Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 109

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 5
Chunk 109
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ase expenses

Our total lease expenses for
the year ended December 31, 2023 and 2024 were nil and nil respectively. It was mainly due to the closure of all experience store, and
the termination of all contractual arrangements with City Modern in 2022.

Others

“ Others” primarily
includes depreciation and amortization expenses for equipment directly related to revenue. For the year ended December 31, 2023 and 2024,
other costs represented less than 1% of total costs.

Operating Expenses

Operating expenses increased
by 8.8% to RMB215.1 million (US$29.5 million) in 2024 from RMB197.7 million in 2023.

Fulfilment expenses

The fulfilment expenses increased
from RMB7.3 million to RMB8.0 million (US$1.1 million) for the year ended December 31, 2023 and 2024. The increase was in line with
the increase of revenue for the year ended December 31, 2024.

Sales and marketing expenses

The sales and marketing expenses
were RMB17.4 million and RMB20.9 million (US$2.9 million) for the years ended December 31, 2023 and 2024. The increase in sales
and marketing expenses was in line with the increase of revenue for the year ended December 31, 2024.

General and administrative expenses

The general and administrative
expenses increased by 20.2% from RMB82.5 million to RMB99.1 million (US$13.6 million) for the year ended December 31, 2023 and 2024. The
increase was mainly due to the impairment of intangible assets of RMB18.7 million (US$2.6 million).

Impairment loss on goodwill

The impairment loss on goodwill
resulted from the impairment of goodwill from acquisition of subsidiaries. They have failed to meet the performance requirement and we
performed the quantitative impairment test for goodwill. Fair value of these reporting units was less than their carrying amount. The
impairment loss on goodwill was RMB6.6 million and RMB67.9 million (US$9.3 million) for the year ended December 31, 2023 and 2024.

Share-based compensation

The cost for share-based compensation
were RMB83.9 million and RMB19.1 million