Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 176

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 176
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 transactions for the identical or a similar investment of the same issuer.

Equity investments, except for those
accounted under ASU 2016-01 equity method, are measured at fair value, and any changes in fair value are recognized in earnings. For equity
investments measured at fair value with changes in fair value recorded in earnings, the Company does not assess whether those securities
are impaired.

F-10

l. Fair Value of Financial Instruments

Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. To increase the comparability of fair value measures, a three-tier fair value hierarchy prioritizes the inputs used in measuring
fair value. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined
as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable
inputs in which little or no market data exist, therefore, requiring the Company to develop its own assumptions to determine the best
estimate of fair value.

The carrying amounts of cash and cash
equivalents, accounts receivable, accounts payable, and accrued and other liabilities approximate fair value because of the short maturity
of these instruments. The carrying amounts of long-term debt and line of credit at December 31, 2024 and 2023 approximate fair value
because the interest rate approximates the current market interest rate. The fair value of these financial instruments was determined
using level 2 input.

m. Accumulated Other Comprehensive
Loss

Comprehensive loss consists of net loss
and adjustments to stockholders’ equity for foreign currency translation adjustments. Accumulated other comprehensive loss consists
entirely of foreign currency translation adjustments. The tax impact is not material to the consolidated financial statements.

n. Revenue Recognition

Revenue is recognized when control of
a promised product or service transfers to a customer, in an amount that reflects the consideration to which the Company expects to be
entitled in exchange for transferring that product or service. Revenue is recognized net of sales taxes and discounts. The Company primarily
generates revenue through product and extended warranty sales on its platforms, through fees earned for facilitating marketplace transactions,
and services rendered through its Newegg Partner Services (“ NPS”).

The
Company recognizes revenue on product sales at a point in time to customers when control of the product passes to the customer upon delivery
to