Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 255

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 255
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 (the “ SPA”) with Mr. Liao Xuefeng and three entities controlled by Mr. Liao Xuefeng, which are Chongqing Meng Wei
Technology Co., Ltd., Chongqing Yizhichan Leisure Food E-commerce Service Department and Chongqing Wei Bang Internet Technology Co., Ltd.
(“the Sellers”), to acquire a number of online stores (“collectively referred to as Mengwei Stores”). Mengwei
Stores are principally engaged in online sales of self-heated hotpots. The Company further entered into a store operation agreement (“ Store
Operation Agreement”) with the Sellers on the same date that the Sellers shall operate and manage Mengwei Stores under the instructions
of the Company since January 12, 2021, yet the legal name of these stores are still registered with the E-commerce platforms under the
Sellers.

Acquisition of Mengwei Stores shall diversify
the Company’s existing business portfolio, and broaden the source of income of the Company.

The transaction was accounted for under the acquisition
method of accounting in accordance with ASC 805, Business Combinations.

The total consideration payable by the Company
comprises fixed cash consideration of RMB3.0million and contingent cash consideration on achievement of Mengwei Stores’ GMV (as
defined in the SPA) and net profit for each performance period from January 2021 to March 2022 (as defined in the SPA). The potential
undiscounted amount of all future payments that could be required to be paid under the contingent consideration arrangement is between
RMB niland RMB4.5million. The fair value of the contingent consideration payable of RMB3.3million as of January 12, 2021 and RMB0.6million as of December 31, 2021 were estimated by applying income approach which considers the present value of the expected future payment,
discounted using a risk- adjusted discount rate of12.4% as of January 12, 2021 and12.7% as of December 31, 2021, that are not observable
in the market (level 3 inputs).

In addition, the Company will grant share options
to Mr. Liao Xuefeng and Mr. Zheng Haohua, holder of10.0% equity interests in Chongqing Meng Wei Technology Co., Ltd. (“the Selling
Shareholders”) at the end of each performance period, depending on achievement of Mengwei Stores’ GMV (as defined