12.       EARN-OUT 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, 2025, pursuant to the terms and calculations of the earnout provision, management has determined that the earnout payment of $2.5 million is vested, whereas the performance criteria for the Performance year ended December 31, 2025 was satisfied. The earnout amount of $2.5 million was recognized as earn-out payable in current liabilities. On December 1, 2025, the Company issued 14,992,504 shares of common stock to Chan Sze Yu, at $0.03335 per share to settle $500,000 earn-out payable. The share price of common stock was based upon the fifteen day average closing price of the Company’s common stock immediately preceding the date of the debt to equity conversion agreement. The debt to equity conversion agreement was approved by Board of Directors on December 1, 2025. Subsequently, the Company agreed to make the remaining earnout payments on or before June 30, 2026.

The earnout payments are classified as liability and were initially measured at fair value at the share exchange transaction date and will subsequently be remeasured at the end of each reporting period with the change in fair value of the earnout liability recorded in the consolidated statements of operations and comprehensive income (loss). The estimated fair value of the total earnout liability was $4.7 million as of December 31, 2025.

The following table presents information about earn-out payable that was measured at fair value on a recurring basis as of December 31, 2025 and 2024, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

The Company determined the fair value using the probability-weighted expected model with the following assumptions for years ended December 31, 2025 and 2024:

The following summarizes the fair value table due under the Company’s earnout provision:

The following table summarizes the contingent earnout payments due under the Company’s earnout provision: