Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 226

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 19
Chunk 226
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 other matters, the nature, frequency and severity of current
and cumulative losses, forecasts of futures profitability, the duration of statutory carry forward periods, the Company’s experience
with operating loss and tax credit carry forwards, if any, not expiring.

The Company applies a “more-likely-than-not”
recognition threshold in the evaluation of uncertain tax positions. The Company recognizes the benefit of a tax position in its consolidated
financial statements if the tax position is “more-likely-than-not” to prevail based on the facts and technical merits of the
position. Tax positions that meet the “more-likely-than-not” recognition threshold is measured at the largest amount of tax
benefit that has a greater than fifty percent likelihood of being realized upon settlement. Unrecognized tax benefits may be affected
by changes in interpretation of laws, rulings of tax authorities, tax audits, and expiry of statutory limitations. In addition, changes
in facts, circumstances and new information may require the Company to adjust the recognition and measurement estimates regarding individual
tax positions. Accordingly, unrecognized tax benefits are periodically reviewed and re-assessed. Adjustments, if required, are recorded
in the Company’s consolidated financial statements in the period in which the change that necessities the adjustments occur. The
ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in certain
circumstances, a tax appeal or litigation process. The Company records interest and penalties related to unrecognized tax benefits (if
any) in interest expenses and general and administrative expenses, respectively.

(ae) Concentration and Risk

Concentration of credit risk

Financial instruments that potentially expose
the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, accounts receivable, net,
other receivables, short-term and long-term deposits, receivables of supplier rebates, prepayments and other receivables due from YJW
and KeKe.

The Company’s investment policy requires
cash, cash equivalents and restricted cash to be placed with high quality financial institutions and to limit the amount of credit risk
from any one institution. The Company regularly evaluates the credit standing of the counterparties or financial institutions.

Accounts receivable, net, derived from product
sales and provision of services on the Company’s E-commerce platforms and retail stores, as well as other receivables, deposits
and other current assets (note 7), are exposed to credit risk. The assessment of the counterparties’ creditworthiness is