Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 286

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 286
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ible Preferred
Shares are redeemable at holders’ discretion at any time, the Company adjusts the Redeemable Convertible Preferred Shares to their
maximum redemption amount at each reporting date. The adjustments were recorded, in the absence of retained earnings, first as a reduction
of additional paid-in capital of RMB36.2million (US$5.4million) and RMB110.1million (US$15.6million) for the years ended December
31, 2022 and 2023, respectively, and then as an increase to the accumulated deficit of RMB72.9million and RMB nilfor the years ended
December 31, 2022 and 2023, respectively.

Modification and Extinguishment of Redeemable
Convertible Preferred Shares

Upon the issuance of the Series B-2 Redeemable
Convertible Preferred Shares in September 2018, the redemption term of Series A, A-1, B and B-1 Redeemable Convertible Preferred
Shares were modified to be the same as the redemption term of the B-2 Redeemable Convertible Preferred Shares to extend the earliest redemption
date to January 1, 2022 in the event the Company does not complete a qualified IPO. In October 2021, all investors of Company’s
Redeemable Convertible Preferred Shares investors signed confirmation letters with the Company that they will not exercise their redemption
rights at any time on or before January 1, 2023. In May 2022, all but one investors of the Company’s Redeemable Convertible
Preferred Shares signed further confirmation letters that they will not exercise their redemption rights at any time on or before January
1, 2024. In June 2023, all but six investors of the Company’s Redeemable Convertible Preferred Shares signed further confirmation
letters that they will not exercise their redemption rights at any time on or before January 1, 2025.

The Company assessed whether there was a change
in fair value of each modification of Redeemable Convertible Preferred Shares exceeding10% immediately after the change in terms compared
to the fair value of the Redeemable Convertible Preferred Shares immediately before the amendment at each modification date. A change
in fair value exceeding10% would result in extinguishment accounting, while a change in fair value not exceeding10% would be considered
non-substantive and subject to modification accounting.

The Company accounts for modifications that result
in an increase to the fair