Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 290

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 290
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arrant”) to the same
lender for a consideration of HK$1.0to subscribe for the new Class A Ordinary Shares at an exercise price of US$10.64per share. The
total subscription price for the Class A Ordinary Shares shall not exceed US$2,405,964. At the same time, the B-2 & C Warrant issued
to the lender were cancelled. The Class A OS Warrant will expire on 25 September 2023 (“the fourth modification”).

The warrants are legally detachable and separately
exercisable for underlying Redeemable Convertible Preferred Shares that are contingently redeemable and therefore are considered a freestanding
financial liability under ASC 480. The Class A OS Warrant are legally detachable and separately exercisable for variable number of
the Company’s equity shares and therefore are considered a freestanding financial liability under ASC 480. The warrants are
initially measured and recognized at its fair value and also 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.

F-83

18. CONVERTIBLE LOANS AND SHAREHOLDER LOANS(cont.)

The Company assessed whether there were substantial
changes of terms of the January 2019 Shareholder Loan. If the terms are substantially different, the modification is accounted for
as a debt extinguishment. Otherwise, it is accounted for as a modification. In order to determine whether the terms are substantially
different upon each modification, the Company compared whether the present value of the cash flows under the terms of the modified debt
instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original debt instrument.
If the terms of a non-convertible debt instrument are modified and the cash flow effect on a present value basis is less than 10 percent,
the debt instruments are not considered to be substantially different. The calculation of the present value of the cash flows of the new
debt instruments included all cash flows specified by the terms of the new debt instruments plus any amounts paid by the Company. Those
amounts paid by the Company were the fair value of new warrants issued in the first modification, the incremental fair value resulted
from the revision of the warrant terms in the second modification, nil in the third modification and the excess of the fair value of Class
A OS Warrant issued, over the fair value of the B-2 & C Warrants cancelled