Company: MVNC
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001683168-25-003814
Chunk: 62

Company: Marvion Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 8
Chunk 62
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2024, the amount represented temporary advances made by a shareholder, Mr. Young to the Company for capital expenditure and working
capital purposes, which was unsecured, interest-free and repayable on demand. The balance was $858,765 and $826,716 as of March 31, 2025
and December 31, 2024, respectively.

11.        PROMISSORY
NOTES PAYABLE AND EARNOUT PAYABLE

The Company entered into certain
promissory notes with its shareholders in connection with the Share Purchase Agreement (“SEA”) and agreed to make the contingent
earnout payments in the aggregate amount of $5.5 million (collectively, the “Earn Out Payments”) upon UWMC’s achievement
of certain operating net income performance milestones during each six months period ending June 30 and December 31 (each, a “Performance
Period”) for a total of nine Performance Periods ending December 31, 2028. These contingent earnout payments become vested upon
the satisfaction of specific performance criteria, which is determined by the aggregate of net earnings of its operating subsidiaries,
excluding the expenses incurred by the headquarter during the respective Performance Period. The Company has the option to pay any earnout
amount in cash or in shares of common stock of the Company. The Earn Out Payments will be payable in the form of interest free promissory
notes and shared equally among Chan Sze Yu, Fong Hiu Ching and Young Chi Kin Eric, who are also shareholders of UWMC. The share exchange
transaction contemplated by the SEA was consummated on September 12, 2024. Subsequent to the closing of the SEA, Chan Sze Yu, Fong Hiu
Ching and Young Chi Kin Eric became the Company’s shareholders.

The foregoing descriptions of
the SEA and the Promissory Notes are qualified in their entirety by reference to the SEA and the Promissory Notes.

As of December 31, 2024, pursuant
to the terms and calculations of the earnout provision, management has determined that the earnout payment of $1 million is vested, whereas
the performance criteria for the Performance Period ended December 31, 2024 was satisfied. The earnout amount of $1 million was recognized
as “earnout payable”. Subsequently, the Company agreed to make the earnout payments on or before June 30, 2025.

The earnout payments are classified
as liability and were initially measured at fair value