Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 42

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 42
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our issued and outstanding common shares as of December 31, 2024. They will exert significant influence on our business and operations
and may have a conflict of interest with our other shareholders.

Mr. Zhitao He (as the Chairman and CEO of Hangzhou
Lianluo and in his own capacity) and Mr. Fred Chang control approximately 57.3% and 30.9%, respectively, of the voting power of our issued
and outstanding common shares, and 88.2%, collectively, as of December 31, 2024. Additionally, Mr. Zhitao He and Mr. Fred Chang, both
of whom serve as our directors, will be able to exercise substantial influence over our business and operations. They may also have a
conflict of interest with our other shareholders. Where such a conflict exists, our other shareholders will be dependent upon Mr. He,
Mr. Chang, and other directors exercising, in a manner fair to all of our shareholders, their fiduciary duties. Also, Mr. He and Mr. Chang
will have the ability to control the outcome of most corporate actions requiring shareholder approval, including the sale of all or substantially
all of our assets and amendments to our Memorandum and Articles of Association. Moreover, such concentration of voting power could have
the effect of delaying, deterring, or preventing a change of control or other business combination, which may, in turn, have an adverse
effect on the market price of our shares or prevent our shareholders from realizing a premium over the then-prevailing market price for
their shares.

We are a “controlled company”
within the meaning of the Nasdaq Listing Rules and, as a result, qualify for exemptions from certain corporate governance requirements.
You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

Mr. Zhitao He, through Hangzhou Lianluo, Hyperfinite
Galaxy Holding Limited, and Digital Grid, controls a majority of the voting power of our outstanding common shares. As a result, we are
a “controlled company” within the meaning of Nasdaq’s corporate governance standards. Under these rules, a company of
which more than 50% of the voting power is held by an individual, group or another company is a “controlled company.” For
so long as we remain a controlled company under this definition, we are permitted to elect to rely on certain exemptions from corporate
governance rules, including:

  an exemption from the