Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 206

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 206
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000            488,498  
  Net decrease in cash                                                          ( 26,986          ( 134,132  
  Cash and cash equivalents at the beginning of the year                         166,654            139,668  
  Cash and cash equivalents at the end of the termination date                   139,668              5,536  

F-19

1. DESCRIPTION OF BUSINESS AND ORGANISATION(cont.)

The VIE arrangements with Farm Entities

The Company acquired a business for planting fresh
vegetables (“ Farm”) in January 2019. The acquired Farm business was operated through Shanghai City Modern Agriculture
Development Co., Ltd. (“ City Modern”), a limited liability company controlled by Mr. Cui Yixiong and Shanghai City Vegetable
Production and Distribution Co-op (“ City Vegetable”), Shanghai Jiapin Vegetable Planting Co-op (“ Jiapin Vegetable”)
and Shanghai Jiapin Ecological Agriculture Co-op (“ Jiapin Ecological”), incorporated in the PRC, collectively referred to
as “ Farm Entities” thereafter.

Prior to the acquisition, the Farm Entities operate
agricultural greenhouse facilities in the PRC, where it produces, markets, and sells premium-quality vegetable products. City Vegetables,
Jiapin Vegetables and Jiapin Ecological are farmers’ specialized cooperatives (together the “ FSCs”) in China. Legal
members of FSCs shall consist of no less than80% qualified farmers. Mr. Cui Yixiong controlled these FSCs since their establishment,
and the formal contractual agreements, including Exclusive Consultancy and Service Agreement and Exclusive Option Agreement (collectively,
the “ FSC VIE Agreements”), were entered into among City Modern, and the nominee equity holders, i. e. the qualified farmers
of the FSCs in January 2019.

The principal terms of the FSC VIE arrangements
are as follows:

1) Exclusive Consultancy and Service Agreement

City Modern shall provide management consulting,
technical support, intellectual property licensing and other relevant services to the FSCs during the service period, which is 20 years
and will be automatically renewed for 20 years upon each expiration. The FSCs shall pay to City Modern100% of their net profit as
service fees for the consultancy services provided by City Modern.

The FSCs and their nominee equity holders shall
accept the services provided by City Modern, cannot receive services from other third parties directly or indirectly, and shall not enter
into any transaction