Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 271

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 271
---
 a private company and could not be publicly traded or readily convertible into cash, the embedded conversion feature
is not an embedded derivative and does not require bifurcation.

The Company further evaluated the embedded contingent
redemption feature and concluded that it is not required to be bifurcated because it is considered to be clearly and closely related to
the debt host, as the loans were not issued at a substantial discount or premium and are redeemable at par. There were no other embedded
derivatives that are required to be bifurcated.

In June 2023, the Company further extended the
repayment date of the August 2021 Convertible Loan to January 1, 2025, or an earlier date if agreed by both parties. Other terms remained
the same.

It was determined that there was no substantial
change of terms for this 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 revised cash flow under the term of the modified debt instrument.

In November 2023, in connection with the
completion of the IPO, which is not the qualified IPO according to the original term of the August 2021 Convertible Loan, the holder agreed
with the Company to convert part of the loan with the carrying amount of RMB8.5million into340,365class A ordinary shares at the conversion
price of US$3.5per share. The Company applied the debt extinguishment guidance, recognized the fair value of Class A ordinary shares
and derecognized the carrying value of the August 2021 Convertible Loan of RMB8.5million, resulting in an extinguishment loss of RMB4.0million (note 22).

As of December 31, 2023, the remaining outstanding
August 2021 Convertible Loan of RMB3.5million was recorded as non-current liability at amortized cost. As of December 31, 2024, the remaining
outstanding August 2021 Convertible Loan of RMB3.5million was recorded as current liability at amortized cost.

F-75

17. CONVERTIBLE LOANS AND SHAREHOLDER LOANS(cont.)

May 2022 Convertible Loan

In May 2022, the Company entered into a convertible
loan agreement with a new lender for a total principal amount of RMB3.5million (US$0.5million) (“the May 2022