Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 284

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 284
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able
and therefore are considered freestanding financial liabilities under ASC 480. The 2021 Warrant, the HL Option and the PFI Warrant
are initially measured and recognized at their fair value and subsequently measured at fair value with changes in fair value recognized
in “changes in fair value of financial instruments” in the consolidated statements of operations and comprehensive loss.

The proceeds of US$10.0million received
from the investor HL were first allocated to the 2021 Warrant and the HL Option which are financial liabilities at fair value. The total
fair value of the 2021 Warrant of US$11.6million (equivalent to RMB74.2million) and the HL Option of US$4.0million (equivalent
to RMB25.5million) exceeded proceeds received by US$5.6million (equivalent to RMB36.0million), representing future business
collaboration expected, which was recognized as “other expenses, net” in the consolidated statements of operations and comprehensive
loss. As a result, nil consideration was allocated to Series C-1 redeemable convertible preferred shares. As Series C-1 redeemable
convertible preferred shares are redeemable at holders’ discretion at any time, the Company adjusts the Series C-1 redeemable
convertible preferred shares from the nil consideration allocated, to their maximum redemption amount at each reporting date. The adjustments
were recorded, in the absence of retained earnings, first as a reduction of additional paid-in capital and then as an increase to the
net loss attributable to ordinary shareholders.

The proceeds of US$5.1million received from
the C-1 investors for issuance of Series C-1 redeemable convertible preferred shares, the 2021 Warrant and ordinary shares were first
allocated to the 2021 Warrant which are financial liabilities at their fair value of US$2.7million (equivalent to RMB17.1million),
with the remaining proceed allocated to Series C-1 redeemable convertible preferred shares and ordinary shares based on their relative
fair values of US$0.3million (equivalent to RMB1.8million) and US$2.0million (equivalent to RMB12.9million) respectively.

The proceeds of US$4.9million received from
the C-1 investors for issuance of the February 2021 Shareholders Loan, the 2021 Warrant and ordinary shares were first allocated
to the 2021