Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 13

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 13
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 credit card information.

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. Such third parties could attempt to gain entry to our systems for the purpose of stealing
data or disrupting the systems. In addition, our security measures may also be breached due to employee error, malfeasance, system errors
or vulnerabilities, including vulnerabilities of our vendors, suppliers, their products, or otherwise. Third parties may also attempt
to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information
to gain access to our customers’ data or our data, including intellectual property and other confidential business information.

While we have implemented security measures designed
to protect against security breaches, these measures could fail or may be insufficient, particularly as techniques used to sabotage or
obtain unauthorized access to systems change frequently and generally are not recognized until launched against a target, resulting in
the unauthorized disclosure, modification, misuse, destruction, or loss of our or our customers’ data or other sensitive information.
Any failure to prevent or mitigate security breaches and improper access to or disclosure of the data we maintain, including personal
information, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation
and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our
business.

We believe we have taken appropriate measures
to protect our systems from intrusion, but we cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities
in our systems and attempts to exploit those vulnerabilities, physical system or facility break-ins and data thefts or other developments
will not compromise or breach the technology protecting our systems and the information we possess.

We may incur significant costs in protecting against
or remediating cyber-attacks. Any security breach could result in operational disruptions that impair our ability to meet our customers’
requirements, which could result in decreased revenue. In addition, there can be no assurance that our insurance coverage will be sufficient
to cover the financial, legal, business or reputational losses that may result from a cyber-attack. Also, whether there is an actual or
a perceived breach of our security, our reputation could suffer irreparable harm, causing our current and prospective customers to