Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 110

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 5
Chunk 110
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                                    —                         38,993,201                83,863,299      11,811,899  

Fulfilment expenses:

“ Fulfilment expenses”
mainly consists of (i) logistics and shipping costs for delivering the goods to the customers, and (ii) packaging costs for
the products sales.

Sales and marketing expenses:

“ Sales and marketing
expenses” mainly consists of (i) salaries and benefits for sales and marketing employees, and (ii) branding and advertisement
expenses paid to the online platform providers and third-party marketing partners.

General and administrative expenses:

“ General and administrative
expenses” primarily consists of (i) salaries and benefits for general and administrative staff, (ii) consulting fees,
(iii) other expenses primarily including general office expenses, (iv) research and development expenses, and (iv) office rental
expenses.

Impairment loss on goodwill:

Impairment loss on goodwill
resulted from the impairment of goodwill from the acquisition of subsidiaries.

Share-based compensation:

The Company’s shareholders
and Board of Directors approved option plans from 2014 to 2023 in order to provide incentives and rewards to the Company’s employees,
directors, consultants and senior management (the “ Option Plans”). The cost of share-based compensation also includes options
granted related to certain business acquisitions.

Result of operations

Year ended December 31, 2023 compared to Year ended December
31, 2022

Revenues

For the year ended December
31, 2023, we recorded RMB205.5 million (or US$28.9 million) in total revenue compared to RMB179.6 million for the year ended December
31, 2022, representing a 14.4% increase. The increase in total revenue was due to the increase in offline consumer product sales of RMB64.4
million (US$9.1 million), offset by the decrease in online consumer product sales of RMB36.2 million (US$5.1 million). In additions, we
completed two acquisitions during second half of 2023. Assuming these two acquisitions had taken place on 1 January 2023, the unaudited
pro forma revenue of the Company for the year ended December 31, 2023 would be RMB222.2 million (or US$31.3 million).

Cost of Revenues

Cost of revenues increased
by 13.5% to RMB154.0 million (US$21