Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 285

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 19
Chunk 285
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 Warrant which are financial liabilities at their fair value of US$2.6million (equivalent to RMB16.7million), with
the remaining proceeds allocated to the February 2021 Shareholders Loan and ordinary shares based on their relative fair values of
US$0.4million (equivalent to RMB2.4million) and US$1.9million (equivalent to RMB12.4million) respectively.

The Company applied the debt extinguishment to
account for the exchange of the July 2019 convertible loan and 2020 convertible loan into106,897Series C-1 redeemable convertible
preferred shares and US$4.1million February 2021 Shareholders Loan. As a result, the Company recognized the respective fair
values of series C-1 redeemable convertible preferred shares of US$2.1million (equivalent to RMB13.6million), the February 2021
Shareholders Loan of US$3.9million (equivalent to RMB24.8million), the 2021 Warrant of US$5.3million (equivalent to RMB34.0million)
and ordinary shares of US$33.1million (equivalent to RMB211.0million), and derecognized the carrying value of the July 2019
convertible loan and 2020 convertible loan which resulted in an extinguishment loss of RMB224.4million (US$34.7million) that was
recognized as “other expenses, net” in the consolidated statements of operations and comprehensive loss for the year ended
December 31, 2021.

The C-1 redeemable convertible preferred shares
issued to and those exercised from PFI warrant by Black River were recorded at their fair values on the issuance date.

The Company evaluated the embedded conversion
option in the Redeemable Convertible Preferred Shares to determine if there were any embedded derivatives requiring bifurcation). The
conversion option of the Redeemable Convertible Preferred Shares is not bifurcated because the conversion option is clearly and closely
related to the host equity instrument. The contingent redemption options of the Redeemable Convertible Preferred Shares are not bifurcated
because the underlying ordinary shares are not net settable since the Redeemable Convertible Preferred Shares were neither publicly traded
nor readily convertible into cash.

F-80

17. REDEEMABLE CONVERTIBLE PREFERRED SHARES(cont.)

As all series of the Redeemable Convert