Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 197

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 197
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 Common Stock under the Incentive Award Plan. Newegg Inc. issues new shares of Class A Common Stock from its authorized
share pool to settle stock-based compensation awards. The exercise price of options granted under the plan shall not be less than the
fair value of the Newegg Inc.’s Class A Common Stock as of the date of grant. Options typically vest over the term offouryears,
and are typically exercisable for a period of10yearsafter the date of grant, except when granted to a holder who, at the time the option
is granted, owns stock representing more than 10% of the voting power of all classes of stock of Newegg Inc. any subsidiaries, in which
case, the term of the option shall be no more than five years from the date of grant. In September 2015, the Incentive Award
Plan was amended to permit additional awards to be made after the tenth anniversary of the original adoption of said plan.

The fair value of each option award
granted under the Incentive Award Plan is estimated using the Black-Scholes option pricing model on the date of grant. This model requires
the input of highly complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility
over the expected life of the awards and actual and projected employee stock option exercise behavior with the following inputs: risk-free
interest rate, expected stock price volatility, forfeiture rate, expected term, dividend yield and weighted average grant date fair value.

F-23

The risk-free interest rate is based
on the currently available rate on a U. S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option
converted into a continuously compounded rate. The expected volatility of stock options is based on a review of the historical volatility
and the implied volatility of a peer group of publicly traded companies comparable to the Company. In evaluating comparability, the Company
considered factors such as industry, stage of life cycle, and size. After the adoption of Accounting Standards Update No. 2016-09 Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accountingas of January 1,
2017, the Company elected to recognize the effect of awards for which the requisite service is not rendered when the award is forfeited.
The expected term assumption used by the Company reflects the application of the simplified method set out in Securities and Exchange
Commission Staff Accounting Bulletin No. 110, Shared-Based Payment.