Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 28

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 28
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 future expansion will likely increase the complexity of our business and place a
significant strain on our management, operations, technical systems, financial resources and internal control over financial reporting
functions. Our current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage our
future operations, especially as we employ personnel in several geographic locations. In addition, any future growth will likely require
us to improve our operational and financial systems, procedures and controls, successfully manage international operations and hire additional
personnel. These efforts may not be successful, and we may be unable to improve our systems, procedures and controls in a timely manner.

Delays or problems associated with any of these
initiatives could harm our business and operating results. These initiatives will also cause our operating expenses to increase. If we
fail to accurately estimate and assess our growth or fail to increase net sales to match our increased operating expenses, our financial
condition and results of operations could suffer.

An adverse change in our vendor payment
terms and conditions may have a material adverse effect on our business, financial condition and results of operations.

We purchase our inventory from vendors on trade
accounts typically requiring payment between 30 and 60 days after the date the inventory is shipped to us. As of December 31, 2024, our
accounts payable balance was $148.3 million with 49 days of payables outstanding. Our accounts payable balances as of December 31, 2024
represented 36.4% of our liabilities and shareholders’ equity. An adverse change in our vendors’ payment terms and conditions
would significantly increase our working capital requirements and have a material adverse effect on our business, financial condition
and results of operations.

We and certain of our subsidiaries are parties
to a revolving credit agreement, which contains a number of covenants that may restrict our current and future operations and could adversely
affect our ability to execute business needs.

We and certain of our subsidiaries have entered
into certain credit agreements with financial institutions which contains a number of covenants that limit our ability and our subsidiaries’
ability to, among other things, incur indebtedness, create liens, make investments, merge with other companies, dispose of our assets,
prepay other indebtedness and make other distributions. 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