Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 297

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 297
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 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 23).

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

February 2022 Convertible Loan

In February 2022, the Company entered into a new
convertible loan agreement with an existing lender for a total principal amount of RMB3.5million (US$0.5million) (“the February 2022
Convertible Loan”). The repayment date falls on 12 months from the date of the February 2022 Convertible Loan agreement, provided,
that if a Qualified IPO has not occurred within 12 months from the date of the February 2022 Convertible Loan, the parties hereby agree
that the repayment date shall be extended by 3 months. Interest rate is25% per annum. The Company shall have the discretion to determine
whether its portion of the outstanding principal amount of the February 2022 Convertible Loan together with any accrued but unpaid
interest be applied to issue the conversion shares to the lender at the conversion price on the date of listing of the qualified IPO.
The conversion price is US$11.7936per share.

As the embedded conversion features are underlying
ordinary shares of 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 February 2023, the Company extended the
duration of the February 2022 Convertible by way of entering into a new loan agreement with the lender. The repayment date is December
31, 2023, or an earlier date if agreed by both parties. Interest rate is25% per annum. The conversion price is US$11.7936per share.
(“the modification”)

It was determined that there was no substantial