with respect to any of the proposals to be acted upon at the 2023 Annual Meeting.
Costs
of Proxy Solicitation
We
will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit
proxies in person, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation
for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial
owners.
Householding
SEC
rules permit us to deliver a single copy of our annual report and proxy statement, to one address shared by two or more of our stockholders.
This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this
opportunity, we have delivered only one copy of the annual report and proxy statement, to multiple stockholders who share an address,
unless we received contrary instructions from the impacted stockholders prior to the mailing date. If you received a householded mailing
this year and you would like to have additional copies of our annual report and proxy statement mailed to you or you would like to opt
out of this practice for future mailings, contact Thanh H. Lam, our Chief Executive Officer, located at 6565 E. Washington Blvd., Commerce,
CA 90040. We agree to deliver promptly, upon written or oral request, a separate copy of this Proxy Statement and annual report to any
stockholder at the shared address to which a single copy of those documents were delivered.
Stockholder
List
For
at least ten days prior to the meeting, a list of stockholders entitled to vote at the 2023 Annual Meeting, arranged in alphabetical
order, showing the address of and number of shares registered in the name of each stockholder, will be open for examination by any stockholder,
for any purpose related to the 2023 Annual Meeting, during ordinary business hours at our principal executive office. The list will also
be available for examination at the 2023 Annual Meeting.
Other
Business
The
Board is not aware of any other matters to be presented at the 2023 Annual Meeting other than those mentioned in this Proxy Statement
and our accompanying Notice of Annual Meeting of Stockholders. If, however, any other matters properly come before the 2023 Annual Meeting,
the persons named in the accompanying proxy will vote in accordance with their best judgment.
Information
About the Company
The
principal executive offices of our Company are located at of Nova LifeStyle, Inc., located at 6565 E. Washington Blvd, Commerce, California
90040.
We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, which requires that we file reports,
proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements
and other information regarding companies, including Nova LifeStyle, Inc, that file electronically with the SEC. The SEC’s website
address is www.sec.gov. In addition, our filings may be inspected and copied at the public reference facilities of the SEC located at
100 F Street, N.E. Washington, DC 20549.
Proposals
of Stockholders for 2024 Annual Meeting
Stockholder
proposals will be considered for inclusion in the Proxy Statement for the 2023 Annual Meeting in accordance with Rule 14a-8 under Securities
Exchange Act of 1934, as amended (the “Exchange Act”), if they are received by the Company on or before December 20, 2023.
Stockholder
notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the
name and address, as they appear on our books, of the stockholder proposing such business; (iii) the class and number of shares of Nova
LifeStyle, which are beneficially owned by the stockholder; (iv) any material interest of the stockholder in such business; and (v) any
other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Exchange Act, in his or her
capacity as a proponent to a stockholder proposal.
A
stockholder’s notice relating to nomination for directors shall set forth as to each person, if any, whom the stockholder proposes
to nominate for election or re-election as a director: (i) the name, age, business address and residence address of such person, (ii)
the principal occupation or employment of such person, (iii) the class and number of shares of Nova LifeStyle, which are beneficially
owned by such person, (iv) a description of all arrangements or understandings between the stockholder and each nominee and any other
person(s) (naming such person(s)) pursuant to which the nominations are to be made by the stockholder, and (v) any other information
relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act (including without limitation such person’s written consent to being
named in our Proxy Statement, if any, as a nominee and to serving as a director if elected).
Proposals
and notices of intention to present proposals at the 2023 Annual Meeting should be addressed to Thanh H. Lam, our Chief Executive Officer,
located at 6565 E. Washington Blvd., Commerce, CA 90040.
The
Board has not received any stockholder proposals in connection with the 2023 Annual Meeting.
Voting
Results of 2023 Annual Meeting
Voting
results will be published in a Current Report on Form 8-K issued by us within four (4) business days following the 2023 Annual Meeting.
PROPOSAL
NO. 1— ELECTION OF DIRECTORS
Nominees
Our
Bylaws provide that the Board shall consist of not less than one (1) nor more than ten (10) directors. Vacancies on the Board may be
filled only by persons elected by a majority of the remaining directors, although vacancies occurring as a result of removal of directors
by the Company’s stockholders may only be filled by the stockholders. A director elected by the Board to fill a vacancy (including
a vacancy created by an increase in the Board) will serve for the remainder of the one year term in which the vacancy occurred and until
the director’s successor is elected and qualified. This includes vacancies created by an increase in the number of directors.
Our
Board currently consists of five (5) members. All of our current directors will stand for re-election at the 2023 Annual Meeting.
If
elected as a director at the 2023 Annual Meeting, each of the nominees will serve a one-year term expiring at the 2024 Annual Meeting
of Stockholders and until his or her successor has been duly elected and qualified. Biographical information regarding each of the nominees,
as of April 19, 2023, is set forth below, including their ages, positions with the Company, recent employment and other directorships.
No family relationships exist among any of our director nominees or executive officers.
Each
of the nominees has consented to serve as a director if elected. If any nominee should be unavailable to serve for any reason (which
is not anticipated), the Board may designate a substitute nominee or nominees (in which event the persons named on the enclosed proxy
card will vote the shares represented by all valid proxy cards for the election of such substitute nominee or nominees), allow the vacancies
to remain open until a suitable candidate or candidates are located, or by resolution provide for a lesser number of directors.
Directors
The
persons who have been nominated for election at the annual meeting to serve on our Board of Directors are named in the table below. Proxies
cannot be voted for a greater number of persons than the number of nominees named.
Name |
|
Age |
|
Position |
|
Served
From |
Thanh H. Lam |
|
55 |
|
Chief Executive Officer,
President, Chairperson and Director |
|
June 2011 |
Min Su |
|
39 |
|
Corporate Secretary, Director |
|
November 2016 (2) |
Ming-Cherng Sky Tsai (1) |
|
47 |
|
Director (Independent) |
|
July 2020 |
Huy (Charlie) La (1) |
|
48 |
|
Director (Independent) |
|
January 2017 |
Umesh Patel (1) |
|
65 |
|
Director (Independent) |
|
October 2016 |
(1)
Member or nominee, as applicable, of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee
(2)
As a member of our Board since August 22, 2017
Biographical
Information
Thanh
H. Lam was appointed our President and a member of our Board on June 30, 2011, and was elected as Chairperson of the Board on June
4, 2013. Ms. Lam was appointed as our Interim Chief Executive Officer on October 7, 2016, and as our Chief Executive Officer on April
10, 2017. Ms. Lam was a co-founder of the Diamond Sofa brand and previously was the Chief Executive Officer of Diamond Bar in Commerce,
California, our wholly-owned subsidiary acquired by the Company in August 2011. Ms. Lam has pioneered the Diamond Sofa brand since 1992
and, prior to our acquisition of the Diamond Sofa brand, was in charge of its product development and merchandising for the U.S. market
and managed its national sales force and oversaw distribution. In 2005, Ms. Lam was featured in a Furniture Today “Fresh Faces”
profile, one of the highest honors bestowed to exceptional and talented young entrepreneurs in the furniture industry. Ms. Lam received
her Bachelor of Science degree in Business Administration and Finance from the California State University of Los Angeles. Ms. Lam brings
to the Board many years of experience in developing a furniture brand and marketing to the U.S. furniture industry. The Board believes
that Ms. Lam’s in-depth knowledge of the U.S. furniture market and knowledge of our business through her work with the Diamond
Sofa brand will assist us in our future growth and expansion plans.
Min
Su was appointed as a member of our Board on August 22, 2017, and has served as the Company’s Corporate Secretary since November
2016. From 2012 to November 2016, Ms. Su served as the accounts payable coordinator of Diamond Bar Outdoors Inc., the wholly-owned subsidiary
of the Company. Ms. Su received her Bachelor’s Degree in E-Commerce Business from California State Polytechnic University, Pomona
in 2005. Ms. Su has been selected as a nominee for director due to her extensive experience and knowledge, and participation in the Company’s
operations since 2012.
Ming-Cherng
Sky Tsai was appointed a member of our Board on July 27, 2020. Mr. Tsai has served as vice president of Skyrocket Investments LLC
since 2010. Mr. Tsai received his Bachelor’s Degree in Supply Chain Management from the Eli Broad College of Business at Michigan
State University in 2004. The Board believes that Mr. Tsai’s extensive experience in investment and supply chain management qualifies
him to serve as a member of the Board.
Umesh
Patel was appointed a member of the Board on October 7, 2016. Since December 2009, Mr. Patel has served as a managing partner of
DviBri LLC, a California-based consulting company providing services to private companies interested in conducting initial public offerings,
along with other associated securities and investment services. Since March 2013, Mr. Patel has also been a consultant and coordinator
for Eos-Petro Inc., an international and domestic petroleum exploration and production company based in Southern California. Mr. Patel
has also served as a director and the Chief Executive Officer of Fuse Group Holding Inc., a company exploring opportunities in the mining
industry, since February 2017. Mr. Patel received his Bachelor of Commerce degree specializing in audits and accounts, and an Associate
degree in hotel management and catering from Maharaja Sayaji Rao University in Baroda, India in 1978. The Board believes that Mr. Patel
is well qualified to serve as a member of the Board due to his extensive regulatory and investment experience.
Charlie
Huy La was appointed a member of the Board on January 24, 2017. Since May 2015, Mr. La has served as a managing member of Grand Pinnacle
Investment LLC, an investment company specializing in real estate investment and management. Since November 2008, Mr. La has served as
the human resource information system lead at Reliance Steel and Aluminum Co., a Fortune 500 company and the largest metals service center
in North America. Mr. La holds a bachelor degree in management information systems from La Salle University, which he received in July
1999. The Board believes that Mr. La’s expertise and knowledge of investment, management, human resource systems and payroll operation
will benefit the Company’s operations and make him a valuable member of the Board and its committees.
All
directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified.
There are no membership qualifications for directors. There are no arrangements or understandings pursuant to which our directors are
selected or nominated.
THE
BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS
PROXY STATEMENT.
PROPOSAL
NO. 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
The
Audit Committee, in accordance with its charter and authority delegated to it by the Board, has appointed WWC,
P.C. to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023, and the Board
has directed that such appointment be submitted to our stockholders for ratification at the 2023 Annual Meeting. WWC,
P.C. is considered by our Audit Committee to be well qualified, and has served as our independent registered public accounting
firm since October 6, 2022. We are asking our stockholders to ratify the appointment of WWC, P.C.
as our independent registered public accountants. If the stockholders do not ratify the appointment of WWC,
P.C., the Audit Committee may determine to reconsider the appointment. Even if the selection is ratified, the Audit Committee,
in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines
that such a change would be in the best interests of the Company and its stockholders. At the time of mailing this Proxy Statement, the
Company does not anticipate that any representative of WWC, P.C. will be present, either
by phone or in person, at the 2023 Annual Meeting. Should a representative of WWC, P.C.
be available and desire to make a statement either in person or by telephone at our 2023 Annual Meeting, they will have the opportunity
to do so and will respond to appropriate questions.
THE
BOARD, UPON THE RECOMMENDATION OF THE AUDIT COMMITTEE, RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL AND RATIFICATION
OF WWC, P.C. AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2023.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Audit
and Non-Audit Fees
The
following table represents the aggregate fees from our former principal accountant, Centurion ZD CPA & Co. for the years ended December
31, 2021 and 2022, and our current principal accountant WWC, P.C. for the years ended December 31, 2022:
| |
Centurion ZD CPA & Co. | | |
WWC. P.C. | |
| |
2022 | | |
2021 | | |
2022 | |
Audit fees | |
$ | 232,129 | | |
$ | 397,786 | | |
$ | 60,000 | |
Audit-related fees | |
| - | | |
| - | | |
| - | |
Tax fees | |
| - | | |
| - | | |
| - | |
All other fees | |
| - | | |
| - | | |
| - | |
In
the above table, “audit fees” are fees billed for services provided related to the audit of our annual financial statements,
quarterly reviews of our interim financial statements and services normally provided by the principal accountant in connection with statutory
and regulatory filings or engagements for those fiscal periods. “Audit-related fees” are fees not included in audit fees
that are billed by the principal accountant for assurance and related services that are reasonably related to the performance of the
audit or review of our financial statements, which include audits in connection with acquisitions. “Tax fees” are fees billed
by the principal accountant for professional services rendered for tax compliance, tax advice and tax planning. “All other fees”
are fees billed by the principal accountant for products and services not included in the foregoing categories.
Change
in Independent Auditor
As
disclosed in the Current Report on Form 8-K filed by the Company on October 11, 2022, the Audit Committee dismissed Centurion ZD CPA
Limited (“Centurion ZD”) as the Company’s independent auditors for the 2022 fiscal year on October 7, 2022. The Audit
Committee appointed WWC, P.C., an independent registered public accounting firm, as the Company’s independent auditors for the
2022 fiscal year on October 6, 2022.
Centurion
ZD’s report on the financial statements of the Company for the fiscal years ended December 31, 2021 and 2020 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s fiscal years ended December 31, 2021 and 2020 and through October 6, 2022, there were no disagreements (as
that term is defined in Item 304(a)(1)(iv) of Regulation S-K) between Centurion ZD and the Company on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to Centurion ZD’s
satisfaction, would have caused Centurion ZD to make reference to the subject matter in their report on the Company’s consolidated
financial statements for such periods. Furthermore, no “reportable events” occurred within the periods covered by Centurion
ZD’s reports on the Company’s consolidated financial statements, or subsequently up to the date of Centurion ZD’s dismissal.
As used herein, the term “reportable event” means any of the items listed in paragraphs (a)(1)(v) of Item 304 of Regulation
S-K.
The
Company furnished a copy of the above disclosures to Centurion ZD and requested that Centurion ZD provide a letter addressed to the Securities
and Exchange Commission stating whether or not it agrees with the statements made above. A copy of such letter is filed as Exhibit 16.1
to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 11, 2022.
During
the Company’s two most recent fiscal years ended December 31, 2021 and 2020 and through October 6, 2022, neither the Company nor
anyone on behalf of the Company consulted WWC, P.C. regarding any accounting or auditing issues involving the Company, including (i)
the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company’s financial statements, or (ii) any matter that was the subject of a “disagreement”
(as defined in Item 304(a)(1)(iv) of Regulation S-K of the Securities Exchange Act of 1934, as amended, and the related instructions
to Item 304 of Regulation S-K) or a “reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K).
Policy
on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Accountant
Our
Audit Committee pre-approves all audit and non-audit services provided by our independent accountant. These services may include audit
services, audit-related services, tax services and other services. In the past, our Audit Committee generally pre-approves services for
up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget.
In addition, the Audit Committee may pre-approve particular services on a case-by-case basis. For each proposed service, the independent
accountant is required to provide detailed back-up documentation at the time of approval. This pre-approval policy for services provided
by the independent accountant is set forth in the governing charter for the Audit Committee. The Audit Committee may delegate pre-approval
authority to one or more of its members. The member to whom such authority is delegated must report any pre-approval decisions to the
Audit Committee at its next scheduled meeting.
All
services rendered by Centurion ZD CPA & Co. prior to October 7, 2022, and as of and after October 6, 2022, by WWC, P.C. to the Company
are permissible under any applicable laws and regulations. During fiscal year 2022, all services
performed by Centurion ZD CPA & Co. and WWC, P.C. were approved in advance by the Audit Committee.
PROPOSAL
NO. 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
The
Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires that we provide our stockholders
a non-binding, advisory vote to approve the compensation of our named executive officers. This vote is sometimes referred to as a “say-on-pay
vote.” Although this advisory vote is non-binding, the Compensation Committee of our Board will review and consider the voting
results when making future decisions regarding our named executive officer compensation and related executive compensation programs.
As
described in more detail below and in our Annual Report on Form 10-K, our executive compensation program is comprised principally of
salary, equity and performance-based cash compensation, designed to: (i) attract, motivate and retain key executives who are critical
to our success, (ii) align the interests of our executives with stockholder value and our financial performance and (iii) achieve a balanced
package that would attract and retain highly qualified senior officers and appropriately reflect each such officer’s individual
performance and contributions. In addition, the Company regularly reviews its compensation program and the overall compensation package
paid to each of its senior executives to assess risk and to confirm that the structure is still aligned with the Company’s long-term
strategic goals.
Before
you vote on the resolution below, please read the entire “Executive Compensation” section, including the tables, together
with the related narrative disclosure and footnotes, beginning on page 17 of this Proxy Statement as well as the disclosures in
our Annual Report on Form 10-K. Note, as a “smaller reporting company,” we are obligated to provide scaled compensation
disclosures pursuant to Item 402 of Regulation S-K promulgated under the Securities Exchange Act of 1934 (“Regulation S-K”).
For
the reasons provided, the Board is asking stockholders to cast a non-binding, advisory vote FOR the following resolution:
“RESOLVED,
that stockholders approve the compensation paid to our named executive officers as disclosed in this Proxy Statement pursuant to Item
402 of Regulation S-K (which includes the compensation tables and related narrative discussion).”
Though
this proposal calls for a non-binding advisory vote, our Board and Compensation Committee value the opinions of our stockholders and
will consider the outcome of the vote when making future compensation decisions for our named executive officers.
THE
BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED
IN THIS PROXY STATEMENT.
CORPORATE
GOVERNANCE
Leadership
Structure and Role in Risk Oversight
Thanh
H. Lam has served as Chairperson of the Board since June 2013 and as our President and a member of our Board since June 2011. Ms. Lam
was appointed as our Interim Chief Executive Officer on October 7, 2016, and as our Chief Executive Officer on April 10, 2017. Our Board
continues to believe there are important advantages to Ms. Lam serving simultaneously as Chairperson, President and Chief Executive Officer
at this time. Ms. Lam is the director most familiar with our business and industry and is best situated to propose Board agendas and
lead Board discussions on important matters. Ms. Lam provides a strong link between management and the Board, which promotes clear communication
and enhances strategic planning and implementation of corporate strategies. Further, three of our five current Board members have been
deemed to be independent by our Board; therefore, we believe our board structure provides sufficient independent oversight of our management.
Our
Board is responsible for oversight of the Company’s risk management practices while management is responsible for the day-to-day
risk management processes. In the Board’s opinion, this division of responsibilities is the most effective approach for addressing
the risks facing the Company. The Board receives periodic reports from management regarding the most significant risks facing the Company.
In addition, the Audit Committee assists the Board in its oversight of our risk assessment and risk management policies. Our Audit Committee
is empowered to appoint and oversee our independent registered public accounting firm, monitor the integrity of our financial reporting
processes and systems of internal controls and provide an avenue of communication among our independent auditors, management, our internal
auditing department and our Board.
The
Board has not named a lead independent director.
Diversity
The
Board does not have a formal policy with respect to Board nominee diversity. However, in recommending proposed nominees to the full Board,
the Nominating and Corporate Governance Committee considers diversity in the context of the Board as a whole and considers the diversity
of background and experience, including with respect to age, gender, international background, race, and specialized experience of current
and prospective directors as important factors in identifying and evaluating potential director nominees.
Board
Diversity Matrix
The
following table sets forth Board level diversity statistics based on self-identification of members of our Board as of April 19,
2023.
Board
Diversity Matrix (As of April 19, 2023) |
Total Number of Directors |
|
5 |
|
|
|
|
|
|
Female |
|
Male |
|
Non-Binary |
|
Did
Not Disclose Gender |
Part I: Gender Identity |
|
|
|
|
|
|
|
|
Directors |
|
2 |
|
3 |
|
0 |
|
0 |
Part II: Demographic Background |
|
|
|
|
|
|
|
|
Asian |
|
5 |
Director
Independence
The
rules of the Nasdaq Stock Market, or the Nasdaq Rules, require a majority of a listed company’s board of directors to be composed
of independent directors. In addition, the Nasdaq Rules require that, subject to specified exceptions, each member of a listed company’s
audit, compensation and nominating and governance committees be independent. Under the Nasdaq Rules, a director will only qualify as
an independent director if, in the opinion of our Board of Directors, that person does not have a relationship that would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director. The Nasdaq Rules also require that audit committee
members satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange
Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other
than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly
or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be
an affiliated person of the listed company or any of its subsidiaries. In considering the independence of compensation committee members,
the Nasdaq Rules require that our board of directors must consider additional factors relevant to the duties of a compensation committee
member, including the source of any compensation we pay to the director and any affiliations with our company.
Our
Board currently is comprised of five directors. Ms. Lam and Ms. Su, who have served as directors since June 2011, and August 2017, respectively,
do not qualify as an “independent” director for the purposes of the NASDAQ listed company standards currently in effect and
all applicable rules and regulations of the SEC. Messrs. La, Tsai and Patel, who have served as directors since January 27, 2017, July
27, 2020, and October 7, 2016, respectively, all qualify as “independent” directors for the purposes of the NASDAQ listed
company standards currently in effect and all applicable rules and regulations of the SEC. We have elected, and propose to elect, the
above independent directors to our Board as a requirement to the listing of our common stock on a national securities exchange, and has
established an Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee as separately-designated committees
of the Board with written charters governing such committees. The Board has confirmed Mr. Patel as an “audit committee financial
expert” as defined under Item 407(d)(5) of Regulation S-K.
Our
Board reviews each nominee’s relationship with the Company in order to determine whether a director nominee is independent pursuant
to the listing rules of NASDAQ. Our Board has determined that each of Ming-Cherng Sky Tsai, Charlie Huy La and Umesh Patel meets the
independence requirements and standards currently established by NASDAQ. All of the members of each of the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee are independent as defined in NASDAQ Rule 5605(a)(2).
As
required under applicable NASDAQ listing standards, in the 2022 fiscal year, our independent directors met 4 times in regularly scheduled
executive sessions at which only our independent directors were present.
Board
Meetings and Committee Meetings; Annual Meeting Attendance
During
the year ended December 31, 2022, the Board held 4 meetings and acted through unanimous consent on 11 different occasions. In addition,
the Audit Committee held 4 meetings; the Nominating and Corporate Governance Committee held 4 meetings; and the Compensation Committee
held 4 meetings. During the year ended December 31, 2022, each of the directors attended, in person or by telephone, 100% of the meetings
of the Board and the committees on which he or she served during the portion of the year in which he or she was a director.
We
encourage our Board members to attend our Annual Meetings, but we do not have a formal policy requiring attendance. Some of the incumbent
directors attended the 2022 Annual Meeting of Stockholders on June 10, 2022.
Audit
Committee
Our
Audit Committee consists of Ming-Cherng Sky Tsai, Charlie Huy La, and Umesh Patel, each of whom is independent under NASDAQ listing standards.
Mr. Patel currently serves as chairman of our Audit Committee. The Audit Committee assists the Board’s oversight of (i) the integrity
of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications
and independence, and (iv) the performance of our internal audit function and independent auditor, and prepares the report that the Securities
and Exchange Commission requires to be included in our annual proxy statement. The Audit Committee operates under a written charter.
The Board determined that Mr. Patel possesses accounting or related financial management experience that qualifies him as financially
sophisticated within the meaning of the NASDAQ listed company standards currently in effect and all applicable rules and regulations
of the SEC and that he is an “audit committee financial expert” as defined by the rules and regulations of the SEC.
In
addition, the Audit Committee is responsible for the appointment, retention, compensation and oversight of the work of any registered
public accounting firm employed by the Company (including resolution of disagreements between management and the accounting firm regarding
financial reporting) for the purpose of preparing or issuing an audit report or related work or performing other audit, review or other
services. Any such registered public accounting firm must report directly to the Audit Committee. The Audit Committee has the ultimate
authority and responsibility to evaluate and, where appropriate, replace the registered public accounting firm. The Audit Committee’s
policy is to pre-approve all audit and non-audit services by category, including audit-related services, tax services, and other permitted
non-audit services. In accordance with the policy, the Audit Committee regularly reviews and receives updates on specific services provided
by our independent registered public accounting firm. All services rendered by Centurion ZD CPA & Co. prior to October 7, 2022, and
as of and after October 6, 2022, by WWC, P.C. to the Company are permissible under any applicable laws and regulations. During
fiscal year 2022, all services performed by Centurion ZD CPA & Co. and WWC, P.C. were approved in advance by the Audit Committee
in accordance with the pre-approval policy. The Audit Committee operates under a written charter, a copy of which is posted on our website
at www.novalifestyle.com.
Compensation
Committee
The
Compensation Committee consists of Ming-Cherng Sky Tsai, Charlie Huy La and Umesh Patel, each of whom is independent under NASDAQ listing
standards. Mr. Tsai currently serves as chairman of our Compensation Committee. The Compensation Committee is responsible for the administration
of all salary, bonus and incentive compensation plans for our officers and key employees. The Compensation Committee reviews and, as
it deems appropriate, recommends to the Board policies, practices and procedures relating to the compensation of the officers and other
managerial employees and the establishment and administration of employee benefit plans. It advises and consults with the officers of
the Company as may be requested regarding managerial personnel policies. The Compensation Committee has the authority to engage independent
advisors to assist it in carrying out its duties. During fiscal year 2022, the Compensation Committee did not engage the services of
any independent advisors, experts or other third parties. We believe that the functioning of our Compensation Committee complies with
any applicable requirements of the NASDAQ Capital Market and SEC rules and regulations. The Compensation Committee operates under a written
charter, a copy of which is posted on our website at www.novalifestyle.com.
Compensation
Committee Interlocks and Insider Participation in Compensation Decisions
All
members of the Compensation Committee are independent directors. No member of our Compensation Committee is a current or former officer
or employee of the Company or any of its subsidiaries, and none of our executive officers has served as a member of the compensation
or similar committee or as a member of the board of directors of any other entity having an executive officer that also served on the
Compensation Committee or Board of Directors of the Company.
Nominating
and Governance Committee
The
Nominating and Corporate Governance Committee (the “Nominating Committee”) consists of Ming-Cherng Sky Tsai, Charlie Huy
La and Umesh Patel, each of whom is independent under NASDAQ listing standards. Mr. La currently serves as chairman of the Nominating
Committee. The purpose of the Nominating and Corporate Governance Committee is to assist the Board in identifying qualified individuals
to become members of our Board, in determining the composition of the Board and in monitoring the process to assess board effectiveness.
The Nominating Committee uses its, as well as the entire Board’s, network of contacts when compiling a list of potential director
candidates and has the authority to engage outside consultants. The Nominating Committee will consider director nominees recommended
by a stockholder if the stockholder mails timely notice to the Secretary of the Company at its principal offices, which notice includes
(i) the name, age and business address and residence of such nominee, (ii) the principal occupation or employment of such nominee, (iii)
a brief statement as to such nominee’s qualifications, (iv) a statement that such nominee consents to his or her nomination and
will serve as a director if elected, (v) whether such nominee meets the definition of an “independent” director under the
NASDAQ listing standards, (vi) the name, address, class and number of shares of capital stock of the Company held by the nominating stockholder,
and (vii) description of all arrangements or understandings between the stockholder and each nominee and any other person(s) pursuant
to which the nominations are to be made by the stockholder. Any person nominated by a stockholder for election to the Board will be evaluated
based on the same criteria as all other nominees. The Nominating Committee operates under a written charter, a copy of which is posted
on our website at www.novalifestyle.com.
Director
Nomination Procedures
The
Nominating Committee is generally responsible for soliciting recommendations for candidates for the Board, developing and reviewing background
information for such candidates, and making recommendations to the Board with respect to candidates for directors proposed by stockholders.
The nomination process involves a careful examination of the performance and qualifications of each incumbent director and potential
nominees before deciding whether such person should be recommended for nomination by the Nominating Committee and nominated by the Board.
The Board believes that the business experience of its directors has been, and continues to be, critical to the Company’s success.
Directors should possess integrity, independence, energy, forthrightness, analytical skills and commitment to devote the necessary time
and attention to the Company’s affairs. Directors must possess a willingness to challenge and stimulate management and the ability
to work as part of a team in an environment of trust.
In
selecting candidates for appointment or re-election to the Board, the Nominating Committee considers the following criteria:
|
● |
the
characteristics described in the Company’s Corporate Governance Guidelines; |
|
● |
diversity
of background and experience of Board members, including with respect to age, gender, international background, race, and specialized
experience; |
|
● |
whether
the member/potential member is subject to a disqualifying factor as described in the Corporate Governance Guidelines; |
|
● |
whether
the member/potential member is an employee or director of a significant or potentially significant customer, supplier, contractor,
counselor or consultant of the Company; |
|
● |
whether
the member/potential member would be considered a “financial expert” or “financially literate” as described
in applicable listing standards, legislation or Audit Committee guidelines; |
|
● |
the
extent of the member’s/potential member’s business experience, technical expertise, or specialized skills or experience; |
|
● |
whether
the particular experience of the member/potential member is relevant to the Company’s current or future business and will add
specific value as a Board member; and |
|
● |
any
factors related to the ability and willingness of an existing member to continue his/her service or a new member to serve. |
The
Board will generally consider all relevant factors, including, among others, each nominee’s applicable expertise and demonstrated
excellence in his or her field, the usefulness of such expertise to the Company, the availability of the nominee to devote sufficient
time and attention to the affairs of the Company, the nominee’s reputation for personal integrity and ethics, and the nominee’s
ability to exercise sound business judgment. Director nominees are reviewed in the context of the existing membership of the Board (including
the qualities and skills of the existing directors), the operating requirements of the Company and the long-term interests of its stockholders.
There
were no arrangements or understandings between any of our directors and any other person pursuant to which any director was to be selected
as a director or selected as a nominee.
Family
Relationships
No
family relationships exist among any of our current director nominees or executive officers.
Stockholder
Communications
Shareholders
may communicate with the Board or to one or more individual members of the Board by writing to: Nova LifeStyle, Inc., at 6565 E. Washington
Blvd., Commerce, CA 90040., Attention: Corporate Secretary. As appropriate, communications received from shareholders are forwarded directly
to the Board, or to any individual member or members, depending on the facts and circumstances outlined in the communication. The Board
has authorized the Corporate Secretary, in her discretion, to exclude communications that are patently unrelated to the duties and responsibilities
of the Board, such as spam, junk mail and mass mailings. In addition, material that is unduly hostile, threatening, illegal or similarly
unsuitable will be excluded, with the provision that any communication that is filtered out by the Corporate Secretary pursuant to the
policy will be made available to any non-management director upon request. Individual directors are not permitted to communicate with
shareholders or others outside the Company unless they are deemed authorized persons under the Company’s corporate disclosure policy.
Code
of Ethics
Our
Board has adopted a Code of Business Conduct and Ethics, which applies to all of our directors, officers and employees, that we believe
is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable
disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of Code violations; and provide accountability
for adherence to the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics also includes an insider trading policy.
Our Code of Business Conduct and Ethics is filed as an exhibit to our Annual Report and is available in print, without charge, upon written
request to Nova LifeStyle, Inc., 6565 E. Washington Blvd., Commerce, CA 90040, Attn: Corporate Secretary.
Executive
Officers of the Registrant
The
following table sets forth the names of our executive officers and certain significant employees and their ages, positions and biographical
information as of the date of this report. Our executive officers are appointed by, and serve at the discretion of, our Board of Directors.
Each executive officer is a full time employee. There are no family relationships between any of our executive officers or other key
personnel and any other of our executive officers or key personnel. There are no arrangements or understandings between any of our executive
officers and any other persons pursuant to which such executive officer was selected in that capacity.
Name |
|
Position |
|
Age |
Thanh H. Lam |
|
Chairperson,
Chief Executive Officer, President and Director |
|
55 |
Jeffery Chuang |
|
Chief
Financial Officer |
|
53 |
Min Su |
|
Corporate
Secretary, Director |
|
39 |
Mark Chapman |
|
Vice
President – Marketing |
|
54 |
Steven Qiang Liu |
|
Vice
President |
|
48 |
For
information on the business backgrounds of Thanh H. Lam and Min Su, see “Directors” under “Election of Directors”
above.
Jeffery
Chuang was appointed as our Chief Financial Officer on August 22, 2017. Prior to joining the Company, Mr. Chuang served as the
managing partner of Z & C CPAs, LLP from June 2011 to August 2017. Mr. Chuang received his Bachelor of Science in Finance from California
State University, Northridge in 1997 and his Master of Science in Taxation from Golden Gate University in 2006. Mr. Chuang is a Certified
Public Accountant.
Mark
Chapman has served as our Vice President of Marketing since June 30, 2011. Mr. Chapman has been in the furniture business for
over 40 years. Since 2004, Mr. Chapman has been the Sales Manager for Diamond Bar, our wholly-owned subsidiary acquired in August 2011.
Since 1990, Mr. Chapman has served as the Director of Purchasing for various major furniture companies, including: ACE TV Rentals, Central
Rents and Day Page. Mr. Chapman received his Bachelor of Science degree in Business Administration Management and Marketing from Augustana
College.
Steven
Qiang Liu has served as our Vice President since January 2, 2017. Mr. Liu is the chief executive officer and founder of St. Joyal,
a company engaged in business investment and development that was founded in 2007. Mr. Liu has extensive experience in banking and business
management, including acquisitions and investment oversight. He holds a Bachelor’s Degree in Finance and Economics from Hunan College.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following sets forth information as of April 19, 2023, regarding the number of shares of our common stock beneficially owned by
(i) each person that we know beneficially owns 5% or more of our outstanding common stock, (ii) each of our named executive officers,
(iii) each of our directors and (iv) all of our executive officers and directors as a group.
The
amounts and percentages of our common stock beneficially owned are reported on the basis of SEC rules governing the determination of
beneficial ownership of securities. Under the SEC rules, a person is deemed to be a “beneficial owner” of a security if that
person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment
power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial
owner of any securities of which that person has the right to acquire beneficial ownership within 60 days through the exercise of any
stock option, warrant or other right. Under these rules, more than one person may be deemed a beneficial owner of the same securities
and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
Unless
otherwise indicated, each of the shareholders named in the table below, or his or her family members, has sole voting and investment
power with respect to such shares of our common stock. Except as otherwise indicated, the address of each of the shareholders listed
below is: c/o Nova LifeStyle, Inc., 6565 E. Washington Blvd., Commerce, CA 90040.
As
of April 19, 2023, there were 7,194,018 shares of our common stock issued and outstanding.
Name of beneficial owner | |
Number of shares | | |
Percent of class | |
Directors and named executive officers | |
| | | |
| | |
Thanh H. Lam, Chairperson, Chief Executive Officer, President and Director | |
| 59,281 | | |
| * | |
Jeffery Chuang, Chief Financial Officer | |
| 14,000 | (1) | |
| * | |
Min Su, Corporate Secretary and Director | |
| 40,500 | | |
| * | |
Charlie Huy La, Director | |
| 42,424 | (2) | |
| * | |
Umesh Patel, Director | |
| 60,000 | (3) | |
| * | |
Ming-Cherng Sky Tsai, Director | |
| - | | |
| * | |
Steven Qiang Liu, Vice President | |
| 2,003,062 | | |
| 27.8 | % |
Directors and executive officers as a group (7 persons) | |
| 2,219,267 | | |
| 30.85 | % |
|
(1) |
Shares beneficially owned include 7,000 shares subject
to stock options exercisable as of April 19, 2023. |
|
(2) |
Shares beneficially owned include 40,000 shares subject
to stock options exercisable as of April 19, 2023. |
|
(3) |
Shares beneficially owned include 60,000 shares subject
to stock options exercisable as of April 19, 2023. |
*
Represents less than 1% of shares outstanding.
NON-EMPLOYEE
DIRECTOR COMPENSATION
Director
Compensation (excluding Named Executive Officers)
As
of December 31, 2022, none of our independent directors has received any compensation from us for serving as our directors, except for
the director fees described below. Our directors who are also executive officers of the Company do not receive
additional compensation for their services on the Board.
In
connection with their respective appointments to the Board of Directors, the Company entered into director agreements with Mr. Tsai,
Mr. La and Mr. Patel. Pursuant to the amended agreements and certain board resolutions, the directors receive reimbursement of
certain expenses incurred with respect to attendance at board meetings and the following director fees in 2022: (i) $22,560 annually
with respect to Mr. Tsai, (ii) $25,308 annually with respect to Mr. Patel, and (iii) $22,560 annually with respect to Mr. La. The Board
also approved payment of nominal meeting attendance fees to non-employee directors. The director agreements impose certain customary
confidentiality and non-disclosure obligations on the directors.
The
following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our non-employee
directors for the year ended December 31, 2022.
Name | |
Fees earned or paid in cash ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Non-Equity Incentive Plan Compensation Earnings ($) | | |
Non- Qualified Deferred Compensation ($) | | |
Nonqualified deferred compensation earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Umesh Patel | |
| 27,661 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 27,661 | |
Charlie Huy La | |
| 24,845 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 24,845 | |
Ming-Cherng Sky Tsai | |
| 24,845 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 24,845 | |
Except
as set forth above, we do not currently compensate our directors for acting as such, although we may do so for independent directors
in the future, including with cash and equity. All directors are eligible to receive reimbursement of expenses incurred with respect
to attendance at board meetings. We do not maintain a medical, dental or retirement benefits plan for our independent directors.
Outstanding
Equity Awards at Fiscal Year-end
The
following tables set forth certain information regarding outstanding stock options held by our directors (excluding our NEOs) as of December
31, 2022.
Name | |
Outstanding | | |
Vested | |
Umesh Patel | |
| 60,000 | | |
| 60,000 | |
Charlie Huy La | |
| 40,000 | | |
| 40,000 | |
Ming-Cherng Sky Tsai | |
| - | | |
| - | |
EXECUTIVE
COMPENSATION
General
Certain
information concerning our executive officers as of the date of this proxy statement is set forth below. Officers are elected annually
by the Board and serve at the discretion of the Board.
Name |
|
Position |
|
Age |
Thanh H. Lam |
|
Chairperson, Chief Executive Officer, President and
Director |
|
55 |
Jeffery Chuang |
|
Chief Financial Officer |
|
53 |
Min Su |
|
Corporate Secretary, Director |
|
39 |
Summary
Compensation Table
The
following table sets forth information concerning the compensation for the years ended December 31, 2022 and 2021, of each of our named
executive officers.
Summary
Compensation Table
Name and Principal Position | |
Year | | |
Salary | | |
Bonus | | |
Stock Awards | | |
Option Awards | | |
Nonequity Incentive Plan Compensation | | |
Nonqualified Deferred Compensation Earnings | | |
All Other Compensation | | |
Total | |
| |
| | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
Thanh H. Lam | |
| 2021 | | |
| 100,000 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 100,000 | |
Chairperson, Chief Executive Officer, President and Director | |
| 2022 | | |
| 109,808 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 109,808 | |
Jeffery Chuang | |
| 2021 | | |
| 50,000 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 50,000 | |
Chief Financial Officer | |
| 2022 | | |
| 56,635 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 56,635 | |
Min Su | |
| 2021 | | |
| 80,000 | | |
| 0 | | |
| 12,017 | (1)(2) | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 92,017 | |
Corporate Secretary and Director | |
| 2022 | | |
| 88,862 | | |
| 0 | | |
| 10,785 | (2)(3) | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 99,647 | ] |
(1)Represents
the grant date fair value of the stock award granted to Ms. Su on November 10, 2020, under the 2014 Omnibus Long-Term Incentive Plan
(which is described below under the section entitled “Equity Incentive Plan”) computed in accordance with FASB ASC Topic
718.
(2)
Represents the grant date fair value of the stock award granted to Ms. Su on November 11, 2021, under the 2021 Omnibus Equity Plan (which
is described below under the section entitled “Equity Incentive Plan Plan”) computed in accordance with FASB ASC Topic 718.
(3)
Represents the grant date fair value of the stock award granted to Ms. Su on November 11, 2022, under the 2021 Omnibus Equity Plan (which
is described below under the section entitled “Equity Incentive Plan Plan”) computed in accordance with FASB ASC Topic 718
Employment
Agreements
On
May 8, 2018, the Company entered into an employment agreement with Ms. Lam for a term of five years, unless earlier terminated by the
Company or Ms. Lam in accordance with its terms. The employment agreement provides for an annual salary of $100,000 to Ms. Lam as the
Chief Executive Officer and President of the Company and annual bonuses at the sole discretion of the Board of Directors. Upon termination
of employment, Ms. Lam is entitled to accrued but unpaid salary but no severance. The agreement contains confidentiality, non-competition
and non-solicitation covenants in favor of the Company. On December 30, 2021, the Company and Ms. Lam entered into an amendment to the
employment agreement which increased her annual salary to $110,000, effective on January 1, 2022.
On
August 11, 2021, the Company entered into an employment agreement with Mr. Jeffery Chuang with a term of one year, commencing on August
22, 2021, unless earlier terminated by the Company or Mr. Chuang in accordance with its terms. On December 30, 2021, the Company and
Mr. Chuang entered into an amendment to the employment agreement which increased his annual salary to $55,000, effective on January 1,
2022. On August 18, 2022, the Company entered into an employment agreement with Mr. Jeffery Chuang with a term of one year, commencing
on August 22, 2022, unless earlier terminated by the Company or Mr. Chuang in accordance with its terms. This agreement is in substantially
the same form as the previous one-year employment agreements entered into on August 11, 2021, as amended. Pursuant to the agreement,
Mr. Chuang is entitled to a base salary of $55,000 per year and reimbursement of certain business expenses. Mr. Chuang is eligible for
an annual cash bonus at the sole discretion of the Board. Upon termination of employment, Mr. Chuang is entitled to accrued but unpaid
salary but no severance. The agreement contains confidentiality, non-competition and non-solicitation covenants in favor of the Company.
On
November 11, 2021, the Company entered into an employment agreement with its Corporate Secretary Ms. Min Su to renew the terms of her
employment, effective as of November 14, 2021 with a term of one year, unless earlier terminated by the Company or Ms. Su in accordance
with its terms. Pursuant to the agreement, Ms. Su is entitled to: (i) a base salary of $80,000 per year, (ii) a one-time grant of 6,000
shares of common stock, as described below under the section entitled “Share Award and Option Agreements,” and (iii) reimbursement
of certain business expenses. Ms. Su is eligible for an annual cash bonus at the sole discretion of the Board. Upon termination of employment,
Ms. Su is entitled to accrued but unpaid salary but no severance. The agreement contains confidentiality, non-competition and non-solicitation
covenants in favor of the Company. On December 30, 2021, the Company and Ms. Su entered into an amendment to the employment agreement
which increased her annual salary to $88,000, effective on January 1, 2022. On November 11, 2022, the Company extended the employment
agreement with Ms. Su for one more year with the same terms, effective from November 14, 2022.
We
do not have any other arrangements providing for payments or benefits in connection with the resignation, severance, retirement or other
termination of any of our named executive officers, and we do not have any arrangements providing for payments or benefits on a change
in control of the Company.
Share
Award and Option Agreements
We
entered into a Stock Option Agreement with Mr. Chuang under 2014 Plan, dated August 12, 2019, pursuant to which Mr. Chuang was
granted an option to purchase 7,000 shares of common stock at a per share purchase price of $3.85 per share. The shares subject to the
option vested in two equal installments on the date of the Stock Option Agreement and the sixth month anniversary thereof.
We
entered into a Restricted Stock Unit Award Agreement with Ms. Su under 2014 Plan, dated November 10, 2020, pursuant to which Ms. Su was
awarded 6,000 RSUs. Shares of common stock underlying the RSUs vested as follows: (i) 1,500 shares vested on the date of the Restricted
Stock Unit Award Agreement, (ii) 1,500 shares vested on March 31, 2021; (iii) 1,500 shares vested on June 30, 2021; and (iv)1,500 shares
vested on September 30, 2021.
We
entered into a Restricted Stock Unit Award Agreement with Ms. Su under 2021 Omnibus Equity Plan, dated November 11, 2021, pursuant to
which Ms. Su was awarded 6,000 RSUs. Shares of common stock underlying the RSUs will vest as follows: (i) 1,500 shares vested on the
date of the Restricted Stock Unit Award Agreement, (ii) 1,500 shares vested on March 31, 2022; (iii) 1,500 shares vested on June 30,
2022; and (iv)1,500 shares vested on September 30, 2022.
We
entered into a Restricted Stock Unit Award Agreement with Ms. Su under 2021 Omnibus Equity Plan, dated November 11, 2022, pursuant to
which Ms. Su was awarded 6,000 RSUs. Shares of common stock underlying the RSUs vest as follows: (i) 1,500 shares vested on the date
of the Restricted Stock Unit Award Agreement, (ii) 1,500 shares vested on March 31, 2023; (iii) 1,500 shares will vest on June 30, 2023;
and (iv)1,500 shares will vest on September 30, 2023.If Ms. Su ceases to be providing continuous services to the Company for any reason, any unvested shares will be forfeited.
Equity
Incentive Plan
The
Nova Lifestyle, Inc. 2014 Omnibus Long-Term Incentive Plan (the “2014 Plan”) was approved by the stockholders at the 2014
Annual Meeting, effective on May 13, 2014. The 2014 Plan provides for the grant of stock options, stock appreciation rights, restricted
stock, restricted stock units, unrestricted stock and performance awards. The Nova Lifestyle, Inc. 2021 Omnibus Equity Plan (the “2021
Plan”) was approved by the stockholders at the 2021 Annual Meeting, effective on April 12, 2021. The 2021 Plan provides for the
grant of stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted stock.
During
the years ended December 31, 2022 and 2021, the Company granted stock and options to its directors and executive officers.
The
Company entered into a Stock Option Agreement with Mr. Chuang under the 2014 Plan, dated August 12, 2019, pursuant to which Mr. Chuang
was granted an option to purchase 7,000 shares of common stock at a per share purchase price of $3.85 per share. The shares subject to
the option vested in two equal installments on the date of the Stock Option Agreement and the sixth month anniversary thereof.
The
Company entered into a Restricted Stock Unit Award Agreement with Ms. Su under the 2014 Plan, dated November 10, 2020, pursuant to which
Ms. Su was awarded 6,000 RSUs. Shares of common stock underlying the RSUs will vest as follows: (i) 1,500 shares vested on the date of
the Restricted Stock Unit Award Agreement, (ii) 1,500 shares vested on March 31, 2021; (iii) 1,500 shares vested on June 30, 2021; and
(iv)1,500 shares vested on September 30, 2021.
The
Company entered into a Restricted Stock Unit Award Agreement with Ms. Su under the 2021 Plan, dated November 11, 2021, pursuant to which
Ms. Su was awarded 6,000 RSUs. Shares of common stock underlying the RSUs will vest as follows: (i) 1,500 shares vested on the date of
the Restricted Stock Unit Award Agreement, (ii) 1,500 shares vested on March 31, 2022; (iii) 1,500 shares vested on June 30, 2022; and
(iv)1,500 shares vested on September 30, 2022.
The Company
entered into a Restricted Stock Unit Award Agreement with Ms. Su under 2021 Plan, dated November 11, 2022, pursuant to
which Ms. Su was awarded 6,000 RSUs. Shares of common stock underlying the RSUs vest as follows: (i) 1,500 shares vested on the date
of the Restricted Stock Unit Award Agreement, (ii) 1,500 shares vested on March 31, 2023; (iii) 1,500 shares will vest on June 30, 2023;
and (iv)1,500 shares will vest on September 30, 2023. If Ms. Su ceases to be providing continuous services to the Company for any reason,
any unvested shares will be forfeited.
The
Company effected a 1 for 5 reverse stock split on December 20, 2019 and all references to shares and per share data have been retroactively
restated to reflect such split.
Retirement
Plans
We
currently do not have any defined contribution plan, defined benefit pension plan, supplemental retirement plan or nonqualified defined
contribution plan for our named executive officers and we do not currently intend to establish any such plan.
Outstanding
Equity Awards at 2022 Fiscal Year-End Table
The
following table sets forth information concerning the outstanding equity awards for the year ended December 31, 2022 of each of our named
executive officers.
| |
Option Awards | | |
Stock Awards | |
Name | |
# of Securities Underlying Unexercised Options - Exercisable | | |
# of Securities Underlying Unexercised Options - Unexercisable | | |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | |
Option Exercise Price ($) | | |
Option Expiration Date | |
# of Shares or Units of Stock That Have Not Vested | | |
Market Value of Shares or Units of Stock That Have Not Vested
($) (2) | | |
Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested | | |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |
Jeffery Chuang | |
| 7,000 | | |
| 0 | | |
| 0 | | |
| 9.25 | | |
8/24/2023 | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
Jeffery Chuang | |
| 7,000 | | |
| 0 | | |
| 0 | | |
| 3.85 | | |
8/12/2024 | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
EQUITY
COMPENSATION PLAN INFORMATION
Information
about our equity compensation plans that were either approved or not approved by our stockholders is as follows (as of December 31, 2022):
Plan Category | |
(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | |
(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | |
(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in
Column (a)) | |
| |
| | |
| | |
| |
Equity compensation plans approved by security holders | |
| 134,000 | (1) | |
$ | 4.58 | | |
| 2,681,773 | (2) |
Equity compensation plans not approved by security holders | |
| — | | |
$ | — | | |
| — | |
Total | |
| 134,00 | (1) | |
$ | 4.58 | | |
| 2,681,773 | (2) |
(1)
Granted under our 2014 Omnibus Long-Term Incentive Plan (“2014 Plan”)
(2)
Under our 2021 Omnibus Equity Plan, the maximum number of shares of common stock available for issuance is 3,000,000. As of December
31, 2022, a total of 524,727 shares and/or restricted stock units have been granted pursuant to the 2021 Omnibus Equity Plan. It also
includes 206,500 shares under 2014 Plan due to the unexercised stock options expired in November 2022.
PAY
VERSUS PERFORMANCE
As
required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are
providing the following information about the relationship of “compensation actually paid” (“CAP”) to our principal
executive officer (“PEO”) and other named executive officers (“Non-PEO NEOS”) and our performance.
Pay
Versus Performance Table
As
required by Section 953(a) of the Dodd-Frank Wall Street Reform and Customer Protection Act, and item 402(v) of Regulation S-K promulgated
under the Exchange Act, we are providing the following information about the relationship between executive compensation actually paid
and certain financial performance of the Company.
For
purposes of the tables below, the principal executive officer (“PEO”) and non-PEO named executive officers for 2021 and 2022
are the following:
Year |
|
PEO |
|
Non-PEO named executive officers |
2022 |
|
Thanh H. Lam |
|
Jeffery Chuang |
2021 |
|
Thanh H. Lam |
|
Jeffery Chuang |
Year | |
Summary Compensation table total for PEO (1) ($) | | |
Compensation Actually Paid to PEO(2) ($) | | |
Average Summary Compensation Table Total for Non-PEO NEOs(3) ($) | | |
Average Compensation Actually Paid to Non-PEO NEOs(4) ($) | | |
Value of Initial Fixed $100 Investment Based On Total Shareholder Return(5) ($) | | |
Net Loss(6) ($) | |
(a) | |
(b) | | |
(c) | | |
(d) | | |
(e) | | |
(f) | | |
(g) | |
2022 | |
| 109,808 | | |
| 109,808 | | |
| 56,635 | | |
| 56,635 | | |
| (81.93 | ) | |
| 17,101,671 | |
2021 | |
| 100,000 | | |
| 100,000 | | |
| 50,000 | | |
| 50,000 | | |
| (21.43 | ) | |
| 19,962,493 | |
|
(1) |
The
dollar amounts reported in column (b) are the amounts of total compensation reported for the PEO for each corresponding year in the
“Total” column of the Summary Compensation Table at page 17. |
|
(2) |
The
dollar amounts reported in column (c) represent the amount of “compensation actually paid” to the PEO, as computed in
accordance with Item 402(v) of Regulation S-K. No adjustments were required to be made to the PEO’s total compensation for
each year to determine the compensation actually paid pursuant to the requirements of Item 402(v) of Regulation S-K. |
|
(3) |
The
dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s non-PEO named executive
officers as a group in the “Total” column of the Summary Compensation Table in each applicable year. |
|
(4) |
The
dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the non-PEO named
executive officers as a group, as computed in accordance with Item 402(v) of Regulation S-K. No adjustments were required to be
made to average total compensation for the non-PEO named executive officers as a group for each year to determine the compensation
actually paid pursuant to the requirements of Item 402(v) of Regulation S-K. |
|
(5) |
Cumulative
TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment,
and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s
share price at the beginning of the measurement period. |
|
(6) |
The
dollar amounts reported represent the amount of net loss reflected in the Company’s audited financial statements for the applicable
year. |
Description
of Relationships Between Information Presented
In
accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information
presented in the Pay versus Performance table.
COMPENSATION
ACTUALLY PAID AND CUMULATIVE TSR
![](https://content.edgar-online.com/edgar_conv_img/2023/04/21/0001493152-23-013158_formdef14a_001.jpg)
COMPENSATION
ACTUALLY PAID AND NET INCOME
COMPENSATION
ACTUALLY PAID AND STOCK PRICE PERFORMANCE
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Certain
Relationships and Related Transactions
On
September 30, 2011, Diamond Bar leased a showroom in High Point, North Carolina from the Company’s President who is currently also
the Chief Executive Officer and Chairperson of the Board. The lease is renewable and has been renewed each year since 2011. On April
1, 2022, the Company renewed the lease for an additional one year term at a cost of $34,562. During the years ended December 31, 2022
and 2021, the Company recorded rental amounts of $25,921 and $34,561, 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, 2022 and 2021, the Company recorded $392,755 and $399,249 as commission expense to this consulting firm, respectively.
In
September 2021, Nova Malaysia entered into a consultancy agreement with an I.T. firm whose sole shareholder was a director of Nova Macao
to provide E-Commerce Web Application Setup, E-Commerce Essentials Implementation, E-Commerce UIUX and other related services. During
the year ended December 31, 2022 and 2021, the Company recorded $319,100 and $300,000 as technology service expenses to this I.T. firm,
respectively.
There
were no other transactions with any related persons (as that term is defined in Item 404 of Regulation S-K) since the beginning of our
last fiscal year, or the fiscal year preceding our last fiscal year, or any currently proposed transaction in which we were or are to
be a participant and the amount involved was in excess of $120,000 and in which any related person had a direct or indirect material
interest.
Since
the establishment of the Audit Committee on June 4, 2013, we granted authority for reviewing related party transactions to the Audit
Committee to approve or ratify such related party transactions according to its charter. Our Audit Committee reviews related party transactions
involving us on an ongoing basis to prevent conflicts of interest. The Audit Committee will review a transaction in light of the affiliations
of the director, officer or employee and the affiliations of such person’s immediate family. Transactions shall be presented to
the Audit Committee for approval before they are entered into or, if this is not possible, for ratification after the transaction has
occurred. If the Audit Committee finds that a conflict of interest exists, then it will determine the appropriate remedial action, if
any. The Audit Committee approves or ratifies a transaction if it determines that the transaction is consistent with our best interests.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file
reports regarding ownership of, and transactions in, our securities with the Commission and to provide us with copies of those filings.
Based solely on our review of the copies received by us and on the written representations of certain reporting persons, we believe that
all such Section 16(a) filing requirements were timely met during 2022, except for the following reports: Form 4 for Min Su reporting
a grant of 6,000 RSUs on November 11, 2022 was filed on December 8, 2022.
AUDIT
COMMITTEE REPORT
The
Audit Committee has furnished the following report on its activities during the fiscal year ended December 31, 2022. The report is not
deemed to be “soliciting material” or “filed” with the SEC or subject to the SEC’s proxy rules or to the
liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent
filing under the Securities Act or the Exchange Act except to the extent that the Company specifically incorporates it by reference into
any such filing. The Audit Committee charter sets forth the responsibilities of the Audit Committee. A copy of the Audit Committee charter
is posted on our website at www.novalifestyle.com.
The
primary function of the Audit Committee is to assist the Board in its oversight and monitoring of our financial reporting and auditing
process. Management has primary responsibility for the Company’s financial statements and the overall reporting process, including
maintaining effective internal control over financial reporting and assessing the effectiveness of our system of internal controls. The
independent registered public accounting firm audits the annual financial statements prepared by management, expresses an opinion as
to whether those financial statements fairly present our financial position, results of operations and cash flows in conformity with
U.S. generally accepted accounting principles, and discusses with the Audit Committee any issues they believe should be raised with the
Audit Committee. These discussions include a discussion of the quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee monitors our
processes, relying, without independent verification, on the information provided to it and on the representations made by management
and the independent registered public accounting firm.
The
Audit Committee has reviewed and discussed the audited financial statements with our management and representatives of WWC, P.C., our
independent registered public accounting firm. The Audit Committee has discussed WWC, P.C.’s judgments as to the quality, not just
the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee by Statement
on Auditing Standards No. 114 (which superseded Statement on Auditing Standards No. 61), other standards of the Public Company Accounting
Oversight Board (United States), rules of the SEC, and other applicable regulations. The Audit Committee also received the written disclosures
and the letter from WWC, P.C. required by applicable requirements of the Public Company Accounting Oversight Board regarding the firm’s
independence from our management and has discussed with WWC, P.C. its independence. The members of the Audit Committee considered whether
the services provided by WWC, P.C., for the year ended December 31, 2022, are compatible with maintaining their independence. The Board
has delegated to the Audit Committee the authority to approve the engagement of our independent registered public accounting firm.
Based
upon its reviews and discussions, the Audit Committee recommended to our Board that the audited financial statements be included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for filing with the SEC and the Board approved that recommendation.
|
Umesh Patel (Chairman) |
|
Ming-Cherng Sky Tsai |
|
Charlie Huy La |
April
21, 2023
SUBMISSION
OF SHAREHOLDER PROPOSALS
If
you wish to have a proposal included in our proxy statement and form of proxy for next year’s annual meeting in accordance with
Rule 14a-8 under the Exchange Act, your proposal must be received by us at our principal executive office on or before December 20, 2023.
A proposal which is received after that date or which otherwise fails to meet the requirements for shareholder proposals established
by the SEC will not be included. The submission of a shareholder proposal does not guarantee that it will be included in the proxy statement.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have filed reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at the
SEC’s Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain information on the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains the reports, proxy statements and other information we
file electronically with the SEC. The address of the SEC website is www.sec.gov.
You
may request, and we will provide at no cost, a copy of these filings, including any exhibits to such filings, by writing us at the following
address: Nova LifeStyle, Inc. 6565 E. Washington Blvd., Commerce, CA 90040, Attn: Corporate Secretary, or by telephoning us at the following
number: (323) 888-9999.
ANNUAL
REPORT
A
copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which has been filed with the SEC pursuant
to the 1934 Act, is included with this Proxy Statement. Additional copies of this Proxy Statement and/or the Annual Report, as well as
copies of any Quarterly Report may be obtained without charge upon written request to Nova LifeStyle, Inc. 6565 E. Washington Blvd.,
Commerce, CA 90040, Attn: Corporate Secretary, or on the SEC’s internet website at www.sec.gov.
YOUR
VOTE IS IMPORTANT
You
are cordially invited to attend the 2023 Annual Meeting. However, to ensure that your shares are represented at the meeting, please submit
your proxy or voting instructions. Please see the instructions on the proxy and voting instruction card. Submitting a proxy or voting
instructions will not prevent you from attending the 2023 Annual Meeting and voting in person, if you so desire, but will help the Company
secure a quorum and reduce the expense of additional proxy solicitation.
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
|
April
21, 2023 |
/s/ Thanh
H. Lam |
|
Thanh H. Lam |
|
Chairperson of the Board, President and CEO |
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