Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 268

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 268
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 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 in the SPA)
and net profit for each performance period from January 2021 to March 2022 (as defined in the SPA). Such share options will be fully vested
upon each of the grant and enable Selling Shareholders to acquire the Company’s ordinary shares at the stated nominal exercise price
upon the completion of Company’s IPO. Each share option has a contractual life of10years. As of December 31, 2022, the Company
had granted18,016share options to Mr. Liao Xuefeng and2,002share options to Mr. Zheng Haohua, respectively, in connection with the