SCHEDULE: Galkin Family Discloses 10.8% Stake in Newegg Commerce, Signals Intent for Board Representation

Vladimir and Angelica Galkin, along with their revocable trust, have disclosed a 10.8% beneficial ownership stake in Newegg Commerce, Inc., acquired for investment purposes with an intent to engage management on strategic and governance matters, including potential board representation.

Summary

• Vladimir Galkin, Angelica Galkin, and the Angelica Galkin Revocable Trust (collectively, the "Reporting Persons") have acquired a beneficial ownership of 2,100,000 common shares of Newegg Commerce, Inc.
• This stake represents approximately 10.8% of Newegg Commerce, Inc.'s outstanding common shares, based on 19,478,394 shares outstanding as of December 31, 2024.
• The Reporting Persons paid approximately $19,557,397 to acquire these shares.
• Funds for the acquisition came from the Galkin Revocable Trust's capital account and margin account borrowings.
• The acquisition was made for investment purposes, driven by the Reporting Persons' belief in Newegg Commerce, Inc.'s business prospects and strategy.
• The Reporting Persons intend to communicate with Newegg's board and management regarding operational, strategic, financial, or governance matters, and have had, and intend to continue, discussions about potential board representation.
• Transactions during the past 60 days included numerous purchases and a few sales, all conducted in the open market.

Sentiment

Score: 7

Explanation: The filing indicates a substantial investment by a new significant shareholder group, the Galkin family, who express confidence in Newegg Commerce, Inc.'s business prospects and strategy. Their stated intent to engage with management and the board on strategic and governance matters, including potential board representation, suggests a proactive approach that could lead to positive changes and enhanced shareholder value. The use of margin, while a risk for the investor, does not directly reflect negatively on the company's current state.

Positives

• A significant investor group, the Galkin family, has taken a substantial 10.8% stake in Newegg Commerce, Inc., indicating confidence in the company's business prospects and strategy.
• The Reporting Persons intend to engage with management and the board on strategic, financial, and governance matters, which could lead to enhanced shareholder value.
• Discussions regarding potential board representation suggest a proactive approach to influencing company direction.

Negatives

• A portion of the share acquisition was financed through margin account borrowings, which introduces leverage risk for the Reporting Persons.
• The document does not provide specific details on the Issuer's financial performance or operational challenges, limiting a comprehensive assessment of the investment's underlying value.

Risks

• The Reporting Persons' investment is subject to market conditions and the Issuer's business performance.
• The use of margin account borrowings to acquire shares means the positions are pledged as collateral, exposing the Reporting Persons to potential margin calls if the stock price declines.
• There is no guarantee that discussions with management and the board will result in desired changes or board representation.

Future Outlook

The Reporting Persons reserve the right to acquire or dispose of additional securities of Newegg Commerce, Inc. at any time and to formulate other plans or proposals regarding the Issuer, based on investment policies, market conditions, or other factors. They intend to continue discussions with Newegg's management and board regarding potential board representation.

Management Comments

• "The Reporting Persons acquired the securities reported herein for investment in the ordinary course of business because of their belief that the Issuer represents an attractive investment based on the Issuer's business prospects and strategy."
• "The Reporting Persons may communicate with the board of directors of the Issuer (the Board), members of management and/or other shareholders or other relevant parties from time to time with respect to operational, strategic, financial or governance matters or otherwise work with management and the Board with a view to maximizing shareholder value."
• "In addition, the Reporting Persons have had, and intend to continue to have, discussions with members of the Issuer's management and board of directors regarding the possibility of board representation."

Industry Context

This filing indicates a significant investor taking a substantial stake in an e-commerce company, Newegg Commerce, Inc. Such an investment, particularly with stated intentions to engage on governance and potentially seek board representation, suggests a belief in the company's underlying value or a desire to influence its strategic direction within the competitive e-commerce landscape. It could signal a potential shift in corporate strategy or increased scrutiny on performance, aligning with broader trends of shareholder activism in underperforming or undervalued companies.

Stakeholder Impact

• Shareholders: The entry of a significant investor with an intent to engage on strategic and governance matters could lead to increased scrutiny of management, potential strategic shifts, and efforts to maximize shareholder value. This could be viewed positively by other shareholders.
• Management/Board: The company's management and board will likely face increased engagement and potential pressure from the Reporting Persons regarding operational, strategic, and governance decisions.

Next Steps

• The Reporting Persons may acquire additional securities of Newegg Commerce, Inc.
• The Reporting Persons may dispose of their securities in Newegg Commerce, Inc.
• The Reporting Persons may formulate other plans or proposals regarding Newegg Commerce, Inc. or its securities.
• The Reporting Persons intend to continue discussions with Newegg Commerce, Inc.'s management and board of directors regarding the possibility of board representation.
• The Reporting Persons may communicate with Newegg Commerce, Inc.'s board, management, and other shareholders regarding operational, strategic, financial, or governance matters.

Key Dates

Keywords

Newegg Commerce, NEGG, Schedule 13D, beneficial ownership, activist investor, stock acquisition, investment, corporate governance, board representation, common shares, Galkin Vladimir, Galkin Angelica, Angelica Galkin Revocable Trust