Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 191

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 191
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Additionally, the Company also made an accounting policy election to not separate lease and non-lease components of a contract, and to
recognize the lease payments under short-term leases as an expense on a straight-line basis over the lease term without recognizing the
lease liability and the right of use (“ ROU”) lease asset.

The Company evaluates whether its contractual
arrangements contain leases at the inception of such arrangements. Specifically, the Company considers whether it can control the underlying
asset and have the right to obtain substantially all of the economic benefits or outputs from the assets. Substantially all of its leases
are long-term operating leases with fixed payment terms. The Company does not have significant financing leases. Its ROU operating lease
assets represent the right to use an underlying asset for the lease term, and its operating lease liabilities represent the obligation
to make lease payments. ROU operating lease assets are recorded in other noncurrent assets in the consolidated balance sheet. Operating
lease liabilities are recorded in other current liabilities or other noncurrent liabilities in the consolidated balance sheets based on
their contractual due dates.

F-19

The Company’s operating lease
liability is recognized as of the lease commencement date at the present value of the lease payments over the lease term. The Company’s
ROU operating lease asset is recognized as of the lease commencement date at the amount of the corresponding lease liability, adjusted
for prepaid lease payments, lease incentives received, and initial direct costs incurred. The Company evaluates its ROU lease assets for
impairment consistent with its impairment of long-lived assets policy. See Note 3 - Summary of Significant Accounting
Policies.

Operating lease expense is recognized
on a straight-line basis over the lease term, and is included in selling, general, and administrative expenses in the consolidated statements
of operations. Operating lease expense totaled $22.4million, $21.9million and $25.3million, respectively, for the years ended
December 31, 2024, 2023 and 2022. The Company has made an accounting policy election by underlying asset class to not apply the recognition
requirements of ASC 842 to short-term leases. As a result, certain leases with a term of 12 months or less are not recorded
on the balance sheet and expense is recognized on a straight-line basis over the lease term. Cash payments made for operating leases totaled
$18.2million, $18.8million, and $22.0million during years ended December 31