Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 221

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 221
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 the sales contracts with end customers and small retailers, including delivering
products, providing customer support and handling sales return. The Company also has discretion in setting the price charged on individual
customers or small retailers. Accordingly, the Company determined that individual customers and small retailers (as opposed to the platforms)
are the Company’s customers. The sales contracts with individual customers normally include a customer’s right to return products
within seven days after receipt of goods.

The Company identifies that its performance obligation
under online consumer product sales is to provide the ordered products to end customers or small retailers. Revenue is recognized upon
delivery of the products. In scenarios where the Company separates one order into multiple deliveries, transaction price will be allocated
to each product based on relative standalone selling prices and the allocated amount will be recognized as revenue when the product is
delivered.

Estimated sales allowances for sales returns are
made based on contract terms and historical patterns. Discount coupons are recorded as a deduction of revenue when used by customers.
The Company does not issue any discount coupons concurrent with a sales transaction.

2) Offline consumer product sales

The Company primarily sells RTC, RTH, RTE &
Plant Base, private label products and fresh products to various distributors, e. g. offline retail chains or supermarkets who then sell
to end customers. Revenue is recognized on a gross basis upon delivery of the products to the warehouses of the distributors for the following
reasons: (1) the Company is the primary obligor and is responsible for the acceptability of the products purchase orders and the fulfilment
of the delivery services; (2) the Company is responsible to compensate the customers if the products are defective; (3) the Company has
latitude in establishing selling prices and selecting suppliers.

The Company recognize revenues from its own product
vouchers, when they are redeemed by the customer. Product vouchers generally expire over a period of up to 12 months. The Company recognize
breakage revenue, which is the amount of product vouchers that is not expected to be redeemed, when the likelihood of redemption is remote,
in situations where the Company does not expect to be entitled to breakage, provided that there is no requirement for remitting balances
to government agencies under unclaimed property laws. The Company reviews its breakage estimates at least annually based upon the latest
available information regarding redemption and expiration patterns.

Advertising services

The Company provides advertising services to customers
for promotion of their brands and products. These types of advertising services include production and online publishment of customized
promotional videos,