Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 112

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 5
Chunk 112
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 shipping locations were open and
our daily logistics volume was adversely affected.

Sales and marketing expenses

The sales and marketing expenses
were RMB20.8 million and RMB17.4 million (US$2.5 million) for the years ended December 31, 2022 and 2023. The decrease in sales
and marketing expenses was due to a continuous focus on improving return-on-marketing investment by optimizing marketing spend across
one or more customer acquisition, and/or sales distribution channels.

General and administrative expenses

The general and administrative expenses increased
by 54.2% from RMB53.5 million to RMB82.5 million (US$11.6 million) for the year ended December 31, 2022 and 2023. The increase in general
and administrative expenses was attributed to increased expenses related to our public offering.

Impairment loss on goodwill

The impairment loss on goodwill resulted from the impairment of goodwill
from acquisition of Cook SF. Cook SF has failed to meet the performance requirement and we performed the quantitative impairment test
for goodwill. Fair value of Cook SF reporting unit was less than its carrying amount. The impairment loss on goodwill was nil and RMB6.6
million (US$0.9 million) for the year ended December 31, 2022 and 2023.

Share-based compensation

The cost for share-based compensation
were RMB39.0 million and RMB83.9 million (US$11.8 million) for the years ended December 31, 2022 and 2023. The increase was
due to mass exercise of stock options upon our successful IPO in November 2023 which resulted in recognition of share-based compensation
expense.

Year ended December 31, 2022 compared to Year ended December
31, 2021

Revenues

Our revenue decreased to RMB179.6
million (US$24.8 million) for the year ended December 31, 2022 from RMB205.2 million for the year ended December 31, 2021. This drop in
revenue was primarily a result of the negative impact from the extended zero-covid policy in China, which led to massive disruptions in
the company’s e-commerce operations. In face of this challenge, we completed four acquisitions in 2022 to speed up the diversification
of revenue streams as well as aggressive improvement on overall cost structure. Assuming these four acquisitions had taken place on 1
January