Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 267

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 267
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 operations and comprehensive loss.

F-72

17. CONVERTIBLE LOANS AND SHAREHOLDER LOANS(cont.)

The Company assessed whether there were substantial
changes of terms of the January 2019 Shareholder Loan. If the terms are substantially different, the modification is accounted for
as a debt extinguishment. Otherwise, it is accounted for as a modification. In order to determine whether the terms are substantially
different upon each modification, the Company compared whether the present value of the cash flows under the terms of the modified debt
instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original debt instrument.
If the terms of a non-convertible debt instrument are modified and the cash flow effect on a present value basis is less than 10 percent,
the debt instruments are not considered to be substantially different. The calculation of the present value of the cash flows of the new
debt instruments included all cash flows specified by the terms of the new debt instruments plus any amounts paid by the Company. Those
amounts paid by the Company were the fair value of new warrants issued in the first modification, the incremental fair value resulted
from the revision of the warrant terms in the second modification, nil in the third modification and the excess of the fair value of Class
A OS Warrant issued, over the fair value of the B-2 & C Warrants cancelled, in the fourth modification.

Based on the above assessment, it was determined
that there was no substantial change of terms in the first modification and the new debt was accounted for at amortized cost using a new
effective interest rate determined based on the original debt’s net carrying amount after deducting the fair value of the newly
issued C Warrant and the revised cash flow under the term of the modified debt instrument.

For the second modification, it was determined
that there was substantial change of terms and extinguishment accounting was applied. The excess of the reacquisition price of debt, being
the fair value of the new debt instruments and the incremental fair value of RMB2.9million (US$0.5million) of the warrants
resulted from the revision of the exercise price, over the net carrying amount of the extinguished debt was recognized as losses upon
the extinguishment.

It was determined that there was no substantial
change of terms in the third modification and the new debt was accounted for at amortized cost using a new effective interest rate determined
based on the original debt’s net carrying amount and