Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 21

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 3
Chunk 21
---
 material adverse effect on our business, financial condition
and results of operations.

We may be unable to manage our growth effectively
or efficiently.

Growing our business rapidly,
particularly though acquisitions, will place a strain on our management team, financial and information systems, supply chain and distribution
capacity and other resources. To manage growth effectively, we must continue to enhance our operational, financial and management systems,
including our warehouse management and inventory control; maintain and improve our internal controls and disclosure controls and procedures;
maintain and improve our information technology systems and procedures; and expand, train and manage our employee base.

We may not be able to effectively
manage this expansion in any one or more of these areas, and any failure to do so could significantly harm our business, financial condition
and results of operations. Growing our business rapidly may make it difficult for us to adequately predict the expenditures we will need
to make in the future. If we do not make the necessary overhead expenditures to accommodate our future growth, we may not be successful
in executing our growth strategy, and our results of operations would suffer.

We have incurred net loss in the past, and
we may not be able to achieve or maintain profitability in the future.

We incurred net loss of RMB458.7
million, RMB122.2 million and RMB162.0 million (US$22.8 million) in 2021, 2022 and 2023. We also had negative cash flows from operating
activities of RMB91.4 million, RMB37.1 million and RMB89.4 million (US$12.6 million) in the fiscal years ended December 31,
2021, 2022 and 2023 respectively. Management uses the adjusted EBITDA, non-GAAP financial measures, in evaluating our operating results
and for financial and operational decision-making purposes.

For the years ended December
31, 2021, 2022 and 2023, we incurred an adjusted EBITDA with loss of RMB108.5 million, RMB37.5 million and RMB38.6 million (US$5.4 million)
respectively. For details, please refer to section “ Non-GAAP Financial Measure”.

We cannot assure you that
we will be able to generate net profits or positive cash flow from operating activities in the future. Our ability to achieve and maintain
profitability will depend in large part on our ability to maintain or increase our operating margin, either by growing our revenues at