Certain Relationships and Related Party Transactions
Review and Approval of Related Party Transactions
We review all relationships and transactions in which we and any of our directors, executive officers, or their immediate family members are participants to determine whether those persons have a direct or indirect material interest in the relevant transaction. Our Audit Committee is responsible for reviewing, approving, and overseeing transactions between us and any related person and other potential conflict of interest situations. Our Bylaws provide that a transaction will not be void or voidable because it is a related party transaction if:
• the material facts of the relationship or related party’s interest in the transaction are disclosed to the Board or the Audit Committee and the Board or Audit Committee authorizes the transaction with the affirmative votes of a majority of directors disinterested in the transaction;
• the material facts of the relationship or related party’s interest in the transaction are disclosed to the stockholders entitled to vote on the transaction and the transaction is approved in good faith by a vote of the stockholders; or
• the transaction is fair to the Company as of the time it is authorized, approved, or ratified by the Board, any committee of the Board or the stockholders.
Related Party Transactions
Historically, we have engaged in transactions with entities that are considered our affiliates. These entities include:
• Ford Glory International Limited (“FGIL”), which is 49% owned by Mr. Choi through Merlotte (defined below);
• Ford Glory Holdings Limited (“FGH”), which is 49% owned by Mr. Choi through Merlotte, is the parent company of FGIL, and was formerly our indirect parent company;
• Jiangmen Treasure Success Business Consultancy Co., Ltd. (“Jiangmen Treasure Success”), which is a wholly-owned subsidiary of Treasure Success;
• Jiangmen V-Apparel Manufacturing Limited, which is a subsidiary of FGH;
• Merlotte Enterprise Limited (“Merlotte”), which is wholly owned by Mr. Choi;
• Multi-Glory Corporation Ltd. (“Multi-Glory”), which is wholly owned by Ng Tsze Lun, one of our significant stockholders;
• Treasure Success, which is our wholly-owned subsidiary; and
• Yukwise Limited (“Yukwise”), which is wholly owned by Mr. Choi.
Transactions with Affiliates
On October 3, 2018, Treasure Success and FGIL entered into a lease agreement, pursuant to which Treasure Success leased its office space in Hong Kong from FGIL for a monthly rent in the amount of HKD119,540 (approximately $15,253) and for a one-year term with an option to extend the term for an additional year at the same rent. On October 3, 2019, Treasure Success exercised the option to extend the lease for an additional year at the same rent. On December 15, 2020, Treasure Success and FGIL renewed the lease agreement with the same term and lease amount. On February 25, 2021, the lease agreement was terminated, and Ford Glory disposed of the property that was subject of the lease agreement between Treasure Success and Ford Glory.
On July 1, 2020, Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited entered into a factory lease agreement, which was a replacement of a previous lease agreement between Treasure Success and Jiangmen V-Apparel Manufacturing Limited dated August 31, 2019, pursuant to which Treasure Success leased additional space for office and sample production purposes in Jiangmen, China from Jiangmen V-Apparel Manufacturing Limited for a
monthly rent in the amount of CNY28,300 (approximately $4,300). The lease had one-year term and might be renewed with a one-month notice. On April 30, 2021, the factory lease agreement between Jiangmen Treasure Success and Jiangmen V-apparel Manufacturing Limited was terminated.
Agreements Relating to Contributions of Consultants
Eric Tang, who is the husband of our Vice President, Secretary, and director, Ms. Yang, has provided us with consulting services since 2013 primarily in sales and marketing, including playing a critical role providing consulting services in connection with our transition from receiving purchase orders from FGIL to receiving purchase orders directly from VF Corporation, one of our major customers. On December 1, 2016, Mr. Tang entered into an employment agreement with our wholly-owned subsidiary, Treasure Success, to serve as our Administration Manager providing marketing advice. Mr. Tang is entitled to receive monthly compensation of HKD39,000 (approximately $5,000). We do not consider Mr. Tang to be an executive officer of our company. Mr. Tang received aggregate compensation in the amount of HKD307,023 (approximately $39,362) and HKD581,458 (approximately $74,546) during fiscal 2021 and the fiscal year ended March 31, 2020 (“fiscal 2020”), respectively.
On January 12, 2018, Treasure Success and Yukwise entered into a consulting agreement, pursuant to which Mr. Choi serves as Chief Executive Officer and provides high-level advisory and general management services for $300,000 per annum. The agreement renews automatically for one-month terms. This agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Yukwise’s compensation was temporarily reduced to $20,000 per month from May 2020 to August 2020. Total consulting fees under this agreement were $280,000 and $300,000, respectively, for fiscal 2021 and fiscal 2020.
On January 16, 2018, Treasure Success and Multi-Glory entered into a consulting agreement, pursuant to which Ng Tsze Lun, a significant stockholder of the Company, provides consulting services to the Company as Head of Marketing for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Multi-Glory’s compensation was temporarily reduced to $20,000 per month from May 2020 to August 2020. Total consulting fees under this agreement were $280,000 and $300,000, respectively, for fiscal 2021 and fiscal 2020.
Our Executive Officers
The table and biographies below identify our executive officers, the term they have served with us, and their business experience:
Name
|
|
Age
|
|
Office and Position
|
Choi Lin Hung
|
|
59
|
|
Chairman, Chief Executive Officer, President, and Treasurer of the Company
|
Gilbert K. Lee
|
|
63
|
|
Chief Financial Officer of the Company
|
Wei (“Kitty”) Yang
|
|
38
|
|
Vice President and Secretary of the Company
|
Choi Lin Hung, the Chairman of the Board, is the Chief Executive Officer, President, and Treasurer of the Company. His biographical information is set forth above under “Proposal No. 1 — Election of Directors.”
Gilbert K. Lee has served as our Chief Financial Officer since November 2019. From August 2015 to November 2019, Mr. Lee served as the Chief Financial Officer of Fuling Global Inc., a manufacturer of environmentally-friendly plastic and paper food service ware. From August 2011 through May 2015, Mr. Lee served Tanke Biosciences Corporation, a livestock nutrition products manufacturer, first as its U.S.-based Chief Financial Officer and then as its Vice President of Business Development. Mr. Lee received his Master of Business Administration degree from the University of Texas at Austin in 1994 and his Master’s degree in Professional Accounting and Bachelor’s degree in Marketing from the University of Texas at Arlington in 1987 and 1982, respectively.
Wei (“Kitty”) Yang, our Vice President and Secretary, is also a member of the Board. Her biographical information is set forth above under “Proposal No. 1 — Election of Directors.”