Outstanding Equity Awards at Fiscal Year-End Table

The following table sets forth information concerning the year-end number and value of unexercised options, restricted stock that has not vested and equity incentive plan awards for each of the Named Executive Officers.

OUTSTANDING EQUITY AWARDS

AT DECEMBER 31, 2019 2020FISCAL YEAR-END

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation awarded by the companyCompany to the named executive officers, as disclosed under “Executive Compensation”,“Executive Compensation,” including the tabular disclosures and other narrative executive compensation disclosures in the proxy statement for the 20202021 Annual Meeting of Stockholders as required by the rules of the Securities and Exchange Commission.”

Our board of directors believes that approval of the compensation paid to certainour named executive officers is in the best interest of all stockholders and, accordingly, unanimously recommends a vote “FOR” approval, on an advisory basis, of the compensation paid to certainour named executive officers.

APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK

Our board of directors has unanimously adopted resolutions approving, declaring advisable and recommending to stockholders for their approval an amendment (the “Charter Amendment”) to our Restated Certificate of Incorporation to effect a reverse stock split (the “Reverse Split”) of the issued and outstanding shares of our common stock at a ratio to be determined by our board, in its sole discretion, prior to the effective time of the Charter Amendment of not less than 1-for-10 and not more than 1-for-20.

The Charter Amendment will be effected by filing a certificate of amendment (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware substantially in the form attached as Appendix A to this proxy statement. If the Charter Amendment is approved by stockholders, no further action on the part of stockholders will be required to implement or abandon the Reverse Split or to select the ratio for the Reverse Split. Even if the Charter Amendment is approved by stockholders, the board reserves the right, in its sole discretion, to elect to abandon the Reverse Split and not file the Certificate of Amendment if it believes that such action is in the best interests of the Company and our stockholders.

Our board of directors is proposing that it have the discretion to select the ratio for the Reverse Split from within the range referenced above, rather than proposing that stockholders approve a specific ratio, in order to give the board flexibility to select a ratio that reflects, at such time, the board’s then-current evaluation of the factors described below under “Potential Effects of the Proposed Reverse Split—Establishing the Ratio” in order to implement the Reverse Split in a manner that maximizes the anticipated benefits for the Company and our stockholders.

If the Charter Amendment is approved by stockholders and our board does not elect to abandon the Reverse Split, the Reverse Split will be effective upon the effectiveness of the Certificate of Amendment, which will occur on the date the Certificate of Amendment is filed or at such later time as is chosen by the board in its sole discretion and set forth in the Certificate of Amendment.

Upon effectiveness of the Certificate of Amendment, the Reverse Split will occur simultaneously for all issued and outstanding shares of our common stock and the ratio determined by our board will be applicable to all issued and outstanding shares of our common stock. Except for adjustments that may result from the treatment of fractional shares as described under “Potential Effects of the Proposed Reverse Split—Fractional Shares” below, each stockholder will hold the same percentage of common stock outstanding immediately following the Reverse Split as that stockholder held immediately before the Reverse Split. The Charter Amendment will not change the total number of our authorized shares of common stock or preferred stock and will not change the par value of our common stock.  The Charter Amendment also will not change the terms of our common stock, which will continue to have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the common stock currently outstanding.

The affirmative vote of a majority of the outstanding shares of our common stock is required to approve the Charter Amendment. For the reasons set forth below, our board of directors currently believes that the Charter Amendment is in the best interests of the Company and our stockholders and, accordingly, unanimously recommends a vote “FOR” the approval of the Charter Amendment.

APPROVAL OF AMENDMENT TO THE STANLEY FURNITURE COMPANY, INC.

RIGHTS AGREEMENT EXTENDING TERMReasons to Effect the Reverse Split

Potential for Listing on NASDAQ

On December 5, 2016, we entered into

Our common stock is currently quoted on the OTCQB, one of the OTC Markets Group over-the-counter markets, which is not a Rights Agreementnational securities exchange. Our board intends to apply for the listing of our common stock on the NASDAQ Stock Market (“NASDAQ”) or a similar national stock exchange. One of the key requirements for initial listing on NASDAQ is that our common stock must meet certain minimum bid price requirements, which our common stock currently does not meet. The Reverse Split is intended, in an effortpart, to protect againsthelp the Company meet the minimum bid price requirements for a possible limitationpotential up-listing on NASDAQ.

If our common stock is listed on NASDAQ, the liquidity of our common stock could be increased, which could result in higher prices for our common stock than might otherwise prevail while our common stock is traded on the OTCQB, lowered spreads between the bid and asked prices for our common stock and lower transaction costs inherent in trading such shares. Additionally, certain investors will only purchase securities that are listed on a national securities exchange. As a result, a listing on NASDAQ may increase our ability to useraise funds through the issuance of our net operating loss carryforwards (“NOLs”).common stock or other securities convertible into our common stock in the future from a larger pool of potential investors.

Although we believe that the Reverse Split would, at least initially, allow us to meet minimum bid price requirements for initial listing on NASDAQ, the effect of the Reverse Split on the price of our common stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in similar circumstances is varied. As a result, there can be no assurance that:

Moreover, while it is the current intent of December 31, 2019, we had federal NOLsour board to apply for listing of approximately $33.8 million.our common stock on NASDAQ, there can be no assurance that the board will not later decide that pursuing such listing is not in the best interests of the Company and its stockholders.

Additionally, even though a Reverse Split, by itself, would not impact the Company’s assets or prospects, the Reverse Split could be followed by a decrease in the aggregate market value of our common stock. The Rights Agreement was approved by stockholders atprice of our 2017 Annual Meeting of Stockholders and was scheduledcommon stock will also continue to expire in December 2019.  On December 5, 2019, we entered into Amendment No. 2be based on other factors that are unrelated to the Rights Agreement to extend the termnumber of the Rights Agreement.  Amendment No. 2 amends the definition of “Expiration Time” to provide that unless otherwise expiring under the terms of the existing definition, the Rights Agreement will expire (i) at the close of business on the day aftershares outstanding, including our 2020 Annual Meeting of Stockholders unless the stockholders approve the amendment to the definition of “Expiration Time” in Amendment No. 2 or (ii) the close of business on December 5, 2022. Our board of directors unanimously recommends that stockholders vote “FOR” approval of the amendment to the Rights Agreement set forth in Amendment No 2 thereto extending the term of the Rights Agreement.future performance.

Background and Reasons for the ProposalPotential Increased Investor Interest

Our board of directors approved the Rights Agreement and Amendment No. 2 thereto in an effort to protect againstbelieves that a possible limitation on our ability to use our NOLs. Our federal NOLs totaled approximately $33.8 million as of December 31, 2019. We may utilize these NOLs in certain circumstances to offset future U.S. taxable income and reduce its U.S. federal income tax liability, which may arise even if we incur an accounting loss in a given periodhigher share price for reporting purposes.

Our ability to utilize our NOLs, however, could be substantially limited if an “ownership change,” as defined under Section 382 of the Internal Revenue Code (“Code”), occurred. In general, an ownership change would occur if and when the percentage of ownership of our common stock by one orcould also help generate investor interest in the Company. Many investment funds may be reluctant to invest in lower priced stocks and some potential investors may be prohibited from investing in “penny stocks” (as discussed in more “5-percent shareholders” (as defined under Code Section 382) has increased by more than 50detail below). Investors may also be dissuaded from purchasing lower priced stocks because the brokerage commissions, as a percentage points over their lowest ownership percentage at any time during the prior three years (calculated on a rolling basis). These provisions can be triggered not only by merger and acquisition activity but by trading as well. The Rights Agreement is designed to deter trading that would result in an ownership change that could lead to the loss of the NOLstotal transaction, tend to be higher for such stocks. Furthermore, various regulations and a resulting reductionpolicies restrict the ability of stockholders to borrow against or “margin” low-priced stock and declines in our company’s value.

In connection with the approving the Rights Agreement in 2016, our board authorized and declared a dividend of one preferred stock purchase right (a “Right”) for each outstanding share of our common stock to stockholders of record as of the close of business on December 15, 2016. Each share of our common stock issued after December 15, 2016 until the Separation Time (as defined below) will have a Right associated with it. In general, the Rights will work to impose a significant penalty upon any person or group which becomes the beneficial owner of 4.9% or more of our outstanding common stock or upon any 4.9% or greater holder which becomes the beneficial owner of an additional 1% or more of our outstanding common stock. There is no guarantee, however, that the Rights Agreement will prevent us from experiencing an ownership change and, therefore, having a limitation on its ability to utilize our NOLs.

Description of the Rights Agreement

The following description of the Rights Agreement is qualified in its entirety by reference to the text of the Rights Agreement, which was filed as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on December 6, 2016, and amended by (i) Amendment No. 1 thereto dated as of January 30, 2016, which was filed as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on January 31, 2016 and (ii) Amendment No. 2 thereto dated as of December 4, 2019, which was filed as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on December 5, 2019, each of which is available on the SEC’s web site (www.sec.gov) and our web site (www.hgholdings.net). Please read the Rights Agreement, Amendment No. 1 thereto and Amendment No. 2 thereto in their entirety as the discussionprice below is only a summary.certain levels may trigger unexpected margin calls.

The Rights. UntilNotwithstanding the Separation Time, each Rightforegoing, the liquidity of our common stock may be adversely affected by the Reverse Split as a result of fewer shares of common stock being outstanding after giving effect to the Reverse Split. However, the board believes that the anticipated higher bid price will be evidenced by eitherreduce, to some extent, the registrationnegative effects on the liquidity and marketability of the associated sharecommon stock inherent in some of the policies and practices of institutional investors and brokerage houses described above. 

Our common stock is also currently deemed to be a “penny stock” (as defined in Rule 3a51-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and subject to the penny stock rules of the Exchange Act specified in rules 15g-1 through 15g-100. Such rules require broker-dealers, before effecting transactions in a penny stock, to meet certain additional disclosure requirements to their customers. The additional burdens imposed upon broker-dealers by such requirements can discourage broker-dealers from making a market, seeking or generating interest in our common stock and otherwise effecting transactions in our common stock, which can limit the market liquidity of our common stock and the ability of investors to trade our common stock.

Moreover, The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may also limit which the market liquidity of our common stock and the ability of investors to trade our common stock.

If we are able to increase the price of our common stock through implementation of the Reverse Split (and, subsequently, achieve listing of our common stock on our stock transfer books or the certificate for the associated share ofNASDAQ), our common stock may no longer be deemed a penny stock, or be considered speculatively low priced for purposes of FINRA Rules, and the burdens and limitations described above may only be transferred with the associated share of our common stock. Following the Separation Time, separate certificates evidencing the Rights will be delivered to holders of record of our common stock aslifted.

Potential Effects of the Separation Time and the Rights may be transferred independent of our common stock.Proposed Reverse Split

Holders’ Rights as StockholdersGeneral. The holders of Rights will, solely by reason of their ownership of Rights, have no rights as stockholders of our company, including, without limitation, the right to vote or to receive dividends.

ExercisabilityUpon effectiveness of the Rights. The Rights are not exercisable untilReverse Split, our outstanding common stock will be combined, such that up to 20 shares of existing common stock will be combined into one new share of common stock. As of April 28, 2021, the close of business on the earlier of (i) the tenth business day (subject to adjustment by our board) after the date on which any person commences a tender or exchange offer that, if consummated, would result in such person becoming an Acquiring Person (as defined in the Rights Agreement) (provided that if any tender or exchange offer is cancelled, terminated or otherwise withdrawn prior to the close of business on the tenth business day following its commencement without the purchase of anyCompany had [34,404,556] shares of our common stock outstanding, against a total of 35,000,000 authorized shares of common stock. As a result, the Reverse Split, if and when effected in the sole discretion of the board, will decrease the Company’s issued and outstanding shares of common stock. The table below shows, as of April 28, 2021, the number of outstanding shares of common stock that would result from the Reverse Split (without giving effect to the treatment of fractional shares) if our board were to approve a Reverse Split in the ratio of 1-for-10 (the minimum of the authorized range), 1-for-15 (the midpoint of the authorized range) or 1-for-20 (the maximum of the authorized range).

Except for adjustments that may result from the treatment of fractional shares as described below, each stockholder will hold the same percentage of the Company’s issued and outstanding common stock immediately following the Reverse Split as such offer shall be deemed, for these purposes, to never have been made) and (ii) the next business day after the first date of public announcement by us or by an Acquiring Person that a person has become an Acquiring Person (such date being the “Stock Acquisition Announcement Date” and the close of business on the earlier of (i) or (ii) being the “Separation Time”). On or after the Separation Time andstockholder holds immediately prior to the Expiration Time (as defined below), the RightsReverse Split. The Reverse Split will be exercisable and each Right will entitle the holder thereof to purchase from us for $8.00 (the “Exercise Price”) one one-thousandth of a share of our Series A Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”).

Flip-In Event. In the event that a person becomes an Acquiring Person, each Right, other than those beneficially owned by the Acquiring Person which shall become null and void, will as of such date (the “Flip-in Date”) constitute the right to purchase from us for the Exercise Price sharesaffect all holders of our common stock having an aggregate Market Price (as defineduniformly and will not affect any stockholder’s percentage ownership interest in the Rights Agreement) equalCompany or proportionate voting power (subject to twice the Exercise Price.

Termstreatment of the Preferred Stockfractional shares). The terms ofCharter Amendment will also not change the Preferred Stock issuable upon exercise of the Rights are designed so that each one one-thousandth of a share of Preferred Stock is the economic and voting equivalent of one whole share of our common stock. In addition, the Preferred Stock has certain minimum dividend and liquidation rights, which are set out in the form of Certificate of Designation of Series A Participating Preferred Stock attached as Exhibit B to the Rights Agreement.

Exchange. Our board may, at its option, at any time after a Flip-in Date and prior to the time that an Acquiring Person becomes the beneficial owner of more than 50% of the outstanding sharesterms of our common stock, electwhich will continue to exchangehave the same voting rights and rights to dividends and distributions and will be identical in all (but not less than all) ofother respects to the then outstanding Rights (other than Rights beneficially owned by the Acquiring Person or any affiliate thereof, which Rights shall become void) for shares of our common stock at an exchange ratio of one share of ourcurrently outstanding. Our common stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Separation Time (the “Exchange Ratio”).  Immediately upon such action by our board (the “Exchange Time”), the right to exercise the Rights will terminatealso remain duly authorized, fully paid and each Right will thereafter represent only the right to receive a number of shares of our common stock equal to the Exchange Ratio.

Substitution. Whenever we shall become obligated, as described in the preceding paragraphs, to issue shares of our common stock upon exercise of or in exchange for Rights, we, at our option, may substitute therefor shares of Preferred Stock, at a ratio of one one-thousandth of a share of Preferred Stock for each share of our common stock so issuable, or, subject to certain conditions, other debt or equity securities.non-assessable.

Exempt PersonsEstablishing the Ratio. Any person desiring

The board believes that the ability to engagedetermine the timing and to set the ratio within a range will provide it with the flexibility to implement the Reverse Split in an acquisitiona manner that maximizes the anticipated benefits for the Company and our stockholders. In determining whether to implement the Reverse Split and the specific ratio for the Reverse Split, the Board may consider, among other things, factors such as:

Impact on Shares of Common Stock Available for Future Issuance

Currently, we are authorized to issue up to 35,000,000 shares of common stock, of which [34,404,556] shares were issued and outstanding as of April 28, 2021. In addition, we are authorized to issue up to 1,000,000 shares of preferred stock, but none are currently issued and outstanding so the Reverse Split will have no impact on preferred stock. In connection with the Reverse Split, our board has determined to keep the total number of authorized shares of common stock the same under our Restated Certificate of Incorporation after giving effect to the Reverse Split. As a result, we will have the ability to issue a greater percentage of our common stock that, if consummated, might cause such personin relation to become an Acquiring Person may request that our board exempt such acquisition fromoutstanding shares after the provisionsReverse Split than we currently have.

The additional shares of common stock authorized for issuance would have the same rights and privileges under our Restated Certificate of Incorporation as the shares of common stock currently authorized for issuance. Holders of the Rights Agreement such that the person would not be deemed to be an Acquiring Person. Our board may grant any such request if it determines, in its sole discretion, that the acquisition (i) does not (x) create a significant risk of material adverse tax consequences to us or (y) constitute an event of default under our prior credit facility which is no longer in force or (ii) is otherwise in our best interest. Our board has granted several exemptions under the Agreement. Currently, the effective exemptions are (i) an exemption requested by Solas Capital Management, LLC (“Solas”) to purchase up to an additional 16.9% of our outstandingCompany’s common stock (which would result in Solas owning approximately 34%do not have preemptive rights to subscribe for and purchase any new or additional issues of our outstanding stock if the remaining exempted amount of approximately 11.2% of our outstanding common stock was fully purchased), and (ii) an exemption requested by the Hale Funds permitting them to purchase up to an additional 14.4% of our outstanding common stock (which would result in the Hale Funds owning approximately 32% of our outstanding common stock if the remaining exempted amount of approximately 7.3% of our outstanding common stock was fully purchased).

Redemption. Our board may, at its option and at any time prior to a Flip-in Date, redeem all (but not less than all) of the then outstanding rights at a price of $0.0001 per Right (the “Redemption Price”). Immediately upon the action of our board electing to redeem the Rights, and without any further action or notice, the right to exercise the Rights will terminate and each Right will thereafter represent only the right to receive the Redemption Price in cash or securities for each Right so held.

Anti-Dilution Adjustments. The Exercise Price and the number of Rights outstanding, or in certain circumstances the securities purchasable upon exercise of the Rights, are subject to adjustment from time to time to prevent dilution in the event of a stock dividend on, or a subdivision or a combination into a smaller number of shares of, our common stock or the issuance or distribution of any securities or assets in respect of, in lieu of or in exchange for ourconvertible into common stock.

Supplements and Amendments.  The Rights Agreement may be supplemented or amended without the approval of holders of the Rights at any time and in any respect prior to the Flip-in Date. Subsequent to the Flip-in Date, the Rights Agreement may only be supplemented or amended in certain limited circumstances as specified in the Rights Agreement.

Expiration. The Rights and the Rights Agreement will expire on the earliest of (i) the Exchange Time, (ii) the date on which the Rights are redeemed as described above, (iii) the close of business on the day after our 2020 Annual Meeting of Stockholders unless our stockholders approve the amendment to the Rights Agreement set forth in Amendment No. 2, (iv) the close of business on December 5, 2022, and (iv) the time at which our board determines, in its sole discretion, that the NOLs are utilized in all material respects or no longer available in any material respect under Section 382 of the Code or any applicable state law or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which we could use the NOLs, or materially impair the amount of the NOLs that could be used by us in any particular time period, for applicable tax purposes (in any such case, the “Expiration Time”).

Certain Considerations Related to the Rights Agreement

Our board of directors believes that attempting to protect our NOLs asthe availability of additional authorized shares of common stock is in our company’sthe best interests of the Company and our stockholders’ best interests. However, we cannot eliminateits stockholders and will provide us with additional flexibility, including having shares available for issuance for such corporate purposes as the possibility that an ownership change will occur even if the amendment to the Rights Agreement is approved. Please consider the items below when making your decision.board may determine in its discretion, including, without limitation:

Future Use of the NOLs is Uncertain. Our use of the NOLs depends on our ability to generate taxable income in the future. There can be no assurance that we will have taxable income in any applicable period, or if we do, that we will have NOLs in an amount equal to our taxable income.

●

exercise or conversion of securities convertible into, or exercisable for, shares of common stock (including preferred stock, convertible notes and debentures, warrants, options and other convertible securities);

Potential Challenge to the NOLs. The IRS has not audited or otherwise validated the amount of our NOLs. The IRS could challenge the amount of our NOLs, which could limit our ability to use our NOLs to reduce future taxable income. In addition, the complexity of Code Section 382’s provisions and the limited knowledge any public company has about the ownership of its publicly traded stock make it difficult to determine whether an ownership change has occurred. Therefore, we cannot assure you that the IRS will not claim that we experienced an ownership change and attempt to reduce or eliminate the benefit of our NOLS even if the Rights Agreement is in place.

The Company has no current plans, proposals, or arrangements, written or otherwise, at this time to issue any of the newly available authorized shares of common stock (except shares of common stock that may be issued upon exercise of outstanding restricted stock awards).

No further stockholder approval is required to issue any additional shares of common stock. Any issuance of additional shares of common stock could have the effect of diluting any future earnings per share and book value per share of the outstanding shares of our common stock, and such additional shares could be used to dilute the stock ownership or voting rights of a person seeking to obtain control of the Company.

Anti-Takeover Effects

Although not designed or intended for such purposes, the overall effect of keeping the number of our authorized shares of common stock the same under our Restated Certificate of Incorporation after giving effect to the Reverse Split could be to enable our board to render more difficult or discourage an attempt to obtain control of the Company that may be favored by a majority of stockholders and/or that may provide an above market premium to our stockholders, since the additional shares could be issued to purchasers who support our board and are opposed to a takeover.

Our board’s determination to keep the number of our authorized shares of common stock the same under our Restated Certificate of Incorporation after giving effect to the Reverse Split is not prompted by any specific effort or perceived threat of takeover. We are not currently aware of any pending or proposed transaction involving a change of control. Nor is the change in authorized shares of common stock a plan by the board or management to adopt a series of amendments to our certificate of incorporation or bylaws to institute an anti-takeover provision. The Company does not have any plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences.

Potential EffectsOdd Lots

The Reverse Split could result in some stockholders holding less than 100 shares of common stock and as a consequence may incur greater costs associated with selling such shares. Brokerage commissions and other costs of transactions in odd lots may be higher, particularly on Liquidity. a per-share basis than the cost of transactions in even multiples of 100 shares.

Accounting Matters

The Rights AgreementReverse Split would not affect the par value of our common stock, which will restrictremain $0.02 per share of common stock. As a stockholder’s abilityresult, upon effectiveness of the Reverse Split, the stated capital on our balance sheet attributable to acquire, directlythe common stock will be reduced in proportion to the fraction by which the number of shares of common stock are reduced, and the additional paid-in capital account shall be credited with the amount by which the stated capital is reduced. The per share net income or indirectly, additionalloss and net book value of our common stock will be increased because there will be fewer shares of our common stock outstanding. In subsequent financial statements, net income or loss per share and other per share amounts for periods before the Reverse Split will be recast to give retroactive effect to the Reverse Split.

No Going Private Transaction

The Reverse Split is not intended as a “going private transaction” within the meaning of Rule 13e-3 under the Exchange Act.

Effect on Restricted Stock Awards

Upon effectiveness of the Reverse Split, all outstanding restricted stock awards will be adjusted to reflect the Reverse Split. The number of shares of common stock that the holders of outstanding restricted stock awards may receive upon vesting may decrease, in proportion to the fraction by which the number of shares of common stock underlying such restricted stock awards are reduced as a result of the Reverse Split.

Registration and Trading of our Common Stock

Our common stock is currently registered under Section 12(g) of the Exchange Act, and we are subject to periodic reporting and other requirements of the Exchange Act. If the board determines to implement the Reverse Split, the Reverse Split will not affect the registration of our common stock under the Exchange Act or our obligation to publicly file financial and other information with the SEC. If a Reverse Split is implemented, our common stock will begin trading on a post-split basis after the Effective Time (as defined below). We will announce the Effective Time and timing for post-split trading to commence in a Current Report on Form 8-K at the time of implementation of the Reverse Split. On the date that our common stock begins trading on a post-split basis, we expect that our trading symbol as quoted on the OTCQB will change to “STLYD.”  The “D” will be removed 20 business days from that date, and the symbol will revert to the original symbol of “STLY.”  In connection with the Reverse Split, the Company’s CUSIP number (which is an identifier used by participants in the securities industry to identify our common stock) will change to a number that will also be announced in such Current Report on Form 8-K.

Effectiveness of the Reverse Split

If implemented, the Reverse Split will be effective upon the effectiveness of the Certificate of Amendment, which will occur on the date the Certificate of Amendment is filed with the Secretary of State of the State of Delaware or at such later time as is chose by the board and set forth in the Certificate of Amendment (the “Effective Time”), without any action on the part of our stockholders and without regard to the date that any stock certificates representing our common stock prior to the Reverse Split are physically surrendered.

Exchange of Book-Entry Shares

Upon effectiveness of the Reverse Split, stockholders whose shares are uncertificated and held in “street name” with a broker or other nominee, either as direct or beneficial owners, will have their holdings automatically exchanged by their brokers to give effect to the Reverse Split. In addition, stockholders whose shares are held in book-entry form on the books of our transfer agent, Continental Stock Transfer & Trust Company (“Continental”), will have their holdings automatically exchanged by Continental to give effect to the Reverse Split. Continental will issue new statements of holdings following such exchange.

Exchange of Shares held in Certificate Form

STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM FROM OUR TRANSFER AGENT.

Stockholders holding shares of our common stock in excesscertificated form will be sent a transmittal letter by Continental after the Effective Time to be used in forwarding their certificates for surrender and exchange for the whole number of the specified limitations. Further, a stockholder’s ability to disposenew shares of our common stock maythat such stockholder is entitled to receive as a result of the Reverse Split. For ease of stockholder record keeping, we have asked that Continental provide instructions for the exchange of those certificates into book-entry shares in lieu of certificates. The book-entry shares would be limited by reducingheld in a separate account on the classbooks of potential acquirersour transfer agent for such shares. In addition,the benefit of each stockholder. Each stockholder who surrenders certificates will receive a stockholder’s ownershipbook-entry account statement reflecting the shares of our common stock to which such stockholder is entitled as a result of the Reverse Split, or in lieu thereof, such stockholder may become subjectelect to receive new certificates representing the shares of our common stock to which he or she is entitled as a result of the Reverse Split. No book-entry shares or new certificates will be issued to a stockholder until the stockholder has surrendered his or her outstanding certificate(s) together with the properly completed and executed transmittal form.

Fractional Shares

No fractional shares of common stock will be issued as a result of the Reverse Split. Instead, in lieu of any fractional shares to which a stockholder of record would otherwise be entitled as a result of the Reverse Split, we will pay cash (without interest) equal to such fraction multiplied by the 90-day Volume Weighted Average Price (“VWAP”) of our common stock on the OTCQB for the period immediately preceding the effective date of the Reverse Split (with such average closing sales prices being adjusted to give effect to the restrictionsReverse Split). After the Reverse Split, a stockholder otherwise entitled to a fractional interest will not have any voting, dividend or other rights with respect to such fractional interest except to receive payment as described above.

If the proposed Reverse Split is implemented, stockholders owning fractional shares will be paid out in cash for such fractional shares. For example, assuming the board elected to consummate an Approved Split Ratio of 1:10, if a stockholder held eleven shares of common stock immediately prior to the Reverse Split, then such stockholder would be paid in cash for the one share of common stock (pre-split value) but will maintain ownership of the Rights Agreement upon actions taken by persons related to, or affiliated with, such stockholder.remaining share of common stock (post-split).

Potential Anti-Takeover Impact. Federal Income Tax Consequences of the Reverse Split

The reason our board approvedfollowing discussion is a general summary of certain U.S. federal income tax consequences of the Rights Agreement and Amendment No. 2 thereto isReverse Split to protect our ability to use our NOLs. The Rights Agreement is not intended to prevent a takeover of our company. Because our board can redeem the Rights, the Rights should not interfere with a merger or other business combination approved by our board. However, the Rights Agreement could be deemed to have an anti-takeover effect because, among other things, it will restrict the ability of a person, entity or group to accumulate more than a 4.9%U.S. Holders (as defined below) of our common stock and does not describe all of the abilityincome tax consequences that may be relevant to U.S. Holders (as defined herein) in light of their particular circumstances, including alternative minimum tax and Medicare contribution tax consequences. This discussion applies only to U.S. Holders of common stock who hold such common stock as capital assets for U.S. federal income tax purposes.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations each as in effect on the date hereof, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This discussion is for general information purposes only and the tax treatment of a stockholder may vary depending upon the particular facts and circumstances of such stockholder. In addition, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular circumstances or to holders who may be subject to special tax treatment, including without limitation, holders who are brokers or dealers in securities, regulated investment companies, real estate investment trusts, traders in securities that use a mark-to-market method of tax accounting, persons other than U.S. Holders, U.S. Holders whose functional currency is not the U.S. dollar, insurance companies, tax-exempt or governmental organizations, banks, financial institutions, U.S. Holders that hold our stock through a non-U.S. entity or non-U.S. account, or through an individual retirement or other tax-deferred account, U.S. holders who hold stock as part of a hedge, straddle, wash sale, conversion or constructive sale, or other integrated transaction, U.S. Holders that use the accrual method of accounting that are required to include certain amounts in income no later than the time such amounts are reflected on certain financial statements, U.S. expatriates (as defined in the Code), S corporations, partnerships or other pass-through entities for U.S. federal income tax purposes or a person that holds our stock through such entities, or groups now owning moreU.S. Holders who acquired the common stock pursuant to the exercise of compensatory stock options or otherwise as compensation.

The following discussion also does not address the tax consequences of the Reverse Split under foreign, state or local tax laws, or under any U.S. federal tax laws relating to taxes other than 4.9%U.S. federal income taxes (such as estate and gift taxes). Accordingly, each stockholder should consult his, her or its tax advisor to determine the particular tax consequences to him, her or it of a reverse stock split, including the application and effect of U.S. federal, state, local and/or foreign income tax and other laws.

This disclosure applies to you if you are a U.S. Holder. You are a “U.S. Holder” if, for U.S. federal income tax purposes, you are a beneficial owner of our common stock that is:

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our stock, the tax treatment of the partnership and a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Any such partner or partnership should consult its own tax advisor as to acquire additional sharesits tax consequences of the Reverse Split.

The Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service (“IRS”) regarding the U.S. federal income tax consequences of the Reverse Split. This summary of certain U.S. federal income tax consequences is for general information only and is not tax advice. Each beneficial owner of our common stock withoutis urged to consult its own tax advisor with respect to the approvalapplication of U.S. federal income tax laws to its particular situation, as well as any tax consequences arising under the U.S. federal estate or gift tax laws or the Medicare tax on net investment income, or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

The Company believes that the Reverse Split will constitute a reorganization under Code Section 368(a)(1)(E). Generally, if the Reverse Split qualifies as a recapitalization under Code Section 368(a)(1)(E), the Company should not recognize any gain or loss as a result of the Reverse Split and U.S. Holders should not recognize gain or loss for U.S. federal income tax purposes, except to the extent of cash received in lieu of fractional shares. The aggregate adjusted basis of the new shares of common stock will be the same as the aggregate adjusted basis of the common stock exchanged for such new shares, reduced by any basis allocated to the fractional share(s) for which cash is received. The holding period of the post-Reverse Split shares of the common stock resulting from implementation of the Reverse Split generally will include the stockholder’s respective holding periods for the pre-Reverse Split shares of common stock. A U.S. Holder who receives cash in lieu of fractional shares generally will recognize taxable gain or loss equal to the amount of cash received and such U.S. Holder’s tax basis allocated to the fractional share, provided that the receipt of cash is, for U.S. federal income tax purposes, (i) “not essentially equivalent” to a dividend, (ii) a “substantially disproportionate” redemption of stock (generally defined as a greater than 20 percent reduction in a U.S. Holder’s voting stock), or (iii) in complete termination of the U.S. Holder’s interest. Although we expect that the receipt of cash in lieu of fractional shares pursuant to the Reverse Split would be “not essentially equivalent” to a dividend, such determination must be made with respect to each U.S. Holder’s particular facts and circumstances.

If the receipt of cash by a U.S. Holder does not meet one of the three tests above, the receipt of cash will be treated as a dividend to such U.S. Holder to the extent of our board. Consequently,earnings and profits as determined under U.S. federal tax principles. To the Rights Agreement may discourage or make more difficult,extent the cash exceeds our earnings and profits, it will first be treated as a merger, tender offer, proxy contest or assumptiontax-free return of control by a substantial holder of our securities.the U.S. Holder’s tax basis and then as capital gain.

Gain or loss, if any, realized by a U.S. Holder on the receipt of cash in lieu of fractional shares will generally be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period with respect to the fractional share (taking into account the holding periods for pre-Reverse Split shares of common stock) is more than one year. Long-term capital gains recognized by non-corporate taxpayers are subject to reduced rates, while the deductibility of capital losses is subject to significant limitations.

Payments of cash in lieu of fractional shares to a U.S. Holder that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is an exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding. If a U.S. Holder is subject to backup withholding, a paying agent within the United States will be required to withhold at the applicable statutory rate, currently 24%. U.S. Holders who are required to establish their exempt status generally must provide a properly completed IRS Form W-9. The amount of any backup withholding from a payment to a U.S. Holder is not an additional tax and will be allowed as a credit against such U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely and accurately furnished to the IRS. U.S. Holders should consult their tax advisors concerning the application of information reporting and backup withholding rules.

The tax discussion set forth above is included for general information only. U.S. Holders should consult with their own tax advisors to determine their particular tax consequences with respect to the Reverse Split, including the applicability and effect of state, local and non-U.S. tax laws.

Reservation of Right to Select Timing of or to Abandon the Reverse Split

As previously noted, even if the Charter Amendment is approved by stockholders, our board reserves the right, in its sole discretion, to (i) select the Effective Time or (ii) elect to abandon the Reverse Split and not file the Certificate of Amendment. Accordingly, by voting in favor of the Charter Amendment, you are also expressly authorizing the board to delay or abandon the Reverse Split if it should decide, in its sole discretion, that that such action is in the best interests of the Company and our stockholders.

Interests of Certain Persons

No person who has been a director or officer of the Company at any time since the beginning of the last fiscal year, or any associate of such person, has any substantial interest, direct or indirect, in this Charter Amendment proposal that differs from that of other stockholders of the Company.

No Appraisal Rights

Neither Delaware law, including the Delaware General Corporation Law, nor our Restated Certificate of Incorporation provide for dissenter’s rights of appraisal, and the Company will not independently provide stockholders with any such rights, in connection with the Charter Amendment.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 27, 202028, 2021 by each stockholder we know to be the beneficial owner of more than 5% of our outstanding common stock, by each director, and director nominee, by each of the Named Executive Officersexecutive officers and by all directors and executive officers as a group:

_______________________

INDEPENDENT PUBLIC AUDITORS

Change in Certifying Accountant

On April 29, 2019, the audit committee of our board approved the engagement of Cherry Bekaert LLP (“CB”) as our principal independent registered public accountant to audit the company’sCompany’s financial statements for the fiscal year ended December 31, 2019. As a result, on April 29, 2019, we dismissed BDO USA, LLP (“BDO”), as our principal independent registered public accountants.

The reports of BDO on our consolidated financial statements for the fiscal years ended December 31, 2018 and 2017 did not contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles.

During our fiscal years ended December 31, 2018 and 2017, and the subsequent interim period through April 29, 2019, we did not have any disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope, or procedure, which disagreements, if not resolved to the satisfaction of BDO, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the consolidated financial statements for such years.

During our fiscal years ended December 31, 2018 and 2017, and through April 29, 2019, no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K have occurred, except for the material weaknessweaknesses in our internal controls over financial reporting as described below.

The material weakness in internal control over financial reporting as disclosed in Item 4 of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 was identified as we did not design and maintain effective controls related to the accounting with respect to the recording of a gain on extinguishment of the Amended and Restated Subordinated Secured Promissory Note, dated September 6, 2018, issued by Stanley Furniture Company LLC in favor of the company.Company. This material weakness was subsequently remediated as of December 31, 2018. The audit committee has discussed these matters with BDO, and we authorized BDO to respond fully to any inquiries by CB concerning the subject matter of such reportable event.

The material weakness in internal control over financial reporting as disclosed in Item 9A of our Annual Report on Form 10-K for the annual period ended December 31, 2017 was identified as we did not design and maintain effective controls related to the accounting with respect to modifications of share-based payment awards. This material weakness was subsequently remediated as of March 31, 2018. The audit committee discussed these matters with BDO, and we authorized BDO to respond fully to any inquiries by CB concerning the subject matter of such reportable event.

We previously requested that BDO furnish a letter addressed to the SEC stating whether or not it agrees with the above statements.  A copy of the letter from BDO is filed as Exhibit 16.1 to the Current Report on Form 8-K we filed with the SEC on May 3, 2019.

We engaged CB as of May 2, 2019.  During the fiscal years ended December 31, 2018 and 2017, and the interim period through May 2, 2019, we did not consult with CB regarding: (i) the application of accounting principles to a specified transaction, either proposed or completed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company or oral advice was provided that CB concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

Fees and Services

The audit committee has appointed Cherry Bekaert LLP (“CB”) to serve as our independent public auditors for 2019. While we expect CB to be selected as our independent public auditors for 2020, the audit committee will not make that selection until it completes its review of the engagement terms for the current year.2021.

Representatives of CB are expected to be present at the 20202021 Annual Meeting. These representatives will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

The following table sets forth the fees, including reimbursement of expenses, billed by, or expected to be billed by, CB for services to the companyCompany in the fiscal yearyears ended December 31, 2020 and December 31, 2019, all of which were pre-approved by the audit committee.

Audit Fees. Annual auditThese fees relate to professional services rendered for the audit of our annual financial statements and reviews of our Forms 10-Q.

Tax Fees. Tax FeesThese fees related to professional services rendered for an analysis of the “Change in Ownership,” as defined by Internal Revenue Code Section (“IRC Section”) 382.

All Other Fees. These fees related to professional services rendered for the consent to include the audited financial statements in the registration statement of our Rights Offering.

Pre-Approval Policies and Procedures

The audit committee has established a policy to pre-approve all audit, audit-related, tax and other services proposed to be provided by our independent accountants before engaging the accountants for that purpose. Consideration and approval of these services generally occur at the audit committee’s regularly scheduled meetings. In order to address situations where it is impractical to wait until the next scheduled meeting, the audit committee has delegated the authority to approve non-audit services not in excess of $25,000 individually or in the aggregate to the chairman of the audit committee. Any services approved pursuant to this delegation of authority are required to be reported to the full audit committee at the next regularly scheduled meeting.

AUDIT COMMITTEE REPORT

The primary purpose of the audit committee is to assist the board in fulfilling its responsibility to oversee management's conduct of our financial reporting process, including internal control over financial reporting. Management is responsible for preparing the company’sCompany’s financial statements and assessing the effectiveness of the company’sCompany’s internal control over financial reporting. The independent accountants are responsible for performing an independent audit of the company’sCompany’s financial statements in accordance with generally accepted auditing standards and for issuing a report thereon. In addition, the independent accountants also express their opinion on the company’sCompany’s internal control over financial reporting. The audit committee is directly responsible for the appointment, compensation and oversight of the work of the company’sCompany’s independent accountants.

In this context, the audit committee has met and held discussions with management and the independent accountants. Management represented to the audit committee that the company’sCompany’s financial statements were prepared in accordance with generally accepted accounting principles, and the audit committee has reviewed and discussed the financial statements with management and the independent accountants.

The audit committee discussed with the independent accountants matters required to be discussed by Auditing Standards No. 1301 (Communications with Audit Committees).the applicable requirements of the Public Company Accounting Oversight Board and the SEC. In addition, the audit committee has discussed with the independent accountants the accountant's independence from the companyCompany and its management, including the matters in the written disclosures required by Rule 3526 (Communications with Audit Committees Concerning Independence) of the Public Company Accounting Oversight Board. The audit committee has also considered whether the provision of non-audit services by the independent accountants is compatible with maintaining the independent accountant's independence.

In reliance on the reviews and discussions referred to above, the audit committee recommended to the board of directors that the audited financial statements be included in the company'sCompany's Annual Report on Form 10-K for the year ended December 31, 2019,2020, for filing with the Securities and Exchange Commission.SEC.

The members of the Audit Committeeaudit committee are:

Jeffrey S. Gilliam, Chairman

Matthew A. HultquistPeter M. Sherman

OTHER BUSINESS

Management knows of no other business which will be presented for consideration at the Annual Meeting, but should any other matters be brought before the meeting, it is intended that the persons named in the accompanying proxy will vote such proxy at their discretion.

ADDITIONAL INFORMATION

Voting Procedures

Votes will be tabulated by one or more Inspectors of Elections. With respect to the election of directors, the nominee in the class which term ends in 2024 receiving the greatest number of votes cast for the election of directors will be elected. The say-on-pay advisory resolution approving the compensation paid to certain executivesour named executive officers will be adopted if this proposal receives the affirmative vote of the holders of at least a majority of the shares of our outstanding common stock represented at the meeting. The approvalaffirmative vote of a majority of the amendmentoutstanding shares of our common stock is required to approve the Rights Agreement andCharter Amendment proposal. The approval of any other matters properly brought before the meeting will require the affirmative vote of the holders of at least a majority of the shares of our outstanding common stock represented at the meeting.

If a stockholder, present in person or by proxy, abstains on any matter, the stockholder’s shares will not be voted on such matter. ThusAccordingly, an abstention from voting on a matter hasthe Charter Amendment proposal will have the same legal effect as a votevoting “against” the matter,proposal, even though the stockholder may interpret such action differently. WithAn abstention with respect to the election of directors or the nomineesay-on-pay vote will have no effect on the outcome of such proposals.

If you hold your shares in the class which term ends in 2023 receiving the greatest number of votes cast forstreet name and you do not provide your broker with timely voting instructions on the election of directors, the say-on-pay vote or the Charter Amendment proposal, rules governing voting of proxies by brokers will be elected.not permit your brokerage firm to vote your shares on such matter. Consequently, without your voting instructions on the election of directors, the say-on-pay vote or the Charter Amendment proposal, a “broker non-vote” with respect to that matter will occur. A broker non-vote with respect to the Charter Amendment proposal will have the same effect as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the election of directors or the say-on-pay vote.

A majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business at the meeting.Annual Meeting. Shares for which the holder has elected to abstain or to withhold the proxies’ authority to vote on a matter will count toward a quorum. “Broker non-votes”Broker non-votes will not count toward a quorum and will not be voted on any matter to be considered at the meeting.quorum.

If you hold your shares in street name and you do not provide your broker with timely voting instructions on the election of directors or the say-on-pay vote, rules governing voting of proxies by brokers will not permit your brokerage firm to vote your shares. Consequently, without your voting instructions on the say-on-pay vote or the proposed Amendment, a “broker non-vote” will occur.

Internet Availability of Proxy Materials

Under rules adopted by the Securities and Exchange Commission,SEC, we are now furnishing proxy materials on the Internet and sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders. The Notice includes instructions on how to access the proxy materials on the Internet and instructions on how to access the proxy card to vote over the Internet. Paper copies of the proxy materials are available to stockholders upon request. We provide instructions on the Notice on how to request paper copies.

Stockholder Proposals for 20212022 Annual Meeting

Any stockholder desiring to present a proposal to the stockholders at the 20212022 Annual Meeting and who desires that such proposal be included in our proxy statement and proxy card relating to that meeting, must transmit such proposal to our Secretary so that it is received at our principal executive offices on or before December 31, 2020.2021. All such proposals should be in compliancecomply with applicable Securities and Exchange CommissionSEC regulations.

Any stockholder desiring to present any other matter (other than the nomination of a director) in person before the 2021 Annual Meetingan annual meeting of stockholders is required by our bylaws to notify our Secretary in writing no later than the close of business on the 60th day prior to the one-year anniversary of the immediately preceding annual meeting. For the 20212022 Annual Meeting, written notice must be delivered no later than the close of business on April 26, 2021.23, 2022. Any such notice must include the information required by Article II, Section 12 of our bylaws. Any stockholder desiring to nominate persons for election as directors at an annual meeting of stockholders must provide written notice to our Secretary as described under “Corporate Governance—Nominations for Director” above. For the 2022 Annual Meeting such written notice must be delivered no later than December 31, 2021.

With respect to stockholder proposals that are not included in the proxy statement for the 20202021 Annual Meeting, the persons named in the proxy solicited by our board of directors for the 20202021 Annual Meeting will be entitled to exercise the discretionary voting power conferred by such proxy under the circumstances specified in Rule 14a-4(c) under the Securities Exchange Act, of 1934, as amended, including with respect to proposals we receive after April 22, 2020.26, 2021.

Bradley G. Garner

Secretary

April 29, 202030, 2021

Appendix A

Form of Certificate of Amendment

STATE OF DELAWARE

CERTIFICATE OF AMENDMENT TO THE

RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED

OF

HG HOLDINGS, INC.

HG Holdings, Inc. (the “Corporation”) organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:

FIRST: That the Board of Directors of the Corporation duly adopted a resolution proposing and declaring advisable and in the best interests of the Company and its stockholders the following amendment to the Restated Certificate of Incorporation of the Corporation, as amended (as amended, the “Amended and Restated Certificate of Incorporation”) and recommending that the stockholders of the Corporation consider and approve the resolution. The resolution setting forth the proposed amendment is as follows:

RESOLVED, that the Restated Certificate of Incorporation, as amended, of HG Holdings, Inc. be, and it hereby is, amended to add the following after the first sentence of Article FOURTH thereof:

“Upon effectiveness (“Effective Time”) of this amendment to the Amended and Restated Certificate of Incorporation of the Corporation, a __ reverse stock split of the Corporation’s Common Stock shall become effective, pursuant to which each __ share of Common Stock outstanding and held of record by each stockholder of the Corporation (including treasury shares) immediately prior to the Effective Time (“Old Common Stock”) shall be reclassified and split into __ shares of Common Stock automatically and without any action by the holder thereof upon the Effective Time and shall represent __ shares of Common Stock from and after the Effective Time (“New Common Stock”). The number of authorized shares of Common Stock shall be unaffected by this action.

No fractional shares of Common Stock will be issued in connection with the reverse stock split. Stockholders of record who otherwise would be entitled to receive fractional shares, will be entitled to receive cash (without interest) in lieu of fractional shares, equal to such fraction multiplied by the 90-day Volume Weighted Average Price (“VWAP”) of our Common Stock on the exchange the Corporation is currently trading for the period immediately preceding the effective date of the Reverse Split (with such average closing sales prices being adjusted to give effect to the Reverse Split).

Each holder of record of a certificate or certificates for one or more shares of the Old Common Stock shall be entitled to receive as soon as practicable, upon surrender of such certificate, a certificate or certificates representing the largest whole number of shares of New Common Stock to which such holder shall be entitled pursuant to the provisions of the immediately preceding paragraphs, or if so indicated on the instruction form submitted with the certificate or certificates, evidence that such shares of new Common Stock are now held in book entry. Any certificate for one or more shares of the Old Common Stock not so surrendered shall be deemed to represent one share of the New Common Stock for each ______ shares of the Old Common Stock previously represented by such certificate.”

SECOND: That hereafter, pursuant to resolution of its Board, an annual meeting of the stockholders of said corporation was duly called and held upon notice and in accordance with Section 222 of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed by a duly authorized officer on this  [__] day of   [______], 2021.

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