Nova Lifestyle Inc

Our common stock is currently listed on the Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(d) (“Rule 5635(d)”) requires us to obtain stockholder approval prior to the issuance of our common stock in connection with a non-public offering involving the sale, issuance or potential issuance by the Company of common stock (and/or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock outstanding immediately prior to entering into an agreement in connection with any such non-public offering. On April 6, 2025, we entered into a non-binding term sheet (the “Term Sheet”) with American Trust Investment Services, Inc. (the “Placement Agent”), pursuant to which we will retain American Trust Investment Services, Inc. to act as our exclusive placement agent in connection with an offering of up to $8,000,000 of our common stock, par value $0.001 (the “Common Stock”). Purchaser of each share of Common Stock will also receive two (2) warrants (the “Warrant”). The shares of Common Stock and Warrants will be issued separately in this offering. The assumed offering price for each share of Common Stock (the “Offering Price”) will be equivalent to 50% of the closing price of our Common Stock on the Nasdaq on the date immediately preceding the closing date. A holder of one (1) warrant may exercise the right to acquire one (1) share of common stock at an exercise price that equals to 120% of the Offering Price and will be exercisable until the fifth anniversary of the issuance date and subject to certain adjustment. The Placement Agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number of dollar amount of securities. We will pay the Placement Agent a commission equal to 7% of the gross proceeds sold in this offering. We will provide the Placement Agent a non-accountable expense allowance equal to 1% of the gross proceeds of this offering and out-of-pocket expenses up to a maximum amount of $150,000. This summary is qualified in its entirety by the full text of the Term Sheet, a copy of the Term Sheet is attached as Annex A to the accompanying proxy statement.