Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 116

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 5
Chunk 116
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 debt holder with, at a minimum, the consideration issuable under the conversion privileges provided in the terms of the instrument.
This update applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature
as of both its issuance date and the date the inducement offer is accepted. Effective for all entities for annual reporting periods beginning
after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is
evaluating the impact the updated guidance will have on its consolidated financial statements and disclosure.

In January 2025, the Financial
Accounting Standards Board (“ FASB”) updated 2025-01: Income Statement - Reporting Comprehensive Income - Expense Disaggregation
Disclosures (Subtopic 220-40): Clarifying the Effective Date. Public business entities must adopt the guidance in Update 2024-03 for annual
reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15,
2027. The update clarifies that all public business entities should initially adopt the disclosure requirements in the first annual reporting
period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.
The Group is evaluating the impact the updated guidance will have on its consolidated financial statements and disclosures.

5. B. Liquidity and Capital Resources

Cash Flows and Working Capital

Our sources of liquidity are
primarily from the cash earned from operating activities and cash by financing activities. Financial instruments that potentially subject
us to significant concentrations of credit risk are cash and cash equivalents. Our cash and cash equivalents consist of cash on-hand and
demand deposits placed with banks or other financial institutions which are unrestricted as to withdrawal and use and have original maturities
less than three months.

As of December 31, 2022,
2023 and December 31, 2024, RMB26.8 million, RMB78.8 million and RMB61.0 million (US$8.4 million), respectively was deposited
with financial institutions mainly located in the Chinese mainland, Hong Kong and U. S.

A majority of our expense
transactions are denominated in RMB and a significant portion of our (and our subsidiaries) assets and liabilities (including the VIEs)
are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC certain foreign