Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 39

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 39
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 such loans.

On May 27, 2024, Hangzhou Lianluo announced that
its board of directors convened and approved a proposed application to the Hangzhou Court for reorganization (the “ Reorganization
Proposal”). Hangzhou Lianluo’s stockholders approved the Reorganization Proposal at a duly convened shareholders’ meeting
held on June 12, 2024. The Reorganization Proposal is also subject to the approval of the Hangzhou Court, which approval had not yet been
obtained as of March 31, 2025. Upon approval, the Hangzhou Court may appoint an administrator to oversee the reorganization proceedings
for Hangzhou Lianluo. Such administrator could assume the director nomination rights currently held by Digital Grid. In addition, Hangzhou
Lianluo’s shares of the Company’s stock could be sold during the proposed reorganization to help meet Hangzhou Lianluo’s
liquidity needs.

On August 16, 2024, the Shenzhen Stock Exchange
delisted the common shares of Hangzhou Lianluo, which could cause its creditors and shareholders to seek liquidity, including by seeking
the sale of Newegg Common Shares held by Hangzhou Lianluo.

In recent years, Hangzhou Lianluo and its affiliates
have been liquidating some of their holdings in Hangzhou Lianluo to pay down loans secured by Hangzhou Lianluo’s common shares.
From December 20, 2021 to December 29, 2023, we estimate Mr. Zhitao He transferred approximately 121,098,905 common shares of Hangzhou
Lianluo (constituting approximately 5.56% of its total capital stock) to various creditors to pay down the loans secured by Hangzhou Lianluo’s
common shares. The continued sale of these shares could result in a change in control of Hangzhou Lianluo, and thus a change in control
of Newegg.

Our second largest shareholder, Mr. Fred Chang,
has also pledged 2,600,000 Newegg Common Shares beneficially owned by him to East West Bank (“ EWB”) as collateral to support
loans provided by EWB to Tekhill USA LLC (“ Tekhill”), an affiliate of Mr. Chang. Mr. Chang informed us that the total principal
amount owed by Tekhill under the EWB loan as of March 31, 2025 was $15 million. In January 202