Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 180

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 180
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 2024, 2023 and 2022, respectively.

q. Incentives Earned from Vendors

The Company participates in various
vendor incentive programs that include, but are not limited to, purchasing-based volume discounts, sales-based volume incentives, marketing
development funds, including for certain cooperative advertising, and price protection agreements. Vendor incentives are recognized in
the consolidated statements of operations as an offset to marketing and promotional expenses to the extent that they represent reimbursement
of advertising costs incurred by the Company on behalf of the vendors that are specific, incremental, and identifiable. Reimbursements
that are in excess of such costs and all other vendor incentive programs are accounted for as a reduction of cost of sales, or if the
related product inventory is still on hand at the reporting date, inventory is reduced in the consolidated balance sheets.

The Company reduced cost of sales by
$166.3million, $215.2million and $224.3million for the years ended December 31, 2024, 2023 and 2022, respectively, for these
vendor incentive programs. Reductions to advertising and promotional expenses related to direct reimbursements for costs incurred in advertising
vendors’ products totaled $0.4million, $0.8million and $1.3million for the years ended December 31, 2024, 2023 and
2022, respectively. Amounts receivable related to vendor incentive programs were $48.5million and $57.1million, net of allowances of
$0.4million and $0.7million, at December 31, 2024 and 2023, respectively. Amounts due to the Company are included in accounts receivable
in the consolidated balance sheets.

r. Selling, General, and Administrative
Expenses

Selling, general, and administrative
expenses primarily consist of marketing and advertising expenses, sales commissions, credit card processing fees, payroll and related
benefits, depreciation and amortization, professional fees, litigation costs, rent expense, information technology expenses, warehouse
costs, office expenses, and other general corporate costs.

The Company recognizes the cost of legal
services related to defending litigation when the services are provided.

s. Advertising

Advertising and promotional expenses
are charged to operations when incurred and are included in selling, general, and administrative expenses. Advertising and promotional
expenses for the years ended December 31, 2024, 2023 and 2022 were $14.0million,