United States securities and exchange commission logo
September 15, 2023
Norma Chu
Chief Executive Officer
DDC Enterprise Ltd
Room 1601-1602, 16/F, Hollywood Centre
233 Hollywood Road
Sheung Wan, Hong Kong
Re: DDC Enterprise Ltd
Amendment No. 3 to
Registration
Statement on Form F-1
Filed September 8,
2023
File No. 333-272689
Dear Norma Chu:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Amendment No 3 to Form F-1 filed September 8, 2023
Prospectus Summary, page 1
1. We note your
disclosures that subsequent to June 30, 2023, you completed two
acquisitions.
However, this appears inconsistent with your disclosures on pages 123-
124, which only discuss
that the Cook San Francisco, LLC acquisition was completed in
July 2023. Please
revise throughout to clarify this apparent discrepancy, including the
Unaudited Pro Forma
Financial Information section on page 125. Further, refer to the
fourth graphic on the
cover page and your RMB123.6 million pro forma revenue and
26.1% gross margin
amounts, which are based on the assumptions that four acquisitions
had taken place on 1
January 2022. However, this appears inconsistent with your
Norma Chu
DDC Enterprise Ltd
September 15, 2023
Page 2
disclosure on page 2 that these amounts are based on the assumption
that two
acquisitions had taken place on 1 January 2023. Please revise or
clarify your disclosure.
2. Please ensure that the information you provide in your filing is
balanced. We note your
disclosures on pages F-88 and F-131 that international revenues
comprised 0% and 0.17%
of your total revenue in the fiscal year ended December 31, 2022 and
six months ended
June 30, 2023, respectively. However, you discuss throughout the
filing that you are
targeting to have international sales to account for 20 30% of
total revenue in 2024 and
around 50% in 2025. Please revise your filing throughout to provide
your actual revenue
stream based on geographic markets and any related uncertainties.
Further, please
elaborate on how you plan to significantly increase your international
sales.
Non-GAAP Financial Measures, page 37
3. We note you present non-GAAP financial measures you identify as
EBITDA,
LBITDA and Adjusted net loss. Please address the following:
Please note that EBITDA already represents net income or loss
before interest, taxes,
depreciation and amortization. In order to avoid further confusion
regarding the
definition of EBITDA, please remove your reference to LBITDA here
and
throughout the filing;
Tell us how you determined it was appropriate to include allowance
for other current
assets and allowance of accounts receivable in your determination
of Adjusted net
loss. Tell us and clarify how you determined your non-GAAP
financial measures
comply with Question 100.01 of the Division of Corporation Finance
s Compliance
& Disclosure Interpretations on Non-GAAP Financial Measures; and
We note your non-GAAP performance measure of Adjusted net loss
adds back
historical tax expenses/(benefits) and does not include an
adjustment for the tax
impact of all the other non-GAAP adjustments. Please be advised
non-GAAP
Adjusted Net Income/(Loss) measures are required to reflect current
and deferred tax
expenses commensurate with the non-GAAP measure of profitability.
Please explain
to us why you believe the non-GAAP performance measure you present
is
appropriate. Please specifically address how you considered the
guidance
in Question 102.11 Division of Corporation Finance s Compliance &
Disclosure
Interpretations on Non-GAAP Financial Measures.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
Contractual Obligations, page 122
4. We note that you revised this table to present your contractual
obligations in less than six
FirstName LastNameNorma Chu
months and in the year ending 2024 and 2025. Please revise these columns
to present
Comapany
yourNameDDC Enterprise
cash requirements for Ltd
the short-term (i.e., the next 12 months
from June 30, 2023).
Refer to Item 5.B.
September 15, 2023 Page 2 of Form 20-F.
FirstName LastName
Norma Chu
FirstName LastNameNorma Chu
DDC Enterprise Ltd
Comapany 15,
September NameDDC
2023 Enterprise Ltd
September
Page 3 15, 2023 Page 3
FirstName LastName
Related Party Transactions, page 175
5. Please update this section to reflect the information as of the date
of the document. Refer
to Item 7.B. of Form 20-F.
You may contact Ernest Greene at 202-551-3733 or Kevin Woody at
202-551-3629 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jenny O'Shanick at 202-551-8005 or Erin Purnell at 202-551-3454 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing
cc: Lawrence Venick