SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. You are urged to carefully read the entire proxy statement/prospectus and the other documents attached to or referred to in this proxy statement/prospectus in order to fully understand the merger agreement, the disposition agreement, the proposed merger, the proposed disposition and the other proposals to be considered at the special meeting. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

The Companies (See Page 74)

Lianluo Smart Limited

The Company, through its wholly owned subsidiaries in the People’s Republic of China (which we refer to as the PRC or China), has been engaged in the medical device business, currently focusing on the development, production and marketing of sleep respiratory analysis systems in China.

The Company has developed and distributed medical devices, with a focus on sleep respiratory solutions for the Obstructive Sleep Apnea Syndrome, or OSAS, since 2010. The Company provides users with medical grade detection and monitoring, long-distance treatment and integration solutions of professional rehabilitation. Since 2018, the Company has been providing examination services to hospitals and medical centers through its proprietary medical wearable devices, and doctors are able to refer to examination results provided by such devices in making diagnoses regarding OSAS.

The Company was incorporated pursuant to the laws of the British Virgin Islands, or BVI, on July 22, 2003 under the name “De-Haier Medical Systems Limited.” It changed its name to “Lianluo Smart Limited” on November 21, 2016. As a holding company, the Company does not conduct any operations and instead relies on Lianluo Connection, and prior to August 2020, Beijing Dehaier Medical Technology Company Limited, or Beijing Dehaier, to operate in China.

The Company’s Class A common shares are listed on the NASDAQ Capital Market under the symbol “LLIT.” The Company’s principal executive offices are located at Room 1003B, 10th Floor, BeiKong Technology Building, No. 10 Baifuquan Road, Changping District, Beijing 102200, People’s Republic of China, and its telephone number is +86-10-89788107. Information on the Company’s website is not incorporated by reference into or otherwise part of this proxy statement/prospectus.

On October 21, 2020, we completed a share combination of our common shares at a ratio of one-for-eight, which decreased our outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and our outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased our authorized shares to 6,250,000 common shares of par value of $0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares. Accordingly, except as otherwise indicated, all share and per share information contained in this proxy statement/prospectus has been restated to retroactively show the effect of this share combination.

See “Information about the Company” and “Management Discussion and Analysis of Financial Condition and Results of Operations for the Company” for important business and financial information regarding the Company.

Lightning Delaware Sub, Inc.

Merger Sub was formed in the State of Delaware on September 23, 2020 and is a wholly owned subsidiary of the Company. Merger Sub was formed solely for the purpose of completing the merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the merger agreement and the merger.

Merger Sub is a privately-held corporation and its securities do not trade on any marketplace. The principal executive offices of Merger Sub are located at c/o the Company, Room 1003B, 10th Floor, BeiKong Technology Building, No. 10 Baifuquan Road, Changping District, Beijing 102200, People’s Republic of China, and its telephone number is +86-10-89788107.

Newegg Inc.

Newegg is a tech-focused e-commerce company in North America, and ranked second after Best Buy as the global top electronics online marketplace according to Web Retailer’s report, as measured by 32.4 million visits per month in 2019. Through newegg.com and other online platforms, Newegg operates a direct sales and marketplace models for IT computer components, consumer electronics, entertainment, smart home and gaming products and provides certain third party logistics services globally.

Newegg is a privately-held corporation and its securities do not trade on any marketplace. The principal executive offices of Newegg are located at 17560 Rowland Street, City of Industry, CA 91748, and its telephone number is 626-271-9700. Newegg maintains a website at www.newegg.com. Information on Newegg’s website is not incorporated by reference into or otherwise part of this proxy statement/prospectus.

See “Information about Newegg” and “Management Discussion and Analysis of Financial Condition and Results of Operations for Newegg” for important business and financial information regarding Newegg.

The Merger (See Page 80)

The merger agreement provides for the merger, in which Merger Sub will be merged with and into Newegg, with Newegg surviving the merger as a wholly owned subsidiary of the Company.

Upon closing of the merger, Mr. Zhitao He and Mr. Fred Chang will own approximately 60.91% and 35.98%, respectively, of the voting power of our issued and outstanding common shares, and 96.90%, collectively, based on the number of our common shares and Newegg stock outstanding as of March 30, 2021. See additional disclosures relating to the shares held by Mr. He under “Risk Factors — A majority of Newegg’s capital shares are, and upon completion of the merger, a majority of our common shares will be, pledged as collateral to support delinquent indebtedness of our parent company and could be sold to satisfy that indebtedness.” Moreover, Mr. Zhitao He and Mr. Fred Chang, both of whom will serve as our directors upon closing, will be able to exercise substantial influence over our business and operations. They may also have conflicts of interest with our other shareholders. Where those conflicts exist, 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.

The merger will be completed and become effective at such time as the certificate of merger for the merger is filed with the Secretary of State of the State of Delaware (or at such time as agreed to between the Company and Newegg and specified in such certificate of merger in accordance with applicable law). Unless another date and time are agreed to by the Company and Newegg, completion of the merger will occur no later than the second business day following the day on which the last of the conditions described in this proxy statement/prospectus is to be satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of such conditions).

As of the date of this proxy statement/prospectus, we expect that the merger will be completed by May 31, 2021. However, completion of the merger is subject to the satisfaction or waiver of the conditions to completion of the merger, which are summarized below. There can be no assurances as to when, or if, the merger will occur. If the merger is not completed on or before June 30, 2021, either the Company or Newegg may terminate the merger agreement. The right to terminate the merger agreement if the merger is not completed on or prior to such date will not be available to either of the Company or Newegg if the failure of the merger to be consummated by such date is due to a material breach by such party of any representation, warranty, covenant or other agreement of such party set forth in the merger agreement. See “The Merger Agreement — Conditions to Completion of the Merger” and “The Merger Agreement — Termination of the Merger Agreement.”

Upon the completion of the merger, the principal executive offices of the Company will be located at 17560 Rowland Street, City of Industry, CA 91748 and its telephone number will be 626-271-9700.

A copy of the merger agreement, as amended to the date of this proxy statement/prospectus, is attached as Annex A to this proxy statement/prospectus. You should read the merger agreement carefully because it is the legal document that governs the merger.

The Disposition (See Page 112)

Pursuant to the disposition agreement, the Purchaser will acquire 100% of the equity interests in Lianluo Connection for RMB0 immediately following completion of the merger. In exchange for all of the equity interests in Lianluo Connection, the Purchaser agreed to contribute RMB87.784 million to Lianluo Connection’s registered capital by September 23, 2023 in accordance with the articles of association of Lianluo Connection. In addition, as an inducement for the Purchaser to enter into the disposition agreement, the Company agreed to convert the indebtedness in the aggregate amount of $11,255,188 that Lianluo Connection owes to the Company into additional paid-in capital of Lianluo Connection immediately prior to the closing of the disposition. The disposition will be completed and become effective immediately following completion of the merger.

A copy of the disposition agreement, as amended to the date of this proxy statement/prospectus, is attached as Annex E to this proxy statement/prospectus. You should read the disposition agreement carefully because it is the legal document that governs the disposition.

Special Meeting of Shareholders (See Page 75)

Meeting.    The special meeting will be held on [            ], 2021 at 10:00 a.m., local time, at our offices located at Room 1003B, 10th Floor, BeiKong Technology Building, No. 10 Baifuquan Road, Changping District, Beijing, 102200, People’s Republic of China. At the special meeting, shareholders will be asked to consider and vote on the merger proposal, the disposition proposal, the redesignation proposal, the share combination proposal, the share increase proposal, the name change proposal, the charter amendment proposal and the adjournment proposal. Under our amended and restated memorandum and articles of association, the business to be conducted at the special meeting will be limited to the proposals set forth in the notice to shareholders provided with this proxy statement/prospectus.

Record Date.    Our board of directors has fixed the close of business on March 26, 2021 as the record date for determination of the shareholders entitled to vote at the special meeting, or any adjournment or postponement thereof. Only shareholders of record at the record date are entitled to receive notice of, and to vote at, the special meeting, or any adjournment or postponement thereof. As of the close of business on the record date, there were 3,465,683 Class A common shares and 1,388,888 Class B common shares outstanding and entitled to vote at the special meeting. Each Class A common share is entitled to one vote per share and each Class B common share is entitled to ten votes per share.

Quorum.    The presence at the commencement of the special meeting, in person or by proxy, of not less than 50% of the votes of the common shares issued and outstanding and entitled to vote constitutes a quorum for the special meeting. Abstentions will be deemed present at the special meeting for the purpose of determining the presence of a quorum. Shares held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee holder of record will not be deemed present at the special meeting for the purpose of determining the presence of a quorum. Shares held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee holder of record on any of the proposals to be voted on at the special meeting, and shares with respect to which the beneficial owner otherwise fails to vote, will not be deemed present at the special meeting for the purpose of determining the presence of a quorum. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the special meeting. There must be a quorum to hold the special meeting. Failure of a quorum to be present at the special meeting will necessitate an adjournment of the meeting and will subject us to additional expense.

Required Vote.    Assuming that a quorum is present, the merger agreement requires the affirmative vote of both (i) a majority of the votes cast at the special meeting and (ii) a majority of the votes cast at the special meeting which are not beneficially owned by Hangzhou Lianluo to approve the merger proposal, the disposition proposal, the redesignation proposal, the share combination proposal, the share increase proposal, the name change proposal and the charter amendment proposal. In addition, assuming that a quorum is present, approval of the redesignation proposal also requires the affirmative vote of a majority of the issued and outstanding Class B common shares entitled to vote and voting on that proposal at the special meeting. The affirmative vote of a majority of the votes cast at the special meeting is required to approve the adjournment proposal.

Share Ownership of and Voting by Directors and Executive Officers.    At the record date for the special meeting (the close of business on March 26, 2021), our current directors and executive officers and their affiliates did not beneficially own any common shares of the Company.

Support Agreements (See Page 110).    In conjunction with the merger agreement, Hangzhou Lianluo and its affiliate, Hyperfinite Galaxy Holding Limited, entered into a Support Agreement dated as of October 23, 2020 pursuant to which such shareholders agreed to vote in favor of the each of the proposals described in this proxy statement/prospectus. Hangzhou Lianluo is our controlling shareholder, and is controlled by Mr. Zhitao He, our former Chairman of Board of Directors and former Chief Executive Officer. Hyperfinite Galaxy Holding Limited is also controlled by Mr. He. Collectively, Hangzhou Lianluo and Hyperfinite Galaxy Holding Limited have voting control over 58,937 outstanding Class A common shares and 1,388,888 outstanding Class B common shares, which collectively comprise over 80.4% of the voting power of our outstanding common shares as of the record date.

Mr. Ping Chen, our former Chief Executive Officer and board member, also entered into a similar Support Agreement. Mr. Chen holds 201,692 outstanding Class A common shares, which represents approximately 5.9% of the outstanding voting power which is not controlled by Hangzhou Lianluo, measured as of the record date. Mr. Chen also holds options exercisable for an additional 65,733 Class A common shares at exercise prices ranging from $11.60 to $42.48 per share.

What Newegg Stockholders Will Receive in the Merger (See Page xiii)

If the merger is completed, each share of the capital stock of Newegg that was issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 5.8417 common shares of the Company (which we refer to as the exchange ratio), plus the right, if any, to receive cash in lieu of fractional shares of the Company (which we collectively refer to as the merger consideration); provided that the exchange ratio shall be appropriately adjusted to reflect the effect of any share split, split-up, reverse share split, share dividend or distribution of securities convertible into the Company’s common shares or Newegg’s capital stock or any reorganization, recapitalization, reclassification or other like change with respect to Company’s common shares or Newegg’s capital stock having a record date occurring on or after the date of the merger agreement and prior to the completion of the merger.

Although the exchange ratio for the merger consideration is fixed (subject to the adjustments described above), the market value of the merger consideration will fluctuate with the market price of our Class A common shares. Based on the closing price on October 23, 2020, the last trading day before the public announcement of the signing of the merger agreement, the implied aggregate value of the merger consideration was approximately $1.19 billion. Based on the closing price on [            ], 2021, the last practicable date before the date of the accompanying proxy statement/prospectus, the implied aggregate value of the merger consideration was up to approximately $[            ] billion. 

Treatment of Newegg Equity Awards (See Page 98)

The terms of the equity-based compensation issued by Newegg prior to the merger will be assumed by the Company. The shares of common stock that are issued or may be issued under Newegg’s Incentive Award Plan and Significant Shareholder Incentive Plan will be exchanged for our common shares, adjusted for the exchange ratio, but otherwise on the same terms and conditions.

Recommendations of the Board and its Reasons for the Merger and the Disposition (See Pages 86 and 112)

Each of the special committee and our board of directors unanimously recommended that shareholders vote “FOR” the merger proposal and “FOR” the disposition proposal. For the factors considered by the special committee and the board of directors in reaching this decision, see “Proposal I: The Merger — Reasons for the Merger” and “Proposal II: The Disposition — Reasons and Background for the Proposed Disposition.”

Ownership of Common Shares After the Merger (See Page 92)

We will issue 363,325,542 common shares to Newegg stockholders upon completion of the merger, based on the number of shares of Newegg issued and outstanding as of March 30, 2021, the most recent practicable date for which such information was available. Based on the number of our common shares and Newegg stock outstanding as of such date, immediately following the completion of merger, our shareholders immediately prior to the merger are expected to own approximately 1.32% of our outstanding common shares and Newegg stockholders are expected to own approximately 98.68% of our outstanding common shares.

Opinions of Financial Advisor (See Pages 87 and 113)

The Company engaged The Benchmark Company, LLC, or Benchmark, to render opinions as to whether the merger consideration to be paid and the disposition consideration to be received by the Company are fair to the Company’s shareholders from a financial point of view. Benchmark rendered its written opinions to the special committee on October 23, 2020 that merger consideration to be paid and the disposition consideration to be received by the Company were fair to the Company’s shareholders from a financial point of view.

The full text of Benchmark’s written opinions, dated October 23, 2020, which describes the assumptions made and limitations upon the review undertaken by Benchmark in preparing its opinions for the merger and the disposition are attached hereto as Annexes D and F, respectively, and are incorporated by reference herein. You should read the opinions carefully in their entirety.

Interests of Directors and Executive Officers in the Merger and the Disposition (See Pages 93 and 118)

In considering the recommendations of the special committee and the board to vote for the merger proposal, you should be aware that certain of the current directors, executive officers and major shareholders of the Company and Newegg have interests in the merger that may be different from, or in addition to, the interests of our unaffiliated shareholders generally and may create potential conflicts of interest. These interests are described in more detail below. The special committee was aware of each of these interests in reviewing, considering and negotiating the terms of the proposed merger and in recommending that the board and the shareholders approve the proposed merger. The board was also aware of these interests in approving the merger agreement and the transactions thereby and in recommending the approval of the merger agreement to our shareholders.

Mr. Zhitao He, our former Chairman and Chief Executive Officer, who also controlled approximately 80.4% of our total outstanding voting power on the record date through Hangzhou Lianluo and its affiliate, Hyperfinite Galaxy Holding Limited, also serves on the board of Newegg and, through Digital Grid (Hong Kong) Technology Co., Limited, or Digital Grid, beneficially owns a majority of the equity interests in Newegg. Hangzhou Lianluo has indicated that one of the reasons it would like to complete the merger is that it believes it is the best way for Newegg to become publicly listed, which will provide it and other Newegg stockholders better liquidity for their Newegg investment. Ms. Yingmei Yang, our Interim Chief Financial Officer and one of our directors, also serves on the board of Newegg.

The merger agreement provides that all of Newegg’s shareholders, including Digital Grid, will receive our common shares. Following the merger, Mr. Zhitao He will beneficially own approximately 224,269,418 common shares, representing approximately 60.91% of our outstanding total voting power based on the number of our common shares and Newegg stock outstanding as of March 30, 2021. Substantially all of Mr. He’s shares are pledged as collateral to BOC as collateral to support working capital loans and letters of credit provided by BOC to Hangzhou Lianluo. The total amount owed under these loans is RMB400 million in RMB denominated loans, plus $66.5 million in U.S. dollar loans, plus interest, fees and penalties on such amounts. In May 2020, BOC filed several lawsuits in the Hangzhou Intermediate People’s Court in China alleging that Hangzhou Lianluo has failed

to repay the loans when due and is in breach of the loan agreements. This litigation is ongoing. BOC could sell, or force Mr. He to sell, some or all of his shares of Newegg and the Company at any time while the BOC loan remains delinquent. Mr. He could also choose to voluntarily sell some or all of his shares at any time to satisfy the BOC loan. See additional disclosures relating to the shares held by Mr. He under “Risk Factors — A majority of Newegg’s capital shares are, and upon completion of the merger, a majority of our common shares will be, pledged as collateral to support delinquent indebtedness of our parent company and could be sold to satisfy that indebtedness.”

In addition, because the completion of the merger is contingent upon the disposition our medical device business, Mr. Zhitao He and Ms. Yingmei Yang may also have interests in the disposition that may be different from, or in addition to, the interests of our unaffiliated shareholders.

Dissenters’ Rights Available to Shareholders (See Pages 96 and 118)

Under BVI law, our shareholders will not be entitled to appraisal or dissenters’ rights in connection with the merger or the disposition.

Completion of the Merger is Subject to Certain Conditions (See Page 97)

The obligation of each of the Company, Newegg and Merger Sub to complete the merger is subject to the fulfillment (or waiver, to the extent permissible under applicable law) of the following conditions:

•        the shareholders of the Company shall have approved the merger, the disposition and the other proposals set forth herein (other than the adjournment proposal), which shall in all cases include approval of a majority of votes cast which are not beneficially owned by Hangzhou Lianluo;

•        all consents or filings required to be obtained from or made with any governmental authority or third parties in order to consummate the transactions contemplated by the merger agreement shall have been obtained or made;

•        no governmental authority shall have enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) or order that is then in effect and which has the effect of making the transactions or agreements contemplated by the merger agreement or the disposition agreement illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by the merger agreement;

•        there shall not be any pending action brought by a third-party non-affiliate to enjoin or otherwise restrict the consummation of the merger or the disposition;

•        the persons identified by Newegg shall have been elected or appointed to the Company’s board of directors;

•        all of the conditions to the obligations of each party to consummate the disposition described in the disposition agreement shall have been satisfied;

•        the amendment to that certain stockholder agreement, dated March 30, 2017, between Newegg and certain stockholders of Newegg that was entered into concurrently with the merger agreement shall be in full force and effect and shall be assigned from Newegg to the Company at the closing of the merger;

•        the registration statement of which this proxy statement/prospectus forms a part shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order;

•        the registration statement on Form F-1 relating to a public offering of common shares of the Company for $30 million, or such other amount necessary to meet NASDAQ’s initial listing requirements, shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order; and

•        the foregoing offering and the disposition are capable of being consummated on the closing date.

In addition, the obligation of Newegg to complete the merger is subject to the satisfaction (or waiver, to the extent permitted by applicable law) of the following conditions:

•        all of the representations and warranties of the Company and the Merger Sub set forth in the merger agreement and in any certificate delivered by the Company and the Merger Sub pursuant thereto shall be true and correct on and as of the date of the agreement and on and as of the completion date of the merger as if made on the completion date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or material adverse effect), individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on, or with respect to, the Company and its subsidiaries or materially and adversely affects the Company and the Merger Sub’s ability to consummate the transactions contemplated by the merger agreement;

•        the Company and the Merger Sub shall have performed in all material respects all of such party’s obligations and complied in all material respects with all of such party’s agreements and covenants under the merger agreement to be performed or complied with by it on or prior to the completion of the merger;

•        no material adverse effect shall have occurred with respect to the Company, Merger Sub and any subsidiary since the date of the merger agreement;

•        the Company shall have entered into employment agreements, in form and substance reasonably satisfactory to Newegg, with the persons identified by Newegg;

•        Newegg shall have received a duly executed legal opinion addressed to Newegg from the Company’s legal counsel in form and substance reasonably satisfactory to Newegg;

•        Newegg shall have received from the Company copy of the amended and restated memorandum and articles of association of the Company approved by shareholders at the special meeting;

•        the Company and Merger Sub shall have delivered to Newegg customary officer’s certificates, secretary’s certificates and good standing certificates;

•        if required, the transactions contemplated by the merger agreement shall have been approved by the investors pursuant to the securities purchase agreements that the investors and the Company entered into on February 12, February 21 and February 27, 2020; and

•        the Company shall have been approved by NASDAQ for listing following the merger.

In addition, the obligation of each of the Company and Merger Sub to complete the merger is subject to the satisfaction (or waiver, to the extent permitted by applicable law) of the following conditions:

•        all of the representations and warranties of Newegg (including its subsidiaries) set forth in the merger agreement and in any certificate delivered by Newegg pursuant thereto shall be true and correct on and as of the date of the merger agreement and on and as of the completion date of the merger as if made on the completion date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or material adverse effect), individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on, or with respect to, Newegg and any subsidiary or materially and adversely affect Newegg’s ability to consummate the transactions contemplated by the merger agreement;

•        Newegg shall have performed in all material respects all of Newegg’s obligations and complied in all material respects with all of Newegg’s agreements and covenants under the merger agreement to be performed or complied with by it on or prior to the completion of the merger;

•        the lock-up agreements entered into on the date of the merger agreement by among Newegg, the Company and any Newegg stockholders who would hold more than 5% of the Company common shares immediately after the closing of the merger shall be in full force and effect;

•        No material adverse effect shall have occurred and be continuing with respect to Newegg and its subsidiaries, taken as whole, since the date of the merger agreement;

•        Newegg shall have delivered to the Company and Merger Sub customary officer’s certificates, secretary’s certificates, good standing certificates and a certified copy of its certificate of incorporation; and

•        the Company and Merger Sub shall have received a duly executed legal opinion addressed to the Company and Merger Sub from Newegg’s legal counsel in form and substance reasonably satisfactory to the Company and Merger Sub.

While we currently expect that the merger will be completed by May 31, 2021, there can be no assurances as to when, or if, the merger will occur.

Completion of the Disposition is Subject to Certain Conditions (See Page 119)

The obligation of each of the Purchaser, the Company and Lianluo Connection to complete the disposition is subject to the fulfillment (or waiver, to the extent permissible under applicable law) of the following conditions:

•        obtaining any requisite regulatory approvals;

•        no law or order prohibiting or preventing consummation of the disposition;

•        no litigation to enjoin or otherwise restrict consummation of the disposition;

•        the Company shareholder’s approval of the disposition;

•        the consummation of the merger; and

•        the conversion of indebtedness in the aggregate amount of $11,255,188 owed by Lianluo Connection to the Company into additional paid-in capital of Lianluo Connection.

Regulatory Approvals (See Page 93)

The consummation of the merger is not subject to any regulatory or governmental approvals or filings, other than (i) the filing of a certificate of merger with the Secretary of State of the State of Delaware and (ii) the declaration by the Securities and Exchange Commission, or the SEC, of the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, and any required notice or other filings under applicable state securities laws.

The consummation of the disposition is not subject to any regulatory approvals.

Listing on NASDAQ (See Page 94)

The approval for listing of our common shares on the NASDAQ Capital Market, including the shares issued in the merger, subject only to official notice of issuance, is a condition to the obligations of Newegg to complete the merger. We have applied for such listing under the symbol “NEGG.”

Completion and Effectiveness of the Merger and the Disposition (See Page 97)

The merger will be completed and become effective at such time as the certificate of merger for the merger is filed with the Secretary of State of the State of Delaware (or at such time as agreed to between the Company and Newegg and specified in such certificate of merger in accordance with applicable law). Unless the merger agreement is terminated or another date and time are agreed to by the Company and Newegg, completion of the merger will occur no later than the second business day following the day on which the last of the conditions is satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of such conditions).

The disposition will be completed immediately following completion of the merger.

As of the date of this proxy statement/prospectus, we expect that the merger and the disposition will be completed by May 31, 2021. However, completion of the merger and the disposition are subject to the satisfaction or waiver of the conditions to completion of the merger and the disposition. There can be no assurances as to when, or if, the merger and the disposition will occur. If the merger is not completed on or before June 30, 2021, either the Company or Newegg may terminate the merger agreement; provided that the right to terminate the merger agreement if the merger is not completed on or prior to such date will not be available to either of the Company or Newegg if the failure of the merger to be consummated by such date is due to a material breach by such party of any representation, warranty, covenant or other agreement of such party set forth in the merger agreement.

Go Shop (See Page 105)

During the period from the date of the merger agreement and continuing until the earlier of the termination of the merger agreement or the completion of the merger, each of the Company, the Merger Sub and Newegg may and may cause its representatives to directly or indirectly, (i) solicit, assist, initiate or facilitate the making, submission or announcement of, or intentionally encourage, any acquisition proposal, (ii) furnish any non-public information regarding such party or its affiliates or their respective businesses, operations, assets, liabilities, financial condition, prospects or employees to any person or group in connection with or in response to an acquisition proposal, (iii) engage or participate in discussions or negotiations with any person or group with respect to, or that could be expected to lead to, an acquisition proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any acquisition proposal, (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any acquisition proposal, or (vi) release any third person from, or waive any provision of, any confidentiality agreement to which such party is a party.

Each of the Company and Newegg agreed to notify the other as promptly as practicable (and in any event within 48 hours) orally and in writing of the receipt by such party or any of its representatives of (i) any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any acquisition proposal or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could be expected to result in an acquisition proposal, and (ii) any request for non-public information relating to such party or its affiliates (or any subsidiary, respectively), specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information. Each of the Company, the Merger Sub and Newegg agreed to keep the other parties promptly informed of the status of any such inquiries, proposals, offers or requests for information.

For purposes of the merger agreement, an “acquisition proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any person or group at any time relating to an alternative transaction (other than the transactions contemplated by the merger agreement) concerning the sale of (i) all or any material part of the business or assets of any subsidiaries of Newegg or the Company and its subsidiaries, or (ii) any of the shares or other equity interests or profits of any subsidiaries of Newegg or the Company and its subsidiaries, in any case, whether such transaction takes the form of a sale of shares or other equity, assets, merger, consolidation, issuance of debt securities, management contract, joint venture or partnership, or otherwise.

Termination of the Merger Agreement (See Page 107)

The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after our shareholders have approved the merger, in any of the following ways:

•        by mutual written consent of the Company and Newegg;

•        by either the Company or Newegg (i) if the merger shall not have occurred on or prior to June 30, 2021; provided, that the right to terminate shall not be available to any party whose material breach of a representation, warranty or covenant in the merger agreement has been a principal cause of the failure of the merger to be consummated on or before such date; (ii) if any governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the merger, and, in each case, such order or action shall have become final and non-appealable; provided, that the right to terminate shall not be available to any party whose material

breach of a representation, warranty or covenant in the merger agreement has been the principal cause of such action, or (iii) if the shareholder proposals described in this proxy statement/prospectus are not approved at the special meeting by a majority of votes cast which are not beneficially owned by Hangzhou Lianluo;

•        by Newegg (provided it is not then in material breach of any of its obligations under the merger agreement) (i) if there is any breach of any representation, warranty, covenant or agreement on the part of the Company or Merger Sub set forth in the merger agreement, or if any representation or warranty of the Company or Merger Sub shall have become untrue, in either case such that the applicable conditions set forth in the merger agreement would not be satisfied; provided, however, if such breach is curable by the Company or Merger Sub, Newegg may not terminate for so long as the Company or Merger Sub continue to exercise their best efforts to cure such breach, unless such breach is not cured within thirty (30) days after notice of such breach is provided by Newegg to the Company, (ii) if for any reason the Company fails to call and hold the special meeting within sixty (60) days following the filing of the registration statement of which this proxy statement/prospectus forms a part, unless such failure is as a result of the Company responding in good faith to comments on such registration statement or the registration statement on Form F-1 related to the public offering of the Company’s common shares for $30 million, or such other amount necessary to meet NASDAQ’s initial listing requirements, received from the SEC or comments from NASDAQ, or (iii) if the Company’s board (or any subgroup or committee thereof) withdraws, modifies or changes its recommendation of the merger agreement or the merger in a manner adverse to Newegg or shall have resolved to do any of the foregoing, or approves or recommends, or proposes to approve or recommend, an acquisition proposal;

•        by the Company (provided neither it nor its subsidiary is then in material breach of any of their obligations under the merger agreement) (i) if there is any breach of any representation, warranty, covenant or agreement on the part of Newegg as set forth in the merger agreement or if any representation or warranty of Newegg shall have become untrue, in either case such that the applicable conditions set forth in the merger agreement would not be satisfied; provided, however, if such breach is curable by Newegg, the Company may not terminate the merger agreement for so long as Newegg continues to exercise its best efforts to cure such breach, unless such breach is not cured within thirty (30) days after notice of such breach is provided by the Company to Newegg, or (ii) if the Newegg board (or any subgroup or committee thereof) (A) withdraws, modifies or changes its recommendation of the merger agreement or the merger in a manner adverse to the Company or shall have resolved to do any of the foregoing, or (B) approves or recommends, or proposes to approve or recommend, an acquisition proposal;

•        by Newegg if it receives a bona fide written offer prior to the approval of the merger by our shareholders at the special meeting, and Newegg’s special committee determines in good faith (based upon a written opinion of an independent financial advisor) that such offer constitutes a superior offer to the stockholders of Newegg to the terms set forth in the merger agreement, and the Newegg special committee determines in good faith (based upon advice of counsel) that, in light of such superior offer, the withdrawal or modification of the Newegg board’s approval is required in order for the Newegg board to comply with its fiduciary obligations to Newegg’s stockholders under the applicable law; or

•        by the Company if it receives a bona fide written offer prior to the approval of the merger by our shareholders at the special meeting, and the Company’s special committee determines in good faith (based upon a written opinion of an independent financial advisor) that such offer constitutes a superior offer to the shareholders of the Company to the terms set forth in the merger agreement, and the Company’s special committee determines in good faith (based upon advice of counsel) that, in light of such superior offer, the withdrawal or modification of our board’s approval is required in order for our board to comply with its fiduciary obligations to the Company’s shareholders under the applicable law.

If the merger agreement is validly terminated, the merger agreement will terminate (except that the confidentiality agreement between Newegg and the Company, and the provisions described in Section 5.12 (Public Announcements), Section 5.13 (Confidential Information), Section 7.2 (Effect of Termination), Article VII (Termination), Article VIII (Indemnification) and Article IX (General Provisions) of the merger agreement, which provisions shall survive such termination), and there will be no other liability on the part of either party to the other except as described under “— Termination Fees and Expenses;” provided, that no party will be relieved from liability for fraud or a willful breach of a representation or warranty contained in the merger agreement or the breach of any covenant contained in the merger agreement, in which case the aggrieved party will be entitled to all rights and remedies available at law or in equity.

Termination Fees and Expenses (See Page 109)

If the merger agreement is terminated (i) because the shareholder proposals described in this proxy statement/prospectus are not approved at the special meeting by a majority of votes cast which are not beneficially owned by Hangzhou Lianluo, or (ii) upon any of the events described in the third or sixth bullet under “— Termination of the Merger Agreement” above, then the Company is required to immediately pay to Newegg in cash or by wire transfer of immediately available funds or by disbursement from the escrow account, an amount equal to $450,000.

If the merger agreement is terminated upon any event described in the fourth or fifth bullet under “— Termination of the Merger Agreement” above, then Newegg is required to immediately pay to the Company in cash or by wire transfer of immediately available funds in an amount equal to $450,000. During the period from the date of the merger agreement and continuing until the earlier of the termination of the merger agreement or the completion of the merger, Newegg agreed to keep $450,000 of cash available for the payment of the foregoing termination fee.

Termination of the Disposition Agreement (See Page 120)

The disposition agreement may be terminated prior to the closing date as follows:

•        by mutual written consent of the Purchaser and the Company;

•        by written notice by either the Purchaser or the Company if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the disposition agreement and such order or other action has become final and non-appealable;

•        by written notice by the Company if the required shareholder approval is not obtained; or

•        by written notice by the Company if the merger is not closed.

Specific Performance (See Page 109)

Under the merger agreement, each of the Company and Newegg is entitled to seek an injunction or injunctions to prevent breaches of the merger agreement and to seek to specifically enforce the terms and provisions of the merger agreement.

Material U.S. Federal Income Tax Consequences of the Merger (See Page 94)

The Company and Newegg have structured the merger with the intent that it will qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code, specifically as a “reverse subsidiary merger” under Section 368(a)(2)(E) of the Code. However, the qualification of the merger as a tax-free reorganization depends on compliance with numerous technical requirements, and there is a risk that the merger may not satisfy certain of these requirements. There cannot be any assurance that the merger will so qualify as a “reorganization”. See “Risk Factors — Risks Related to the Merger — There can be no assurances that Newegg stockholders will not be required to recognize gain for U.S. federal income tax purposes upon the exchange of Newegg stock for common shares of the Company stock in the merger.” The Company and Newegg have not

sought, and will not seek, any ruling from the Internal Revenue Service, or the IRS, regarding any matter affecting the merger or any of the United States federal income tax consequences discussed herein; and have not sought, and will not seek, any tax opinion from their respective legal counsel regarding the qualification of the merger as a tax-free “reorganization” within the meaning of Section 368(a) of the Code and generally as a tax-free transaction. Thus, there can be no assurance that the IRS will ultimately conclude that the merger does meet all of the requirements for qualification as a “reorganization” within the meaning of Section 368(a) of the Code, and there can be no assurance that any of the other statements made herein would not be challenged by the IRS and, if so challenged, would be sustained upon review in a court. A successful challenge by the IRS could result in taxable income to Newegg and, as described below, its stockholders.

Assuming the merger qualifies for the intended tax treatment, U.S. holders will not recognize any gain or loss upon the receipt of our common shares in the merger. However, if the merger does not qualify as a tax free reorganization as intended, then a U.S. holder will recognize capital gain or loss in an amount equal to the difference, if any, between (i) the sum of the fair market value of our common shares and the fair market value of other merger consideration received in the merger and (ii) the U.S. holder’s adjusted tax basis in the Newegg stock exchanged in the merger.

The foregoing is qualified by reference to, and each Newegg stockholder is urged to read, the sections “Proposal I: The Merger — Material U.S. Federal Income Tax Consequences of the Merger” and “Risk Factors — Risks Related to the Merger — There can be no assurances that Newegg stockholders will not be required to recognize gain for U.S. federal income tax purposes upon the exchange of Newegg stock for common shares of the Company stock in the merger,” and to consult its tax advisor to determine the particular U.S. federal, state or local or non-U.S. income or other tax consequences to it of the merger.

Anticipated Accounting Treatment (See Page 96)

The merger will be accounted for as a reverse merger in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. Under this method of accounting, the Company will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Newegg comprising the ongoing operations of the combined company, Newegg’s senior management comprising the senior management of the combined company and Newegg’s stockholders having a majority of the voting power of the combined company. For accounting purposes, Newegg will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of Newegg (i.e., a capital transaction involving the issuance of shares by the Company for the stock of Newegg). Accordingly, the consolidated assets, liabilities and results of operations of Newegg will become the historical financial statements of the combined company, and the Company’s assets, liabilities and results of operations will be consolidated with Newegg beginning on the acquisition date.

Transaction Expenses (See Page 96)

The Company estimates that its total merger transaction expenses will be approximately $1.20 million, which includes financial advisor fees of approximately $0.27 million, legal fees in the amount of approximately $0.60 million, accounting fees in the amount of approximately $0.14 million, transfer agent fees in the amount of approximately $0.01 million, printing and mailing fees in the amount of approximately $0.05 million, filing fees in the amount of approximately $0.10 million and other expenses in the amount of approximately $0.03 million. None of these expenses are contingent on approval and consummation of the merger unless stated otherwise.

Newegg estimates that its total merger transaction expenses will be approximately $2.24 million, which includes legal fees in the amount of approximately $1.15 million and accounting fees in the amount of approximately $1.09 million. None of these expenses are contingent on approval and consummation of the merger unless stated otherwise.

Risk Factors (See Page 30)

You should carefully read this proxy statement/prospectus and especially consider the factors discussed in “Risk Factors” in connection with your consideration of the merger and disposition before deciding whether to vote for approval of the merger proposal and the disposition proposal. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in “Risk Factors.”

Risks Related to the Merger and Disposition

Risks and uncertainties related to the merger and disposition include, but are not limited to, the following:

•        The merger and disposition are subject to a number of conditions.

•        Certain of our director, executive officer and major shareholders have interests in the merger and disposition that are different from, and may potentially conflict with, our interests and the interests of our unaffiliated shareholders.

•        Failure to complete the merger and disposition could negatively impact our business, financial condition, results of operations or share price.

•        Following the merger, our business may suffer as a result of the lack of public company operating experience of new management.

•        The transition to becoming the subsidiary of a public company will require changes in the way that Newegg operates its business and incur additional expenses pertaining to SEC reporting obligations and SEC compliance matters, and our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

•        Newegg is not a publicly traded company, making it difficult to determine the fair market value of Newegg.

•        Our future results following the merger and disposition may differ materially from the unaudited pro forma financial information included in this proxy statement/prospectus.

•        NASDAQ may not list or continue to list our common shares on its exchange, which could prevent consummation of the merger or limit investors’ ability to make transactions in our shares. Consequently, we may be subject to additional trading restrictions.

•        A majority of Newegg’s capital shares are, and upon completion of the merger, a majority of our common shares will be, pledged as collateral to support delinquent indebtedness of our parent company and could be sold to satisfy that indebtedness.

Risks Related to the Business of the Company

The Company is subject to risks and uncertainties related to its business, including, but not limited to, the following:

•        Our business is seasonal and revenues and operating results could fall below investor expectations during certain periods, which could cause the trading price of our common shares to decline.

•        We sell our products primarily to distributors, and our technical services are provided to hospitals and check-up centers; our ability to add distributors, hospitals and check-up centers will impact our revenue growth. Failure to maintain or expand our distribution network and network of hospitals and check-up centers would materially and adversely affect our business.

•        We generate a significant portion of our revenues from a small number of products, and a reduction in demand for any of these products could materially and adversely affect our financial condition and results of operations.

Risks Relating to Doing Business in China

We face risks and uncertainties related to doing business in China in general, including, but not limited to, the following:

•        Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business.

•        Currently, there are no specific laws or regulations applicable to wearable medical products in China, which are instead subject to general laws applicable to medical products. If there are applicable government regulations in the future, it may create risks and challenges with respect to our compliance efforts and our business strategies.

•        Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.

Risks Related to the Business of Newegg

Newegg is subject to risks and uncertainties related to its business, including, but not limited to, the following:

•        Newegg faces risks related to system interruption, including failures caused or experienced by third-party service providers, and lack of redundancy and timely upgrades.

•        Newegg’s business faces intense domestic and international competition.

•        A decline in demand for IT and CE products could adversely affect Newegg’s operating results.

•        The loss of key employees or the failure to attract qualified personnel could have a material adverse effect on Newegg’s ability to run its business.

•        If Newegg is unable to provide a satisfactory customer experience, its reputation would be harmed and it could lose customers.

•        Newegg depends on its vendors to source sufficient quantities of merchandise on favorable terms. If Newegg fails to maintain strong vendor relationships or if its vendors are otherwise unable to supply products that meet its standards in a timely manner, its net sales and net income could suffer.

•        Newegg’s international sales and operations require access to international markets and are subject to applicable laws relating to trade, export and import controls and economic sanctions, the violation of which could adversely affect its operations.

•        Newegg has incurred net loss in the past and may continue to experience losses in the future.

•        The successful operation of Newegg’s business depends upon the performance, reliability and security of the internet infrastructure in the countries where it operates.

•        Because many of the products that Newegg sells are manufactured abroad, Newegg may face delays, increased cost or quality control deficiencies in the importation of these products, which could reduce its net sales and profitability.

•        Assertions, claims and allegations, even if not true, that Newegg has infringed or violated intellectual property rights could harm Newegg’s business and reputation. Also, Newegg may be subject to product liability claims, which could be costly and time-consuming to defend.

•        Newegg may incur additional costs due to tax assessments resulting from ongoing and future audits by tax authorities.

•        Significant developments stemming from recent U.S. government actions and proposals concerning tariffs and other economic proposals could have a material adverse effect on Newegg.

•        Newegg and certain of its subsidiaries are parties to a revolving credit agreement, which contain a number of covenants that may restrict Newegg’s current and future operations and could adversely affect Newegg’s ability to execute business needs.

Risks Related to Ownership of our Common Shares

In addition to the risks described above, we are subject to general risks and uncertainties related to our common shares, including, but not limited to, the following:

•        If we fail to maintain compliance with NASDAQ Listing Rules, we may be delisted from the NASDAQ Capital Market, which would result in a limited public market for trading our shares and make obtaining future debt or equity financing more difficult for us.

•        The trading price of the common shares is likely to be volatile and could fluctuate widely due to multiple factors, some of which are beyond our control.

•        We are a “controlled company” within the meaning of the NASDAQ 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.

•        As a company incorporated in the BVI, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NASDAQ corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the NASDAQ’s corporate governance listing standards.

•        We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.