Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 205

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 205
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5) Loan agreement

A loan agreement was entered into between the
WFOE and the nominee shareholder of Weishi. Under the loan agreement, the WFOE would make an interest-free loan in an amount of RMB10.0million
in total to the nominee shareholder of Weishi exclusively for the purpose of the capitalization of Weishi. The loan shall be repaid in
full if the nominee shareholders of Weishi ceases to be the employee of Weishi, the WFOE or their affiliates; and can only be repaid with
the proceeds derived from the sale of all of the equity interests in Weishi to the WFOE or its designated representatives pursuant to
the Exclusive Purchase Agreement. The term of the loan is twentyyears from the date of the loan agreement and may be extended upon
mutual written consent of the WFOE and the nominee shareholder of Weishi.

As of December 31, 2021 and March 31, 2022, the
drawdown amount of the loan by the nominee shareholder was RMB1.0million.

F-17

1. DESCRIPTION OF BUSINESS AND ORGANISATION(cont.)

Termination of the VIE agreements with Weishi

On April 1, 2022, the WFOE, Weishi and the nominee
shareholder entered into an agreement to terminate the VIE arrangements with Weishi for nil consideration. Upon the termination, the Company
recognized a gain of RMB426,690, which is the difference between (i) net liabilities of RMB63,362,821of Weishi as of March 31, 2022,
and (ii) a net payable of RMB62,936,131due to the Company. after the Company waiving the net receivables due from Weishi. Historically,
the Company’s business was substantially conducted through its wholly owned subsidiaries established in China. Prior to the termination,
revenue generated through Weishi amounted to RMB nilfor the three months ended March 31, 2022. The Company’s management believes
that the termination of the Weishi VIE Agreements does not represent a strategic shift that has a major effect on the Company’s
operations and financial results and is not accounted as discontinued operations.

The following presents the balance sheet information
of Weishi as of March 31, 2022, and the operations and cash flows of Weishi for the three months ended March 31, 2022.

                                                                        RMB