Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 111

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 5
Chunk 111
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2.4 million to RMB0.9 million
(US$0.1million) for the year ended December 31, 2022 and 2023. The closure of all retail locations also corresponded to a decrease in
the revenue from experience stores.

Lease expenses

Our total lease expenses for the year ended December 31, 2022 and 2023
were RMB0.6 million and nil respectively. The decrease was mainly attributable to the closure of all experience store during the year,
and the termination of all contractual arrangements with City Modern.

Others

“ Others” primarily
includes depreciation and amortization expenses for equipment directly related to revenue. For the year ended December 31, 2022 and 2023,
other costs represented less than 1% of total costs.

Operating Expenses

Operating expenses increased
by 54.2% to RMB197.7 million (US$27.8 million) in 2023 from RMB123.9 million in 2022.

Fulfilment expenses

The fulfilment expenses decreased
from RMB10.6 million to RMB7.3 million (US$1.0 million) for the year ended December 31, 2022 and 2023. The cost reduction was a result
of the decline in online consumer product sales since the second quarter of 2022. As a result, fewer shipping locations were open and
our daily logistics volume was adversely affected.

Sales and marketing expenses

The sales and marketing expenses
were RMB20.8 million and RMB17.4 million (US$2.5 million) for the years ended December 31, 2022 and 2023. The decrease in sales
and marketing expenses was due to a continuous focus on improving return-on-marketing investment by optimizing marketing spend across
one or more customer acquisition, and/or sales distribution channels.

General and administrative expenses

The general and administrative
expenses increased by 54.2% from RMB53.5 million to RMB82.5 million (US$11.6 million) for the year ended December 31, 2022 and 2023. The
increase in general and administrative expenses was attributed to increased expenses related to our public offering.

Impairment loss on goodwill

The impairment loss on goodwill resulted from
the impairment of goodwill from acquisition of Cook SF. Cook SF has failed to meet the performance requirement and we performed the quantitative
impairment test for goodwill