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What changed in Newegg Commerce, Inc.'s 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of Newegg Commerce, Inc.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+415 added−431 removedSource: 20-F (2025-04-28) vs 20-F (2024-04-24)

Top changes in Newegg Commerce, Inc.'s 2024 20-F

415 paragraphs added · 431 removed · 343 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

121 edited+42 added−35 removed276 unchanged
Biggest changeGenerally, the areas in which the courts will intervene are the following: (i) a company is acting or proposing to act illegally or beyond the scope of its authority; (ii) the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; (iii) the individual rights of the plaintiff shareholder have been infringed or are about to be infringed; or (iv) those who control the company are perpetrating a “fraud on the minority.” These rights may be more limited than the rights afforded to our shareholders under the laws of states in the United States.
Biggest changeGenerally, the areas in which the courts will intervene are the following: (i) a company is acting or proposing to act illegally or beyond the scope of its authority; (ii) the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; (iii) the individual rights of the plaintiff shareholder have been infringed or are about to be infringed; or (iv) those who control the company are perpetrating a “fraud on the minority.” These rights may be more limited than the rights afforded to our shareholders under the laws of states in the United States. 30 Under the Companies Act, members of the general public, on payment of a nominal fee, can obtain copies of the public records of a company available at the office of the Registrar which will include the company’s certificate of incorporation, its memorandum and articles of association (with any amendments) and records of license fees paid to date and will also disclose any articles of dissolution, articles of merger and a register of charges if the company has elected to file such a register.
If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit.
If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit.
These factors include, without limitation: ● “short squeezes”; ● comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media; ● actual or anticipated fluctuations in our financial and operating results; ● shifts in the timing or content of certain promotions or service offerings; ● announcements of new products and services by us or our competitors; ● the effect of changes in tax rates in the jurisdictions in which we operate; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● the mix of earnings in the countries in which we operate; ● changes in foreign currency exchange rates; ● announcements about our earnings that are not in line with shareholders’ expectations; ● changes in financial estimates by securities analysts; ● negative public perception of us, our competitors, or industry; ● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; ● potential litigation or regulatory investigations; and ● overall general market fluctuations.
These factors include, without limitation: ● “short squeezes”; ● comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media; ● actual or anticipated fluctuations in our financial and operating results; ● shifts in the timing or content of certain promotions or service offerings; ● announcements of new products and services by us or our competitors; ● the effect of changes in tax rates in the jurisdictions in which we operate; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; 25 ● the mix of earnings in the countries in which we operate; ● changes in foreign currency exchange rates; ● announcements about our earnings that are not in line with shareholders’ expectations; ● changes in financial estimates by securities analysts; ● negative public perception of us, our competitors, or industry; ● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; ● potential litigation or regulatory investigations; and ● overall general market fluctuations.
We currently operate customer service centers in California and Texas, focusing on serving North American buyers. Any material disruption or slowdown in our customer support services resulting from telephone or internet failures, power or service outages, natural disasters, labor disputes or other events could make it difficult or impossible for us to provide adequate customer support.
We currently operate customer service centers in California, Texas and Asia, focusing on serving North American buyers. Any material disruption or slowdown in our customer support services resulting from telephone or internet failures, power or service outages, natural disasters, labor disputes or other events could make it difficult or impossible for us to provide adequate customer support.
There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of such dividend. As a company incorporated in the British Virgin Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq’s corporate governance listing standards.
There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of such dividend. 31 As a company incorporated in the British Virgin Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq’s corporate governance listing standards.
We may not be able to defend against any such short seller attacks and may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. 28 Investors may have difficulty enforcing judgments against us, our directors and management.
We may not be able to defend against any such short seller attacks and may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Investors may have difficulty enforcing judgments against us, our directors and management.
If we fail to maintain favorable recognition of our brand, we may not be successful in maintaining and strengthening our relationships with vendors in existing and new product categories or in maintaining existing offerings and sourcing new products at competitive prices and with adequate levels of inventory. Adverse publicity about Newegg may arise from time to time.
If we fail to maintain favorable recognition of our brand, we may not be successful in maintaining and strengthening our relationships with vendors in existing and new product categories or in maintaining existing offerings and sourcing new products at competitive prices and with adequate levels of inventory. 10 Adverse publicity about Newegg may arise from time to time.
Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: ● investors’ perception of, and demand for, our securities; 19 ● conditions of the U.S. and other capital markets in which we may seek to raise funds; and ● our future results of operations and financial condition.
Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: ● investors’ perception of, and demand for, our securities; ● conditions of the U.S. and other capital markets in which we may seek to raise funds; and ● our future results of operations and financial condition.
Our systems and operations potentially are vulnerable to damage or interruption from a number of sources, including the following: ● natural disaster or other catastrophic event such as earthquake, fire, power loss or interruption, telecommunications failure, hurricane, volcanic eruption, flood or terrorist attack.
Our systems and operations potentially are vulnerable to damage or interruption from a number of sources, including the following: ● natural disaster or other catastrophic event such as earthquake, fire, drought, power loss or interruption, telecommunications failure, hurricane, volcanic eruption, flood or terrorist attack.
For certain products, we do not currently, and in the future may not be able to, meet the sales volumes or other requirements necessary to receive favorable treatment from the manufacturer of that product. As a result, we may not receive favorable pricing, vendor incentives or other considerations from those vendors.
For certain products, we do not currently, and in the future may not be able to, meet the sales volumes or other requirements necessary to receive favorable treatment from the vendor of that product. As a result, we may not receive favorable pricing, vendor incentives or other considerations from those vendors.
The obligations under the credit agreements are also guaranteed by our assets or those of our subsidiaries. 18 The terms of these credit agreements may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs or to execute business strategies in the means or manner desired.
The obligations under the credit agreements are also guaranteed by our assets or those of our subsidiaries. The terms of these credit agreements may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs or to execute business strategies in the means or manner desired.
Additionally, these and other external factors have caused and may continue to cause the market price and demand for our common shares to fluctuate, which may limit or prevent investors from readily selling their common shares and may otherwise negatively affect the liquidity of our common shares. 25 Mr.
Additionally, these and other external factors have caused and may continue to cause the market price and demand for our common shares to fluctuate, which may limit or prevent investors from readily selling their common shares and may otherwise negatively affect the liquidity of our common shares. Mr.
Recent inflationary pressures have affected, and may continue to affect, wages, the cost and our ability to obtain products, the price of our goods and services, our ability to meet customer demand, discretionary consumer spending that may lead to lesser demand for our products, our gross margins and operating profit.
Inflationary pressures have affected, and may continue to affect, wages, the cost and our ability to obtain products, the price of our goods and services, our ability to meet customer demand, discretionary consumer spending that may lead to lesser demand for our products, our gross margins and operating profit.
Such policies could result in increased production costs including higher energy and raw materials prices, which could negatively impact our financial condition and results of operations. New and evolving regulations on climate and emissions disclosures could cause our expenses to increase. It is difficult to assess the likelihood of such threat and any potential impact at this time.
Such policies could result in increased production costs including higher energy and raw materials prices, which could negatively impact our financial condition and results of operations. New and evolving regulations on climate and emissions disclosures could cause our expenses to increase. It is difficult to assess the likelihood of such threats and any potential impact at this time.
While we may invest in building our business in other markets, we may not be able to successfully manage the challenges associated with our current and future international operations due to risks, such as: ● international economic and political conditions or geopolitical events and security issues (including terrorist attacks, war, or other armed hostilities); ● changes in, or impositions of, legislative or regulatory requirements on e-commerce businesses and companies, such as U.S. sanctions laws and regulations, and limitations on our ability to directly own or control key assets, such as overseas warehouses; ● the legal and regulatory environment in foreign jurisdictions, including with respect to consumer privacy and data protection laws, tax, law enforcement, network security, climate and emissions regulations, trade compliance and intellectual property matters, as well as consumer litigation; ● tax laws, regulations and treaties, including U.S. taxes on foreign operations and repatriation of funds; ● difficulties in identifying, attracting, hiring, training and retaining qualified personnel, and overseeing international operations, including the efficient management of our international operations; ● delays or additional costs resulting from import/export controls, duties, tariffs or other barriers to trade; and ● currency exchange controls or changes in exchange rates, which could make our pricing less competitive or reduce our profit margins.
While we may invest in building our business in other markets, we may not be able to successfully manage the challenges associated with our current and future international operations due to risks, such as: ● international economic and political conditions (including the relationship between China and the U.S.) or geopolitical events and security issues (including terrorist attacks, war, or other armed hostilities); ● changes in, or impositions of, legislative or regulatory requirements on e-commerce businesses and companies, such as U.S. sanctions laws and regulations, and limitations on our ability to directly own or control key assets, such as overseas warehouses; ● the legal and regulatory environment in foreign jurisdictions, including with respect to consumer protection; data privacy, protection, and localization; AI; law enforcement; network security; climate and emissions regulations; trade compliance and intellectual property matters; as well as consumer litigation; ● tax laws, regulations and treaties, including U.S. taxes on foreign operations and repatriation of funds; ● difficulties in identifying, attracting, hiring, training and retaining qualified personnel, and overseeing international operations, including the efficient management of our international operations; ● delays or additional costs resulting from tariffs, import/export controls, duties, or other barriers to trade or changes to trade policy; and ● currency exchange controls or changes in exchange rates, which could make our pricing less competitive or reduce our profit margins.
If we are not able to acquire or protect our trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty. 20 Assertions, claims and allegations, even if not true, that we have infringed or violated intellectual property rights could harm our business and reputation.
If we are not able to acquire or protect our trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty. 21 Assertions, claims and allegations, even if not true, that we have infringed or violated intellectual property rights could harm our business and reputation.
In May 2020, BOC filed several lawsuits against Hangzhou Lianluo, Digital Grid, Beijing Digital Grid Technology Co., Ltd. and Mr. Zhitao He in the Hangzhou Intermediate People’s Court in China alleging that Hangzhou Lianluo has failed to repay the loans when due and is in breach of the loan agreements.
In May 2020, BOC filed several lawsuits against Hangzhou Lianluo, Digital Grid, Beijing Digital Grid Technology Co., Ltd. and Mr. Zhitao He in the Hangzhou Intermediate People’s Court in China (the “Hangzhou Court”) alleging that Hangzhou Lianluo has failed to repay the loans when due and is in breach of the loan agreements.
In addition, on April 11, 2023, the Industrial and Commercial Bank of China (“ICBC”) filed a lawsuit against Hangzhou Lianluo in the Hangzhou Intermediate People’s Court in China alleging that Hangzhou Lianluo failed to repay when due three separate loans, provided by ICBC to Hangzhou Lianluo, and was in breach of the related loan agreements.
In addition, on April 11, 2023, the Industrial and Commercial Bank of China (“ICBC”) filed a lawsuit against Hangzhou Lianluo in the Hangzhou Court alleging that Hangzhou Lianluo failed to repay when due three separate loans, provided by ICBC to Hangzhou Lianluo, and was in breach of the related loan agreements.
Three of our ten largest suppliers, ASI Corporation, MSI Computer Corporation, and TD Synnex, accounted for approximately 38% of our purchases for the same period. Failure to maintain a positive relationship with these key suppliers could impact our ability to sell to customers the products they want.
Three of our ten largest suppliers, ASI Corporation, MSI Computer Corporation, and TD Synnex, accounted for approximately 33% of our purchases for the same period. Failure to maintain a positive relationship with these key suppliers could impact our ability to sell to customers the products they want.
This means that, notwithstanding that we are a company incorporated in the BVI, we will be treated for all U.S. federal tax purposes as if we are a U.S. corporation and you will be treated for all U.S. federal tax purposes as holding the stock of a U.S. corporation. See “Item 10. Additional Information – E.
This means that, notwithstanding that we are a company incorporated in the BVI, we will be treated for all U.S. federal tax purposes as if we are a U.S. corporation and you will be treated for all U.S. federal tax purposes as holding the stock of a U.S. corporation. See “Item 10. Additional Information – E. Taxation” for additional detail.
You should consider all of the risk factors described in our public filings when evaluating our business, including risks relating to: ● the impact of global macroeconomic conditions on consumer spending; ● the intense domestic and international competition we face; ● any decline in demand for IT/CE products; ● our reputation and business if we or Newegg Marketplace sellers sell pirated, counterfeit, illegal or “gray market” items; ● our inability to provide a satisfactory customer experience; ● our use of software and systems contain open source software; 1 ● pricing strategies not meeting customers’ price expectations or resulting in profitability; ● system interruptions, including failures caused or experienced by third-party service providers, and lack of redundancy and timely upgrade; ● our reliance on and relationships with third-party payment processors to process deposits and withdrawals made by users of our Marketplace; ● the loss of key employees or the failure to attract or retain qualified personnel; ● any significant inadvertent disclosure or breach of confidential or personal information we hold; ● our ability to promote and strengthen the Newegg brand; ● inflation, uncertainty and volatility in the financial markets and other macroeconomic factors; ● the material weaknesses we identified in our internal control over financial reporting; ● our international operations (principally in Canada); ● our expansion into new product categories, services, technologies and geographic regions; ● any interruption in our fulfillment operations; ● our reliance on a limited number of third-party courier service providers; ● pandemics and other public health crises, natural disasters, terrorist activities and political unrest; ● our dependence on relationships with vendors to source sufficient quantities of merchandise on favorable terms; ● our marketing activities to help attract visitors to our online platforms; ● delays, increased cost or quality control deficiencies in the importation of products manufactured abroad; ● our dependence on third parties to perform a number of our e-commerce functions; ● management of our inventory; ● the fact that we have incurred net losses in the past and may experience losses in the future; ● failure to adopt new technologies or adapt our websites, mobile apps and systems to changing customer requirements or emerging industry standards; ● the seasonality of our business; ● the life cycle fluctuations of the products we sell; ● physical and transition risks related to climate change, such as severe weather events and regulatory and reputational risks; ● the performance, reliability and security of the internet infrastructure in the countries where we operate; ● management of our growth or execution of our strategies; 2 ● any adverse change in our vendor payment terms and conditions; ● our disclosure controls and procedures; ● our revolving credit agreement, which contains a number of covenants that may restrict our current and future operations; ● access to international markets and applicable laws relating to trade, export and import controls and economic sanctions; ● our ability to raise additional capital; ● claims, litigation, government investigations, and other proceedings may adversely affect our business and results of operations; ● our ability to adequately protect our intellectual property rights; ● any assertions, claims and allegations that we have infringed or violated intellectual property rights; ● product liability claims, which could be costly and time-consuming to defend; ● any additional costs incurred due to tax assessments resulting from ongoing and future audits by tax authorities; ● significant developments stemming from recent U.S. government actions and proposals concerning tariffs and other economic proposals; ● relatively stringent employment laws in some of the countries in which we operate; ● our ability to use our net operating loss carryforwards and certain other tax attributes; ● our being treated as a U.S. corporation for all U.S. federal tax purposes; ● the shares pledged as collateral to support delinquent indebtedness of our parent company; ● the extreme volatility of the market price of our common shares due to numerous circumstances beyond our control; ● Mr.
You should consider all of the risk factors described in our public filings when evaluating our business, including risks relating to: ● the impact of global macroeconomic conditions on consumer spending; ● the intense domestic and international competition we face; ● any decline in demand for IT/CE products; ● our reputation and business if we or Newegg Marketplace sellers sell pirated, counterfeit, illegal or “gray market” items; ● our inability to provide a satisfactory customer experience; 1 ● our use of software and systems contain open source software; ● pricing strategies not meeting customers’ price expectations or resulting in profitability; ● system interruptions, including failures caused or experienced by third-party service providers, and lack of redundancy and timely upgrade; ● our reliance on and relationships with third-party payment processors to process deposits and withdrawals made by users of our Marketplace; ● the loss of key employees or the failure to attract or retain qualified personnel; ● any significant inadvertent disclosure or breach of confidential or personal information we hold; ● our ability to promote and strengthen the Newegg brand; ● inflation, uncertainty and volatility in the financial markets and other macroeconomic factors; ● the material weaknesses we identified in our internal control over financial reporting; ● our international operations; ● our expansion into new product categories, services, technologies and geographic regions; ● any interruption in our fulfillment operations; ● our reliance on a limited number of third-party courier service providers; ● pandemics and other public health crises, natural disasters, climate change, terrorist activities and political unrest; ● our dependence on relationships with vendors to source sufficient quantities of merchandise on favorable terms; ● our marketing activities to help attract visitors to our online platforms; ● delays, increased cost or quality control deficiencies in the importation of products manufactured abroad; ● our dependence on third parties to perform a number of our e-commerce functions; ● management of our inventory; ● the fact that we have incurred net losses in the past and may experience losses in the future; ● failure to adopt new technologies or adapt our websites, mobile apps and systems to changing customer requirements or emerging industry standards; ● the seasonality of our business; ● the life cycle fluctuations of the products we sell; ● the performance, reliability and security of the internet infrastructure in the countries where we operate; ● management of our growth or execution of our strategies; ● any adverse change in our vendor payment terms and conditions; 2 ● our revolving credit agreement, which contains a number of covenants that may restrict our current and future operations; ● access to international markets and applicable laws relating to trade, export and import controls and economic sanctions; ● our ability to raise additional capital; ● significant developments stemming from recent U.S. government actions and proposals concerning tariffs and other economic proposals; ● claims, litigation, government investigations, and other proceedings may adversely affect our business and results of operations; ● our ability to adequately protect our intellectual property rights; ● any assertions, claims and allegations that we have infringed or violated intellectual property rights; ● product liability claims, which could be costly and time-consuming to defend; ● any additional costs incurred due to tax assessments resulting from ongoing and future audits by tax authorities; ● relatively stringent employment laws in some of the countries in which we operate; ● our ability to use our net operating loss carryforwards and certain other tax attributes; ● our being treated as a U.S. corporation for all U.S. federal tax purposes; ● the shares pledged as collateral to support delinquent indebtedness of our two largest and controlling shareholders; ● the extreme volatility of the market price of our common shares due to numerous circumstances beyond our control; ● Mr.
As of December 31, 2023, approximately 24% of our website and mobile app visitors were referred to us through paid and unpaid search engine listings, shopping comparison sites and other affiliate networks that provide links to our online platforms.
As of December 31, 2024, approximately 24% of our website and mobile app visitors were referred to us through paid and unpaid search engine listings, shopping comparison sites and other affiliate networks that provide links to our online platforms.
Legal and Regulatory Risks Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations We are, or may be, subject to actual and threatened claims, litigation, investigations, and other proceedings, involving a wide range of issues, including patent and other intellectual property matters, taxes, labor and employment, privacy, data use, data protection, data security, network security, consumer protection, product liability, commercial disputes, and other matters.
Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations We are, or may be, subject to actual and threatened claims, litigation, investigations, and other proceedings, involving a wide range of issues, including patent and other intellectual property matters, taxes, labor and employment, privacy, data use, data protection, data security, network security, consumer protection, product liability, commercial disputes, and other matters.
For example, Newegg was named as the defendant in a putative class action accusing it of violating the False Advertising Law, the Unfair Competition Law and the Consumer Legal Remedies Act by using allegedly deceptive list prices with allegedly overstated discounts for our products. This matter was dismissed by the court on September 18, 2023 for failure to prosecute.
For example, Newegg was named as the defendant in a putative class action accusing it of violating the False Advertising Law, the Unfair Competition Law and the Consumer Legal Remedies Act by using allegedly deceptive list prices with allegedly overstated discounts for our products. This matter was dismissed in September 2023 for failure to prosecute.
Fred Chang’s approximate 58.7% and 32.9% control, respectively, and 91.6%, collectively, of the voting power of our issued and outstanding common shares; ● our status as a “controlled company” within the meaning of the Nasdaq Listing Rules and the corresponding exemptions from certain corporate governance requirements; ● certain provisions of Newegg’s Amended Shareholders Agreement that may delay or prevent us from raising funding in the future and may have an adverse impact on us and the liquidity and market price of our common shares; ● any shareholder litigation due to the volatility in the price of our common shares, which may result in substantial costs and a diversion of our management’s attention and resources; ● our failure to maintain compliance with Nasdaq Listing Rules, which may lead to us being delisted from Nasdaq, which would result in a limited public market for trading our shares and make obtaining future debt or equity financing more difficult; 3 ● any involvement of our directors and officers in investigations or other forms of regulatory or governmental inquiry which may cause reputational harm to the Company, result in additional expenses, and distract our management from our day-to-day operations; ● securities or industry analysts not publishing research or reports about our business or adversely changing their recommendations regarding our common shares; ● techniques employed by short sellers to drive down the market price of our common shares; ● difficulty enforcing judgments against us, our directors and management; ● unavailability of certain types of class or derivative actions under British Virgin Islands law and other interests under U.S. law; ● protecting shareholder interests that would otherwise be normally available to shareholders of a U.S. corporation; ● our expectation not to pay dividends in the foreseeable future; ● certain home country (British Virgin Islands) practices in relation to corporate governance matters that differ significantly from Nasdaq’s corporate governance listing standards, which may afford less protection to shareholders; and ● our foreign private issuer status, which exempts us from certain reporting requirements applicable to U.S. domestic public companies.
Fred Chang’s approximate 57.3% and 30.9% control, respectively, and 88.2%, collectively, of the voting power of our issued and outstanding common shares as of December 31, 2024; ● our status as a “controlled company” within the meaning of the Nasdaq Listing Rules and the corresponding exemptions from certain corporate governance requirements; ● certain provisions of Newegg’s Amended Shareholders Agreement that may delay or prevent us from raising funding in the future and may have an adverse impact on us and the liquidity and market price of our common shares; ● any shareholder litigation due to the volatility in the price of our common shares, which may result in substantial costs and a diversion of our management’s attention and resources; ● our failure to maintain compliance with Nasdaq Listing Rules, which may lead to us being delisted from Nasdaq, which would result in a limited public market for trading our shares and make obtaining future debt or equity financing more difficult; ● any involvement of our directors and officers in investigations or other forms of regulatory or governmental inquiry which may cause reputational harm to the Company, result in additional expenses, and distract our management from our day-to-day operations; 3 ● securities or industry analysts not publishing research or reports about our business or adversely changing their recommendations regarding our common shares; ● techniques employed by short sellers to drive down the market price of our common shares; ● difficulty enforcing judgments against us, our directors and management; ● unavailability of certain types of class or derivative actions under British Virgin Islands (“BVI”) law and other interests under U.S. law; ● protecting shareholder interests that would otherwise be normally available to shareholders of a U.S. corporation; ● our expectation not to pay dividends in the foreseeable future; ● certain home country (British Virgin Islands) practices in relation to corporate governance matters that differ significantly from Nasdaq’s corporate governance listing standards, which may afford less protection to shareholders; and ● our foreign private issuer status, which exempts us from certain reporting requirements applicable to U.S. domestic public companies.
In addition, in May 2022, our warehouse located in Toronto, Canada experienced a break-in and theft of approximately $3.4 million of inventory. Our fulfillment infrastructure and processes may also contain undetected errors or design flaws that may cause our fulfillment operations to fail and materially impact our business and results of operations.
For example, in May 2022, our warehouse located in Toronto, Canada experienced a break-in and theft of approximately $3.4 million of inventory. Our fulfillment infrastructure and processes may also contain undetected errors or design flaws that may cause our fulfillment operations to fail and materially impact our business and results of operations.
For the year ended December 31, 2023, we recorded inventory write-offs or write-downs totaling $5.0 million, or 0.4% of our cost of goods sold. We may sell obsolete or dated merchandise at a discount or loss. If there were unforeseen product developments or if vendors were to change their terms and conditions, our inventory risks could increase.
For the year ended December 31, 2024, we recorded inventory write-offs or write-downs totaling $4.2 million, or 0.4% of our cost of goods sold. We may sell obsolete or dated merchandise at a discount or loss. If there were unforeseen product developments or if vendors were to change their terms and conditions, our inventory risks could increase.
If such third parties are unwilling or unable to continue providing these services, our business could be harmed. As of December 31, 2023, approximately 8.6% of our gross merchandise value (“GMV”) was generated by the sale of products fulfilled through third parties. These third parties provide various services on our behalf, including inventory maintenance and order processing.
If such third parties are unwilling or unable to continue providing these services, our business could be harmed. As of December 31, 2024, approximately 8.9% of our gross merchandise value (“GMV”) was generated by the sale of products fulfilled through third parties. These third parties provide various services on our behalf, including inventory maintenance and order processing.
If we fail to comply with this, or any other, Nasdaq Listing Rule, our common shares may lose their status on Nasdaq and they would likely be traded on the over-the-counter market, including the Pink Sheets market.
However, if we fail to comply with this, or any other, Nasdaq Listing Rule in the future, our common shares may lose their status on Nasdaq and they would likely be traded on the over-the-counter market, including the Pink Sheets market.
As of December 31, 2023 and 2022, approximately 65% and 71% of our products that were sold through our platforms, both direct sales and marketplace, were manufactured in China, respectively. U.S. government actions since 2018 have imposed greater restrictions and economic disincentives on international trade impacting imports and exports.
As of December 31, 2024 and 2023, approximately 58% and 65% of our products that were sold through our platforms, both direct sales and marketplace, were manufactured in China, respectively. U.S. government actions since 2018 have imposed greater restrictions and economic disincentives on international trade impacting imports and exports.
We incurred net losses of $59.0 million and $57.4 million in 2023 and 2022, respectively, and reported net income of $36.3 million and $30.4 million in 2021 and 2020, respectively. We cannot assure you that we will be able to generate net profits or positive cash flow from operating activities in the future.
We incurred net losses of $43.3 million, $59.0 million, and $57.4 million in 2024, 2023, and 2022, respectively, and reported net income of $36.3 million in 2021. We cannot assure you that we will be able to generate net profits or positive cash flow from operating activities in the future.
We rely on a limited number of third-party courier service providers to deliver our products, and their failure to provide high-quality courier services in a timely manner, if at all, to our customers may negatively impact the procurement experience of our customers, damage our market reputation and materially and adversely affect our business and results of operations.
We rely on a limited number of third-party courier service providers to deliver our products, and our inability to negotiate acceptable terms with these providers and their failure to provide high-quality courier services in a timely manner, if at all, to our customers may negatively impact the procurement experience of our customers, damage our market reputation and materially and adversely affect our business and results of operations.
Furthermore, replacing executive officers or other key employees with other highly skilled and qualified candidates has been and may continue to be difficult, taking an extended period of time. For example, as previously announced, our Chief Financial Officer, Robert Chang, is retiring effective May 17, 2024.
Furthermore, replacing executive officers or other key employees with other highly skilled and qualified candidates has been and may continue to be difficult, taking an extended period of time. For example, as previously announced, our Chief Financial Officer, Robert Chang, retired in May 2024.
If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our Common Stock could be adversely affected and we could become subject to additional litigation, investigations or inquiries by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources.
If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our Common Stock could be adversely affected and we could become subject to additional litigation, investigations or inquiries by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources. 11 We are, or may become, subject to risks associated with our international operations, which may harm our business.
We rely on a limited number of third-party courier service providers to deliver products to our customers. For the periods of the fiscal years ended December 31, 2023 and 2022, approximately 85.3% and 78.2%, respectively, of our total packages were shipped by our top three third-party courier service providers.
We rely on a limited number of third-party courier service providers to deliver products to our customers. For the periods of the fiscal years ended December 31, 2024 and 2023, approximately 95.8% and 85.3%, respectively, of our total packages were shipped by our top three third-party courier service providers.
As sales begin to slow in the first and second quarters, inventory levels decrease, inventory turnover lengthens, and accounts payable and cash balances decrease as we pay our vendors. As of the fiscal year ended December 31, 2023 and 2022, accounts payable amounted to approximately $206.6 million and $207.1 million, respectively.
As sales begin to slow in the first and second quarters, inventory levels decrease, inventory turnover lengthens, and accounts payable and cash balances decrease as we pay our vendors. As of the fiscal year ended December 31, 2024 and 2023, accounts payable amounted to approximately $148.3 million and $206.6 million, respectively.
The loans have been guaranteed jointly and severally by Beijing Digital Grid Technology Co., Ltd., a subsidiary of Hangzhou Lianluo, and by Mr. Zhitao He. The total principal amount owed under these loans as of March 31, 2024 was RMB150 million in RMB-denominated loans plus USD$66.5 million in U.S. dollar-denominated loans.
The loans have been guaranteed jointly and severally by Beijing Digital Grid Technology Co., Ltd., a subsidiary of Hangzhou Lianluo, and by Mr. Zhitao He. Hangzhou Lianluo has informed us that the total principal amount owed under these loans as of March 31, 2025 was RMB147 million in RMB-denominated loans plus USD$66.5 million in U.S. dollar-denominated loans.
Sales of the Common Shares owned or pledged by Digital Grid or Hangzhou Lianluo, including for the payment of financial or settlement obligations to BOC or ICBC, could cause the market price of the Common Shares to drop significantly. BOC could sell, or force Digital Grid to sell, some or all of its shares while the BOC loans remain delinquent.
Chang, Digital Grid or Hangzhou Lianluo, including for the payment of financial or settlement obligations to EWB, BOC or ICBC, could cause the market price of the Common Shares to drop significantly. BOC could sell, or force Digital Grid to sell, some or all of its shares while the BOC loans remain delinquent.
Fred Chang acting as a “Minority Representative” selected by a majority of the Legacy Shareholders (as defined in the Company’s Amended and Restated Memorandum and Articles of Association), who collectively own approximately 34.5% of our total voting power as of December 31, 2023.
Fred Chang acting as a “Minority Representative” selected by a majority of the Legacy Shareholders (as defined in the Company’s Amended and Restated Memorandum and Articles of Association), who collectively own approximately 32.6% of our total voting power as of December 31, 2024.
If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected. Our success depends upon our ability to manage the growth of our operations effectively. We anticipate expanding further as we pursue our growth strategies.
If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected. Our success depends upon our ability to manage the growth of our operations effectively.
The shares of our common stock owned by Digital Grid have been pledged to Bank of China Limited Zhejiang Branch, or BOC, as collateral to support working capital loans and letters of credit provided by BOC to Hangzhou Lianluo.
Our common shares (“Newegg Common Shares”) owned by Digital Grid have been pledged to Bank of China Limited Zhejiang Branch (“BOC”) as collateral to support working capital loans and letters of credit provided by BOC to Hangzhou Lianluo.
Certain vendors provide a significant portion of our merchandise. In the United States and Canada, for the twelve months ended December 31, 2023, our ten largest suppliers accounted for approximately 71% of the merchandise we purchased.
Certain vendors provide a significant portion of our merchandise. In the United States and Canada, for the twelve months ending December 31, 2024, our ten largest suppliers accounted for approximately 68% of the merchandise we purchased.
Our business, operating results, and cash flows may be adversely impacted by inflation. Due to labor and supply chain constraints, there has been a volatile inflationary environment resulting in significant increases to the cost of components, labor and freight costs and other expenses.
Our business, operating results, and cash flows may be adversely impacted by inflation. Labor and supply chain constraints have in the past, and may in the future, contribute to a volatile inflationary environment resulting in significant increases to the cost of components, labor and freight costs and other expenses.
If such efforts to limit or restrict these channels are successful, our ability to engage and interact with existing and potential customers could be significantly limited, which could in turn have a material adverse impact on our business results.
If such efforts to limit or restrict these channels are successful (such as U.S. legislation that was set to ban TikTok), our ability to engage and interact with existing and potential customers could be significantly limited, which could in turn have a material adverse impact on our business results.
No. 117-167 (“CHIPS Act”). The CHIPS Act may increase costs for Newegg in several ways. First, the law prevents CHIPS Act funding recipients from using the funds to engage in any joint research or technology licensing efforts with foreign entities of concern, which may increase the costs of certain products.
First, the law prevents CHIPS Act funding recipients from using the funds to engage in any joint research or technology licensing efforts with foreign entities of concern, which may increase the costs of certain products.
U.S. sanctions generally prohibit transactions by U.S. persons, including us, involving sanctioned countries, entities and persons, without U.S. government authorization (which will rarely be granted). Non-U.S. subsidiaries of U.S. companies are required to comply with U.S. sanctions against Cuba and Iran.
Department of Treasury’s Office of Foreign Assets Control, as well as other U.S. government agencies. U.S. sanctions generally prohibit transactions by U.S. persons, including us, involving sanctioned countries, entities and persons, without U.S. government authorization (which will rarely be granted). Non-U.S. subsidiaries of U.S. companies are required to comply with U.S. sanctions against Cuba and Iran.
Newegg’s reputation and business may be harmed if Newegg or the Newegg Marketplace sellers sell pirated, counterfeit, illegal or “gray market” items. We receive from time to time, and may receive in the future, communications alleging that Newegg or the Newegg Marketplace sellers sold pirated, counterfeit, illegal or “gray market” items.
We receive from time to time, and may receive in the future, communications alleging that Newegg or the Newegg Marketplace sellers sold pirated, counterfeit, illegal or “gray market” items.
The estimated total amount owed under the loans, including interest, fees, expenses and penalties, as of December 31, 2023 was approximately RMB485 million. Hangzhou Lianluo did not pledge any Common Shares owned by it or Digital Grid as collateral to support the ICBC loans.
Hangzhou Lianluo has informed us that the estimated total amount owed under the loans, including interest, fees, expenses and penalties, as of March 31, 2025, was approximately RMB448 million. Hangzhou Lianluo did not pledge any Newegg Common Shares owned by it or Digital Grid as collateral to support the ICBC loans.
The failure to attract or retain qualified personnel could have a material adverse effect on our business. 9 A significant inadvertent disclosure or breach of confidential or personal information we hold could be detrimental to our business, reputation and results of operations.
There can be no assurance that we will continue to attract and retain the personnel needed for our business. The failure to attract or retain qualified personnel could have a material adverse effect on our business. A significant inadvertent disclosure or breach of confidential or personal information we hold could be detrimental to our business, reputation and results of operations.
Pandemics or other public health crises, natural disasters, climate change, terrorist activities, and political unrest could adversely affect our business, financial condition, and results of operations.
As a result, we could lose customers, and our financial condition and market reputation could suffer. Pandemics or other public health crises, natural disasters, climate change, terrorist activities, and political unrest could adversely affect our business, financial condition, and results of operations.
For example, on November 6, 2023, we received a letter from Nasdaq notifying us that we were not in compliance with the Minimum Bid Price Requirement, which was subsequently cured on December 12, 2023. As of December 31, 2023, our common stock closed at a price of $1.26 per share.
For example, on November 6, 2023, we received a letter from Nasdaq notifying us that we were not in compliance with the Minimum Bid Price Requirement, which was subsequently cured on December 12, 2023.
We are also subject to a number of other laws and regulations relating to the payments we accept from our users, including with respect to money laundering, money transfers, privacy and information security.
We may in the future offer new payment options to users that may be subject to additional regulations and risks. We are also subject to a number of other laws and regulations relating to the payments we accept from our users, including with respect to money laundering, money transfers, privacy and information security.
As of December 31, 2023, we had 932 full-time employees, of whom approximately 61% were located in the United States, 32% in China, 5% in Taiwan, and 2% in Canada and other countries and regions.
As of December 31, 2024, we had 762 full-time employees, of whom approximately 65% were located in the United States, 30% in China, 3% in Taiwan, and 2% in Canada and other countries and regions.
In addition, California has in the past experienced power outages as a result of limited electric power supply; ● diseases or pandemics (such as COVID-19) that have affected and may continue to affect the supply chain of our brand partners and Marketplace sellers, and our logistics in the future due to inconsistent and unanticipated order patterns, other diseases or pandemics or unforeseen natural disasters; ● computer malware, physical or electronic break-ins and similar disruptions; ● security breaches and hacking attacks; ● failure by third-party vendors, including data center and bandwidth providers, to provide steady and high-speed access to our online platforms and systems.
For example, our headquarters and the majority of our infrastructure, including some of our servers, are located in Southern California, a seismically active region; ● diseases or pandemics that have affected and may continue to affect the supply chain of our brand partners and Marketplace sellers, and our logistics in the future due to inconsistent and unanticipated order patterns, other diseases or pandemics or unforeseen natural disasters; ● computer malware, physical or electronic break-ins and similar disruptions; ● security breaches and hacking attacks; ● failure by third-party vendors, including data center and bandwidth providers, to provide steady and high-speed access to our online platforms and systems.
The development of proprietary technology entails significant technical and business risks. There can be no assurance that our efforts to develop proprietary technologies will succeed or that any technology licenses will be available on commercially reasonable terms.
The development of proprietary technology entails significant technical and business risks. There can be no assurance that our efforts to develop proprietary technologies will succeed or that any technology licenses will be available on commercially reasonable terms. Substantial investments will be required to remain technologically competitive, and our failure to do so may harm our business and results of operations.
In addition, BVI law does not make a distinction between public and private companies and some of the protections and safeguards (such as statutory pre-emption rights, save to the extent expressly provided for in the memorandum and articles of association) that investors may expect to find in relation to a public company are not provided for under BVI law. 29 There may be less publicly available information about us than is regularly published by or about U.S. issuers.
In addition, BVI law does not make a distinction between public and private companies and some of the protections and safeguards (such as statutory pre-emption rights, save to the extent expressly provided for in the memorandum and articles of association) that investors may expect to find in relation to a public company are not provided for under BVI law.
Mr. Zhitao He (as the Chairman and CEO of Hangzhou Lianluo and in his own capacity) and Mr. Fred Chang control approximately 58.7% and 32.9%, respectively, of the voting power of our issued and outstanding common shares, and 91.6%, collectively, as of December 31, 2023. Additionally, Mr. Zhitao He and Mr.
Zhitao He (as the Chairman and CEO of Hangzhou Lianluo and in his own capacity) and Mr. Fred Chang control approximately 57.3% and 30.9%, respectively, and 88.2%, collectively, of the voting power of our issued and outstanding common shares as of December 31, 2024.
Taxation” for additional detail. 23 Risks Related to our Common Shares A majority of Newegg’s capital shares are pledged as collateral to support delinquent indebtedness of our parent company and could be sold to satisfy that indebtedness or other delinquent indebtedness of our parent company.
Risks Related to our Common Shares A majority of Newegg’s Common Shares are pledged as collateral to support delinquent indebtedness of our two largest shareholders and could be sold to satisfy that indebtedness or for other reasons.
Almost all access to the internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology of the People’s Republic of China.
We have several servers located in China that provide development, testing and quality control services. Almost all access to the internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology of the People’s Republic of China (“PRC”).
In addition, negative sentiments towards the United States among non-U.S. customers and among non-U.S. employees or prospective employees could adversely affect sales or hiring and retention, respectively. Employment laws in some of the countries in which we operate are relatively stringent.
In addition, negative sentiments towards the United States among non-U.S. customers and among non-U.S. employees or prospective employees could adversely affect sales or hiring and retention, respectively.
However, completion of remediation for these material weaknesses does not provide assurance that our remediated controls will continue to operate properly and as a result, that our financial statements will be free from material error. 11 Although currently remediated, previously existing material weaknesses could recur, or other material weaknesses could arise, and result in material misstatements to our annual or interim consolidated financial statements that might not be prevented or detected on a timely basis or result in delayed filing of required periodic reports.
Although currently remediated, previously existing material weaknesses could recur, or other material weaknesses could arise, and result in material misstatements to our annual or interim consolidated financial statements that might not be prevented or detected on a timely basis or result in delayed filing of required periodic reports.
While the search for a permanent replacement is ongoing, these processes can be time-consuming and disruptive to our business, and we cannot guarantee that a suitable candidate will be identified in a timely manner. Recruiting skilled personnel is highly competitive. The increased availability of flexible or remote work arrangements has both intensified and expanded competition for qualified personnel.
While the search for a permanent replacement is ongoing, these processes can be time-consuming and disruptive to our business, and we cannot guarantee that a suitable candidate will be identified in a timely manner, if at all. Recruiting skilled personnel is highly competitive.
Declines in consumer spending have resulted, and in the future may result, in decreased demand for our products and services which may have an adverse effect on our results of operations. 4 A downturn in the economic environment can also lead to financial instability; increased credit and collectability risk on our receivables; the failure of important partners, including suppliers, logistics providers, and financial institutions; limitations on our ability to issue new debt; reduced liquidity and declines in the fair value of our financial instruments.
A downturn in the economic environment can also lead to financial instability; increased credit and collectability risk on our receivables; the failure of important partners, including suppliers, logistics providers, and financial institutions; limitations on our ability to issue new debt; reduced liquidity and declines in the fair value of our financial instruments.
Any loss of trust in our brand could harm our reputation and result in consumers, sellers, brands, vendors and other participants reducing their activity level in our business, which could materially reduce our profitability. 10 If we do not, or are unable to continue to, promote and strengthen the Newegg brand, or if the brand fails to continue to be viewed favorably, we may not be successful in attracting new customers and Marketplace sellers, which could have a material adverse effect on our financial condition and results of operations.
If we do not, or are unable to continue to, promote and strengthen the Newegg brand, or if the brand fails to continue to be viewed favorably, we may not be successful in attracting new customers and Marketplace sellers, which could have a material adverse effect on our financial condition and results of operations.
Fred Chang, who beneficially own approximately 58.7% and 32.9%, respectively, of our total voting power, have the right to appoint four directors and three directors, respectively, with Mr.
Digital Grid and Mr. Fred Chang, who beneficially own approximately 57.3% and 30.9%, respectively, of our total voting power as of December 31, 2024, have the right to appoint four directors and three directors, respectively, with Mr.
These changes have significantly expanded export license requirements for U.S. companies that sell certain advanced computing and related equipment to counterparties located in or headquartered in China and other countries.
These changes have significantly expanded export license requirements for U.S. companies that sell certain advanced computing and related equipment to counterparties located in or headquartered in China and other countries. They have also impacted from where and from which suppliers companies like Newegg can source different inputs for its products.
Chang, and other directors exercising, in a manner fair to all of our shareholders, their fiduciary duties. Also, Mr. He and Mr. Chang will have the ability to control the outcome of most corporate actions requiring shareholder approval, including the sale of all or substantially all of our assets and amendments to our Memorandum and Articles of Association.
Chang will have the ability to control the outcome of most corporate actions requiring shareholder approval, including the sale of all or substantially all of our assets and amendments to our Memorandum and Articles of Association.
In addition, consumer preferences may be influenced even further as the social and economic environment navigates through the post-pandemic environment. These and other similar factors could have a material adverse impact on our revenue and profitability. The successful operation of our business depends upon the performance, reliability and security of the internet infrastructure in the countries where we operate.
These and other similar factors could have a material adverse impact on our revenue and profitability. The successful operation of our business depends upon the performance, reliability and security of the internet infrastructure in the countries where we operate. Our business depends on the performance, reliability and security of the telecommunications and internet infrastructure in the countries where we operate.
Under the Amended Shareholders Agreement, the Principal Shareholders have pre-emptive rights to acquire additional shares when the Company issues or sells additional securities in the future, except for “excluded issuances” as defined in the Amended Shareholders Agreement or common shares offered pursuant to a registration statement filed with the SEC. 26 In addition, the Company and the Principal Shareholders also have rights of first refusal over certain transfers of the common shares by the Principal Shareholders, pursuant to the Amended Shareholders Agreement, as amended, and subject to compliance with applicable laws and Nasdaq’s Listing Rules.
Fred Chang and certain other shareholders (the “Principal Shareholders”). Under the Amended Shareholders Agreement, the Principal Shareholders have pre-emptive rights to acquire additional shares when the Company issues or sells additional securities in the future, except for “excluded issuances” as defined in the Amended Shareholders Agreement or common shares offered pursuant to a registration statement filed with the SEC.
Our inability to execute an effective pricing strategy, or a determination by our Marketplace sellers that they can more competitively price their products through other distribution channels could adversely affect our business, financial condition, results of operations and prospects. 7 Operational Risks We face risks related to system interruption, including failures caused or experienced by third-party service providers, and lack of redundancy and timely upgrades.
Our inability to execute an effective pricing strategy, or a determination by our Marketplace sellers that they can more competitively price their products through other distribution channels could adversely affect our business, financial condition, results of operations and prospects.
Zhitao He (as the Chairman and CEO of Hangzhou Lianluo and in his own capacity) and Mr. Fred Chang control approximately 58.7% and 32.9%, respectively, and 91.6%, collectively, of the voting power of our issued and outstanding common shares. They will exert significant influence on our business and operations and may have a conflict of interest with our other shareholders.
They will exert significant influence on our business and operations and may have a conflict of interest with our other shareholders. Mr. Zhitao He (as the Chairman and CEO of Hangzhou Lianluo and in his own capacity) and Mr.
Any such sale could be done quickly and without regard for maximizing the sale price, other than to enable BOC to recover the amount of indebtedness owed to it by Hangzhou Lianluo.
EWB could do the same with Mr. Chang’s Newegg Common Shares while the EWB loan remains in default. Any such sale could be done quickly and without regard for maximizing the sale price, other than to enable BOC or EWB to recover the amount of indebtedness owed to it by Hangzhou Lianluo or Mr. Chang.
The Amended and Restated Memorandum and Articles of Association limit your ability to appoint directors and influence corporate matters and could discourage others from pursuing any change of control transactions that minority holders of common shares may view as beneficial. Digital Grid and Mr.
As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. 26 The Amended and Restated Memorandum and Articles of Association limit your ability to appoint directors and influence corporate matters and could discourage others from pursuing any change of control transactions that minority holders of common shares may view as beneficial.
In recent years, the frequency, severity and sophistication of cyber-attacks, computer malware, viruses, social engineering, and other intentional misconduct by computer hackers has significantly increased, and government agencies and security experts have warned about the growing risks of hackers, cyber criminals and other potential attackers targeting information technology systems.
For example, in 2018, Newegg suffered an intrusion of a portion of its network, as a result of which access was gained to a limited amount of credit card information. 9 In recent years, the frequency, severity and sophistication of cyber-attacks, computer malware, viruses, social engineering, and other intentional misconduct by computer hackers has significantly increased, and government agencies and security experts have warned about the growing risks of hackers, cyber criminals and other potential attackers targeting information technology systems.
We may not succeed in promoting and strengthening the Newegg brand, which may materially and adversely affect our business and results of operations. Brand recognition is a primary competitive factor in the e-commerce market and will be a key factor in maintaining and expanding our customer base, market position and bargaining power with vendors.
Brand recognition is a primary competitive factor in the e-commerce market and will be a key factor in maintaining and expanding our customer base, market position and bargaining power with vendors.
Such laws and regulations include, but are not limited to, the Export Administration Act and the Export Administration Regulations. Newegg must also comply with U.S. sanctions laws and regulations, which are primarily administered by the U.S. Department of Treasury’s Office of Foreign Assets Control, as well as other U.S. government agencies.
Newegg must comply with all applicable U.S. export and import laws and regulations. Such laws and regulations include, but are not limited to, the Export Administration Act and the Export Administration Regulations. Newegg must also comply with U.S. sanctions laws and regulations, which are primarily administered by the U.S.
If we do not have sufficient fulfillment capacity or experience a problem fulfilling orders in a timely manner or if certain products are out of stock, our customers may experience delays in receiving their orders, which could harm our reputation and our relationship with our customers.
If we do not have sufficient fulfillment capacity or experience a problem fulfilling orders in a timely manner or if certain products are out of stock, our customers may experience delays in receiving their orders, which could harm our reputation and our relationship with our customers. 12 Our fulfillment infrastructure may be vulnerable to damage caused by fire, floods, power outages, telecommunications failures, break-ins, earthquakes, human error and other events.
If we fail to maintain compliance with Nasdaq Listing Rules, we may be delisted from Nasdaq, which would result in a limited public market for trading our shares and make obtaining future debt or equity financing more difficult for us.
In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations. 27 If we fail to maintain compliance with Nasdaq Listing Rules, we may be delisted from Nasdaq, which would result in a limited public market for trading our shares and make obtaining future debt or equity financing more difficult for us.
Such delisting from Nasdaq and continued or further declines in our common share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions. 27 We and our directors and officers may be involved in investigations or other forms of regulatory or governmental inquiry which may cause reputational harm to the Company, result in additional expenses, and distract our management from our day-to-day operations.
Such delisting from Nasdaq and continued or further declines in our common share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.
To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would enjoy under Nasdaq’s corporate governance listing standards applicable to U.S. domestic issuers. 31 We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.
To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would enjoy under Nasdaq’s corporate governance listing standards applicable to U.S. domestic issuers.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeOur current and potential competitors include: (i) online, offline and multichannel retailers, publishers, vendors, distributors, manufacturers, and producers of the products we offer and sell to customers; (ii) companies that provide ancillary D2C platform services and solutions, including website development, advertising, customer service and payment processing; (iii) companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline; and (iv) companies that design, manufacture, market, or sell consumer electronics, telecommunication, and electronic devices.
Biggest changeOur current and potential competitors include: (i) online, offline and multichannel retailers, publishers, vendors, distributors, manufacturers, and producers of the products we offer and sell to customers; (ii) companies that provide ancillary D2C platform services and solutions, including website development, advertising, customer service and payment processing; (iii) companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline; and (iv) companies that design, manufacture, market, or sell consumer electronics, telecommunication, and electronic devices. 45 We believe the principal competitive factors in our market are: ● breadth and quality of product offerings; ● pricing; ● fulfillment capabilities; ● brand recognition and reputation; ● customer service; ● ability to respond more quickly to changing consumer preferences; ● ability to reach a geographically broader set of customers; and ● ability to be more flexible in marketing to a specific set of potential customers.
The table below shows our major product categories offered through our platforms and their selected featured brands: Category Products Selected Featured Brands Computer System Desktops, laptops, gaming laptops, peripherals and accessories Asus, MSI, HP, Lenovo, Acer, Microsoft, Samsung, LG, Gigabyte, Logitech Components CPU/processors, graphic cards, motherboards, storage devices and computer accessories Intel, AMD, Asus, MSI, Corsair, Gigabyte, ASRock, Western Digital, Seagate, Samsung, G.Skill Others Software, virtual reality, gaming consoles, networking, digital games, home appliances, gaming desks/chairs and TVs Meta, PlayStation, Samsung, Dyson, Netgear, LG, Nintendo, H&R Block, Adobe 37 We strive for a steady supply of products and optimized pricing and allocation, and as a result, we maintain multiple sourcing arrangements for most of our products.
The table below shows our major product categories offered through our platforms and their selected featured brands: Category Products Selected Featured Brands Computer System Desktops, laptops, gaming laptops, peripherals and accessories Asus, MSI, HP, Lenovo, Acer, Microsoft, Samsung, LG, Gigabyte, Logitech Components CPU/processors, graphic cards, motherboards, storage devices and computer accessories Intel, AMD, Asus, MSI, Corsair, Gigabyte, ASRock, Western Digital, Seagate, Samsung, G.Skill Others Software, virtual reality, gaming consoles, networking, digital games, home appliances, gaming desks/chairs and TVs Meta, PlayStation, Samsung, Dyson, Netgear, LG, Nintendo, H&R Block, Adobe We strive for a steady supply of products and optimized pricing and allocation, and as a result, we maintain multiple sourcing arrangements for most of our products.
This feature limits the number of orders placed for out-of-stock items, allowing us to better manage aging inventory and minimize customer dissatisfaction by eliminating backorder merchandise. 43 ● Transaction management. We have developed and deployed a scalable back office platform that allows us to monitor transactions and changes to financial data as well as provide our management with daily updates.
This feature limits the number of orders placed for out-of-stock items, allowing us to better manage aging inventory and minimize customer dissatisfaction by eliminating backorder merchandise. ● Transaction management. We have developed and deployed a scalable back office platform that allows us to monitor transactions and changes to financial data as well as provide our management with daily updates.
This intra-year seasonal fluctuation in demand is in accord with historic experience in the retail and e-commerce industries, with increased volumes during the fourth calendar quarter of the year. 45 Government Regulations We are subject to U.S. federal and state consumer protection laws, including laws protecting the privacy of customer personal information and regulations prohibiting unfair and deceptive trade practices.
This intra-year seasonal fluctuation in demand is in accord with historic experience in the retail and e-commerce industries, with increased volumes during the fourth calendar quarter of the year. Government Regulations We are subject to U.S. federal and state consumer protection laws, including laws protecting the privacy of customer personal information and regulations prohibiting unfair and deceptive trade practices.
While each Newegg platform is strategically focused on different market segments, customers and/or product categories, the platforms share a common Newegg brand and are supported by our integrated logistics and fulfillment capability, operational expertise and technology infrastructure, and we offer the same level of customer service and dedication across all these platforms. B2C Platforms ● Newegg.com.
While each Newegg platform is strategically focused on different market segments, customers and/or product categories, the platforms share a common Newegg brand and are supported by our integrated logistics and fulfillment capability, operational expertise and technology infrastructure, and we offer the same level of customer service and dedication across all these platforms. 39 B2C Platforms ● Newegg.com.
This redundancy could allow us to continually fulfill most orders, albeit less efficiently, as long as a single warehouse is operational. 40 ● Efficiency. We have a well-designed, fully customized, warehousing management software system that is adopted by all warehouses, featuring smart categorization of inventory assortment in various warehouse locations to maximize logistics efficiency.
This redundancy could allow us to continually fulfill most orders, albeit less efficiently, as long as a single warehouse is operational. ● Efficiency. We have a well-designed, fully customized, warehousing management software system that is adopted by all warehouses, featuring smart categorization of inventory assortment in various warehouse locations to maximize logistics efficiency.
In late 2020, we started offering “Pay in 4” payment option that allows customers to pay in four interest-free installments within a six-week timeframe. This payment option is offered through Zip. We also allow our customers to pay at their own pace for up to a period of 24 months through Affirm. 41 ● B2B payment options.
In late 2020, we started offering “Pay in 4” payment option that allows customers to pay in four interest-free installments within a six-week timeframe. This payment option is offered through Zip. We also allow our customers to pay at their own pace for up to a period of 24 months through Affirm. ● B2B payment options.
We control access to use and distribution of our intellectual property through license agreements, confidentiality procedures, non-disclosure agreements with third parties and our employment and contractor agreements. 44 Our intellectual property portfolio includes numerous domain names for websites that we use in our business. We have registered the domain names Newegg.com, Newegg.ca and NeweggBusiness.com and their variations.
We control access to use and distribution of our intellectual property through license agreements, confidentiality procedures, non-disclosure agreements with third parties and our employment and contractor agreements. Our intellectual property portfolio includes numerous domain names for websites that we use in our business. We have registered the domain names Newegg.com, Newegg.ca and NeweggBusiness.com and their variations.
Our extensive product offerings enable us to meet the diverse needs of a group of sophisticated customers, which is difficult for brick-and-mortar retailers to match due to shelf space constraints. ● Data-driven shopping experience. o Content-rich, user-friendly interface.
Our extensive product offerings enable us to meet the diverse needs of a group of sophisticated customers, which is difficult for brick-and-mortar retailers to match due to shelf space constraints. ● Data-driven shopping experience. ○ Content-rich, user-friendly interface.
From a customer base and target audience perspective, we categorize our business model into B2C and B2B operations. We strive to offer a compelling online shopping experience, reliable and timely order fulfilment and superior customer service across our B2C and B2B operations through our Direct sales, Marketplace and NPS platforms.
From a customer base and target audience perspective, we categorize our business model into B2C and B2B operations. We strive to offer a compelling online shopping experience, reliable and timely order fulfilment and superior customer service across our B2C and B2B operations through our Direct sales, and Marketplace platforms.
Other existing and future laws cover issues such as user privacy, spyware and the tracking of consumer activities, marketing emails and communications, other advertising and promotional practices, money transfers, pricing, content and quality of products and services, taxation, electronic contracts and other communications and information security.
Other existing and future laws cover issues such as AI, user privacy, spyware and the tracking of consumer activities, marketing emails and communications, other advertising and promotional practices, money transfers, pricing, content and quality of products and services, taxation, electronic contracts and other communications and information security.
We monitor changes in these laws, regulations, treaties, and agreements, and believe that we are in material compliance with applicable laws. C. Organizational Structure See Exhibit 8.1 for a list of our significant subsidiaries. 46 D.
We monitor changes in these laws, regulations, treaties, and agreements, and believe that we are in material compliance with applicable laws. C. Organizational Structure See Exhibit 8.1 for a list of our significant subsidiaries. D.
From a customer service perspective, in addition to customers, we broadly define our customers to also include our Marketplace sellers, from whom we earn commissions, and purchasers of our 3PL services and other ancillary e-commerce solutions and services.
From a customer service perspective, in addition to our retail customers, we broadly define our customers to also include our Marketplace sellers, from whom we earn commissions, and purchasers of our 3PL services and other ancillary e-commerce solutions and services.
For more details, see “— Technology — Our IT Capability — Mobile site and apps.” 39 B2B Platforms In 2009, we launched NeweggBusiness.com, a site that currently supports substantially all of our B2B operations.
For more details, see “— Technology — Our IT Capability — Mobile site and apps.” B2B Platforms In 2009, we launched NeweggBusiness.com, a site that currently supports substantially all of our B2B operations.
While Newegg.com operates predominantly as a B2C e-commerce platform, Newegg.com supports both direct sales, where we sell merchandise directly to customers, and the Marketplace model where third-party sellers offer their inventory to our customers. As of December 31, 2023, Newegg.com fulfilled orders originating from various countries, mostly in North America. ● Newegg.ca.
While Newegg.com operates predominantly as a B2C e-commerce platform, Newegg.com supports both direct sales, where we sell merchandise directly to customers, and the Marketplace model where third-party sellers offer their inventory to our customers. As of December 31, 2024, Newegg.com fulfilled orders originating from various countries, mostly in North America. ● Newegg.ca.
NeweggBusiness.com supports both direct sales and a B2B Marketplace that connects our B2B customers with over 1,680 third-party sellers globally. Other Platforms In addition to the major Newegg platforms discussed above, we also operate Newegglogistics.com, a platform dedicated to providing reliable logistics and supply chain solutions through 3PL operations.
NeweggBusiness.com supports both direct sales and a B2B Marketplace that connects our B2B customers with over 1,130 third-party sellers globally. Other Platforms In addition to the major Newegg platforms discussed above, we also operate Newegglogistics.com, a platform dedicated to providing reliable logistics and supply chain solutions through 3PL operations.
Also, we have leveraged our AI capabilities to allow category extraction for different products based on the unstructured content and images, the results of which have been used to provide miscategorization correction and site search relevancy improvement. ● Inventory management. Our supply chain management system includes price optimization, inventory balancing, and inventory forecasting and other subsystems.
Also, we have leveraged our AI capabilities to allow category extraction for different products based on unstructured content and images, the results of which have been used to provide categorization correction and site search relevancy improvement. ● Inventory management. Our supply chain management system includes price optimization, inventory balancing, and inventory forecasting and other subsystems.
We launched Newegg Global in 2017 to expand our footprint in the global e-commerce market. Newegg Global currently fulfills orders originating from 20 countries or regions. Newegg Global had over 1.2 million registered customers outside North America as of December 31, 2023. ● Mobile apps.
We launched Newegg Global in 2017 to expand our footprint in the global e-commerce market. Newegg Global currently fulfills orders originating from 20 countries or regions. Newegg Global had over 1.2 million registered customers outside North America as of December 31, 2024. ● Mobile apps.
For more information, see “Risk Factors — Risks Related to Newegg’s Business — A significant inadvertent disclosure or breach of confidential or personal information we hold could be detrimental to our business, reputation and results of operations.” Intellectual Property We rely on a combination of trademark, trade secret and other intellectual property laws as well as confidentiality agreements with our employees and suppliers for the purpose of protecting the proprietary rights associated with the products branded under our private labels.
For more information, see “Risk Factors — Risks Relating to Our Business — A significant inadvertent disclosure or breach of confidential or personal information we hold could be detrimental to our business, reputation and results of operations.” Intellectual Property We rely on a combination of trademark, trade secret and other intellectual property laws as well as confidentiality agreements with our employees and suppliers for the purpose of protecting the proprietary rights associated with the products branded under our private labels.
We are focused on continuing to enhance our brand awareness through a variety of online and offline marketing and brand promotion activities, while leveraging technology to drive scalability and sustainability and eventually achieve optimal return on investment and highly effective cost of traffic as well as sales.
We are focused on continuing to enhance our brand awareness through a variety of online and offline marketing and brand promotion activities, while leveraging technology to drive scalability and sustainability and eventually achieve optimal return on investment and highly effective cost of traffic and sales.
We are particularly strong in the components categories where we are one of the largest channels online or offline and we continue to gain significant traction with suppliers in other categories, such as desktop PCs, laptops, and input/output devices. We maintain extensive and longstanding relationships with many of the biggest technology product brands and distributors globally.
We are particularly strong in the components categories where we are one of the largest channels online or offline and we continue to gain significant traction with suppliers in other categories, such as desktop PCs and laptops. We maintain extensive and longstanding relationships with many of the biggest technology product brands and distributors globally.
As of December 31, 2023, we had over 2.5 million active customers, defined as a unique customer ID with at least one item purchased on our platforms in the past 12 months. Our core customers include both our business-to-consumer (“B2C”) customers and our business-to-business (“B2B”) customers. See “Our Business Models” for more information about our B2C and B2B businesses.
As of December 31, 2024, we had over 2.1 million active customers, defined as a unique customer ID with at least one item purchased on our platforms in the past 12 months. Our core customers include both our business-to-consumer (“B2C”) customers and our business-to-business (“B2B”) customers. See “Our Business Models” for more information about our B2C and B2B businesses.
We operate in-house video production that generates original content to engage and inform customers, and we continue to enhance these capabilities in order to produce more and better content. Our platforms also provide an extensive portfolio of user-generated content, including over 4.8 million reviews as of December 31, 2023. 33 o Timely, secure and reliable fulfillment.
We operate in-house video production that generates original content to engage and inform customers, and we continue to enhance these capabilities in order to produce more and better content. Our platforms also provide an extensive portfolio of user-generated content, including over 4.8 million reviews as of December 31, 2024. ○ Timely, secure and reliable fulfillment.
We currently operate customer service centers in California and Texas, focusing on serving North American buyers. Our customer service representatives are available by phone, live-chat, chatbot or email. We have also been making investments in artificial intelligence and machine learning technologies, such as ChatGPT, to enhance our chatbot functionality and better serve our customers. ● Marketplace monitoring.
We currently operate customer service centers in California, Texas, and Asia, focusing on serving North American buyers. Our customer service representatives are available by phone, live-chat, chatbot or email. We have also been making investments in AI and machine learning technologies, such as ChatGPT, to enhance our chatbot functionality and better serve our customers. ● Marketplace monitoring.
For more information, see “Risk Factors — Risks Related to Newegg’s Business — Our reputation and business may be harmed if we or our Marketplace sellers sell pirated, counterfeit, illegal or “gray market” items.” ● Newegg Marketplace Guarantee service. We also offer a special customer service program, Newegg Marketplace Guarantee, for Marketplace orders.
For more information, see “Risk Factors — Risks Relating to Our Business — Newegg’s reputation and business may be harmed if Newegg or the Newegg Marketplace sellers sell pirated, counterfeit, illegal or “gray market” items.” 41 ● Newegg Marketplace Guarantee service. We also offer a special customer service program, Newegg Marketplace Guarantee, for Marketplace orders.
See also “— Logistics and Fulfillment.” As of December 31, 2023, we achieved, for orders directly fulfilled by us, an over 99.9% average delivery accuracy rate, which is a measure of orders that are delivered with the correct contents and to the correct address as a percentage of total orders, a 95.8% one-business day fulfillment rate in the United States and Canada if ordered prior to our 2:00 p.m. local time order cut-off, and a 98.8% two-business day fulfillment rate in the United States and Canada. ● Vibrant community of tech-savvy customers.
See also “— Logistics and Fulfillment.” As of December 31, 2024, we achieved, for orders directly fulfilled by us, an over 99.7% average delivery accuracy rate, which is a measure of orders that are delivered with the correct contents and to the correct address as a percentage of total orders, a 98.0% one-business day fulfillment rate in the United States and Canada if ordered prior to our 2:00 p.m. local order cut-off time, and a 99.8% two-business day fulfillment rate in the United States and Canada. 34 ● Vibrant community of tech-savvy customers.
For more information about merchandise sourced for direct sales, see “— Merchandise Sourcing.” Marketplace Our Marketplace operations enable customers to discover and purchase products from qualified third-party sellers from over 40 countries and regions globally as of December 31, 2023.
For more information about merchandise sourced for direct sales, see “— Merchandise Sourcing.” Marketplace Our Marketplace operations enable customers to discover and purchase products from qualified third-party sellers from over 30 countries and regions globally as of December 31, 2024.
Our standard “Hassle Free” return policy generally allows most items that are directly sold and shipped by us to be returned within 30 days of the delivery date for a full refund or replacement. Restocking fees are waived for all items.
Our standard “Hassle Free” return policy generally allows most items that are directly sold and shipped by us to be returned within 30 days of the delivery date for a full refund or replacement.
We believe our success is built upon our ability to cater to the preferences, tastes and habits of this demographic. As of December 31, 2023, we served customers in the United States, Canada and over 20 additional countries and regions through our Newegg.com, Newegg.ca and Newegg Global platforms.
We believe our success is built upon our ability to cater to the preferences, tastes and habits of this demographic. As of December 31, 2024, we served customers in the United States, Canada and 18 additional countries and regions through our Newegg.com, Newegg.ca and Newegg Global platforms.
Our IT infrastructure enables us to support over 90 million page views per day and provides the capability to process up to 0.93 million orders per day. Our platform obtained PCI Level 1 certification in 2010. Our IT Capability ● Websites. Our website incorporates proprietary technology internally developed on a primarily Microsoft.NET platform.
Our IT infrastructure enables us to support over 200 million page views per day and provides the capability to process up to 1.45 million orders per day. Our platform obtained PCI Level 1 certification in 2010. 43 Our IT Capability ● Websites. Our website incorporates proprietary technology internally developed on a primarily Microsoft.NET platform.
As of December 31, 2023, our Marketplace consisted of over 3,100 active sellers based in the United States, over 3,900 active sellers based in China, and over 900 active sellers coming from other countries. Our Marketplace sellers pay us commissions on their sales, with published commission rates varying from 8% to 15% according to product category.
As of December 31, 2024, our Marketplace consisted of over 2,400 active sellers based in the United States, over 2,100 active sellers based in China, and over 600 active sellers coming from other countries. Our Marketplace sellers pay us commissions on their sales, with published commission rates varying from 8% to 15% according to product category.
In addition, our Newegg Media team also provides social media and video content service offerings to market our brand partners to millions of social fans across various internet platforms, including Facebook, TikTok, X, YouTube and Instagram through live stream shopping, video content, and engaging social posts by offering promotions, sweepstakes, and reviews in order to maximize our brand partners’ exposure.
In addition, our Newegg studios team also provides social media and video content service offerings to market our brand partners to millions of social fans across various internet platforms, including Facebook, TikTok, X, YouTube, Instagram, Blue Sky, and Threads through video content, photography, and engaging social posts by offering promotions, sweepstakes, and reviews in order to maximize our brand partners’ exposure.
We launched Newegg.ca in 2008 to sell IT/CE products in Canada with a business model similar to that of Newegg.com. Newegg.ca is a leading e-commerce platform focusing on IT/CE products in Canada, with approximately 2.0 million registered accounts, and GMV of $129.6 million for the year ended December 31, 2023 and $159.3 million for the year ended December 31, 2022.
We launched Newegg.ca in 2008 to sell IT/CE products in Canada with a business model similar to that of Newegg.com. Newegg.ca is a leading e-commerce platform focusing on IT/CE products in Canada, with approximately 2.1 million registered accounts, and GMV of $100.8 million for the year ended December 31, 2024 and $129.6 million for the year ended December 31, 2023.
While expanding our range of product offerings, we continue to maintain a large and vibrant community of tech-savvy customers, providing inspiration for visitors to discover new technology trends and products and valuable decision-making intelligence typically not found at traditional retailers.
We continue to maintain a large and vibrant community of tech-savvy customers, providing inspiration for visitors to discover new technology trends and products and valuable decision-making intelligence typically not found at traditional retailers.
As of December 31, 2023, we sourced merchandise from over 2,580 brand partners for our direct sales business, and featured the official online stores of a number of brand partners, including some of the most well-known brands such as AMD, Asus, Gigabyte, HP, Intel, Lenovo, Meta Quest, Microsoft, MSI, Nvidia, and Samsung.
As of December 31, 2024, we sourced merchandise from over 2,050 brand partners for our direct sales business, and featured the official online stores of a number of brand partners, including some of the most well-known brands such as AMD, Acer, ASUS, Corsair, Gigabyte, HP, Intel, Lenovo, Meta Quest, Microsoft, MSI, Nvidia, Samsung, Seagate, and Western Digital.
The following chart sets forth our business models: 35 B2C We have maintained a B2C business since launching our e-commerce platform in 2001. With a focus on selling IT/CE products, our B2C business has expanded to include an increasingly wide range of products.
B2C We have maintained a B2C business since launching our e-commerce platform in 2001. With a focus on selling IT/CE products, our B2C business has expanded to include an increasingly wide range of products.
We capitalize on a robust transportation framework that connects international air and sea transport, domestic over-the-road carriers, and last-mile delivery to residential consumers such as United States Postal Service, Purolator, and UPS. We have also engaged and are working with multiple logistics partners to offer a wide array of flexible delivery options. ● Virtual fulfillment.
We capitalize on a robust transportation framework that connects international air and sea transport, domestic over-the-road carriers, and last-mile delivery to residential consumers through key logistics partners. We have also engaged and are working with multiple logistics partners to offer a wide array of flexible delivery options. ● Virtual fulfillment.
We are a business enabler for our Newegg Marketplace sellers in many ways. We believe that our Marketplace sellers choose to partner with us not just because we offer a large online sales channel, but also because we deliver the following additional value: ● Scaled access to technology-focused consumers.
We believe that our Marketplace sellers choose to partner with us not just because we offer a large online sales channel, but also because we deliver the following additional value: ● Scaled access to technology-focused consumers.
In 2023, 2.5 million buyers purchased over 436,000 items from us, making us one of the largest e-commerce businesses in the United States. In 2023, we offered more than 6 million SKUs for sale on our platform, representing over 35,000 brands in the IT, consumer electronics and other related categories.
In 2024, 2.1 million buyers purchased over 302,000 items from us, making us one of the largest e-commerce businesses in the United States. In 2024, we offered more than 4 million SKUs for sale on our platform, representing over 27,000 brands in the IT, consumer electronics and other related categories.
With approximately 6.2 million SKUs and 1,595 categories as of December 31, 2023, we are viewed by our customers as a one-stop shop for a vast selection of technology products, ranging from brand-name IT/CE products and in-house brands of computer hardware to peripherals under our private labels.
With approximately 4.4 million SKUs and 1,513 categories as of December 31, 2024, we offer our customers a one-stop shop for a vast selection of technology products, ranging from brand-name IT/CE products and in-house brands of computer hardware to peripherals under our private labels.
In addition to consumers, our Newegg Marketplace also provides smaller vendors and retailers with access to profitable B2B opportunities that would otherwise be difficult to reach due to the challenges associated with providing specialized support for business’ purchasing needs. ● Access to premium e-commerce solutions. Sellers generally face high barriers entering the e-commerce market, including logistics and scalable economics.
In addition to consumers, our Newegg Marketplace also provides smaller vendors and retailers with access to profitable B2B opportunities that would otherwise be difficult to reach due to the challenges associated with providing specialized support for business’ purchasing needs. ● Access to premium e-commerce solutions.
As of December 31, 2023, approximately 60.6% of our direct sales inventory was purchased directly from manufacturers, 36.7% from distributors and 2.7% from other sources. As of December 31, 2023, the 10 largest suppliers, whom we have worked with for over a decade, accounted for 71% of the merchandise we purchased for direct sales.
As of December 31, 2024, approximately 60.0% of our direct sales inventory was purchased directly from manufacturers, 35.6% from distributors and 4.4% from other sources. As of December 31, 2024, the 10 largest suppliers, whom we have worked with for over a decade, accounted for 68% of the merchandise we purchased for direct sales.
Technology Our technology systems are a critical component of our success and designed to enhance efficiency and scalability. Our research and development team, coupled with our proprietary technology infrastructure and the large volume of data generated and collected on our platforms, has created opportunities for continuous improvements in our technology capabilities, empowering reliability, scalability, and flexibility.
Our research and development team, coupled with our proprietary technology infrastructure and the large volume of data generated and collected on our platforms, has created opportunities for continuous improvements in our technology capabilities, empowering reliability, scalability, and flexibility.
Security and Privacy Policy We are committed to protecting information security across all Newegg platforms. We use a variety of techniques to protect the integrity of our networks and the confidential data we collect and store. Confidential information concerning our customers, sellers and suppliers is encrypted and protected using SSL encryption software.
We use a variety of techniques to protect the integrity of our networks and the confidential data we collect and store. Confidential information concerning our customers, sellers and suppliers is encrypted and protected using SSL encryption software.
In the United States, virtual fulfillment accounted for approximately 8.4% of direct sales for the year ended December 31, 2023. Our logistics and fulfillment focus on reliable, efficient, and flexible delivery. ● Reliability. We have a reliable technology platform and order process for our fulfillment operation. Each order is verified at least twice before being shipped.
In the United States, virtual fulfillment accounted for approximately 8.5% of direct sales for the year ended December 31, 2024. Our logistics and fulfillment focus on reliable, efficient, and flexible delivery. ● Reliability. We have a reliable technology platform and order process for our fulfillment operation.
We also periodically evaluate our facility requirements as necessary and believe our existing and planned facilities will be sufficient for our needs for at least the next 12 months.
We periodically evaluate our facility requirements as necessary and believe our existing and planned facilities will be sufficient for our needs for at least the next twelve (12) months. 47 Item 4A. Unresolved Staff Comments None.
This has allowed us to deliver over 22,850 parcels per day on average, with an average accuracy rate of over 99.9%, a 95.8% one-business day fulfillment rate in the United States and Canada if ordered prior to our 2:00 p.m. local time order cut-off and a 98.8% two-business day fulfillment rate in the United States and Canada, as of December 31, 2023.
This has allowed us to deliver over 33,170 parcels per day on average, with an average accuracy rate of over 99.7%, a 98.0% one-business day fulfillment rate in the United States and Canada if ordered prior to our daily order cut-off time and a 99.8 % two-business day fulfillment rate in the United States and Canada, as of December 31, 2024.
Our Marketplace offers a variety of product categories, including emerging smart home automation, VR, lifestyle electronics, health and beauty technology products and houses online stores of some of the most well-known brands in the technology industry, such as Dyson and Lenovo.
Our Marketplace offers a variety of product categories, including emerging smart home automation, VR, lifestyle electronics, health and beauty technology products and houses online stores of some of the most well-known brands in the technology industry, such as Dyson and Lenovo. 37 While we encourage Marketplace sellers to offer the most attractive prices, they have the flexibility to price the products sold through our Marketplace.
B2B With a focus on providing office and IT equipment, NeweggBusiness.com offers our B2B customers access to our extensive product assortment and account managers with expertise in sourcing technology for business and processing industry specific requirements. Our B2B operations generated GMV of $325.6 million and $379.5 million for the years ended December 31, 2023 and 2022, respectively.
For details of these platforms, see “— Our Platforms — B2C Platforms.” Our B2C operations generated GMV of $1.2 billion and $1.4 billion for the years ended December 31, 2024 and 2023, respectively. 36 B2B With a focus on providing office and IT equipment, NeweggBusiness.com offers our B2B customers access to our extensive product assortment and account managers with expertise in sourcing technology for business and processing industry specific requirements.
The Company’s registered office is located at 17560 Rowland Street, City of Industry, CA 91748 and its telephone number is (626) 271-9700, and its website address is www.Newegg.com. The address of the Company’s registered agent is Vistra License Holdings (BVI) Limited, Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
The Company’s principal executive office is located at 21688 Gateway Center Drive, Suite 300, Diamond Bar, CA 91765 and its telephone number is (626) 271-9700, and its website address is www.Newegg.com. The address of the Company’s registered agent is Vistra License Holdings (BVI) Limited, Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
See also “— Customer Service and Support — Marketplace monitoring.” Merchandise Sourcing As of December 31, 2023, we offered approximately 6.2 million SKUs across our platforms, consisting of over 103,100 direct sales SKUs sourced from at least 330 suppliers globally and approximately 6.1 million SKUs on our Marketplace from over 8,000 third-party sellers globally.
See also “— Customer Service and Support — Marketplace monitoring.” Merchandise Sourcing As of December 31, 2024, we offered approximately 4.4 million SKUs across our platforms, consisting of over 73,500 direct sales SKUs sourced from at least 310 suppliers globally and approximately 4.3 million SKUs on our Marketplace from over 5,200 third-party sellers globally.
For our direct sales, we generally source the products, take inventory risk, process customer payments, prepare packages for shipment and delivery, and provide customer service and support.
For our direct sales, we generally source the products, take inventory risk, process customer payments, prepare packages for shipment and delivery, and provide customer service and support. We stock and ship from our own warehouses, and also drop-ship directly to customers from our partners’ warehouses.
We currently have one company-owned data center in City of Industry, California and three co-location data centers at facilities in Los Angeles, California, and New Jersey to provide redundancy for our e-commerce data. We maintain approximately 1,242 servers stored in our data centers and approximately 268 network devices.
We currently have two co-location data centers at facilities in Los Angeles, California and New Jersey to provide redundancy for our e-commerce data. We maintain approximately 834 servers stored in our data centers and approximately 197 network devices.
As of December 31, 2023, our Marketplace connected B2C and B2B customers to over 8,000 third-party sellers offering approximately 6.1 million SKUs.
As of December 31, 2024, our Marketplace connected B2C and B2B customers to over 5,200 third-party sellers offering approximately 4.3 million SKUs.
Whether customers are undertaking a project, seeking deals, or simply exploring, we tailor our targeted emails to align with their specific needs and interests. ● Other online marketing channels.
Our personalized email marketing efforts and customer retargeting strategies are based on customers’ on-site behavioral data and purchase history data. Whether customers are undertaking a project, seeking deals, or simply exploring, we tailor our targeted emails to align with their specific needs and interests. ● Other online marketing channels.
Our solutions range from small parcel delivery to Less Than Truckload, heavy freight, and all the way up to intermodal transport and cross-border shipping, with easy access to road, rail, water, and air transport.
Our solutions range from small parcel delivery to Less Than Truckload, heavy freight, and all the way up to intermodal transport and cross-border shipping, with easy access to road, rail, water, and air transport. We typically enter into a master service agreement with our Newegg Logistics customers and charge service fees at a fixed rate.
It provides product descriptions, search and ordering functionalities, and product reviews. ● Mobile site and apps. Customer activity on mobile devices is growing, and we are investing significantly in mobile technology to increase sales to customers using mobile devices.
It provides product descriptions, search and ordering functionalities, and product reviews. ● Mobile site and apps. Customer activity on mobile devices is growing, and we are investing in mobile technology to increase sales to customers using mobile devices. Our mobile app aims to create an easy and convenient shopping experience for our customers on the go. ● Data and analytics.
Our research and development personnel continually upgrade our platforms and test new features to improve our customer experience. Our research and development team also develops custom-built proprietary systems and engages third-party solutions to support our specific customer, vendor and Marketplace seller requirements, including handling heavy traffic on our platforms, and providing quick and efficient fulfillment services to meet customer expectations.
Our research and development team also develops custom-built proprietary systems and engages third-party solutions to support our specific customer, vendor and Marketplace seller requirements, including handling heavy traffic on our platforms, and providing quick and efficient fulfillment services to meet customer expectations. 44 Security and Privacy Policy We are committed to protecting information security across all Newegg platforms.
Outside of North America, we also own or lease corporate office facilities principally in China and Taiwan. We own warehouse facilities in Shanghai, China that are currently leased to third party tenants. Our Asia headquarters is in Shanghai.
We also lease additional fulfillment and warehouse facilities throughout North America, principally in California, Indiana, and Georgia in the United States, and Toronto in Canada. Outside of North America, we also own or lease corporate office facilities principally in China and Taiwan. We own warehouse facilities in Shanghai, China that are currently leased to third party tenants.
Other online marketing channels include click-through based advertising on publishers’ sites, targeted messages, email distribution, banner advertisements on high-traffic portals, social networking via major social media sites and our own branded portal, and onsite promotions and cross-selling opportunities on our websites. 42 Offline Marketing We also devote marketing resources to various offline formats, including hosting or exhibiting at live events, including trade shows, conferences and various industry and consumer networking events.
Other online marketing channels include click-through based advertising on publishers’ sites, targeted messages, email distribution, banner advertisements on high-traffic portals, social networking via major social media sites and our own branded portal, and onsite promotions and cross-selling opportunities on our websites.
Online Marketing We conduct the majority of our marketing efforts online through targeted marketing via affiliates, search engines, promotional emails, social media traffic, targeting and personalization, and online promotion campaigns. ● Paid search engine marketing. Search engine marketing is an important driver of our traffic and customer acquisition.
In 2024, 88% of traffic was free, as compared to the paid traffic of 12%. 42 Online Marketing We conduct the majority of our marketing efforts online through targeted marketing via affiliates, search engines, promotional emails, social media traffic, targeting and personalization, and online promotion campaigns. ● Paid search engine marketing.
We continuously seek to build similar relationships with suppliers in new and emerging categories and geographies. Due to our strong supplier relationships and our purchasing volume, we are able to obtain favorable pricing, early allocation of new products, preferential allocation of products in shortage, and funding for product promotion and cooperative marketing.
Due to our strong supplier relationships and our purchasing volume, we are able to obtain favorable pricing, early allocation of new products, preferential allocation of products in shortage, and funding for product promotion and cooperative marketing. We also enjoy exclusive arrangements with certain suppliers where we are able to offer highly demanded products exclusively on our platforms.
Our Marketplace connects sellers, whether brand owners or retailers, to a large and growing customer base, the majority of whom are tech-savvy, in more than 20 countries and regions as of December 31, 2023, without expanding their physical footprint. In 2023, approximately 1.0 million active customers purchased $369.7 million in gross merchandise value from our Marketplace business.
Our Marketplace connects sellers, whether brand owners or retailers, to our large established tech-savvy customer base in 20 countries and regions as of December 31, 2024. In 2024, approximately 0.8 million active customers purchased $318.6 million in gross merchandise value from our Marketplace business.
Key Ecosystem Participants and How We Create Value for Them There are three key participants of our ecosystem: customers, Marketplace sellers, and brand partners. Customers We have built a large, highly engaged and loyal customer base.
Additionally, our platforms offer a comprehensive suite of e-commerce solutions, including product listing, fulfillment, marketing, customer service and other value-added tools and services. 33 Key Ecosystem Participants and How We Create Value for Them There are three key participants of our ecosystem: customers, Marketplace sellers, and brand partners. Customers We have built a large, highly engaged and loyal customer base.
Other Services and Solutions In addition to online retail sales, we also generate revenues from a range of ancillary value-added partner services. We believe by providing these services, we create additional value for our business partners and customers and ultimately benefit our ecosystem and all its participants. Supply Chain Third-party (3PL) Services ● Shipped by Newegg® Service.
We believe by providing these services, we create additional value for our business partners and customers and ultimately benefit our ecosystem and all its participants. Supply Chain Third-party (3PL) Services ● Shipped by Newegg Service. We began to offer Shipped by Newegg, a comprehensive suite of warehousing and fulfillment services, to our Marketplace sellers in 2013.
We help brands reach a potential audience by leveraging our online portals, marketing affiliates and promotional emails. We help our brand partners and Marketplace sellers design marketing activities with highly effective cost of sales.
We help our brand partners and Marketplace sellers design marketing activities with highly effective cost of sales.
Free traffic includes mobile apps, email & SMS, social media, and brand mentions, reviews and shares. Paid traffic includes affiliate marketing, sponsorships, influences, connected TV, and paid searches. In 2023, 90% of traffic was free, as compared to the paid traffic of 10%.
Free traffic includes mobile apps, email & SMS, social media, and brand mentions, reviews and shares. Paid traffic includes affiliate marketing, sponsorships, social media influencers, and paid searches.
Our private label assortment is primarily focused around categories where we believe that we can compete at higher than average margins while delivering cost effective, high quality options to our customers. We offer our Rosewill and ABS products across our platforms and on other e-commerce platforms, such as Walmart, Amazon, and eBay.
We leverage our data and insights from customers and activity on the platform to determine products and features to focus our investment. Our private label assortment is primarily focused around categories where we believe that we can compete at higher than average margins while delivering cost effective, high quality options to our customers.
There is also great uncertainty over whether or how existing laws governing issues such as property ownership, sales and other taxes, auctions, libel, and personal privacy apply to the Internet and commercial online services.
Federal Trade Commission regulations, we must accurately identify product offerings, not make misleading claims on our platforms, and use qualifying disclosures where and when appropriate. 46 There is also great uncertainty over whether or how existing laws governing issues such as property ownership, sales and other taxes, auctions, libel, and personal privacy apply to the Internet and commercial online services.
Private Labels We currently offer two private label brands on Newegg.com: Rosewill, which is focused on offering computer components and accessories, gaming peripherals and home electronics, and ABS, which offers high-end gaming PCs for consumers, on Newegg.com. We leverage our data and insights from customers and activity on the platform to determine products and features to focus our investment.
Our merchandising professionals review our product categories and brands on a regular basis to assess demand and trends so that we offer our customers access to the most current and desirable products. 38 Private Labels We currently offer two private label brands on Newegg.com: Rosewill, which is focused on offering computer components and accessories, gaming peripherals and home electronics, and ABS, which offers high-end gaming PCs for consumers, on Newegg.com.
Clients such as vendor partners utilize these services as a one-stop shop solution for all their business needs. Marketing Services In 2020, we began rolling out the first of our marketing services for Newegg Marketplace sellers. We offer flexible marketing packages consisting of advertising sales, event organization, and other marketing campaigns to our brand partners.
Marketing Services In 2020, we began rolling out the first of our marketing services for Newegg Marketplace sellers. We offer flexible marketing packages consisting of advertising sales, event organization, and other marketing campaigns to our brand partners. We help brands reach a potential audience by leveraging our online portals, marketing affiliates and promotional emails.
Our new product and service introductions are aimed at continually improving our value proposition to these key constituents of our ecosystem and marketplace. For consumers, on the demand side, we provide access to a vast, yet curated selection of technology products sourced globally.
We have developed a powerful online marketplace that delivers value to consumers, brands and sellers in the technology products sector. Our new product and service introductions are aimed at continually improving our value proposition to these key constituents of our ecosystem and marketplace.
Property, Plants and Equipment Our Facilities As of December 31, 2023, we leased the following principal facilities: Description of Use Approximate Square Footage Geographic Location Lease Expirations Corporate office facilities 44,440 North America 01/31/2025 through 12/31/2025 Corporate office facilities 19,817 China 03/26/2025 through 8/31/2025 Corporate office facilities 8,146 Taiwan Through 04/30/2024 Fulfillment and warehouse operations 1,414,478 North America 05/31/2024 through 09/30/2034 As of December 31, 2023, Newegg owned the following principal facilities: Description of Use Approximate Square Footage Geographic Location Corporate office facilities 81,796 North America Corporate office facilities 391,367 China Corporate office facilities 50,674 Taiwan Leased warehouse facilities 109,469 China Our corporate headquarters is located in the City of Industry, California.
Property, Plants and Equipment Our Facilities As of December 31, 2024, we leased the following principal facilities: Description of Use Approximate Square Footage Geographic Location Lease Expirations Corporate office facilities 44,440 North America 12/31/2025 through 01/31/2026 Corporate office facilities 7,797 China 03/26/2025 through 12/31/2025 Corporate office facilities 355 Taiwan Through 08/31/2025 Fulfillment and warehouse operations 1,138,493 North America 12/31/2025 through 09/30/2034 Subleased warehouse facilities 650,133 North America 10/31/2028 through 02/28/2029 As of December 31, 2024, Newegg owned the following principal facilities: Description of Use Approximate Square Footage Geographic Location Corporate office facilities 76,602 North America Corporate office facilities 41,787 China Corporate office facilities 34,269 Taiwan Leased office facilities 5,194 North America Leased warehouse and office facilities 452,052 China Our corporate headquarters, which we purchased in June 2023, is located in Diamond Bar, California.
The success of our direct sales business depends largely upon our ability to secure a broad selection of products from suppliers at competitive costs. Since the commencement of our operations, we have sought and cultivated deep, longstanding relationships with some of the biggest IT brands in the world and many of the largest, most important IT distributors.
Since the commencement of our operations, we have sought and cultivated deep, longstanding relationships with some of the biggest IT brands in the world and many of the largest, most important IT distributors. We continuously seek to build similar relationships with suppliers in new and emerging categories and geographies.
We take pride in connecting customers to a wide and increasing selection of technology products and a large range of brands, sellers, suppliers, manufacturers, distributors and third-party service providers. 32 We have developed a powerful online marketplace that delivers value to consumers, brands and sellers in the technology products sector.
Business Overview The Newegg Ecosystem Founded in 2001, we have developed a technology-focused e-commerce ecosystem that enables all of our participants to discover, engage and transact with each other. We take pride in connecting customers to a wide and increasing selection of technology products and a large range of brands, sellers, suppliers, manufacturers, distributors and third-party service providers.
We maintain regional warehouses in Southern California, Indiana, Georgia, and Ontario, Canada to fulfill customer orders in the United States and Canada. The geographical placement of our warehouses in North America enables us to reach approximately 96% of the North American population in two business days. ● Cooperation with reliable logistics service providers.
The geographical placement of our warehouses in North America enables us to reach approximately 98% of the North American population in three business days or less. 40 ● Cooperation with reliable logistics service providers.
For example, we assign dedicated account managers to qualified sellers to help them tackle the variety of challenges associated with operating a virtual storefront. 34 Brand Partners We are a trusted partner and a go-to channel for many leading technology product brands and are increasingly establishing partnerships with brands in a growing number of adjacent product categories.
For example, we assign dedicated account managers to qualified sellers to help them tackle the variety of challenges associated with operating a virtual storefront.
Affiliate marketing is our second largest paid marketing channel and represents approximately 32% of our total marketing expense for the year ended December 31, 2023. ● Personalized email marketing efforts and customer retargeting. Our personalized email marketing efforts and customer retargeting strategies are based on customers’ on-site behavioral data and purchase history data.
Such affiliates are typically deal sites that advertise retailer deals to their audiences. Affiliate marketing is our second largest paid marketing channel and represents approximately 42% of our total marketing expense for the year ended December 31, 2024. ● Personalized email marketing efforts and customer retargeting.
Our Marketplace addresses these challenges by providing sellers with a comprehensive suite of e-commerce solutions, including an API-enabled portal, on-site promotions, a curated marketing program, and fulfillment and delivery services. Particularly, we provide Marketplace sellers with valuable data insights, which help them to market their products more effectively, generate additional traffic and increase conversion. ● Human touch.
Sellers generally face high barriers entering and competing in the e-commerce market, including access to affordable and user-friendly logistics and data analytics services. Our Marketplace addresses these challenges by providing sellers with a comprehensive suite of e-commerce solutions, including an API-enabled portal, on-site promotions, a curated marketing program, and fulfillment and delivery services.
We also offer open-term accounts for business and public sector customers. For example, in response to increasing customer demand, we introduced Bitcoin payment solution in 2014 and Apple Pay in 2016. In late 2020, we also started offering a Pay-in-4 program, where customers are given the freedom and flexibility to spread their payment in four interest-free installments.
We accept a variety of payment options and have sought to add new payment methods to cater to the needs of our customers. We also offer open-term accounts for business and public sector customers. For example, in response to increasing customer demand, we introduced Bitcoin payment solution in 2014 and Apple Pay in 2016.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor the Year Ended December 31, 2023 2022 2021 (in millions, except for percentages and net earnings per share) Amount % of Net Sales Amount % of Net Sales Amount % of Net Sales Net Sales $ 1,497.0 100.0 $ 1,720.3 100.0 $ 2,376.2 100.0 Cost of sales 1,329.4 88.8 1,503.6 87.4 2,050.2 86.3 Gross profit 167.6 11.2 216.7 12.6 326.0 13.7 Selling, general and administrative expenses (1) 238.6 15.9 266.2 15.5 292.5 12.3 Income (loss) from operations (71.0 ) (4.7 ) (49.5 ) (2.9 ) 33.5 1.4 Interest income 2.3 0.2 1.2 0.1 1.1 0.0 Interest expense (2.5 ) (0.2 ) (0.7 ) (0.0 ) (0.6 ) (0.0 ) Other income, net 2.6 0.2 5.2 0.2 1.8 0.1 Impairment of equity method investment — — (2.3 ) (0.1 ) — — Loss from equity method investment — — — — (7.4 ) (0.3 ) Gain from sale of investment 6.8 0.5 1.7 0.1 — — Gain from disposal of subsidiary — — — — 2.0 0.1 Change in fair value of warrants liabilities 0.1 0.0 1.1 0.1 0.1 0.0 Income (loss) before provision for income taxes (61.7 ) (4.0 ) (43.3 ) (2.5 ) 30.5 1.3 Provision for (benefit from) income taxes (2.7 ) (0.2 ) 14.1 0.8 (5.8 ) (0.2 ) Net income (loss) $ (59.0 ) (3.8 ) $ (57.4 ) (3.3 ) $ 36.3 1.5 Net earnings (loss) per share, basic $ (0.16 ) $ (0.15 ) $ 0.10 Net earnings (loss) per share, diluted $ (0.16 ) $ (0.15 ) $ 0.08 Weighted average number of common shares outstanding used in computing per share amounts, basic 378.6 373.1 366.7 Weighted average number of common shares outstanding used in computing per share amounts, diluted 378.6 373.1 432.2 Note: (1) Includes share-based compensation expenses of $33.7 million, $33.9 million, and $6.3 million, respectively, in years ended December 31, 2023, 2022, and 2021.
Biggest changeFor the Year Ended December 31, 2024 2023 2022 (in millions, except for percentages and net earnings per share) Amount % of Net Sales Amount % of Net Sales Amount % of Net Sales Net Sales $ 1,235.6 100.0 $ 1,497.0 100.0 $ 1,720.3 100.0 Cost of sales 1,104.1 89.4 1,329.4 88.8 1,503.6 87.4 Gross profit 131.5 10.6 167.6 11.2 216.7 12.6 Selling, general and administrative expenses (1) 183.0 14.8 238.6 15.9 266.2 15.5 Loss from operations (51.5 ) (4.2 ) (71.0 ) (4.7 ) (49.5 ) (2.9 ) Interest income 2.7 0.2 2.3 0.2 1.2 0.1 Interest expense (1.0 ) (0.1 ) (2.5 ) (0.2 ) (0.7 ) (0.0 ) Other income, net 3.5 0.4 2.6 0.2 5.2 0.2 Impairment of equity method investment — — — — (2.3 ) (0.1 ) Gain from sale of investment 1.6 0.1 6.8 0.5 1.7 0.1 Change in fair value of warrants liabilities 0.1 0.0 0.1 0.0 1.1 0.1 Loss before provision for income taxes (44.6 ) (3.6 ) (61.7 ) (4.0 ) (43.3 ) (2.5 ) Provision for (benefit from) income taxes (1.3 ) (0.1 ) (2.7 ) (0.2 ) 14.1 0.8 Net loss $ (43.3 ) (3.5 ) $ (59.0 ) (3.8 ) $ (57.4 ) (3.3 ) Net loss per share, basic and diluted (2) $ (2.25 ) $ (3.12 ) $ (3.08 ) Weighted average number of common shares outstanding used in computing per share amounts, basic and diluted (2) 19.3 18.9 18.7 Note: (1) Includes share-based compensation expenses of $27.3 million, $33.7 million, and $33.9 million, respectively, in years ended December 31, 2024, 2023, and 2022.
From time to time, we also invest in one-time capital expenditures such as the purchase of our new office building in Diamond Bar, California, for an aggregate purchase price of $23.2 million in June of 2023.
From time to time, we also invest in one-time capital expenditures such as the purchase of our new office building in Diamond Bar, California, for an aggregate purchase price of $23.2 million in June 2023.
Investing activities Net cash used in investing activities was $14.3 million for the year ended December 31, 2023, which was primarily attributable to the payments made to acquire property and equipment of $30.3 million and partially offset by the proceeds received from sale of investment of $15.8 million.
Net cash used in investing activities was $14.3 million for the year ended December 31, 2023, which was primarily attributable to the payments made to acquire property and equipment of $30.3 million and partially offset by the proceeds received from sale of investment of $15.8 million.
Financing activities Net cash provided by financing activities was $1.6 million for the year ended December 31, 2023, which was mainly due to (i) borrowings under line of credit of $66.5 million; and (ii) proceeds from exercise of stock options of $1.2 million, partially offset by (a) the repayment of line of credit of $65.1 million; and (b) payments for employee taxes related to stock compensation of $0.8 million.
Net cash provided by financing activities was $1.6 million for the year ended December 31, 2023, which was mainly due to (i) borrowings under line of credit of $66.5 million; and (ii) proceeds from exercise of stock options of $1.2 million, partially offset by (a) the repayment of line of credit of $65.1 million; and (b) payments for employee taxes related to stock compensation of $0.8 million.
Our suppliers may not continue to sell their inventory to us on current terms or at all, and, if the terms are changed, we may not be able to establish new supply relationships on similar or better terms. 49 We compete with other retailers and direct marketers for favorable product allocations and vendor incentive programs from product manufacturers and distributors.
Our suppliers may not continue to sell their inventory to us on current terms or at all, and, if the terms are changed, we may not be able to establish new supply relationships on similar or better terms. We compete with other retailers and direct marketers for favorable product allocations and vendor incentive programs from product manufacturers and distributors.
There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Based on qualitative and quantitative criteria established by Accounting Standards Codification (“ ASC ”) 280, “Segment Reporting,” we consider ourselves to be operating within one reportable segment. A.
There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Based on qualitative and quantitative criteria established by Accounting Standards Codification (“ ASC ”) 280, “Segment Reporting,” we consider ourselves to be operating within one reportable segment. 50 A.
Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. 55 Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Actual results could differ from those estimates, and we include any revisions to our estimates in our results for the period in which the actual amounts become known. We believe the critical accounting policies described below affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.
Actual results could differ from those estimates, and we include any revisions to our estimates in our results for the period in which the actual amounts become known. 59 We believe the critical accounting policies described below affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, operating profit and our other GAAP results. 56 The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, operating profit and our other GAAP results. The following table reflects the reconciliation of net loss to Adjusted EBITDA for each of the periods indicated.
The value of awards that are ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service periods in the consolidated statements of operations. For detailed discussion on stock-based compensation, see Note 14 to the consolidated financial statements.
The value of awards that are ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service periods in the consolidated statements of operations. For detailed discussion on stock-based compensation, see Note 13 to the consolidated financial statements.
Cost of sales is partially offset by payments we earn under vendor incentive programs, or VIPs, such as purchase rebates, marketing development funds that vendors give us to advertise their products, cooperative marketing programs jointly funded with vendors, and price protection refunds to offset reductions in the manufacturer’s suggested retail price.
Cost of sales is partially offset by payments we earn under vendor incentive programs (“VIPs”), such as purchase rebates, marketing development funds that vendors give us to advertise their products, cooperative marketing programs jointly funded with vendors, and price protection refunds to offset reductions in the manufacturer’s suggested retail price.
Net cash used in investing activities was $3.8 million for the year ended December 31, 2022, which was primarily attributable to the payments made to acquire property and equipment of $9.2 million and partially offset by the proceeds received from sale of investment of $5.4 million. 58 Net cash used in investing activities was $13.8 million for the year ended December 31, 2021, which was primarily attributable to the payments made to acquire property and equipment.
Net cash used in investing activities was $3.8 million for the year ended December 31, 2022, which was primarily attributable to the payments made to acquire property and equipment of $9.2 million and partially offset by the proceeds received from sale of investment of $5.4 million.
The credit facility contains customary covenants, including covenants that limit or restrict our ability to incur capital expenditures and lease payments, make certain investments and enter into certain related-party transactions. The credit facility also requires us to maintain certain minimum financial ratios and maintain operation banking relationship with the financial institutions.
The credit facility contains customary covenants, including covenants that limit or restrict our ability to incur capital expenditures and lease payments, make certain investments, and enter into certain related-party transactions. The credit facility also requires us to maintain certain minimum financial ratios and maintain an operational banking relationship with the financial institutions.
Through Newegg.com , our flagship retail site, and other online platforms, we connect our global customer base to a wide and increasing assortment of tech products and a massive pool of brands, sellers, suppliers, manufacturers, distributors, and third-party service providers. Headquartered in California, Newegg’s reach is global.
Through Newegg.com , our flagship retail site, we connect our global customer base to a wide and increasing assortment of tech products and a massive pool of brands, sellers, suppliers, manufacturers, distributors, and third-party service providers. Headquartered in California, Newegg’s reach is global.
As of December 31, 2023 and December 31, 2022, we were in compliance with all covenants related to the line of credit. 59 C. Research and Development, Patents and Licenses, etc. See Item 4.B under the subheadings, “Technology” and “Intellectual Property.” D.
As of December 31, 2024 and December 31, 2023, we were in compliance with all covenants related to the line of credit. C. Research and Development, Patents and Licenses, etc. See Item 4.B under the subheadings, “Technology” and “Intellectual Property.” D.
In general, advances from this line of credit will be subject to interest at the Term SOFR Rate plus the Applicable Margin, as defined in the credit agreement, so long as the Term SOFR Reference Rate or Term SOFR is offered, ascertainable, and not unlawful, or the Alternate Base Rate (to be defined as the highest of the (a) the Base Rate in effect on such day, (b) the sum of the Overnight Bank Funding Rate in effect on such day plus 0.50%, or (c) the daily Term SOFR Rate plus 1.0%) plus the Applicable Margin.
In general, advances from this line of credit will be subject to interest at the Term SOFR Rate plus the Applicable Margin, as defined in the credit agreement, so long as the Term SOFR Reference Rate or Term SOFR is offered, ascertainable, and not unlawful, or the Alternate Base Rate (defined as the highest of the (a) the Base Rate in effect on such day, (b) the sum of the Overnight Bank Funding Rate in effect on such day plus 0.50%, or (c) the Daily LIBOR Rate prior to the 2024 amendment or, after the 2024 amendment, the Daily Simple SOFR plus 1.0%) plus the Applicable Margin.
For the Year Ended December 31, 2023 2022 2021 Summary Consolidated Cash Flow Data: (in millions) Net cash provided by (used in) operating activities $ (3.8 ) $ 20.5 $ (53.3 ) Net cash used in investing activities (14.3 ) (3.8 ) (13.8 ) Net cash provided by financing activities 1.6 1.5 12.7 Foreign currency effect on cash, cash equivalents and restricted cash (0.5 ) 1.0 1.0 Net increase (decrease) in cash and cash equivalents (17.0 ) 19.2 (53.4 ) Cash, cash equivalents and restricted cash at beginning of the year 123.5 104.3 157.7 Cash, cash equivalents and restricted cash at end of the year $ 106.5 $ 123.5 $ 104.3 Operating activities Net cash used in operating activities was $3.8 million for the year ended December 31, 2023.
For the Year Ended December 31, 2024 2023 2022 Summary Consolidated Cash Flow Data: (in millions) Net cash provided by (used in) operating activities $ (0.8 ) $ (3.8 ) $ 20.5 Net cash provided by (used in) investing activities 2.4 (14.3 ) (3.8 ) Net cash provided by (used in) financing activities (6.1 ) 1.6 1.5 Foreign currency effect on cash, cash equivalents and restricted cash (2.3 ) (0.5 ) 1.0 Net increase (decrease) in cash and cash equivalents (6.8 ) (17.0 ) 19.2 Cash, cash equivalents and restricted cash at beginning of the year 106.5 123.5 104.3 Cash, cash equivalents and restricted cash at end of the year $ 99.7 $ 106.5 $ 123.5 Operating activities Net cash used in operating activities was $0.8 million for the year ended December 31, 2024.
During the same periods, our Newegg Marketplace generated net sales of $32.3 million, $47.0 million, and $63.5 million, respectively, and accounted for 2.2%, 2.7%, and 2.7%, respectively, of our total net sales.
During the same periods, our Newegg Marketplace generated net sales of $25.2 million, $32.3 million, and $47.0 million, respectively, and accounted for 2.0%, 2.2%, and 2.7%, respectively, of our total net sales.
For the Year Ended December 31, 2023 2022 2021 (in millions) Net income (loss) $ (59.0 ) $ (57.4 ) $ 36.3 Adjustments: Stock-based compensation expenses 33.7 33.9 6.3 Interest expense (income), net 0.2 (0.5 ) (0.5 ) Income tax (benefit) provision (2.7 ) 14.1 (5.8 ) Depreciation and amortization 13.4 11.0 10.8 Impairment of equity method investment — 2.3 — Loss from equity method investment — — 7.4 Gain from sale of investment (6.8 ) (1.7 ) — Gain from disposal of subsidiary — — (2.0 ) Gain from change in fair value of warrants liabilities (0.1 ) (1.1 ) (0.1 ) Adjusted EBITDA $ (21.3 ) $ 0.6 $ 52.4 B.
For the Year Ended December 31, 2024 2023 2022 (in millions) Net loss $ (43.3 ) $ (59.0 ) $ (57.4 ) Adjustments: Stock-based compensation expenses 27.3 33.7 33.9 Interest expense (income), net (1.7 ) 0.2 (0.5 ) Income tax (benefit) provision (1.3 ) (2.7 ) 14.1 Depreciation and amortization 10.7 13.4 11.0 Impairment of equity method investment — — 2.3 Loss from fixed asset disposal 0.5 — — Gain from sale of investment (1.6 ) (6.8 ) (1.7 ) Gain from change in fair value of warrants liabilities (0.1 ) (0.1 ) (1.1 ) Adjusted EBITDA $ (9.5 ) $ (21.3 ) $ 0.6 B.
For the year ended December 31, 2023, other income, net, primarily consisted of sales tax rebate from Texas of $0.9 million, property rental income of $1.1 million, sales tax discount income of $0.3 million, and foreign exchange gain of $0.3 million.
For the year ended December 31, 2023, other income, net, primarily consisted of sales tax rebates of $0.9 million, property rental income of $1.1 million, sales tax discount of $0.3 million, and foreign exchange gain of $0.3 million.
For the Year Ended December 31, 2023 2022 2021 (in millions, except for percentages) Cost of sales Amount % Amount % Amount % Purchase price of goods sold by us directly $ 1,227.5 92.3 $ 1,405.0 93.4 $ 1,916.3 93.5 Costs related to Marketplace & service revenues 50.9 3.8 49.4 3.3 59.6 2.9 Inbound and outbound freight costs 48.1 3.6 49.2 3.3 64.5 3.1 Inventory write-downs 5.0 0.4 6.0 0.4 8.2 0.4 Addition to (release of) inventory reserves (2.1 ) (0.1 ) (6.0 ) (0.4 ) 1.6 0.1 Total $ 1,329.4 100.0 $ 1,503.6 100.0 $ 2,050.2 100.0 Selling, General and Administrative Expenses The largest component of our selling, general and administrative expenses (“SG&A expenses”), is salary and other compensation costs, consisting of expenses relating to the employment of our employees, as well as temporary personnel to meet our needs in areas such as customer service and fulfillment during seasonal peaks in orders.
For the Year Ended December 31, 2024 2023 2022 (in millions, except for percentages) Cost of sales Amount % Amount % Amount % Purchase price of goods sold by us directly $ 987.9 89.5 $ 1,227.5 92.3 $ 1,405.0 93.4 Costs related to Marketplace & service revenues 72.7 6.6 50.9 3.8 49.4 3.3 Inbound and outbound freight costs 40.8 3.7 48.1 3.6 49.2 3.3 Inventory write-downs 4.2 0.4 5.0 0.4 6.0 0.4 Release of inventory reserves (1.5 ) (0.2 ) (2.1 ) (0.1 ) (6.0 ) (0.4 ) Total $ 1,104.1 100.0 $ 1,329.4 100.0 $ 1,503.6 100.0 51 Selling, General and Administrative Expenses The largest component of our selling, general and administrative expenses (“SG&A expenses”), is salary and other compensation costs, consisting of expenses relating to the employment of our employees, as well as temporary personnel to meet our needs in areas such as customer service and fulfillment during seasonal peaks in orders.
The number of active customers, repeat purchase rates, and average order value are indicators of the size and engagement of our customer base. 48 Newegg’s product mix We offer a wide range of technology products from a broad mix of brands and sellers. As of December 31, 2023, we offered approximately 6.2 million SKUs across over 1,595 categories.
The number of active customers, repeat purchase rates, and average order value are indicators of the size and engagement of our customer base. Newegg’s product mix We offer a wide range of technology products from a broad mix of brands and sellers. As of December 31, 2024, we offered approximately 4.4 million SKUs across over 1,510 categories.
See “— Newegg’s Business Model.” For the Year Ended December 31, 2023 2022 2021 (in millions) Net Sales $ 1,497.0 $ 1,720.3 $ 2,376.2 Adjustments: GMV – Marketplace 369.7 552.2 742.4 Marketplace Commission (33.6 ) (49.6 ) (67.0 ) Deferred Revenue (5.4 ) (9.3 ) (8.3 ) Other (15.2 ) (17.5 ) (14.9 ) GMV $ 1,812.5 $ 2,196.1 $ 3,028.4 Adjusted EBITDA Adjusted EBITDA is a financial measure that includes the removal of various one-time, irregular, and non-recurring items from EBITDA.
See “— Newegg’s Business Model.” For the Year Ended December 31, 2024 2023 2022 (in millions) Net Sales $ 1,235.6 $ 1,497.0 $ 1,720.3 Adjustments: GMV – Marketplace 318.6 369.7 552.2 Marketplace Commission (25.9 ) (33.6 ) (49.6 ) Deferred Revenue 7.1 (5.4 ) (9.3 ) Other (1.7 ) (15.2 ) (17.5 ) GMV $ 1,533.7 $ 1,812.5 $ 2,196.1 Adjusted EBITDA Adjusted EBITDA is a financial measure that includes the removal of various one-time, irregular, and non-recurring items from EBITDA.
Newegg’s ability to source products from key suppliers on favorable terms As of December 31, 2023, we offered over 103,000 direct sales SKUs sourced from at least 325 suppliers globally. We maintain extensive, long-standing and mutually beneficial relationships with many of the biggest tech product brands and distributors globally.
Newegg’s ability to source products from key suppliers on favorable terms As of December 31, 2024, we offered over 73,500 direct sales SKUs sourced from at least 315 suppliers globally. We maintain extensive, long-standing and mutually beneficial relationships with many of the biggest tech product brands and distributors globally.
Factors Affecting Newegg’s Results of Operations Our financial condition and results of operations have been, and will continue to be, affected by a number of important factors, including the following: Newegg’s ability to grow our customer base and increase their engagement level We monitor the following key operating metrics to evaluate our user traffic and the engagement of our customer base.
We refer to such net sales as services revenues. 48 Factors Affecting Newegg’s Results of Operations Our financial condition and results of operations have been, and will continue to be, affected by a number of important factors, including the following: Newegg’s ability to grow our customer base and increase their engagement level We monitor the following key operating metrics to evaluate our user traffic and the engagement of our customer base.
We anticipate that our existing cash and funds generated from operations, combined with periodic draws from our existing line of credit, will be sufficient to meet our working capital needs and expected capital expenditures for at least 12 months from the date of the filing of this annual report. Our cash and cash equivalents are primarily denominated in U.S. dollars.
We anticipate that our existing cash and funds generated from operations, combined with periodic draws from our existing line of credit, will be sufficient to meet our working capital needs and expected capital expenditures for at least 12 months from the date of the filing of this annual report.
For the Year Ended December 31, 2023 2022 2021 (in millions, except for percentages) Net sales Amount % Amount % Amount % Direct sales revenues $ 1,396.6 93.3 $ 1,607.0 93.4 $ 2,243.4 94.4 Marketplace revenues 32.3 2.2 47.0 2.7 63.5 2.7 Services revenues 68.1 4.5 66.3 3.9 69.3 2.9 Total $ 1,497.0 100.0 $ 1,720.3 100.0 $ 2,376.2 100.0 Cost of Sales The largest component of our cost of sales is the purchase price of goods that we directly sell to customers.
For the Year Ended December 31, 2024 2023 2022 (in millions, except for percentages) Net sales Amount % Amount % Amount % Direct sales revenues $ 1,123.5 91.0 $ 1,396.6 93.3 $ 1,607.0 93.4 Marketplace revenues 25.2 2.0 32.3 2.2 47.0 2.7 Services revenues 86.9 7.0 68.1 4.5 66.3 3.9 Total $ 1,235.6 100.0 $ 1,497.0 100.0 $ 1,720.3 100.0 Cost of Sales The largest component of our cost of sales is the purchase price of goods that we directly sell to customers.
For the Year Ended December 31, Key Operating Metrics: 2023 2022 2021 Number of active customers (1) 2.5 million 2.7 million 3.5 million Repeat purchase rate (2) 29.2 % 31.3 % 31.9 % Average order value (3) $ 379 $ 411 $ 442 Note: 1.
For the Year Ended December 31, Key Operating Metrics: 2024 2023 2022 Number of active customers (1) 2.1 million 2.5 million 2.7 million Repeat purchase rate (2) 26.0 % 29.2 % 31.3 % Average order value (3) $ 396 $ 379 $ 411 Note: 1.
For the Year Ended December 31, 2023 2022 2021 (in millions, except for percentages) Selling, general and administrative expenses Amount % Amount Amount % Salary and other compensation costs $ 121.8 51.0 $ 134.5 50.5 $ 126.6 43.3 Merchant processing fees 35.3 14.8 42.7 16.0 59.3 20.3 Advertising and marketing 12.7 5.3 14.7 5.5 32.8 11.2 Depreciation and amortization 13.4 5.6 11.0 4.1 11.1 3.8 Others 55.4 23.3 63.3 23.9 62.7 21.4 Total $ 238.6 100.0 $ 266.2 100.0 $ 292.5 100.0 51 Results of Operations The following table summarizes our consolidated results of operations in absolute amounts and as percentages of our net sales for the periods indicated.
For the Year Ended December 31, 2024 2023 2022 (in millions, except for percentages) Selling, general and administrative expenses Amount % Amount Amount % Salary and other compensation costs $ 89.3 48.8 $ 121.8 51.0 $ 134.5 50.5 Merchant processing fees 28.0 15.3 35.3 14.8 42.7 16.0 Advertising and marketing 14.0 7.7 12.7 5.3 14.7 5.5 Depreciation and amortization 10.7 5.8 13.4 5.6 11.0 4.1 Others 41.0 22.4 55.4 23.3 63.3 23.9 Total $ 183.0 100.0 $ 238.6 100.0 $ 266.2 100.0 Results of Operations The following table summarizes our consolidated results of operations in absolute amounts and as percentages of our net sales for the periods indicated.
Amounts due to us from payment processors that are classified as cash and cash equivalents totaled $12.9 million and $13.0 million at December 31, 2023 and December 31, 2022, respectively.
Amounts due to us from payment processors that are classified as cash and cash equivalents totaled $6.3 million and $12.9 million at December 31, 2024 and December 31, 2023, respectively.
Gain from sale of investment For the year ended December 31, 2023, we sold 60% of our investment in Bitmain Technologies Holding Company for $14.1 million and all of our investment in Bitdeer Technologies Holding Company for $1.7 million. The Company recorded a total gain on sale of investment of $6.8 million.
For the year ended December 31, 2023, we sold 60% of our investment in Bitmain Technologies Holding Company for $14.1 million and all of our investment in Bitdeer Technologies Holding Company for $1.7 million. The Company recorded a total gain on sale of investment of $6.8 million. See Note 6 to the consolidated financial statements for further information.
The adjustments for non-cash expenses are primarily comprised of (i) $10.8 million of depreciation and amortization that was associated with property and equipment; (ii) $8.3 million of provision for obsolete and excess inventory; (iii) $6.3 million of stock-based compensation; (iv) $7.4 million equity loss from equity method investments; and partially offset by $12.7 million from deferred income taxes.
The adjustments for non-cash expenses are primarily comprised of (i) $10.7 million of depreciation and amortization that was associated with property and equipment; (ii) $3.8 million of provision for obsolete and excess inventory; (iii) $0.7 million from deferred income taxes; and (iv) $27.3 million of stock-based compensation, partially offset by (a) $1.6 million gain from sale of investment.
Net cash provided by financing activities was $1.5 million for the year ended December 31, 2022, which was mainly due to (i) borrowings under line of credit of $46.2 million; and (ii) proceeds from exercise of stock options of $2.9 million, partially offset by (a) the repayment of line of credit of $45.7 million; and (b) payments for employee taxes related to stock compensation of $1.5 million.
Net cash provided by financing activities was $1.5 million for the year ended December 31, 2022, which was mainly due to (i) borrowings under line of credit of $46.2 million; and (ii) proceeds from exercise of stock options of $2.9 million, partially offset by (a) the repayment of line of credit of $45.7 million; and (b) payments for employee taxes related to stock compensation of $1.5 million. 58 Capital Expenditures Our capital expenditures are incurred primarily in connection with purchases of property and equipment and leasehold improvements.
Change in fair value of warrants liabilities Warrants are remeasured at fair value with changes in fair value recorded in earnings in each reporting period. For the year ended December 31, 2022 and 2021, we recorded gain on the change in fair value of warrant liabilities of $1.1 million and $0.1 million, respectively.
Change in fair value of warrants liabilities Warrants are remeasured at fair value with changes in fair value recorded in earnings in each reporting period. For the years ended December 31, 2024 and 2023, we recorded gain on the change in fair value of warrant liabilities of $0.01 million.
Credit Agreements We entered into a credit agreement in August 2021 with several financing institutions that provided a revolving credit facility of up to $100 million with a maturity date of August 20, 2024.
Credit Agreements In July 2018, we entered into a credit agreement with several financial institutions that provided a revolving credit facility of up to $100.0 million with a maturity date of July 27, 2021. In August 2021, we amended the credit agreement to extend the maturity date to August 20, 2024.
These VIPs are sometimes tied to the volume of our purchases or sales and represent an indirect or effective reduction of the selling price of the suppliers’ products.
These VIPs are sometimes tied to the volume of our purchases or sales and represent an indirect or effective reduction of the selling price of the suppliers’ products. Therefore, we treat these program payments as reductions to cost of sales.
Segment Information Our chief operating decision maker (i.e. chief executive officer) reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenue by countries or regions for purposes of allocating resources and evaluating financial performance.
Segment Information Our chief operating decision maker (i.e. chief executive officer) reviews financial information presented on a consolidated basis, accompanied by disaggregated information about net sales by revenue stream, gross margin and operating expenses by expense type for purposes of allocating resources and evaluating financial performance.
For Term SOFR Rate loans, we may select interest periods of one or three months. Interest on Term SOFR Rate loans shall be payable at the end of the selected interest period. Interest on Alternate Base Rate loans is payable monthly.
For Term SOFR Rate loans, we may select interest periods of one or three months. Interest on Term SOFR Rate loans shall be payable at the end of the selected interest period. Interest on Alternate Base Rate loans is payable monthly. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis.
To maintain availability of funds under the loan agreement, we will pay on a quarterly basis, an unused commitment fee of 0.15% per annum on the unused amount for the facility.
To maintain availability of funds under the credit agreement, we pay on a quarterly basis, an unused commitment fee of 0.15% per annum prior to the 2024 amendment or, after the 2024 amendment, 0.20% per annum, on the unused amount for the facility.
Also, as a result of this inventory build-up and faster inventory turnover during the fourth quarter, our accounts payable are typically at their highest levels at year-end, as compared to the first, second and third quarters when sales are lower.
Such inventory build-up may require us to expend cash faster than we generate by our operations during these periods. Also, as a result of this inventory build-up and faster inventory turnover during the fourth quarter, our accounts payable are typically at their highest levels at year-end, as compared to the first, second and third quarters when sales are lower.
For the year ended December 31, 2023, interest income increased to $2.3 million from $1.2 million for the year ended December 31, 2022. For the year ended December 31, 2023, interest expense increased to $2.5 million from $0.7 million for the year ended December 31, 2022.
For the year ended December 31, 2024, interest income increased to $2.7 million from $2.3 million for the year ended December 31, 2023.
During the same period, our gross profit decreased by 22.7% from $216.7 million for the year ended December 31, 2022 to $167.6 million for the year ended December 31, 2023.
During the same period, our gross profit decreased by 21.5% from $167.6 million for the year ended December 31, 2023 to $131.5 million for the year ended December 31, 2024.
Selling, general and administrative expenses (“SG&A”) For the year ended December 31, 2023, SG&A expenses decreased to $238.6 million from $266.2 million for the year ended December 31, 2022, which mainly resulted from (i) a decrease in salary and other compensation costs by $12.7 million, (ii) a decrease in merchant payment fee by $7.4 million which is variable to sales, and (iii) a decrease in marketing expense by $2.0 million.
Selling, general and administrative expenses (“SG&A”) For the year ended December 31, 2024, SG&A expenses decreased to $183.0 million from $238.6 million for the year ended December 31, 2023, which mainly resulted from (i) a $32.5 million decrease in salary and other compensation costs, (ii) a $5.9 million decrease in rent, and (iii) a $7.3 million decrease in merchant payment fees, which is variable to sales.
Therefore, we treat these program payments as reductions to cost of sales. 50 The following table sets forth the components of our cost of sales, in absolute amounts and as percentages of total net sales, for the periods indicated.
The following table sets forth the components of our cost of sales, in absolute amounts and as percentages of total net sales, for the periods indicated.
GMV also includes the services fees charged through our NPS in rendering services for our 3PL, SBN, SLS, staffing and media ad services, as well as the sales made by our Asia subsidiaries.
GMV also includes the services fees charged through our Newegg Partner Services in rendering services for our 3PL, Shipped-by-Newegg (“SBN”), shipping label service (“SLS”), staffing and media ad services, as well as the sales made by our Asia subsidiaries.
Net income/(loss) For the year ended December 31, 2023, we recorded a net loss of $59.0 million, as compared to $57.4 million for the same period in 2022. The decrease in net income is primarily driven by a decline in our net sales and gross margin.
Net loss For the year ended December 31, 2024, we recorded a net loss of $43.3 million, as compared to a net loss of $59.0 million for the same period in 2023. The decrease in net loss is primarily driven by a decline in SG&A.
The increase in our capital expenditures in 2023 was primarily driven by the purchase of our new office building in Diamond Bar, California, for an aggregate purchase price of $23.2 million.
Our capital expenditures were $3.6 million, $30.3 million, and $9.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. The increase in our capital expenditures in 2023 was primarily driven by the purchase of our new office building in Diamond Bar, California, for an aggregate purchase price of $23.2 million.
The line of credit is secured by certain of our U.S. subsidiaries and is collateralized by certain of our assets. Such assets include all receivables, equipment and fixtures, general intangibles, inventory, subsidiary stock, securities, investment property, and financial assets, contract rights, and ledger sheets, as defined in the loan agreement.
Such assets include all receivables, equipment and fixtures, general intangibles, inventory, subsidiary stock, securities, property, and financial assets, contract rights, and ledger sheets, as defined in the credit agreement.
The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders.
The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.
Cost of sales & gross profit For the year ended December 31, 2022, our cost of sales decreased by 26.7% compared to the comparable prior year period from $2,050.2 million in 2021 to $1,503.6 million in 2022, generally reflective of the decrease in our net sales.
Cost of sales & gross profit For the year ended December 31, 2024, our cost of sales decreased by 16.9% compared to the comparable prior year period from $1,329.4 million in 2023 to $1,104.1 million in 2024, generally reflective of the decrease in our net sales.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net sales Net sales decreased by 13.0% for the year ended December 31, 2023 compared to the comparable prior year period from $1,720.3 million in 2022 to $1,497.0 million in 2023, which was mainly due to the decrease in GMV from our direct sales and marketplace businesses from $1,544.8 million and $552.2 million for the year ended December 31, 2022, respectively, to $1,344.4 million and $369.7 million for the year ended December 31, 2023, respectively.
(2) Retroactively adjusted for the twenty-for-one share combination, effective April 7, 2025. 52 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net sales Net sales decreased by 17.5% for the year ended December 31, 2024 compared to the comparable prior year period from $1,497.0 million in 2023 to $1,235.6 million in 2024, which was mainly due to the decrease in GMV from our direct sales and marketplace businesses from $1,344.4 million and $369.7 million for the year ended December 31, 2023, respectively, to $1,109.0 million and $318.6 million for the year ended December 31, 2024, respectively.
The changes in operating assets and liabilities represented $109.1 million cash used in (i) an increase in inventory of $70.8 million; (ii) an increase in other assets of $50.9 million; (iii) a decrease in accounts payable of $20.1 million; (iv) a decrease in deferred revenue of $7.4 million; and (v) an increase in prepaid expenses of $2.2 million, partially offset by (a) an increase in accrued liabilities and other liabilities of $41.5 million; and (b) a decrease in accounts receivable of $0.8 million.
The changes in operating assets and liabilities represented $0.2 million cash used in (i) a decrease in accounts payable of $57.4 million; and (ii) a decrease in accrued liabilities and other liabilities of $8.4 million; and (iii) an increase in prepaid expenses of $0.9 million, partially offset by (a) a decrease in inventory of $32.9 million; (b) a decrease in other assets of $17.4 million; (c) a decrease in accounts receivable of $14.5 million; and (d) an increase in deferred revenue of $1.6 million. 57 Net cash used in operating activities was $3.8 million for the year ended December 31, 2023.
Other income, net For the year ended December 31, 2023 and 2022, we recorded other income, net of $2.6 million and $5.2 million, respectively.
For the year ended December 31, 2024, interest expense decreased to $1.0 million from $2.5 million for the year ended December 31, 2023. 53 Other income, net For the years ended December 31, 2024 and 2023, we recorded other income, net, of $3.5 million and $2.6 million, respectively.
Gain from sale of investment For the year ended December 31, 2022, we sold 25% of our investment in Bitmain Technologies Holding Company for $5.4 million and recorded a gain on sale of investment of $1.7 million. See Note 6 to the consolidated financial statements for further information.
Gain from sale of investment For the year ended December 31, 2024, we sold all of our remaining investment in Bitmain Technologies Holding Company for $3.9 million and recorded a gain on sale of investment of $1.6 million.
Leveraging our extensive fulfillment and warehousing network and the global footprint of our suppliers and sellers, we are able to offer merchandise sourced from over 40 countries and regions to customers located in over 20 countries and regions and deliver customer services in multiple languages. 47 Newegg’s Business Model GMV is the primary driver of our net sales, as we derive a significant majority of net sales from the GMV transacted on our online platforms, net of cancellations and returns.
Leveraging our extensive fulfillment and warehousing network and the global footprint of our suppliers and sellers, we are able to offer merchandise sourced from over 30 countries and regions to customers located in 20 countries and regions and deliver customer services in multiple languages.
The Company also considers the uncertainty posed by the current economic environment and the effect of this uncertainty on the various factors that the Company takes into account in evaluating the need for valuation allowance. 60 The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position.
Recent Accounting Pronouncements For detailed discussion on recent accounting pronouncements, see Note 3 to the consolidated financial statements of Newegg Commerce, Inc. included elsewhere in this annual report.
Recent Accounting Pronouncements For detailed discussion on recent accounting pronouncements, see Note 3 to the consolidated financial statements. 60
For the year ended December 31, 2022, other income, net, primarily consisted of sales tax rebate from Texas of $1.2 million, property rental income of $1.4 million, sales tax discount income of $0.4 million, foreign exchange gain of $0.9 million and other miscellaneous income of $1.3 million.
For the year ended December 31, 2024, other income, net, primarily consisted of property rental income of $1.8 million, vendor incentive payments of $1.5 million, and sales tax discount of $0.3 million.
We believe that these are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. 55 GMV GMV is the total dollar value of products sold on our websites and third-party marketplace platforms, directly to customers and by our Marketplace sellers through Newegg Marketplace, net of returns, discounts, taxes, and cancellations.
We believe that these are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital.
We historically experience higher sales in the fourth quarter due to the holiday season. In anticipation of such higher sales, we typically begin building up our inventory levels in the late third quarter. Such inventory build-up may require us to expend cash faster than we generate by our operations during these periods.
Our cash and cash equivalents are primarily denominated in U.S. dollars. 56 We historically experience higher sales in the fourth quarter due to the holiday season. In anticipation of such higher sales, we typically begin building up our inventory levels in the late third quarter.
Provision for/(benefit from) income taxes Our benefit from income taxes was $2.7 million for the year ended December 31, 2023 compared to a provision of $14.1 million for the year ended December 31, 2022.
Benefit from income taxes Our benefit from income taxes was $1.3 million for the year ended December 31, 2024 compared to $2.7 million for the year ended December 31, 2023. The decrease in our benefit from income taxes was primarily due to a non-recurring state income position the Company settled favorably in 2023.
For the years ended December 31, 2023, 2022, and 2021, our Newegg Marketplace generated GMV of $369.7 million, $552.2 million, and $742.4 million, respectively, and accounted for approximately 20.4%, 25.1% and 24.5%, respectively, of our total GMV.
Success of Newegg Marketplace A key component of our long-term strategy is the success of our Newegg Marketplace, which we believe is an important driver of future profitable growth. 49 For the years ended December 31, 2024, 2023, and 2022, our Newegg Marketplace generated GMV of $318.6 million, $369.7 million, and $552.2 million, respectively, and accounted for approximately 20.8%, 20.4% and 25.1%, respectively, of our total GMV.
We have prepared our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). Overview Newegg is a leading technology-focused e-commerce company in North America, and ranked as the number one online marketplace in the electronics product category according to Web Retailer, based on an estimated 16.9 million website visits for the month of April 2023.
We have prepared our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). Overview Newegg is a leading technology-focused e-commerce company in North America.
If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer. 57 Historical Cash Flows The following table sets forth our selected consolidated cash flow data for the years ended December 31, 2023, 2022, and 2021.
Historical Cash Flows The following table sets forth our selected consolidated cash flow data for the years ended December 31, 2024, 2023, and 2022.
The revolving credit facility includes a letter of credit sublimit of $30.0 million, which can be used to issue standby and trade letters of credit, and a $20.0 million sublimit for swingline loans. In April 2023, we amended the credit agreement in order to transition the benchmark rate for certain loans made under the credit agreement from LIBOR to SOFR.
In April 2023, we amended the credit agreement in order to transition the benchmark rate for certain loans made under the credit agreement from LIBOR to SOFR (as defined in the credit agreement).
The decrease in GMV and net sales in our Marketplace business for the year ended December 31, 2023 versus prior years is primarily due to a decrease in consumer demand, but also partially attributable to a significant year-over-year reduction in the number of Marketplace sellers and SKUs due to quality control and fraud prevention initiatives, as well as category consolidation initiatives designed to streamline our Marketplace catalogue.
The decrease in GMV and net sales in our Marketplace business for the year ended December 31, 2024 versus prior years was primarily driven by softening consumer demand amid macroeconomic uncertainties. Additionally, the decrease was influenced by a strategic reduction in underperforming sellers, as part of our enhanced quality control and fraud prevention measures.
Non-GAAP Financial Measures We have included GMV and Adjusted EBITDA, non-GAAP financial measures, in this annual report.
Results of Operations – Year Ended December 31, 2023, Compared to Year Ended December 31, 2022” of our Annual Report on Form 20-F as of and for the year ended December 31, 2023. 54 Non-GAAP Financial Measures We have included GMV and Adjusted EBITDA, non-GAAP financial measures, in this annual report.
Net cash provided by financing activities was $12.7 million for the year ended December 31, 2021, which was mainly due to (i) cash received from common control asset transaction of $11.4 million; and (ii) borrowings under line of credit of $0.8 million.
Financing activities Net cash used in financing activities was $6.1 million for the year ended December 31, 2024, which was mainly due to (i) repayment of line of credit of $72.5 million; (ii) repurchase of common stock of $3.5 million; (iii) payments for employee taxes related to stock compensation of $1.3 million, and (iv) repayment of long term debt of $1.3 million, partially offset by (a) borrowings under line of credit of $72.5 million; and (ii) proceeds from exercise of stock options of $0.1 million.
Our profit margin decreased to 11.2% for the year ended December 31, 2023 from 12.6% for the year ended December 31, 2022, primarily due to the significant decline in consumer demand caused by reduction in consumer discretionary spending for certain products such as video graphic cards, desktops and notebooks.
Our profit margin decreased to 10.6% for the year ended December 31, 2024 from 11.2% for the year ended December 31, 2023, primarily due to reduced consumer demand for upgrading key technology products like CPUs and graphics cards. To remain competitive amid softer sales, we implemented aggressive promotions in 2024, resulting in a margin decline.
In the event of the permanent or indefinite cessation of the Term SOFR Rate, the Benchmark Replacement will replace the Term SOFR Rate. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis. As of December 31, 2023 and December 31, 2022, there was no balance outstanding under this line of credit.
In the event of the permanent or indefinite cessation of the Term SOFR Rate, the Benchmark Replacement will replace the Term SOFR Rate. The line of credit is secured by certain of our subsidiaries and is collateralized by certain of our assets.
For the year ended December 31, 2021, other income, net, primarily consisted of sales tax rebate from Texas of $1.3 million, insurance proceeds of approximately $1.0 million related to the inventory loss in the U.S., property rental income of $1.6 million, sales tax discount income of $0.4 million, and other miscellaneous income of $0.8 million, which was partially offset by foreign exchange loss of $3.3 million.
Investing activities Net cash provided by investing activities was $2.4 million for the year ended December 31, 2024, which was primarily attributable to the (i) proceeds received from sale of investment of $3.8 million; and (ii) proceeds received from disposal of property and equipment of $2.2 million, partially offset by the payments made to acquire property and equipment of $3.6 million.
Removed
We refer to such net sales as services revenues.
Added
Newegg’s Business Model GMV is the primary driver of our net sales, as we derive a significant majority of net sales from the GMV transacted on our online platforms, net of cancellations and returns.
Removed
Success of Newegg Marketplace A key component of our long-term strategy is the success of our Newegg Marketplace, which we believe is an important driver of future profitable growth.
Added
The decrease in GMV was primarily due to consumer prioritization of essential purchases over discretionary technology upgrades driven by high interest rates and economic uncertainties. In addition, demand for technology products was further slowed by delayed new product launches.
Removed
The decrease in GMV was primarily due to conservative consumer spending in technology products in light of economic uncertainty and the inflationary environment as consumers reduced their discretionary spending. In addition, consumer purchases of technology products during the pandemic, along with longer expected product lifespans, have extended the upgrade cycle.
Added
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For a discussion of our results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, see “Item 5. Operating and Financial Review and Prospects – A.
Removed
As a result, the customer demand for technology products has decreased compared to the prior year period. 52 Cost of sales & gross profit For the year ended December 31, 2023, our cost of sales decreased by 11.6% compared to the comparable prior year period from $1,503.6 million in 2022 to $1,329.4 million in 2023, generally reflective of the decrease in our net sales.
Added
GMV GMV is the total dollar value of products sold on our websites and third-party marketplace platforms, directly to customers and by our Marketplace sellers through Newegg Marketplace, net of returns, discounts, taxes, and cancellations.
Removed
We implemented aggressive promotions in 2023 in order to stay competitive which caused the decline in margin.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

46 edited+7 added−10 removed69 unchanged
Biggest changeWe did not separately set aside any amounts for pensions, retirement, or other benefits for our executive officers, other than pursuant to relevant statutory requirements. 64 For the year ended December 31, 2023, the aggregate cash compensation accrued for our CEO was approximately $2.6 million, of which $1.6 million was for a 2023 bonus that was paid in July 2023 and February 2024.
Biggest changeIn addition, the executive officers exercised stock options and restricted stock units for the year ended December 31, 2024 that resulted in aggregate proceeds of $2.7 million. We did not separately set aside any amounts for pensions, retirement, or other benefits for our executive officers, other than pursuant to relevant statutory requirements.
Zhitao He. Mr. He has served as a director of the Company since October 2016 and has been chairman of the board of directors since March 2018 (other than a brief hiatus in 2020-2021). He has been a director of Newegg Inc. since March 2017. Mr.
Mr. Zhitao He. Mr. He has served as a director of the Company since October 2016 and has been chairman of the board of directors since March 2018 (other than a brief hiatus in 2020-2021). He has been a director of Newegg Inc. since March 2017. Mr.
Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting. The Nasdaq Listing Rules generally require that a majority of an issuer’s board of directors must consist of independent directors. However, the Nasdaq Listing Rules permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters.
Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting. 65 The Nasdaq Listing Rules generally require that a majority of an issuer’s board of directors must consist of independent directors. However, the Nasdaq Listing Rules permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters.
From February 2013 to January 2015, Ms. Yang was the Chief Financial Officer and Secretary of the Board of Beijing Digit Horizon Technology Limited, the predecessor of Hangzhou Lianluo. Mr. Fuya (Frank) Zheng. Mr. Zheng was appointed as an independent director in April 2020. Mr. Zheng has extensive experience in corporate finance and investment management.
From February 2013 to January 2015, Ms. Yang was the Chief Financial Officer and Secretary of the Board of Beijing Digit Horizon Technology Limited, the predecessor of Hangzhou Lianluo. 61 Mr. Fuya (Frank) Zheng. Mr. Zheng was appointed as an independent director in April 2020. Mr. Zheng has extensive experience in corporate finance and investment management.
We do not have a lead independent director because we believe our independent directors are encouraged to freely voice their opinions on a relatively small company board. 66 Our Amended and Restated Memorandum and Articles of Association, subject to compliance with applicable laws and Nasdaq Listing Rules, provides that Digital Grid and Mr.
We do not have a lead independent director because we believe our independent directors are encouraged to freely voice their opinions on a relatively small company board. Our Amended and Restated Memorandum and Articles of Association, subject to compliance with applicable laws and Nasdaq Listing Rules, provides that Digital Grid and Mr.
To be entitled to indemnification, these persons must have acted honestly and in good faith with a view to the best interest of the Company and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful. We have entered into indemnification agreements with our directors and executive officers.
To be entitled to indemnification, these persons must have acted honestly and in good faith with a view to the best interest of the Company and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful. 66 We have entered into indemnification agreements with our directors and executive officers.
He served as the Chief Executive Officer of Lianluo Smart Limited from April, 2020 to August 2020. Mr. Zhitao He is also the Chairman of the Board of Hangzhou Lianluo, a China-listed company and parent of Newegg. Mr. He successfully led Hangzhou Lianluo to list on China’s A share market (ticker: 002280).
He served as the Chief Executive Officer of Lianluo Smart Limited from April, 2020 to August 2020. Mr. He is also the Chairman of the Board of Hangzhou Lianluo, a China-listed company and parent of Newegg. Mr. He successfully led Hangzhou Lianluo to list on China’s A share market (ticker: 002280).
Zhitao He received a warning and was required to pay a fine of RMB 400,000. Further, the shares of our common stock owned by Digital Grid have been pledged to Bank of China Limited Zhejiang Branch, or BOC, as collateral to support working capital loans and letters of credit provided by BOC to Hangzhou Lianluo.
Zhitao He received a warning and was required to pay a fine of RMB 400,000. Further, the shares of our common stock owned by Digital Grid have been pledged to Bank of China Limited Zhejiang Branch(“BOC”) as collateral to support working capital loans and letters of credit provided by BOC to Hangzhou Lianluo.
In 2011, Mr. Chow left Newegg to become CEO of OTTO Group China, the Chinese subsidiary of Germany’s largest online retailer of fashion and lifestyle products. In this role, he helped the company extend its reach beyond Europe and into key parts of Asia.
Chow left Newegg to become CEO of OTTO Group China, the Chinese subsidiary of Germany’s largest online retailer of fashion and lifestyle products. In this role, he helped the company extend its reach beyond Europe and into key parts of Asia.
The compensation committee is responsible for, among other things: ● reviewing and recommending to the board the total compensation package for our most senior executive officers; ● approving and overseeing the total compensation package for our executives other than the most senior executive officers; ● reviewing and recommending to the board the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● reviewing all other compensation and benefit plans as appropriate.
The Compensation Committee is responsible for, among other things: ● reviewing and recommending to the Board the total compensation package for our most senior executive officers; ● reviewing and recommending to the Board the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● reviewing all other compensation and benefit plans as appropriate.
Compensation Committee Our compensation committee currently consists of Mr. Gregory Moore, Mr. Poi (Paul) Wu, and Mr. Fuya (Frank) Zheng. Mr. Wu is the chairman of our compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation relating to our directors and executive officers.
Gregory Moore, Mr. Poi (Paul) Wu, and Mr. Fuya (Frank) Zheng. Mr. Wu is the chairman of our Compensation Committee. The Compensation Committee assists the Board in reviewing and approving the compensation structure, including all forms of compensation relating to our directors and executive officers.
Hou’s direction infuses data science, machine learning and artificial intelligence to enhance the shopping experience with search personalization and product recommendations, as well as safeguards that deter fraudulent activity and eliminate counterfeit product listings on Newegg’s Marketplace. Prior to Mr.
Hou’s direction infuses data science, machine learning and AI to enhance the shopping experience with search personalization and product recommendations, as well as safeguards that deter fraudulent activity and eliminate counterfeit product listings on Newegg’s Marketplace. Prior to Mr.
The following tables give breakdowns of our full-time employees as of December 31, 2023 by function and by region.
The following tables give breakdowns of our full-time employees as of December 31, 2024 by function and by region.
These grants vest over four years, with 25% vesting on the one-year anniversary of grant, and the remainder vesting monthly over the following three years, such that they will be fully vested after four years. One half of the grants, or 3,687,450 RSUs, were granted to the Chief Executive Officer, Anthony Chow.
These grants vest over four years, with 25% vesting on the one-year anniversary of grant, and the remainder vesting monthly over the following three years, such that they will be fully vested after four years. One half of the grants, or 184,373 RSUs, were granted to the Chief Executive Officer, Anthony Chow.
In August 2022, 5,560,780 performance-based vesting restricted stock units (“PRSUs”) were granted to the Chief Executive Officer, Anthony Chow, vesting over four performance periods. The vesting of each PRSU is based on financial performance tied to Budgeted GMV as defined in the grant agreement. The vesting of PRSUs is determined at the end of each of the four-year performance periods.
In August 2022, 277,289 performance-based vesting restricted stock units (“PRSUs”) were granted to the Chief Executive Officer, Anthony Chow, vesting over four performance periods. The vesting of each PRSU is based on financial performance tied to Budgeted GMV as defined in the grant agreement. The vesting of PRSUs is determined at the end of each of the four-year performance periods.
D. Employees As of December 31, 2023 and 2022, we employed a total of 932 and 1,355 full-time employees, respectively. The reduction in our employee count was primarily due to workforce optimization measures made in response to changing macroeconomic conditions and shifting consumer demand for our products.
D. Employees As of December 31, 2024 and 2023, we employed a total of 762 and 932 full-time employees, respectively. The reduction in our employee count was primarily due to workforce optimization measures made in response to changing macroeconomic conditions and shifting consumer demand for our products.
Under the annual Profit Sharing Program, the CEO and other executive officers are entitled to an annual cash bonus, as determined in the discretion of the Compensation Committee, based upon the Company’s GMV and adjusted EBITDA for the year, with the bonus payout weighted 70% based on GMV performance and 30% based upon adjusted EBITDA performance for program year 2023.
Under the annual Profit Sharing Program, the CEO and other executive officers are entitled to an annual cash bonus, as determined in the discretion of the Compensation Committee, based upon the Company’s GMV and adjusted EBITDA for the year, with the bonus payout weighted 50% based on GMV performance and 50% based upon adjusted EBITDA performance for program year 2024.
In September 2015, the Newegg 2005 Incentive Award Plan was amended to permit additional awards to be made after the tenth anniversary of the original adoption of said plan. 2021 Equity Incentive Plan In November 2021, the Newegg 2021 Equity Incentive Plan was approved, with 7,374,900 common shares reserved for issuance thereunder.
In September 2015, the Newegg 2005 Incentive Award Plan was amended to permit additional awards to be made after the tenth anniversary of the original adoption of said plan. 2021 Equity Incentive Plan In November 2021, the Newegg 2021 Equity Incentive Plan was approved, with 368,745 common shares reserved for issuance thereunder.
Bonus awards under the Profit Sharing Program start at 30% of base salary (60% for the CEO) based upon meeting the threshold level of performance and are subject to increase based upon performance above threshold.
Bonus awards under the Profit Sharing Program start at 10% of base salary (15% for the CEO) based upon meeting the threshold level of performance and are subject to increase based upon performance above threshold.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures for proper compliance.
The Audit Committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures for proper compliance; and ● reviewing related person transactions as well as the policies and procedures for the review, approval and ratification of related person transactions. 68 Compensation Committee Our Compensation Committee currently consists of Mr.
Under the Discretionary Bonus Program, executives are eligible to receive an annual cash bonus payment based upon corporate and individual performance, as determined in the discretion of the Compensation Committee, with target bonus amounts ranging from 5% of base salary to 30% of base salary for plan year 2023.
Under the Discretionary Bonus Program, executives are eligible to receive an annual cash bonus payment based upon corporate and individual performance, as determined in the discretion of the Compensation Committee, with target bonus amounts ranging from 14% of base salary to 50% of base salary for plan year 2024.
Subject to certain adjustments in the event of a change in capitalization or similar transaction, we may issue a maximum of 82,952,149 common shares under the Newegg 2005 Incentive Award Plan. We issue new common shares from this authorized share pool to settle stock-based compensation awards.
Subject to certain adjustments in the event of a change in capitalization or similar transaction, we may issue a maximum of 4,147,607 common shares under the Newegg 2005 Incentive Award Plan. We issue new common shares from this authorized share pool to settle stock-based compensation awards.
From 2001 to 2004, she served as the Accounting Manager at GVison USA Inc., a US division for Taiwan manufacturing company specialized in liquid-crystal display (LCD) display supplied to Best Buy & CompUSA. She holds a Bachelor’s degree of Science in Accounting from University of Phoenix, Arizona. B.
Ching served as Newegg Senior Director of Accounting overseeing accounting department. From 2001 to 2004, she served as the Accounting Manager at GVison USA Inc., a US division for Taiwan manufacturing company specialized in liquid-crystal display (LCD) display supplied to Best Buy & CompUSA. Ms. Ching holds a Bachelor’s degree of Science in Accounting from University of Phoenix, Arizona. B.
The nominating and corporate governance committee is responsible for, among other things: ● identifying and recommending nominees for election or re-election to our Board or for appointment to fill any vacancy; 69 ● reviewing annually with our Board its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us; ● identifying and recommending to our Board which directors to serve as members and chairpersons of committees of the Board; ● reviewing our corporate governance principles and advising the Board periodically of any significant developments as appropriate; and ● reviewing related person transactions as well as the policies and procedures for the review, approval and ratification of related person transactions.
The Nominating and Corporate Governance Committee is responsible for, among other things: ● identifying and recommending nominees for election or re-election to our Board or for appointment to fill any vacancy; ● reviewing annually with our Board its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us; ● identifying and recommending to our Board which directors to serve as members and chairpersons of committees of the Board; and ● reviewing our corporate governance principles and advising the Board periodically of any significant developments as appropriate.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee currently consists of Mr. Gregory Moore, Mr. Poi (Paul) Wu, and Mr. Fuya (Frank) Zheng. Mr. Zheng is the chairperson of our nominating and corporate governance committee.
Nominating and Corporate Governance Committee Our Nominating and Corporate Governance Committee currently consists of Mr. Richard Weil, Mr. Poi (Paul) Wu, and Mr. Fuya (Frank) Zheng. Mr. Zheng is the chairperson of our Nominating and Corporate Governance Committee.
Our board also has determined that Mr. Moore qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq Listing Rules. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Moore qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq Listing Rules. The Audit Committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Christina S. Ching has served as Newegg’s Chief Accounting Officer since September 2022. From 2013 to 2022, Ms. Ching served as the Chief Financial Officer for North American and Asia regions for Kriss USA Inc. a leading Swiss Defense Manufacture company. From 2004 to 2013, Ms. Ching served as Newegg Senior Director of Accounting overseeing accounting department.
Christina S. Ching. Ms. Ching has served as Newegg’s Chief Accounting Officer since September 2022 and Interim Chief Financial Officer since May 2024. From 2013 to 2022, Ms. Ching served as the Chief Financial Officer for North American and Asia regions for Kriss USA Inc. a leading Swiss Defense Manufacture company. From 2004 to 2013, Ms.
Hangzhou Lianluo is a PRC company with shares listed on the Shenzhen Stock Exchange and is a majority owner of Newegg through Digital Grid, a wholly-owned subsidiary. Mr. He is the Chairman and Chief Executive Officer of Hangzhou Lianluo. Mr.
Hangzhou Lianluo is a PRC company with shares listed on the National Equities Exchange and Quotations, a Chinese over-the-counter exchange, and is a majority owner of Newegg through Digital Grid, a wholly-owned subsidiary of Hangzhou Lianluo. Mr. He is the Chairman and Chief Executive Officer of Hangzhou Lianluo. Mr.
Mr. Chow’s leadership has guided Newegg through some of the Company’s most transformative years. He first served as Vice President of Newegg Inc.’s North American business from 2006 until 2008, before moving to Shanghai to oversee Newegg Inc.’s China operation, as well as OZZO Logistics, a Newegg subsidiary providing 3PL support for other e-commerce companies based in China.
He first served as Vice President of Newegg Inc.’s North American business from 2006 until 2008, before moving to Shanghai to oversee Newegg Inc.’s China operation, as well as OZZO Logistics, a Newegg subsidiary providing 3PL support for other e-commerce companies based in China. In 2011, Mr.
To the best of our knowledge, except as disclosed herein, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities or commodities laws, any laws respecting financial institutions or insurance companies, any law or regulation prohibiting mail or wire fraud in connection with any business entity or been subject to any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization, except for matters that were dismissed without sanction or settlement.
To the best of our knowledge, except as disclosed herein, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities or commodities laws, any laws respecting financial institutions or insurance companies, any law or regulation prohibiting mail or wire fraud in connection with any business entity or been subject to any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization, except for matters that were dismissed without sanction or settlement. 67 Terms of Directors and Executive Officers Each of our directors holds office until a successor has been duly elected and qualified unless the director was appointed by the Board, in which case such director holds office until the next annual meeting of shareholders at which time such director is eligible for re-election.
Wu is the founder and CEO of Carota, a supplier of connected car services. Mr. Wu is also the co-founder of the MOX mobile accelerator. He previously served as the CEO of Pocketnet Tech, a mobile content provider, and has also served in various roles with MediaTek, Hon Hai Foxconn Technology Group and Hong Kong Hutchison Wampoa’s TOM Group. Mr.
He previously served as the CEO of Pocketnet Tech, a mobile content provider, and has also served in various roles with MediaTek, Hon Hai Foxconn Technology Group and Hong Kong Hutchison Wampoa’s TOM Group. Mr.
Our other executive officers received a combined total of 680,000 RSUs. The remaining 3,007,450 RSUs were granted or reserved for 252 other key employees or expected new hires. In July 2022, the Board of Directors approved an amendment of the 2021 Plan to increase the maximum share pool from 7,374,900 to 16,374,900 shares.
Our other executive officers received a combined total of 34,000 RSUs. The remaining 150,373 RSUs were granted or reserved for 252 other key employees or expected new hires. 64 In July 2022, the Board of Directors approved an amendment of the 2021 Plan to increase the maximum share pool from 368,745 to 818,745 shares.
Audit Committee Our audit committee currently consists of Mr. Gregory Moore, Mr. Poi (Paul) Wu, and Mr. Fuya (Frank) Zheng. Mr. Moore is the chairman of our audit committee. We have determined that Mr. Moore, Mr. Wu, and Mr. Zheng satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act.
Moore is the chairman of our Audit Committee. We have determined that Mr. Moore, Mr. Wu, and Mr. Weil satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act. Our Board also has determined that Mr.
He was the former Chairman and the former Chief Executive Officer of Lianluo Smart Limited (the predecessor company of Newegg prior to the Merger) and is currently the chairman of our board. 67 On October 19, 2020, Hangzhou Lianluo announced that it has received a notice of administrative punishment from the Zhejiang Regulatory Bureau of CSRC, which provided, among other things, that (i) Hangzhou Lianluo received a warning and would be required to correct its unlawful acts and pay a fine of RMB 300,000, and (ii) Mr.
On October 19, 2020, Hangzhou Lianluo announced that it has received a notice of administrative punishment from the Zhejiang Regulatory Bureau of CSRC, which provided, among other things, that (i) Hangzhou Lianluo received a warning and would be required to correct its unlawful acts and pay a fine of RMB 300,000, and (ii) Mr.
Prior to Tokai, he served as a strategy consultant for the MAC Group. Richard graduated from Columbia College, magna cum laude, in 1990 and is a CFA charter holder. Mr. Anthony Chow. Mr. Chow is the Global Chief Executive Officer of Newegg. He sets the Company’s strategic direction and works closely with Newegg’s executives for consistent execution across the organization.
Prior to Tokai, he served as a strategy consultant for the MAC Group. Mr. Weil graduated from Columbia College, magna cum laude, in 1990 and is a CFA charter holder. 62 Mr. Anthony Chow. Mr. Chow is the Global Chief Executive Officer of Newegg.
Compensation 2023 Compensation of Directors and Executive Officers For the year ended December 31, 2023, the aggregate cash compensation accrued for directors, as a group, was approximately $1.0 million, of which less than $0.1 million is related to the proceeds from the exercise of stock options. Employee directors did not receive any compensation for their services as directors.
Compensation 2024 Compensation of Directors and Executive Officers For the year ended December 31, 2024, the aggregate cash compensation accrued for directors, as a group, was approximately $0.9 million. Employee directors did not receive any compensation for their services as directors.
Name* Age Position(s) Zhitao He 42 Chairman and Director Fred Faching Chang 67 Vice Chairman and Director Yingmei Yang 53 Director Fuya (Frank) Zheng 57 Independent Director Gregory Moore 74 Independent Director Poi (Paul) Wu 53 Independent Director Richard Weil 55 Independent Director Anthony Chow 58 Chief Executive Officer Robert Chang 56 Chief Financial Officer Jamie Spannos 46 Chief Operating Officer Montaque Hou 43 Chief Information Security Officer Michael Chen 39 Chief Legal Officer Christina Ching 56 Chief Accounting Officer * Except as otherwise indicated below, the business address of our directors and executive officers is 17560 Rowland Street, City of Industry, CA, United States 91748. 61 Mr.
Name* Age Position(s) Zhitao He 43 Chairman and Director Fred Faching Chang 68 Vice Chairman and Director Yingmei Yang 54 Director Fuya (Frank) Zheng 58 Independent Director Gregory Moore 75 Independent Director Poi (Paul) Wu 54 Independent Director Richard Weil 56 Independent Director Anthony Chow 59 Chief Executive Officer Montaque Hou 44 Chief Information Security Officer Michael Chen 40 Chief Legal Officer Christina Ching 57 Interim Chief Financial Officer and Chief Accounting Officer * Except as otherwise indicated below, the business address of our directors and executive officers is 21688 Gateway Center Drive, Suite 300, Diamond Bar, CA, United States 91765.
Department Count Customer Service 54 Finance 58 Fraud Prevention 22 HR 17 Internal Audit 4 IT 347 Legal 6 Logistics 232 Operations 27 Sales & Marketing 165 Total 932 Location Count China 296 Taiwan 46 U.S. 574 Canada 16 Total 932 During the holiday season, we have historically added temporary workers to augment our full-time work force.
Department Count Customer Service 46 Finance 49 Fraud Prevention 20 HR 15 Internal Audit 3 IT 274 Legal 4 Logistics 196 Operations 24 Sales & Marketing 131 Total 762 69 Location Count China 229 Taiwan 23 U.S. 494 Canada 16 Total 762 During the holiday season, we have historically added temporary workers to augment our full-time work force.
In addition, a combined total of 225,000 RSUs were granted to two executive officers who joined the Company in September and October of 2022. 65 Agreements with Executive Officers Pursuant to our standard employment agreements with each of our executive officers (excluding our Chief Executive Officer), the employment with each of such executive officers is for a single three-year term, renewable thereafter in one-year increments.
Agreements with Executive Officers Pursuant to our standard employment agreements with each of our executive officers (excluding our Chief Executive Officer), the employment with each of such executive officers is for a single three-year term, renewable thereafter in one-year increments.
During the periods from October 2005 to August 2008, January 2013 to January 2015, and October 2019 to March 2020, Mr. Chang was also Newegg Inc.’s Chief Executive Officer. Ms. Yingmei Yang. Ms. Yang has served as a director of the Company since April 2020, and as a director of Newegg Inc. since July 2018. Ms.
During the periods from October 2005 to August 2008, January 2013 to January 2015, and October 2019 to March 2020, Mr. Chang was also Newegg Inc.’s Chief Executive Officer. In addition to his positions within Newegg, Mr.
The payout can vary from zero to 100% based on actual results and performance goals may be adjusted by the Compensation Committee from time to time in its sole discretion.
The payout can vary from zero to 100% based on actual results and performance goals may be adjusted by the Compensation Committee from time to time in its sole discretion. In addition, a combined total of 11,250 RSUs were granted to two executive officers who joined the Company in September and October of 2022.
For the year ended December 31, 2023, the aggregate cash compensation accrued for our executive officers, as a group, was approximately $5.4 million, of which approximately $2.3 million was related to 2023 bonus payments that were paid out in July 2023 and February 2024.
Non-employee directors were entitled to receive payment for serving as directors and may receive option grants or restricted stock units. 63 For the year ended December 31, 2024, the aggregate cash compensation accrued for our executive officers, as a group, was approximately $2.6 million, of which approximately $0.9 million was related to 2024 bonus payments that were paid out in July 2024 and January 2025.
In addition, during the year, Mr. Chow exercised restricted stock units with total proceeds of $1.1 million. Discretionary Bonus and Profit Sharing Program Newegg’s CEO and other executive officers are eligible to participate in the Company’s annual Discretionary Bonus Program and Profit Sharing Program.
Discretionary Bonus and Profit Sharing Program Newegg’s CEO and other executive officers are eligible to participate in the Company’s annual Discretionary Bonus Program and Profit Sharing Program.
Chow holds a Bachelor’s degree in Electrical & Electronics Engineering from the University of Toledo, and a Master of Business Administration from the UCLA Anderson School of Management. Mr. Robert Chang. Mr. Chang is the Chief Financial Officer of Newegg. In this role, he is responsible for overseeing all aspects of the Company’s financial performance, including forecasting, evaluation and reporting.
Chow holds a Bachelor’s degree in Electrical & Electronics Engineering from the University of Toledo, and a Master of Business Administration from the UCLA Anderson School of Management. Mr. Montaque Hou. Mr. Hou has served as Newegg’s Chief Information Security Officer since December 2022. In this role, Mr.
Qualification There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by our shareholders by ordinary resolution. 68 Committees of the Board of Directors Currently, three committees have been established under the Board: the audit committee, the compensation committee and the nominating committee. Each committee’s members and functions are described below.
All of our executive officers are appointed by and serve at the discretion of our Board. Qualification There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by our shareholders by ordinary resolution.
Moore holds a Bachelor’s degree in Business Administration from University of Texas at Austin, and a Master of Business Administration from St. Johns University. 62 Mr. Poi (Paul) Wu. Mr. Wu has been a member of our board since May 2021, and has been a member of Newegg Inc.’s board of directors since February 2020. Mr.
Moore holds a Bachelor’s degree in Business Administration from University of Texas at Austin, and a Master of Business Administration from St. Johns University. Mr. Moore is a Certified Public Accountant (Inactive) in the State of New York. Mr. Poi (Paul) Wu. Mr.
Removed
Mr. Chang has served Newegg Inc. in various finance-related roles for more than two decades, first joining in 1999 and later being appointed to the CFO role in 2015. Prior to Newegg Inc., Mr. Chang spent five years as an Operational Analyst at Taiwan YFY Paper Manufacturers. Mr.
Added
Chang has also served as the Chairman and CEO of Nurodata Inc. since October 2024, and the Chairman of Taiwan Commate Computer Inc. since July 2003. Ms. Yingmei Yang. Ms. Yang has served as a director of the Company since April 2020, and as a director of Newegg Inc. since July 2018. Ms.
Removed
Chang holds a Bachelor’s degree in Economics from Soochow University, and a Master’s degree in Finance from University of La Verne. Mr. Jamie Spannos. Mr. Spannos is the Global Chief Operating Officer of Newegg. In this role, he is responsible for the strategic direction and development of Newegg’s operations as well as executing the Company’s long term goals. Mr.
Added
Wu has been a member of our board since May 2021, and has been a member of Newegg Inc.’s board of directors since February 2020. Mr. Wu is the founder and CEO of Carota, a supplier of connected car services. Mr. Wu is also the co-founder of the MOX mobile accelerator.
Removed
Spannos also oversees Newegg Media Services, a separate Newegg business unit that provides brand marketing services to other e-commerce companies. Prior to joining Newegg Inc. in 2018, Mr. Spannos was Senior Vice President of North America Fulfillment and Logistics at FTD.com from 2017 to 2018, where he oversaw all FTD.com and sub-brand operations across all drop-ship and internal distribution centers.
Added
He sets the Company’s strategic direction and works closely with Newegg’s executives for consistent execution across the organization. Mr. Chow’s leadership has guided Newegg through some of the Company’s most transformative years.
Removed
Before his time at FTD.com, Mr. Spannos spent five years heading up distribution for Kraft Heinz Company, managing the company’s robust network of 3PL and Kraft Heinz employees across all distribution locations.
Added
For the year ended December 31, 2024, the aggregate cash compensation accrued for our CEO was approximately $1.6 million, of which $0.6 million was for a 2024 bonus that was paid in July 2024 and January 2025. In addition, during the year, Mr. Chow received common stock from the vesting of restricted stock units with total value of $1.6 million.
Removed
In that role, he also played an instrumental part in providing strategic and executional direction in optimizing the company’s warehousing infrastructure, in turn unifying several distribution partnership models related to a multitude of company mergers and divestitures. His experience of more than 20 years across a broad range of business functions uniquely qualifies Mr.
Added
All share amounts and per share amounts above have been retroactively adjusted for the twenty-for-one share combination, effective April 7, 2025. See Note 1 of the consolidated financial statements.
Removed
Spannos to continue to expand Newegg’s operational excellence, positively impacting Newegg’s customers and the many businesses that rely on Newegg’s Media Services. 63 Mr. Montaque Hou. Mr. Hou has served as Newegg’s Chief Information Security Officer since December 2022. In this role, Mr.
Added
He was the former Chairman and the former Chief Executive Officer of Lianluo Smart Limited (the predecessor company of Newegg prior to the Merger) and is currently the chairman of our Board.
Removed
Non-employee directors were entitled to receive payment for serving as directors and may receive option grants or restricted stock units.
Added
Committees of the Board of Directors Currently, three committees have been established under the Board: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee’s members and functions are described below. Audit Committee Our Audit Committee currently consists of Mr. Gregory Moore, Mr. Poi (Paul) Wu, and Mr. Richard Weil. Mr.
Removed
In addition, the executive officers exercised stock options and restricted stock units for the year ended December 31, 2023 that resulted in aggregate proceeds of $1.7 million.
Removed
Terms of Directors and Executive Officers Each of our directors holds office until a successor has been duly elected and qualified unless the director was appointed by the Board, in which case such director holds office until the next annual meeting of shareholders at which time such director is eligible for re-election.
Removed
All of our executive officers are appointed by and serve at the discretion of our board.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

10 edited+4 added−2 removed5 unchanged
Biggest changeName and Address of Beneficial Owner Number of Common Shares Beneficially Owned Percentage of Common Shares Beneficially Owned 5% or Greater Shareholders Zhitao He (1) 233,993,977 59.6 % Fred Chang (2) 131,383,686 33.7 % Executive Officers and Directors Anthony Chow (3) 10,152,771 2.6 % Robert Chang (3) 1,385,126 * Jamie Spannos (3) 3,664,570 * Montaque Hou (3) 1,801,180 * Michael Chen (4) 47,828 * Christina Ching (4) 33,234 * Fred Chang (2) 131,383,686 33.7 % Fuya Zheng — * Gregory Moore — * Zhitao He (1) 233,993,977 59.6 % Yingmei Yang (5) 877,402 * Poi (Paul) Wu — * Richard Weil — * All Directors and Executive Officers as a Group (12 persons) 383,339,774 92.2 % * Less than 1% of total outstanding shares (1) Comprised of (i) 222,821,592 Common Shares owned by Digital Grid, (ii) 473,388 Common Shares and warrants to purchase 125,000 Common Shares at an exercise price of $17.60/share owned by Hangzhou Lianluo, (iii) 58,937 Common Shares owned by Hyperfinite Galaxy Holding Limited and (iv) vested stock options exercisable for 10,515,060 Common Shares at an exercise price of $0.55/share held by Mr.
Biggest changeTo our knowledge, 8,214,893 common shares, representing approximately 42.2% of our total outstanding shares, were held by 25 record shareholders with registered addresses in the United States, including brokers and banks that hold securities in street name on behalf of their customers, as of March 31, 2025 We are not aware of any arrangement that may at a subsequent date, result in a change of control of the Company. 70 Name and Address of Beneficial Owner Number of Common Shares Beneficially Owned Percentage of Common Shares Beneficially Owned 5% or Greater Shareholders Zhitao He (1) 11,874,949 58.8 % Fred Chang (2) 6,368,460 32.0 % Executive Officers and Directors Anthony Chow (3) 588,460 3.0 % Robert Chang (4) 21,399 * Jamie Spannos (4) 4,940 * Montaque Hou (3) 113,118 * Michael Chen (5) 2,042 * Christina Ching (5) 2,639 * Fred Chang (2) 6,368,460 32.0 % Fuya Zheng — * Gregory Moore — * Zhitao He (1) 11,874,949 58.8 % Yingmei Yang (6) 19,885 * Poi (Paul) Wu — * Richard Weil — * All Directors and Executive Officers as a Group (13 persons) 18,995,892 89.8 % * Less than 1% of total outstanding shares (1) Comprised of (i) 11,141,079 Common Shares owned by Digital Grid, (ii) 23,669 Common Shares and warrants to purchase 6,250 Common Shares at an exercise price of $352.00/share owned by Hangzhou Lianluo, (iii) 2,946 Common Shares owned by Hyperfinite Galaxy Holding Limited and (iv) vested stock options exercisable for 701,004 Common Shares at an exercise price of $10.95/share held by Mr.
Related Party Transactions For a description of our related party transactions, see “Related Party Transactions” as discussed in Note 18 of the consolidated financial statements to this annual report on Form 20-F. C. Interest of Experts and Counsel Not applicable.
Related Party Transactions For a description of our related party transactions, see “Related Party Transactions” as discussed in Note 17 of the consolidated financial statements to this annual report on Form 20-F. C. Interest of Experts and Counsel Not applicable.
Zhitao He. The total principal amount owed under these loans as of March 31, 2024 was RMB150 million in RMB plus $66.5 million in U.S. dollars. In May 2020, BOC filed several lawsuits against Hangzhou Lianluo, Digital Grid, Beijing Digital Grid Technology Co., Ltd. and Mr.
Zhitao He. The total principal amount owed under these loans as of March 31, 2025 was RMB147 million in RMB plus $66.5 million in U.S. dollars. In May 2020, BOC filed several lawsuits against Hangzhou Lianluo, Digital Grid, Beijing Digital Grid Technology Co., Ltd. and Mr.
Major Shareholders The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our common shares as of March 31, 2024 for: ● each of our directors and executive officers; ● all of our directors and executive officers as a group; and ● each shareholder or group of shareholders known to us to own beneficially more than 5% of our common shares.
Major Shareholders The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our common shares as of March 31, 2025, retroactively adjusted for the twenty-for-one share combination, effective April 7, 2025, for: ● each of our directors and executive officers; ● all of our directors and executive officers as a group; and ● each shareholder or group of shareholders known to us to own beneficially more than 5% of our common shares.
Zhitao He. All of those persons are affiliated with each other and under the control of Mr. Zhitao He. Based on public disclosures filed by Hangzhou Lianluo on March 29, 2024, Mr. Zhitao He beneficially owned 10.2% of Hangzhou Lianluo’s total capital shares. Mr. He is the Chairman and Chief Executive Officer of Hangzhou Lianluo. In addition, Mr.
Zhitao He. All of those persons are affiliated with each other and under the control of Mr. Zhitao He. Based on public disclosures filed by Hangzhou Lianluo on February 11, 2025, Mr. Zhitao He beneficially owned 9.15% of Hangzhou Lianluo’s total capital shares. Mr. He is the Chairman and Chief Executive Officer of Hangzhou Lianluo. In addition, Mr.
In computing the number of common shares beneficially owned by a person listed below and the percentage ownership of such person, common shares underlying options, warrants, restricted stock units, or convertible securities held by each such person that are exercisable or convertible within 60 days of March 31, 2024 are deemed outstanding. 70 The ownership information shown in the column titled “Percentage of Common Shares Beneficially Owned” in the table below is based on 381,766,825 common shares outstanding as of March 31, 2024.
In computing the number of common shares beneficially owned by a person listed below and the percentage ownership of such person, common shares underlying options, warrants, restricted stock units, or convertible securities held by each such person that are exercisable or convertible within 60 days of March 31, 2025 are deemed outstanding.
The exercise price for all of these stock options is $0.55/share. (4) Comprised of (i) 76,350 Common Shares and (ii) restricted stock units representing the right to receive 4,712 Common Shares upon vesting that will vest within 60 days of March 31, 2024. (5) Comprised of vested stock options exercisable for the indicated number of Common Shares for each person.
(5) Comprised of (i) 4,405 Common Shares and (ii) restricted stock units representing the right to receive 276 Common Shares upon vesting that will vest within 60 days of March 31, 2025. (6) Comprised of (i) 2,209 Common Shares and (ii) vested stock options exercisable for 17,676 Common Shares. The exercise price for all of these stock options is $10.95/share.
All of those persons are affiliated with each other and under the control of Fred Chang. Tekhill USA, LLC previously pledged 32,713,520 Common Shares as collateral to Preferred Bank, securing a loan from Preferred Bank to Fred Chang with a principal amount of $7.1 million.
Tekhill USA, LLC previously pledged 1,635,676 Common Shares as collateral to Preferred Bank, securing a loan from Preferred Bank to Fred Chang with a principal amount of $7.1 million. In early 2022, this loan was paid off and the pledge of common shares was released.
The exercise price for all of these stock options is $0.55/share. Rights of Certain Principal Shareholders See Item 10.B. “Memorandum and Articles of Association” under the subheadings “Rights of Certain Principal Shareholders” and “Requirements of Board Approval on Certain Matters.” B.
All share amounts and per share amounts above have been retroactively adjusted for the twenty-for-one share combination, effective April 7, 2025. See Note 1 of the consolidated financial statements. Rights of Certain Principal Shareholders See Item 10.B. “Memorandum and Articles of Association” under the subheadings “Rights of Certain Principal Shareholders” and “Requirements of Board Approval on Certain Matters.” B.
Contemporaneously, Fred Chang entered into a new loan with East West Bank, pursuant to which Tekhill USA, LLC pledged a total of 18,208,303 common shares as collateral to East West Bank to secure a loan from East West Bank to Fred Chang with a principal amount of $20.0 million. 71 (3) Comprised of (i) 2,468,555 Common Shares, (ii) vested stock options exercisable for 13,708,271 Common Shares, and (iii) stock options exercisable for 714,636 Common Shares and restricted stock units representing the right to receive 112,185 Common Shares upon vesting that will vest within 60 days of March 31, 2024.
Contemporaneously, Fred Chang entered into a new loan with East West Bank, pursuant to which Tekhill USA, LLC pledged a total of 910,415 common shares as collateral to East West Bank to secure a loan from East West Bank to Fred Chang with a principal amount of $15.0 million.
Removed
(2) Comprised of (i) 83,591,406 Common Shares held by Tekhill USA, LLC, (ii) 23,624,115 Common Shares held by Fred Chang Partners Trust, (iii) 9,158,558 Common Shares held by Nabal Spring, LLC, (iv) 5,435,754 Common Shares held by Chang Trust 2008, (v) 797,625 Common Shares held by Chang 2009 Annuity Trust No. 1, (vi) 332,340 Common Shares held by Chang 2009 Annuity Trust No. 2, (vii) 664,691 Common Shares held by Chang 2009 Annuity Trust No. 3, (viii) vested stock options exercisable for 7,448,167 Common Shares at an exercise price of $1.19/share held by Fred Chang, and (ix) 331,030 stock options that will vest within 60 days of March 31, 2024.
Added
The ownership information shown in the column titled “Percentage of Common Shares Beneficially Owned” in the table below is based on 19,488,614 common shares outstanding as of March 31, 2025, retroactively adjusted for the twenty-for-one share combination, effective April 7, 2025.
Removed
In early 2022, this loan was paid off and the pledge of common shares was released.
Added
(2) Comprised of (i) 5,513,297 Common Shares held by Tekhill USA, LLC, (ii) 457,928 Common Shares held by Nabal Spring, LLC, and (iii) vested stock options exercisable for 397,236 Common Shares at an exercise price of $23.80/share held by Fred Chang. All of those persons are affiliated with each other and under the control of Fred Chang.
Added
(3) Comprised of (i) 154,520 Common Shares, (ii) vested stock options exercisable for 541,938 Common Shares, and (iii) restricted stock units representing the right to receive 5,120 Common Shares upon vesting that will vest within 60 days of March 31, 2025.
Added
The exercise price for all of these stock options is $10.95/share. 71 (4) Comprised of Common Shares owned by Mr. Chang and Mr. Spannos 90 days subsequent to their separation dates of May 18, 2024 and August 31, 2024, respectively.

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