Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 157

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 8
Chunk 157
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 Industry S. p. A (“ GLI”),
an Italian producer of specialized Asian ready-meals, for approximately USD$9.3 million cash to be paid out over three years plus additional
potential consideration of cash and stock depending on the performance of GLI. The transaction did not close and in September 2024 we
received notice that the shareholders of GLI filed for an arbitration alleging that we failed to fulfill its obligations under the SPA
by not satisfying the closing conditions and claiming damages of EU$4.7 million. we responded by denying any breach of the SPA and by
asserting that GLI breached the SPA by failing to provide documents and failing to satisfy the closing conditions. We believe that the
GLI shareholders’ claims are without merit and plans to vigorously defend itself and assert counterclaims; however, failure to obtain
a favorable resolution could have a material adverse effect on our business, results of operations and financial condition. Currently,
the amount of such material adverse effect cannot be reasonably estimated, and no provision or liability has been recorded for these claims
as of December 31, 2023.

Nona Lim, the former Chief
Executive Officer of Cook San Francisco LLC (“ Cook”), an indirect subsidiary of the Company, has alleged that she had Good
Reason (as defined in her employment agreement) to resign from Cook and is thus owed severance by the Company and Cook. Ms.
Lim, in her capacity as Sellers’ Representative in the Membership Interests Purchase Agreement (the “ MIPA”) between
the Company and Cook members pursuant to which the Company purchased the interests in Cook, has also alleged that the Company breached
the MIPA relating to post-closing payments. On November 26, 2024, Ms. Lim filed a complaint with the Superior Court State of California,
County of San Francisco, against the Company, Cook and our CEO, Norma Chu, as an individual, asserting breach of contract and breach of
various labor laws. The Company disputes the merits of Ms. Lim’s claims but has been negotiating a settlement with her to resolve
all outstanding disputes. Failure to obtain a favorable resolution could have a material adverse effect on the Company’s business,
results of operations and financial condition. Currently, the amount of such material adverse effect cannot be reasonably estimated, and
no provision or liability has been recorded for these claims as of December 31, 2023.

A former service provider
has made allegations against the Company regarding alleged undisclosed related party transactions, improper value-added-tax transactions