UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________________________

SCHEDULE 14A

________________________________

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant		☒
Filed by a Party other than the Registrant		☐

Check the appropriate box:

☒		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☐		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under §240.14a-12

ACE GLOBAL BUSINESS ACQUISITION LIMITED
(Name of Registrant as Specified In Its Charter)

___________________________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
☐	No fee required.
☒	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1)	Title of each class of securities to which transaction applies: Ordinary shares, $0.001 par value per share, of Ace Global Business Acquisition Limited (“Ordinary Shares”)

	(2)	Aggregate number of securities to which transaction applies: 30,000,000 ordinary shares of Ace Global Business Acquisition Limited to be issued to the DDC Enterprise Limited shareholders pursuant to that certain Share Exchange Agreement, dated as of August 23, 2021, by and among Ace Global Business Acquisition Limited, DDC Enterprise Limited and Ka Yin Norma Chu, as shareholders’ representative.

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): The proposed maximum aggregate value of the transaction was calculated based on $10.00 per share (the average of the high and low prices reported on the Nasdaq Capital Market on [*], 2021).

	(4)	Proposed maximum aggregate value of transaction: $300,000,000

	(5)	Total fee paid: $27,810

☐	Fee paid previously with preliminary materials.
☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

	(3)	Filing Party:

	(4)	Date Filed:

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PRELIMINARY PROXY STATEMENT DATED NOVEMBER 5, 2021 — SUBJECT TO COMPLETION

PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
OF ACE GLOBAL BUSINESS ACQUISITION LIMITED

Proxy Statement dated [*], 2021
and first mailed to shareholders on or about [*], 2021

Dear Shareholders:

On behalf of the board of directors Ace Global Business Acquisition Limited (“Ace,” “ACBA,” “we,” “our,” or “us”), we are pleased to enclose the proxy statement relating to the proposed acquisition of DDC Enterprise Limited (“DDC,” and such transaction, the “Business Combination”), pursuant to a share exchange agreement dated as of August 23, 2021 (as may be amended or supplemented from time to time, the “Share Exchange Agreement”) among Ace, DDC and Ka Yin Norma Chu, as representative of DDC’s shareholders. DDC is a leading China-based Business-to-Business (“B2B”) and Business-to-Consumer (“B2C”) content streaming and product marketplace offering easy, convenient ready-to-cook (“RTC”) and ready-to-heat (“RTH”) meals while promoting healthier lifestyle choices to its predominately Millennial and Generation Z customer-base. It currently conducts its operations primarily in China through its wholly-owned or controlled subsidiaries.

In connection with the Business Combination and the other matters described herein, you are cordially invited to attend the extraordinary general meeting in lieu of an annual meeting of Ace (the “Extraordinary General Meeting”) to be held at 10:00 a.m. Eastern Time on , 2021 at the offices of Loeb & Loeb LLP, at 2206-19 Jardine House, 1 Connaught Place, Central, Hong Kong. Only shareholders who held ordinary shares of Ace (the “ACBA Shares” or “Ace Shares”) at the close of business on , 2021 will be entitled to vote at the Extraordinary General Meeting and at any adjournments and postponements thereof. Holders of ACBA Shares will be asked to approve the Share Exchange Agreement dated as of August 23, 2021 and other related proposals.

Ace is a blank check company incorporated on November 2, 2020 as a British Virgin Islands company with limited liability and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses. Ace’s units, ordinary shares and warrants are traded on the Nasdaq Stock Market (“Nasdaq”) under the symbols “ACBAU,” “ACBA,” and “ACBAW,” respectively. At the Closing, Ace’s units will separate into their component shares and warrants so that the units will no longer trade separately under “ACBAU.”

Upon the closing of the transactions contemplated in the Share Exchange Agreement, Ace will acquire 100% of the issued and outstanding securities of DDC, in exchange for 30,000,000 ACBA Shares, of which 3,000,000 ordinary shares are to be issued and held in escrow to satisfy indemnification obligations of DDC and DDC’s current shareholders.

On [*], 2021, the record date for the Extraordinary General Meeting of shareholders, the last sale price of ACBA Share was $[*].

Each shareholder’s vote is very important. Whether or not you plan to attend the Extraordinary General Meeting in person, please submit your proxy card without delay. Shareholders may revoke proxies at any time before they are voted at the meeting. Voting by proxy will not prevent a shareholder from voting in person if such shareholder subsequently chooses to attend the Extraordinary General Meeting.

We encourage you to read this proxy statement carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 21.

Ace’s board of directors unanimously recommends that Ace’s shareholders vote “FOR” approval of each of the proposals.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the Business Combination or otherwise, or passed upon the adequacy or accuracy of this proxy statement. Any representation to the contrary is a criminal offense.


Eugene Wong
Chief Executive Officer
Ace Global Business Acquisition Limited
[*], 2021

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HOW TO OBTAIN ADDITIONAL INFORMATION

This proxy statement incorporates important business and financial information about Ace that is not included or delivered herewith. If you would like to receive additional information or if you want additional copies of this document, the agreements contained in the appendices or any other documents filed by Ace with the Securities and Exchange Commission, such information is available without charge upon written or oral request. Please contact Ace at the following address:

Ace Global Business Acquisition Limited
6/F Unit B, Central 88, 88-89 Des Voeux Road Central,
Central, Hong Kong
Attn: Eugene Wong, Chief Executive Officer
Tel: (852) 9086 7042

If you would like to request documentation, please do so no later than [*], 2021 to receive such documentation before the Extraordinary General Meeting. Please be sure to include your complete name and address in your request. Please see “Where You Can Find Additional Information” to find out where you can find more information about Ace and DDC. You should rely only on the information contained in this proxy statement in deciding how to vote on the Business Combination. Neither Ace nor DDC has authorized anyone to give any information or to make any representations other than those contained in this proxy statement. Do not rely upon any information or representations made outside of this proxy statement. The information contained in this proxy statement may change after the date of this proxy statement. Do not assume after the date of this proxy statement that the information contained in this proxy statement is still correct.

USE OF CERTAIN TERMS

Unless otherwise stated in this proxy statement, references in this proxy statement to:

• “ACBA,” “Ace,” “we,” “us” or “our company” refer to Ace Global Business Acquisition Limited;

• “DDC” refers to DDC Enterprise Limited, its consolidated subsidiaries and its consolidated affiliated entities, including its variable interest entities (“VIEs”) and their consolidated entities;

• “Generation Z” or “GenZ” refer to the demographic cohort in China of individuals born from 1996 to 2010;

• “Millennial” refers to the demographic cohort in China of individuals born from 1980 to 1995;

• “non-tier 1 cities” refer to all cities in China other than Beijing, Shanghai, Guangzhou and Shenzhen;

• “Share Exchange Agreement,” or “Merger Agreement” refer to the Share Exchange Agreement, dated as of August 23, 2021, entered into by and among Ace Global Business Acquisition Limited, DDC Enterprise Limited and Ka Yin Norma Chu, as the shareholders’ representative;

• “tier 1 cities” refer to Beijing, Shanghai, Guangzhou and Shenzhen in China;

• “U.S. Dollars,” “USD”, “US$” and “$” refer to the legal currency of the United States;

• “U.S. GAAP” are to accounting principles generally accepted in the United States; and

The reporting currency of Ace and DDC is the U.S. dollar and Renminbi, respectively. This proxy statement also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB6.4566 to US$1.00, the exchange rate set forth in the Federal Reserve Board on June 30, 2021. We make no representation that the Renminbi or U.S. dollar amounts referred to in this proxy statement could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

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ACE GLOBAL BUSINESS ACQUISITION LIMITED
6/F Unit B, Central 88, 88-89 Des Voeus Road Central
Central, Hong Kong

NOTICE OF EXTRAORDINARY GENERAL MEETING OF
ACE GLOBAL BUSINESS ACQUISITION LIMITED SHAREHOLDERS

To Be Held on [*], 2021

To Ace Global Business Acquisition Limited (“Ace”) Shareholders:

An extraordinary general meeting of shareholders of Ace (the “Extraordinary General Meeting”) will be held at [*], on [*], 2021, at [*] a.m., for the following purposes:

• To approve the share exchange agreement dated as of August 23, 2021 (as may be amended or supplemented from time to time, the “Share Exchange Agreement”, and the transactions contemplated therein, the “Business Combination”) by and among Ace, DDC Enterprise Limited (“DDC”) and Ka Yin Norma Chu, as representative of DDC’s shareholders and the transactions contemplated thereunder, including but not limited to the acquisition of all of the issued and outstanding shares and any other equity interests of DDC from DDC’s current shareholders and the consideration paid to such shareholders by way of a new issuance of ordinary shares credited as fully paid in accordance with the Share Exchange Agreement.” This proposal is referred to as the “Business Combination Proposal” or “Proposal No. 1.”

• To approve as a members resolution the change of Ace’s name to DayDayCook Inc. and the adoption of the Second Amended and Restated Memorandum and Articles of Association of Ace as further described herein. This proposal is referred to as the “Amendment Proposal” or “Proposal No. 2.”

• To approve the issuance of more than 20% of the issued and outstanding ACBA Shares pursuant to the terms of the Share Exchange Agreement, as required by Nasdaq Listing Rules 5635(a) and (d). This proposal is referred to as the “Nasdaq Proposal” or “Proposal 3.”

• To approve the adjournment of the extraordinary general meeting in the event Ace does not receive the requisite shareholder vote to approve the Business Combination. This proposal is called the “Business Combination Adjournment Proposal” or “Proposal 4.”

Proposals 1 through 4 are sometimes collectively referred to herein as the “Proposals.”

As of [*], 2021, there were 6,054,000 ACBA Shares issued and outstanding and entitled to vote. Only Ace’s shareholders who hold shares of record as of the close of business on [*], 2021 are entitled to vote at the Extraordinary General Meeting or any adjournment of the Extraordinary General Meeting. This proxy statement is first being mailed to shareholders on or about [*], 2021. Approval of the Business Combination Proposal and the Amendment Proposal will each require 50% of the issued and outstanding ordinary shares present in person or by proxy and entitled to vote at the Extraordinary General Meeting. Further, approval of the Nasdaq Proposal and the Business Combination Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding ordinary shares present in person or by proxy and entitled to vote at the Extraordinary General Meeting. Attending the Extraordinary General Meeting either in person or by proxy and abstaining from voting will have the same effect as voting against all the proposals and, assuming a quorum is present, broker non-votes will have no effect on the Business Combination Proposal, the Amendment Proposal, the Nasdaq Proposal, and the Adjournment Proposal.

Ace currently is authorized to issue a maximum of 100,000,000 shares of a single class, each with par value of $0.001.

Whether or not you plan to attend the Extraordinary General Meeting in person, please submit your proxy card without delay. Voting by proxy will not prevent you from voting your shares in person if you subsequently choose to attend the Extraordinary General Meeting. If you fail to return your proxy card and do not attend the meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Extraordinary General Meeting. You may revoke a proxy at any time before it is voted at the extraordinary general meeting by executing and returning a proxy card dated later than the previous one, by attending the Extraordinary General Meeting in person and casting your vote by ballot or by submitting a written revocation to Ace Global Business

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Acquisition Limited at 6/F Unit B, Central 88, 88-89 Des Voeux Road Central, Central, Hong Kong, Attention: Eugene Wong, Chief Executive Officer, Telephone: (852) 9086 7042, that is received by us before we take the vote at the Extraordinary General Meeting. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

Ace’s board of directors unanimously recommends that Ace’s shareholders vote “FOR” approval of each of the proposals.

By order of the Board of Directors,

Eugene Wong
Chief Executive Officer of
Ace Global Business Acquisition Limited
[__________], 2021

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TABLE OF CONTENTS

		PAGE
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR ACE shareholders		1
DELIVERY OF DOCUMENTS TO ACE shareholders		8
SUMMARY OF THE PROXY STATEMENT		9
TRADING MARKET AND DIVIDENDS		20
RISK FACTORS		21
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		61
EXTRAORDINARY GENERAL MEETING OF ACE SHAREHOLDERS		62
THE BUSINESS COMBINATION PROPOSAL		67
THE AMENDMENT PROPOSAL		87
THE NASDAQ PROPOSAL		89
THE BUSINESS COMBINATION ADJOURNMENT PROPOSAL		90
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA OF DDC		91
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION		94
HISTORY AND CORPORATE STRUCTURE OF DDC		105
DDC’S BUSINESS		111
INDUSTRY OVERVIEW		125
REGULATION		128
MANAGEMENT’s DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF DDC		140
SELECTED HISTORICAL FINANCIAL INFORMATION OF ACE GLOBAL BUSINESS ACQUISITION		156
MANAGEMENT’s DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ACE GLOBAL BUSINESS ACQUISITION LIMITED		157
ACE GLOBAL BUSINESS ACQUISITION LIMITED’S BUSINESS		160
DIRECTORS, EXECUTIVE OFFICERS, EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE		163
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT PRIOR TO THE BUSINESS COMBINATION		169
SECURITY OWNERSHIP OF THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION		170
CERTAIN TRANSACTIONS		171
DESCRIPTION OF ACE’S SECURITIES		174
SHAREHOLDER PROPOSALS AND OTHER MATTERS		178
WHERE YOU CAN FIND ADDITIONAL INFORMATION		178
ANNEX A-1 — SHARE EXCHANGE AGREEMENT		A-1-1
ANNEX A-2 — SHAREHOLDER SUPPORT AGREEMENT		A-2-1
ANNEX B — FORM OF SECOND AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION OF ACE		B-1
ANNEX C — FORM OF ESCROW AGREEMENT		C-1
ANNEX D — FORM OF LOCK-UP AGREEMENTS		D-1

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR ACE shareholders

The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the Extraordinary General Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to Ace’s shareholders. Ace urges its shareholders to read this proxy statement, including the Annexes and the other documents referred to herein, carefully and in their entirety to fully understand the proposed Business Combination and the voting procedures for the Extraordinary General Meeting, which will be held at [*], on [*], 2021, at [*] a.m.

Q: What is the purpose of this document?

A: Ace Global Business Acquisition Limited, a British Virgin Islands company, or (“Ace,” or “ACBA”), and DDC Enterprise Limited (“DDC”), a Cayman Islands company, have agreed to a business combination under the terms of a share exchange agreement, dated as of August 23, 2021, (as may be amended or supplemented from time to time, the “Share Exchange Agreement”), by and among Ace, DDC, and Ka Yin Norma Chu, as representative of DDC’s shareholders. The consummation of the transactions contemplated by the Share Exchange Agreement relating to the business combination with DDC are referred to as the Business Combination and the proposal to approve the Business Combination is referred to as the Business Combination Proposal. The Share Exchange Agreement is attached to this proxy statement as Annex A-1, and is incorporated into this proxy statement by reference. You are encouraged to read this proxy statement, including the section titled “Risk Factors” and all the annexes hereto, in their entirety.

Ace shareholders are being asked to consider and vote upon a proposal to adopt the Share Exchange Agreement pursuant to which, Ace will acquire all of the issued and outstanding shares and other equity interests of DDC from DDC’s current shareholders, and other proposals directly related thereto. The units that were issued in Ace’s initial public offering (the “ACBA Units”), each consist of one ordinary share of Ace, $0.001 par value per share, or the ACBA Shares, and one redeemable warrant entitling the holder thereof to purchase one ACBA Share, or the ACBA Warrants. Ace shareholders (except for initial shareholders or officers or directors of Ace) will be entitled to redeem their ACBA Shares for a pro rata share of the trust account (currently anticipated to be no less than approximately $10.20 per share) net of taxes payable.

The ACBA Units, ACBA Shares, and ACBA Warrants are currently listed on the Nasdaq Capital Market.

This proxy statement contains important information about the proposed Business Combination and the other matters to be acted upon at the Extraordinary General Meeting of Ace shareholders. You are hereby advised to, and should, read it carefully.

YOUR VOTE IS INPORTANT. YOU ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT.

Q: What is being voted on?

A: Below are the proposals on which Ace’s shareholders are being asked to vote:

• To approve the Share Exchange Agreement and the transactions contemplated thereunder, including but not limited to the acquisition of all of the issued and outstanding shares and any other equity interests of DDC from DDC’s current shareholders and the consideration paid to such shareholders by way of new issue of ordinary shares credited as fully paid in accordance with the Share Exchange Agreement (the transactions contemplated by the Share Exchange Agreement, the “Business Combination”).This proposal is referred to as the “Business Combination Proposal” or “Proposal No. 1.”

• To approve as a member resolution the change of Ace’s name to DayDayCook Inc. and the adoption of the Second Amended and Restated Memorandum and Articles of Association of Ace as further described herein. This proposal is referred to as the “Amendment Proposal” or “Proposal No. 2.”

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After careful consideration, Ace’s board of directors has determined that the Business Combination Proposal, the Amendment Proposal, the Nasdaq Proposal and the Business Combination Adjournment Proposal are in the best interests of Ace and its shareholders, and unanimously recommends that you vote or give instruction to vote “FOR” each of such proposals.

Q: Do any of Ace’s directors or officers have interests that may conflict with my interests with respect to the Business Combination?

A: Ace’s directors and officers may have interests in the Business Combination that are different from your interests as a shareholder. The existence of financial and personal interests of one or more of Ace’s directors and officers may result in a conflict of interest on the part of such director(s) and officer(s) between what he, she or they may believe is in the best interests of Ace and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. You should keep in mind the following interests of Ace’s directors and officers:

In November and December 2020, Ace issued an aggregate of 1,150,000 shares to our initial shareholders, which we refer to throughout this proxy statement as the “insider shares”, for an aggregate purchase price of $25,000. Simultaneous with the consummation of the Initial Public Offering (“IPO”) on April 8, 2021, we consummated the private placement of 280,000 private Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, generating total proceeds of $2,800,000. The Private Placement Units were purchased by Ace’s sponsor, Ace Global Investment Limited (the “Sponsor”). The underwriters exercised the over-allotment option in full and on April 9, 2021, the underwriters purchased 600,000 over-allotment option units, which were sold at an offering price of $10.00 per unit, generating gross proceeds of $6,000,000. On April 9, 2021, simultaneously with the sale of the over-allotment option units, the Company consummated the private sale of an additional 24,000 Private Units, generating gross proceeds of $240,000.

If Ace does not consummate a business combination by April 8, 2022 or January 8, 2023, (pursuant to Ace’s Amended and Restated Memorandum and Articles of Association), then Ace will be required to wind up our affairs and liquidate and the securities held by Ace’s insiders will be worthless because such holders have agreed to waive their rights to any liquidation distributions.

Approval of the Business Combination Proposal and the Amendment Proposal will each require 50% of the issued and outstanding ordinary shares present in person or by proxy and entitled to vote at the Extraordinary General Meeting. Further, approval of the Nasdaq Proposal and the Business Combination Adjournment Proposal will require the affirmative vote of the holders of a majority of the issued and outstanding ACBA Shares present and entitled to vote at the Extraordinary General Meeting. As of the record date of the Extraordinary General Meeting of Ace shareholders, 1,454,000 shares held by Ace’s initial shareholders, or approximately 24.0% of the outstanding ACBA Shares, would be voted in favor of each of the Proposals.

In addition, the exercise of Ace’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes or waivers are appropriate and in Ace shareholders’ best interests.

Q: When and where is the Extraordinary General Meeting of Ace shareholders?

A: The Extraordinary General Meeting of Ace shareholders will take place at [*] on [*], 2021, at [*] a.m.

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Q: Who may vote at the Extraordinary General Meeting of shareholders?

A: Only holders of record of ACBA Shares as of the close of business on [*], 2021 may vote at the extraordinary general meeting of shareholders. As of [*], 2021, there were 6,054,000 ACBA Shares issued and outstanding and entitled to vote. Please see “Extraordinary General Meeting of Ace Shareholders — Record Date; Who is Entitled to Vote” for further information.

Q: What is the quorum requirement for the Extraordinary General Meeting of shareholders?

A: Shareholders representing at least fifty (50) percent of the ACBA Shares issued and outstanding as of the record date and entitled to vote at the Extraordinary General Meeting must be present in person or represented by proxy in order to hold the Extraordinary General Meeting and conduct business. This is called a quorum. ACBA Shares will be counted for purposes of determining if there is a quorum if the shareholder (i) is present and entitled to vote at the meeting, or (ii) has properly submitted a proxy card. In the absence of a quorum, shareholders representing a majority of the votes present in person or represented by proxy at such meeting may adjourn the meeting until a quorum is present. Broker non-votes will not be considered present for the purposes of establishing a quorum.

Q: What vote is required to approve the Proposals?

A: Approval of the Business Combination Proposal and the Amendment Proposal will each require 50% of the issued and outstanding ordinary shares present in person or by proxy and entitled to vote at the Extraordinary General Meeting. Further, approval of the Nasdaq Proposal and the Business Combination Adjournment Proposal will require the affirmative vote of the holders of a majority of the issued and outstanding ACBA Shares present and entitled to vote at the Extraordinary General Meeting. Attending the Extraordinary General Meeting either in person or by proxy and abstaining from voting will have the same effect as voting against all the Proposals and each nominee for election as a director and, assuming a quorum is present, broker non-votes will have no effect on the Proposals.

Q: Are the proposals conditioned on one another?

A: Yes. The Business Combination Proposal and the Nasdaq Proposal are conditioned upon the approval of the Amendment Proposal. The Amendment Proposal is conditioned upon the approval of the Business Combination Proposal and the Nasdaq Proposal.

Q: Why is Ace proposing the Business Combination?

A: Ace was organized for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar Business Combination with one or more businesses or entities.

DDC, through its wholly-owned or controlled subsidiaries and VIEs, is primarily engaged in (a) sales and marketing of convenient ready-to-cook (“RTC”) and ready-to-heat (“RTH”) meal products, private-label and fresh products, (b) the provision of advertising services, and (c) the operation of experience stores to offer cooking classes in China. Based on its due diligence investigations of DDC and the industry in which it operates, including the financial and other information provided by DDC in the course of Ace’s due diligence investigations, the Ace board of directors believes that the Business Combination with DDC is in the best interests of Ace and its shareholders and presents an opportunity to increase shareholder value. However, there is no assurance of this.

Q: How will the initial shareholders vote?

A: Ace’s initial shareholders, who as of [*], 2021 owned [1,454,000] ACBA Shares, or approximately 24.0% of the outstanding ACBA Shares, have agreed to vote their respective ordinary shares acquired by them prior to the initial public offering in favor of the Business Combination Proposal and related proposals. Ace’s initial shareholders have also agreed that they will vote any shares they purchase in the open market in or after the IPO in favor of each of the Proposals.

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Q: Am I required to vote in order to have my ordinary shares redeemed?

A: No. You are not required to vote in order to have the right to demand that Ace redeem your ordinary shares for cash equal to your pro rata share of the aggregate amount then on deposit in the trust account (before payment of deferred underwriting commissions and including interest earned on their pro rata portion of the trust account, net of taxes payable). These rights to demand redemption of ACBA Shares for cash are sometimes referred to herein as redemption rights. If the Business Combination is not consummated, then holders of ACBA Shares electing to exercise their redemption rights will not be entitled to receive such payments.

Q: Do I have redemption rights?

A: If you are a public shareholder and you seek to have your shares redeemed, you have the right to request that we redeem all or a portion of your shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement. Public shareholders may elect to redeem all or a portion of their shares regardless of if or how they vote in respect of the Business Combination Proposal. If you wish to exercise your redemption rights, then please see the answer to the next question: “How do I exercise my redemption rights?”

Q: How do I exercise my redemption rights?

A: If you are a public shareholder and you seek to have your shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern time on [*], 2021 (the business day before the Extraordinary General Meeting), that Ace redeem your shares into cash; and (ii) submit your request in writing to Ace’s transfer agent, at the address listed at the end of this section and delivering your shares to Ace’s transfer agent physically or electronically using the DWAC system the business day prior to the vote at the meeting.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m., Eastern time on [*], 2021 (the business day before the Extraordinary General Meeting) in order for their shares to be redeemed.

Any corrected or changed written demand of redemption rights must be received by Ace’s transfer agent the business day prior to the Extraordinary General Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to the transfer agent the business day prior to the vote at the meeting.

Public shareholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of ACBA Shares as of the record date. Any public shareholder who holds ACBA Shares on or before [*], 2021 (the business day before the Extraordinary General Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid, at the consummation of the Business Combination).

Q: If my shares are held in “street name” by my bank, brokerage firm or nominee, will they automatically vote my shares for me?

A: No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Ace believes the Proposals are non-discretionary and, therefore, your broker, bank or nominee cannot vote your shares without your instruction. Broker non-votes will not be considered present for the purposes of establishing a quorum and will have no effect on the Proposals. If you do not provide instructions with your proxy, your bank, broker or other nominee may submit a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker or nominee is not voting your shares is referred to as a “broker non-vote.” Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your Ace Shares in accordance with directions you provide.

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Q: How can I vote?

A: If you were a holder of record ACBA Shares on [*], 2021, the record date for the Extraordinary General Meeting of Ace shareholders, you may vote with respect to the applicable proposals in person at the Extraordinary General Meeting of Ace shareholders, or by submitting a proxy by mail so that it is received prior to 9:00 a.m. on [*], 2021, in accordance with the instructions provided to you under “Extraordinary General Meetings of Ace Shareholders.” If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, your broker or bank or other nominee may provide voting instructions (including any telephone or Internet voting instructions). You should contact your broker, bank or nominee in advance to ensure that votes related to the shares you beneficially own will be properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Extraordinary General Meeting of Ace shareholders and vote in person, obtain a proxy from your broker, bank or nominee.

Q: What if I abstain from voting or fail to instruct my bank, brokerage firm or nominee?

A: Ace will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for the purposes of determining whether a quorum is present at the Extraordinary General Meeting of Ace shareholders. For purposes of approval, an abstention on any Proposals will have the same effect as a vote “AGAINST” such Proposal.

Q: Can I change my vote after I have mailed my proxy card?

A: Yes. You may change your vote at any time before your proxy is voted at the Extraordinary General Meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, or by attending the Extraordinary General Meeting in person and casting your vote by ballot or by submitting a written revocation stating that you would like to revoke your proxy that we receive prior to the Extraordinary General Meeting. If you hold your shares through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of proxies. If you are a record holder, you should send any notice of revocation or your completed new proxy card, as the case may be, to:

Ace Global Business Acquisition Limited
6/F Unit B, Central 88, 88-89 Des Voeux Road Central,
Central, Hong Kong
Tel: (852) 9086 7042

Q: Should I send in my share certificates now?

A: Yes. Ace shareholders who intend to have their ordinary shares redeemed, by electing to have those ordinary shares redeemed for cash on the proxy card, should send their certificates the business day before the Extraordinary General Meeting. Please see “Extraordinary General Meeting of Ace Shareholders — Redemption Rights” for the procedures to be followed if you wish to redeem your ordinary shares for cash.

Q: When is the Business Combination expected to occur?

A: Assuming the requisite shareholder approvals are received, Ace expects that the Business Combination will occur no later than February 1, 2022.

Q: May I seek statutory appraisal rights or dissenter rights with respect to my shares?

A: No. Appraisal rights are not available to holders of ACBA Shares in connection with the proposed Business Combination. For additional information, see the section entitled “Extraordinary General Meeting of Ace Shareholders — Appraisal Rights.”

Q: What happens if the Business Combination is not consummated?

A: If Ace does not consummate a business combination by April 8, 2022 or January 8, 2023, if we extend the period of time to consummate a business combination, then pursuant to Article 25 of Ace’s Amended and Restated Memorandum and Articles of Association, Ace’s officers must take all actions necessary in accordance with

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the BVI Business Companies Act, 2004 (as the same may be amended and supplemented from time to time, the “Companies Law”) to wind up its affairs and voluntarily liquidate Ace as soon as reasonably practicable. Following liquidation and subsequent dissolution, Ace will no longer exist as a company. In any liquidation, the funds held in the Trust Account, plus any interest earned thereon (net of taxes payable), together with any remaining out-of-trust net assets will be distributed pro-rata to holders of ACBA Shares who acquired such ordinary shares in Ace’s IPO or in the aftermarket. If a business combination is not effected by April 8, 2022, or January 8, 2023, if we extend the period of time to consummate a business combination, the ACBA Warrants will expire worthless. The estimated consideration that each ACBA Share would be paid at liquidation would be approximately $10.20 per share for shareholders based on amounts on deposit in the trust account as of [*], 2021. The closing price of ACBA Shares on the Nasdaq Stock Market as of [*], 2021 was $[*]. Ace’s initial shareholders waived the right to any liquidation distribution with respect to any ACBA Shares held by them.

Q: What happens to the funds deposited in the Trust Account following the Business Combination?

A: Following the closing of the Business Combination, funds in the trust account will be released to Ace. Holders of ACBA Shares exercising redemption rights will receive their per share redemption price. The balance of the funds will be utilized to fund the Business Combination. As of [*], 2021, there was approximately $[*] in Ace’s Trust Account. Approximately $[*] per outstanding share issued in Ace’s initial public offering will be paid to the public investors. Any funds remaining in the Trust Account after such uses will be used for future working capital and other corporate purposes of the combined entity.

Q: What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

A: Ace public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

The Share Exchange Agreement provides that the obligations of each party to consummate the Business Combination are conditioned on, among other things, that as of the closing of the Share Exchange Agreement, after giving effect to (A) the completion of any redemptions by Ace shareholders of all or a portion of their ordinary shares or units in accordance with Ace’s organizational documents; (B) the completion of any additional equity financing obtained by Ace prior to the closing of the Share Exchange Agreement; and (C) all available amounts in the trust account established by Ace in connection with the consummation of its IPO, Ace must have cash in an amount equal to or exceeding $15,000,000. If such condition is not met, and such condition is not or cannot be waived under the terms of the Share Exchange Agreement, then the Share Exchange Agreement could terminate and the proposed Business Combination may not be consummated.

Q: What conditions must be satisfied to complete the Business Combination?

A: The closing of the Business Combination is subject to customary conditions, including, among others, that (i) the Ace shareholders shall have approved and adopted the Share Exchange Agreement and the consummation of the Business Combination; and (ii) as of the closing of the Share Exchange Agreement, after giving effect to (A) the completion of any redemptions by Ace shareholders of all or a portion of their ordinary shares or units in accordance with Ace’s organizational documents; (B) the completion of any additional equity financing obtained by Ace prior to the closing of the Share Exchange Agreement; and (C) all available amounts in the trust account established by Ace in connection with the consummation of its IPO, Ace must have cash in an amount equal to or exceeding $15,000,000.

Q: When do you expect the Business Combination to be completed?

A: It is currently expected that the Business Combination will be consummated by February 1, 2022. This date depends, among other things, on the approval of the proposals to be put to Ace shareholders at the Extraordinary General Meeting. However, such meeting could be adjourned if the Business Combination Adjournment is adopted at the Extraordinary General Meeting and Ace elects to adjourn the Extraordinary General Meeting to a later date or dates to permit further solicitation and vote of proxies if reasonably determined to be necessary or desirable by Ace. For a description of the conditions for the completion of the Business Combination, see “The Business Combination Proposal.”

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Q: What do I need to do now?

A: Ace urges you to read this proxy statement, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder. Ace’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.

Q: What happens if I sell my shares before the Extraordinary General Meeting?

A: The record date for the Extraordinary General Meeting is earlier than the date of the Extraordinary General Meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the record date, but before the Extraordinary General Meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting but the transferee, and not you, will have the ability to redeem such shares (if time permits).

Q: What should I do if I receive more than one set of voting materials?

A: Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.

Q: Who can help answer my questions?

A: If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus, any document incorporated by reference in this proxy statement/prospectus or the enclosed proxy card, you should contact:

Ace Global Business Acquisition Limited
6/F Unit B, Central 88, 88-89 Des Voeux Road Central,
Central, Hong Kong
Tel: (852) 9086 7042

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DELIVERY OF DOCUMENTS TO ACE shareholders

Pursuant to the rules of the Securities and Exchange Commission (the “SEC”), Ace and services that it employs to deliver communications to its shareholders are permitted to deliver to two or more shareholders sharing the same address a single copy of the proxy statement, unless Ace has received contrary instructions from one or more of such shareholders. Upon written or oral request, Ace will deliver a separate copy of the proxy statement to any shareholder at a shared address to which a single copy of the proxy statement was delivered and who wishes to receive separate copies in the future. Shareholders receiving multiple copies of the proxy statement may likewise request that Ace deliver single copies of the proxy statement in the future. Shareholders may notify Ace of their requests by contacting Ace as follows:

Ace Global Business Acquisition Limited
6/F Unit B, Central 88, 88-89 Des Voeux Road Central,
Central, Hong Kong
Tel: (852) 9086 7042

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SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement but may not contain all of the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement, including the Merger Agreement attached as Annex A-1. Please read these documents carefully as they are the legal documents that govern the Business Combination and your rights in the Business Combination.

The Parties

Ace Global Business Acquisition Limited

6/F Unit B, Central 88, 88-89 Des Voeux Road Central,

Central, Hong Kong

Attn: Eugene Wong, Chief Executive Officer

Telephone: (852) 9086 7042

Ace Global Business Acquisition Limited, or Ace, was incorporated as a blank check company on November 2, 2020, under the laws of the British Virgin Islands, for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” Ace’s efforts to identify a prospective target business were not be limited to any particular industry or geographic location.

Ace completed its IPO on April 8, 2021 of 4,000,000 units, with each unit consisting of one ACBA Share, $0.001 par value per share and one redeemable ACBA Warrant. Simultaneous with the consummation of the IPO, we consummated the private placement of 280,000 Private Placement Units at a price of $10.00 per Private Placement Unit, generating total proceeds of $2,800,000. The Private Placement Units were purchased by Ace’s Sponsor. The underwriters in the IPO exercised the over-allotment option in full and on April 9, 2021, the underwriters purchased 600,000 over-allotment option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $6,000,000. On April 9, 2021, simultaneously with the sale of the over-allotment option units, the Company consummated the private sale of an additional 24,000 Private Units, generating gross proceeds of $240,000.

After deducting the underwriting discounts and commissions and the offering expenses, a total of $ 46,920,000 was deposited into a trust account established for the benefit of Ace’s public shareholders, and the remaining proceeds became available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.

As of June 30, 2021, we have approximately $812,369 of unused net proceeds that were not deposited into the trust fund to pay future general and administrative expenses. The net proceeds deposited into the trust fund remain on deposit in the trust fund earning interest. None of the funds held in trust will be released from the trust account, other than interest income to pay any tax obligations, until the earlier of the completion of an initial business combination within the required time period or our entry into liquidation if Ace has not consummated a business combination by April 8, 2022 or by the latest January 8, 2023.

ACBA Units, ACBA Shares, and ACBA Warrants, are each quoted on the Nasdaq Stock Market, under the symbols “ACBAU,” “ACBA,” and “ACBAW” respectively. Each of ACBA Units consist of ordinary share, and one redeemable warrant. ACBA Units commenced trading on April 8, 2021. ACBA Shares, and ACBA Warrants commenced separate trading on May 21, 2021.

DDC Enterprise Limited

Room 3-6, 4/F, Hollywood Center

233 Hollywood Road

Sheung Wan, Hong Kong Attn: Ka Yin Norma Chu

Telephone: +852-28030688

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DDC Enterprise Limited is a Cayman Islands holding company and conducts its operations primarily in China through its wholly-owned or controlled subsidiaries and VIEs. It was founded in Hong Kong in 2012 by Ms. Norma Chu as an online platform which distributed food recipe and culinary content. Subsequently, DDC further expanded its business to provide advertising services to brands that wish to place advertisement on DDC’s platform or video content. In 2015, DDC entered the Mainland China market through the establishment of Shanghai DayDayCook Information Technology Co., Ltd.

Now, DDC is a leading content driven consumer brand offering easy, convenient ready-to-heat (“RTH”) and ready-to-cook (“RTC”) meal products while promoting healthier lifestyle choices to its predominately Millennial and Generation Z (“GenZ”) customer-base. DDC is also engaged in the provision of advertising services and the operation of experience stores to offer cooking classes. DDC’s omni-channel (online and offline) sales, end-to-end (“E2E”) product development and distribution strategy, and data analytics capabilities enables it to successfully identify, assess, and pivot to cater to changing consumer preferences and trends across multiple customer segments and price-points.

DDC has a network of direct-to-customer (“D2C”), retailer, and wholesaler sale options.

• It leverages (i) large China-based E-commerce platforms e.g., Tmall, JD.com, Pinduoduo, (ii) leading livestreaming, video-sharing, content-marketing platforms e.g., ByteDance (TikTok and sister-app Douyin), Bilibili, Weibo, Little Red Book (小红书), Kuaishou etc., and (iii) online-merged-offline (OmO) group-buy platforms e.g., Meituan-Dianping to drive online sales.

• It has access to a network of offline Point-of-Sales (“POS”) through partnerships with (i) convenience stores (ii) multi-national retail corporations (iii) boutique supermarket chains and (iv) various corporate partnerships.

As of the second quarter (“Q2”) of 2021, DDC had 60 million active viewers, 3.4 million paid customers. Of the 60 million active viewers, around 85% are GenZ, 75% of customers are from non-tier 1 cities in China, and 62% are female. The average age of a viewer engaging with DDC’s products or marketplace is younger than 30. DDC also has a content library with more than 473,000 minutes of in-house created content.

For the six months ended 30 June 2021 (“H1 2021”), DDC achieved RMB 88.1 million (or USD 13.6 million) in revenue, which was a slight decrease of 2.0% when compared with the six months ended 30 June 2020 (“H1 2020”). Its focus has been on improving the overall cost structure of the business. As a result, for H1 2021, its gross profit margin was 21.6% versus 15.7% for H1 2020.

DDC’s VIE Structure

DDC conducts part of its operations in China through contractual arrangements with two variable interest entities (“VIEs”) and their subsidiaries. Through such contractual arrangements, DDC controls and receives the economic benefits of the VIEs without owning any direct equity interest in them. See “History and Corporate Structure of DDC — Contractual Arrangements between SH DDC and the VIEs” for more detailed information. If the VIEs, their subsidiaries or the VIEs’ shareholders fail to perform their respective obligations under the contractual arrangements, DDC’s ability to enforce the contractual arrangements that give it effective control over the VIEs could be limited. Furthermore, if DDC is unable to maintain effective control, it would not be able to continue to consolidate the financial results of its VIEs in its financial statements.

Although DDC took every precaution available to effectively enforce the contractual and corporate relationship above, these contractual arrangements may still be less effective than direct ownership and that DDC may incur substantial costs to enforce the terms of the arrangements. For example, the VIEs and their shareholders could breach their contractual arrangements by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. If DDC had direct ownership of the VIEs, it would be able to exercise its rights as a shareholder to effect changes in the board of directors of the VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, DDC relies on the performance of the VIEs and their shareholders of their obligations under the contracts to exercise control over the VIEs. The shareholders of DDC’s consolidated VIEs may not act in the best interests of DDC or may not perform their obligations under these contracts. In addition, failure of the VIEs’ shareholders to perform certain obligations could compel DDC to rely on legal remedies available under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which may not be effective.

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All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. The legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit DDC’s ability to enforce these contractual arrangements. In the event DDC is unable to enforce these contractual arrangements, upon consummation of the Business Combination, we may not be able to exert effective control over our operating entities and we may be precluded from operating our business, which would have a material adverse effect on our financial condition and results of operations. In addition, there is uncertainty as to whether the courts of the Cayman Islands, the British Virgin Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. For a detailed description of the certainties of the VIE arrangements, see “Risk Factors — Risks Relating to Our Corporate Structure.”

PRC Limitation on Oversea Listing and Share Issuances

Neither DDC nor its subsidiaries and VIEs are currently required to obtain approval from Chinese authorities, including the China Securities Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to list on U.S exchanges or issue securities to foreign investors. However, if after consummation of the Business Combination, DDC’s VIEs, subsidiaries or the holding company are required to obtain approval in the future and are denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors. It is uncertain when and whether DDC will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although DDC is currently not required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial to list on the U.S. exchange, its operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry. For more detailed information, see “Risk Factors — Risks Relating to Doing Business in the PRC”

The Business Combination and Share Exchange Agreement

Business Combination with DDC; Business Combination Consideration

Upon the closing of the transactions contemplated in the Share Exchange Agreement, Ace will acquire 100% of the issued and outstanding securities of DDC, in exchange for 30,000,000 ACBA Shares, among which 3,000,000 ACBA Shares are to be issued and held in escrow to satisfy any indemnification obligations of the Seller.

After the Business Combination, assuming no redemptions of ordinary shares for cash, Ace’s current public shareholders will own approximately 11.7% of Ace, Ace’s current directors, officers and affiliates will own approximately 3.3% of Ace, and DDC’s current shareholders will own approximately 76.2% of Ace. Assuming redemption by holders of 4,600,000 of ACBA Shares, Ace public shareholders will own approximately 0% of the combined company, Ace’s current directors, officers and affiliates will own approximately 3.7% of the combined company, and DDC’s current shareholders will own approximately 86.2% of Ace. Upon consummation of the Business Combination, DDC will be a wholly-owned subsidiary of Ace.

The Business Combination and the Share Exchange Agreement comply with the terms described in Ace’s Registration Statement on Form S-1 relating to its initial public offering. Furthermore, the consummation of the Business Combination requires 50% of the issued and outstanding ordinary shares present in person or by proxy and entitled to vote at the extraordinary general meeting and holders of less than 40,001 ordinary shares exercising their redemption rights, according to the financial statements as of June 30, 2021.

The Share Exchange Agreement

On August 23, 2021, Ace, DDC and Ka Yin Norma Chu (as shareholders’ representative) entered into the Share Exchange Agreement, pursuant to which Ace will purchase from DDC’s shareholders all of the issued and outstanding shares and other equity interests in and of DDC. See “The Business Combination Proposal — The Share Exchange Agreement” for more detailed information.

Upon the closing of the transactions contemplated in the Share Exchange Agreement, Ace will acquire 100% of the issued and outstanding securities of DDC, in exchange for approximately 30,000,000 ACBA Shares, among which 3,000,000 ACBA Shares are to be issued and held in escrow to satisfy any indemnification obligations of the Seller.

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The obligations of DDC to consummate the transactions contemplated by the Share Exchange Agreement, in addition to the conditions described above, are conditioned upon each of the following, among other things:

• Ace complying with all of its obligations under the Share Exchange Agreement;

• the representations and warranties of Ace being true on and as of the closing date;

• Ace shall have at least US$15,000,000 (excluding any amount payable for shareholder redemption) in cash in its trust account and/or from any new equity financing after taking into account all shareholder redemptions; and

• there having been no material adverse effect to Ace.

The obligations of Ace to consummate the transactions contemplated by the Share Exchange Agreement, in addition to the conditions described above in the first paragraph of this section, are conditioned upon each of the following, among other things:

• DDC complying with all of its obligations under the Share Exchange Agreement;

• the representations and warranties of DDC being true on and as of the closing date of the acquisition; and

• there having been no material adverse effect to DDC’s business.

See “The Business Combination Proposal — The Share Exchange Agreement — Closing Conditions” for more details.

Post-Business Combination Structure and Impact on the Public Float

The following chart illustrates the ownership structure of the combined company immediately following the Business Combination. The equity interests shown in the diagram below were calculated based on the assumptions that (i) no Ace’s shareholder exercises its redemption rights or dissenter rights, (ii) none of the initial shareholders or DDC’s current shareholders purchase ACBA Shares in the open market, (iii) there is no exercise or conversion of ACBA Warrants, (iv) an aggregate of 32,783 shares are issued upon conversion of the notes issued to the Sponsor (“Notes”), (v) an aggregate of 3,500,000 PIPE Shares are issued at the closing of the Business Combination, (vi) DDC shall buy back 200,000 Ace Ordinary Shares from Ace Global Investment Limited at US$10.00 per Ace Ordinary Share on the consummation of the Closing using the excess funds in the Trust Account, which shall be subsequently cancelled or held in treasury, and (vii) there are no other issuances of equity by Ace prior to or in connection with the consummation of the Business Combination. Notwithstanding the foregoing, the ownership percentages set forth below do not take into account the earnout shares issuable to DDC’s current management team pursuant to the Share Exchange Agreement.

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Management and Board of Directors Following the Business Combination

Effective as of the closing date, the board of directors of Ace will consist of five members. All members of Ace’s board of directors will be designated by DDC and a majority of whom will be considered “independent” under Nasdaq’s listing standards. See section titled “Directors, Executive Officers, Executive Compensation And Corporate Governance — Directors and Executive Officers after the Business Combination” for additional information.

Other Agreements Relating to the Business Combination

Escrow Agreement

In connection with the Business Combination, Ace, Ms. Norma Chu (as representative of DDC shareholders) and an escrow agent will enter into an Escrow Agreement pursuant to which Ace will deposit 3,000,000 of its ordinary shares, representing 10% of the aggregate amount of shares to be issued to DDC’s current shareholders pursuant to the Business Combination, to secure the indemnification obligations of DDC and DDC’s current shareholders as contemplated by the Share Exchange Agreement. The form of Escrow Agreement that was attached as an exhibit to the Share Exchange Agreement is attached to this proxy statement as Annex C.

Lock-Up Agreements

In connection with the Business Combination, Ace will enter into a Lock-Up Agreement with the shareholders of DDC, which will provide that such DDC shareholders will not, within 180 calendar days from the Closing of the Business Combination, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of the shares issued in connection with the Business Combination, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such shares, whether any of these transactions are to be settled by delivery of any such shares, in cash, or otherwise. However, the DDC shareholders will be allowed to transfer any of the lock-up shares (other than the escrow shares while they are held in the escrow account) under the situations specified in the respective Lock-up Agreement.

Recommendations of the Boards of Directors and Reasons for the Business Combination

After careful consideration of the terms and conditions of the Share Exchange Agreement, the board of directors of Ace has determined that Business Combination and the transactions contemplated thereby are fair to and in the best interests of Ace and its shareholders. In reaching its decision with respect to the Business Combination and the transactions contemplated thereby, the board of directors of Ace reviewed various industry and financial data and the due diligence and evaluation materials provided by DDC. The board of directors did not obtain a fairness opinion on which to base its assessment. Ace’s board of directors recommends that Ace shareholders vote:

• FOR the Business Combination Proposal;

• FOR the Amendment Proposal;

• FOR the Nasdaq Proposal; and

• FOR the Business Combination Adjournment Proposal.

Interests of Certain Persons in the Business Combination

When you consider the recommendation of Ace’s board of directors in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that Ace’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder, including:

• If a business combination is not consummated by April 8, 2022 or January 8, 2023, if we extend the period of time to consummate a business combination, then we will be required to wind up our affairs and voluntarily liquidate. In such event, the 1,150,000 ordinary shares held by Ace’s initial shareholders, which were acquired prior to the IPO for an aggregate purchase price of $25,000, will be worthless. Such ordinary shares had an aggregate market value of approximately $11,695,500 based on the closing price of ACBA Shares of $10.17 on the Nasdaq Stock Market as of Oct 21, 2021.

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• In the absence of shareholder approval for a further extension, if a business combination is not consummated by April 8, 2022 or by the latest January 8, 2023, if the time to consummate a business combination is further extended, 304,000 Private Placement Units purchased by the Sponsor for a total purchase price of $3,040,000, will be worthless. Such Private Placement Units had an aggregate market value of approximately $3,164,640 closing price of ACBA Units of $10.41 on Nasdaq as of Oct 21, 2021;

• As of June 30, 2021, Ace has $327,839 in a principal amount outstanding under the Notes that, pursuant to the Share Exchange Agreement, are convertible into 32,783 ACBA Units upon the closing of the Business Combination. In the absence of shareholder approval for a further extension, if a business combination is not consummated by April 8, 2022 or by the latest January 8, 2023, if the time to consummate a business combination is further extended, then such loans may not be repaid;

• Unless Ace consummates the Business Combination, its officers, directors and initial shareholders will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceeded the amount of its working capital. As a result, the financial interest of Ace’s officers, directors and initial shareholders or their affiliates could influence its officers’ and directors’ motivation in selecting DDC as a target and therefore there may be a conflict of interest when it determined that the Business Combination is in the shareholders’ best interest.

• In addition, the exercise of Ace’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our shareholders’ best interest.

• If the Business Combination with DDC is consummated, DDC will designate all of the members of the board of directors of Ace.

Certain Developments

Voting Securities

As of [*], 2021, there were 6,054,000 ACBA Shares issued and outstanding. Only Ace shareholders who hold ordinary shares of record as of the close of business on [*], 2021 are entitled to vote at the extraordinary general meeting of shareholders or any adjournment of the extraordinary general meeting. Approval of the Business Combination Proposal and the Amendment Proposal will each require 50% of the issued and outstanding ordinary shares present in person or by proxy and entitled to vote at the extraordinary general meeting. Further, approval of the Nasdaq Proposal and the Business Combination Adjournment Proposal will require the affirmative vote of the holders of a majority of the issued and outstanding ACBA Shares present and entitled to vote at the extraordinary general meeting. Attending the extraordinary general meeting either in person or by proxy and abstaining from voting will have the same effect as voting against all the proposals and, assuming a quorum is present, broker non-votes will have no effect on the Proposals.

As of [*], 2021, Ace’s initial shareholders, either directly or beneficially, owned and were entitled to vote 1,454,000 ordinary shares, or approximately 24.0% of Ace’s outstanding ordinary shares. With respect to the Business Combination, Ace’s initial shareholders have agreed to vote their respective ACBA Shares acquired by them in favor of the Business Combination Proposal and related Proposals. They have indicated that they intend to vote their shares, as applicable, “FOR” each of the other Proposals although there is no agreement in place with respect to these Proposals.

Appraisal Rights

Holders of ACBA Shares are not entitled to appraisal rights under British Virgin Islands Law.

Emerging Growth Company

Ace is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (or JOBS Act). It is anticipated that after the consummation of the transactions, Ace will continue to be an “emerging growth company.” As an emerging growth company, Ace will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports

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and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and the requirement to obtain shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Ace has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Ace, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison of Ace’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

The combined company could remain an emerging growth company until December 31, 2026, the last day of its fiscal year following the fifth anniversary of the consummation of Ace’s initial public offering. However, if Ace’s non-convertible debt issued within a three-year period exceed $1.0 billion or its total revenues exceed $1.07 billion or the market value of its shares of ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, Ace would cease to be an emerging growth company as of the following fiscal year.

Anticipated Accounting Treatment

The Business Combination will be accounted for as a “reverse merger” in accordance with U.S. GAAP. Under this method of accounting, Ace will be treated as the “acquired” company for financial reporting purposes. DDC was determined to be the accounting acquirer primarily because DDC stakeholders will collectively own a majority of the outstanding shares of the combined company as of the closing of the merger, they have nominated five of the five members of the board of directors as of the closing of the merger, and DDC’s management will continue to manage the combined company. Additionally, DDC’s business will comprise the ongoing operations of the combined company immediately following the consummation of the Business Combination. Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of DDC with the acquisition being treated as the equivalent of DDC issuing stock for the net monetary assets of Ace, accompanied by a recapitalization. The net monetary assets of Ace will be stated at historical cost, with no goodwill or other intangible assets recorded.

Regulatory Approvals

The Business Combination and the other transactions contemplated by the Share Exchange Agreement are not subject to any additional federal or state regulatory requirements or approvals, including the Hart-Scott Rodino Antitrust Improvements Act of 1976, except for filings with the Registrar of the British Virgin Islands necessary to effectuate the transactions contemplated by the Share Exchange Agreement.

Summary of Risk Factors

DDC’s business is subject to numerous risks, as more fully described in “Risk Factors” of this proxy statement. In particular, risks associated with DDC’s business include, among others:

• DDC’s business and future growth prospects rely on consumer demand for our products. Any shift in consumer demand, or any unexpected situation with a negative impact on consumer demand may materially and adversely affect DDC’s business and results of operations.

• If DDC fails to retain existing customers, derive revenue from existing customers consistent with historical performance or acquire new customers cost-effectively, DDC’s business could be adversely affected.

• The market for ready-to-heat, ready-to-cook, plant-based meal products, private-label and fresh products in China is continuously evolving and may not grow as quickly as expected, or at all, which could negatively affect DDC’s business and prospects.

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• DDC’s business and prospects depend on its ability to build its brands and reputation, which could be harmed by negative publicity with respect to DDC, its products and operations, its management, brand ambassadors, key opinion leaders, or other business partners.

• DDC’s products are subject to food safety standards and the failure to satisfy such mandated food safety standards would have a material and adverse effect on DDC’s business, results of operations and prospects.

• DDC may be subject to claims under consumer protection laws, including health and safety claims and product liability claims, if people are harmed by the products sold by DDC.

• DDC faces risks related to instances of food-borne illnesses, health epidemics, natural disasters and other catastrophic events. The outbreak of any severe contagious diseases, if uncontrolled, could adversely affect DDC’s business and results of operation.

• DDC may be liable for improper collection, use or appropriation of personal information provided by its customers.

• DDC has incurred net loss in the past, and it may not be able to achieve or maintain profitability in the future.

• DDC’s historical financial conditions and results of operations are not representative of it future performance. DDC may be unable to effectively manage its future growth and expansion, and may not achieve growth in revenue and profit. If DDC is unable to manage its growth effectively, it may not be able to capitalize on new business opportunities and its business and financial results may be materially and adversely affected.

• DDC depends on a stable and adequate supply of raw materials which are subject to price volatility and other risks. Inadequate or interrupted supply and price fluctuation for raw materials and packaging materials could adversely affect DDC’s profitability.

• If DDC fails to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in China, or if it is required to take compliance actions that are time-consuming or costly, DDC’s business, results of operations and financial condition may be materially and adversely affected.

• If the PRC government finds that the agreements that establish the structure for operating some of DDC’s operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, DDC could be subject to severe penalties or be forced to relinquish our interests in those operations.

• DDC rely on contractual arrangements with its VIEs and their shareholders for certain portions of its business operations, which may not be as effective as direct ownership in providing operational control.

• Any failure by DDC’s VIEs or their shareholder to perform their obligations under DDC’s contractual arrangements with them would have a material and adverse effect on DDC’s business.

• DDC may rely on dividends and other distributions on equity paid by its PRC subsidiaries to fund any cash and financing requirements it may have, and any limitation on the ability of DDC’s PRC subsidiaries to make payments to it could have a material and adverse effect on DDC’s ability to conduct its business.

• PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent DDC from making loans or additional capital contributions to its PRC subsidiaries, which could materially and adversely affect DDC’s liquidity and our ability to fund and expand our business.

• Contractual arrangements in relation to DDC’s VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that DDC’s or its VIEs owe additional taxes, which could negatively affect DDC financial condition and the value of your investment.

• There are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities.

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• PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject DDC’s PRC resident beneficial owners or its PRC subsidiary to liability or penalties, limit DDC’s ability to inject capital into its PRC subsidiaries, limit its PRC subsidiaries’ ability to increase their registered capital or distribute profits to DDC, or may otherwise adversely affect DDC.

• Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for DDC’s products and services and materially and adversely affect DDC’s competitive position.

• If DDC is classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to DDC and its non-PRC shareholders.

• We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies, and heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

• The approval of the China Securities Regulatory Commission may be required in connection with the Business Combination, and, if required, we cannot predict whether we will be able to obtain such approval.

• DDC is a holding company and it relies on its subsidiaries for funding dividend payments, which are subject to restrictions under PRC laws.

• The audit report of DDC for the year ended 31 December 2020 and 2019 included in this prospectus is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and as such, our investors are deprived of the benefits of such inspection.

• Ace will be forced to liquidate the trust account if it cannot consummate a business combination by April 8, 2022 or, if Ace extends the period of time to consummate a business combination, January 8, 2023. In the event of a liquidation, Ace’s public shareholders will receive $10.20 per share and the ACBA Warrants will expire worthless.

• If Ace’s due diligence investigation of DDC was inadequate, then shareholders of Ace following the Business Combination could lose some or all of their investment.

• All of Ace’s officers and directors own ACBA Shares which will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether the business combination is appropriate.

• Ace is requiring shareholders who wish to redeem their ordinary shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for such shareholders to exercise their redemption rights prior to the deadline for exercising such rights.

• If the Business Combination’s benefits do not meet the expectations of financial or industry analysts, the market price of Ace’s securities may decline.

• Ace’s directors and officers may have certain conflicts in determining to recommend the acquisition of DDC, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a shareholder.

• Ace and DDC have incurred and expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is consummated, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by Ace if the Business Combination is consummated or by Ace if the Business Combination is not consummated.

• There will be a substantial number of Ace Shares available for sale in the future that may adversely affect the market price of Ace Shares.

• Ace’s shareholders will experience immediate dilution as a consequence of the issuance of ordinary shares as consideration in the Business Combination. Having a minority share position may reduce the influence that Ace’s current shareholders have on the management of Ace.

• The business combination or post-combination company may be materially adversely affected by the recent COVID-19 outbreak.

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SUMMARY HISTORICAL FINANCIAL INFORMATION OF DDC

The following table contains summary historical financial data as of and for the years ended December 31, 2019 and 2020 and as of and for the six months ended June 30, 2020 and 2021. The consolidated statements of comprehensive loss data (other than US$ data) and consolidated statements of cash flows data (other than US$ data) for the years ended December 31, 2019 and 2020 and the consolidated balance sheets data (other than US$ data) as of December 31, 2019 and 2020, are derived from the audited consolidated financial statements of DDC, which are included elsewhere in this proxy statement.

The consolidated statements of comprehensive loss data (other than US$ data) and consolidated statements of cash flows data (other than US$ data) for the six months ended June 30, 2020 and 2021, and the consolidated balance sheets data (other than US$ data) as of June 30, 2021 are derived from DDC’s unaudited interim condensed consolidated financial statements, which are included elsewhere in this proxy statement. The unaudited financial statements have been prepared in conformity with U.S. GAAP and are prepared on the same basis as the annual audited financial statements included elsewhere in this proxy statement. Results from interim periods are not necessarily indicative of results that may be expected for the entire year. DDC’s historical results are not necessarily indicative of results to be expected for any future period.

The information below is only a summary and should be read in conjunction with the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of DDC” and “Information About DDC” and in its financial statements, and the notes related thereto, which are included elsewhere in this proxy statement.

	For the Years Ended December 31,						For the Six months Ended June 30,
	2019		2020		2020		2020		2021		2020
	RMB		RMB		USD		RMB		RMB		USD
Consolidated Statements of Comprehensive Loss Data:
Total revenues	155,641,432		169,140,193		26,196,480		89,983,026		88,143,068		13,651,623
Gross profit	30,529,715		27,838,099		4,311,572		14,106,936		18,976,728		2,939,121
Loss from operations	(141,075,705	)	(96,744,928	)	(14,983,880	)	(42,019,824	)	(41,245,686	)	(6,388,143	)
Net loss	(157,790,739	)	(114,443,790	)	(17,725,085	)	(53,195,758	)	(346,106,761	)	(53,605,112	)
Net loss attributable to DDC Enterprise Limited	(220,796,524	)	(162,826,205	)	(25,218,567	)	(77,022,789	)	(498,605,644	)	(77,224,181	)
Net loss per ordinary share
– Basic and diluted – Class A	(15.77	)	(11.63	)	(1.39	)	(5.50	)	(7.10	)	(1.09	)
– Basic and diluted – Class B	—		—		—		—		—		—

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	As of December 31,						As of June 30,
	2019		2020		2020		2021		2021
	RMB		RMB		USD		RMB		USD
Consolidated Balance Sheets Data:
Cash, cash equivalent	11,882,630		24,467,650		3,789,556		4,445,618		688,539
Restricted cash	34,881,372		34,155,877		5,290,072		32,946,996		5,102,840
Current assets	100,849,302		97,725,199		15,135,705		156,342,267		24,214,334
Non-current assets	37,708,790		33,095,428		5,125,828		34,371,963		5,323,538
Total assets	138,558,092		130,820,627		20,261,533		190,714,230		29,537,872
Total current liabilities	124,936,272		198,265,047		30,707,344		201,141,831		31,152,899
Total non-current liabilities	36,192,096		67,424,595		10,442,739		217,903,596		33,748,970
Total liabilities	161,128,368		265,689,642		41,150,082		419,045,427		64,901,869
Total mezzanine equity	502,897,585		517,049,423		80,080,758		663,700,557		102,794,127
Total shareholders’ deficit attribute to DDC Enterprise Limited	(530,981,888	)	(656,488,318	)	(101,677,091	)	(895,788,169	)	(138,739,919	)
Non-controlling interests	5,514,027		4,569,880		707,784		3,756,415		581,795
Total liabilities, mezzanine equity and shareholders’ deficit	138,558,092		130,820,627		20,261,533		190,714,230		29,537,872

	For the Years Ended December 31,						For the Six months Ended June 30,
	2019		2020		2020		2020		2021		2021
	RMB		RMB		USD		RMB		RMB		USD
Consolidated Statements of Cash Flow Data:
Net cash used in operating activities	(177,552,741	)	(48,753,843	)	(7,551,008	)	(23,724,902	)	(44,716,628	)	(6,925,723	)
Net cash used in investing activities	(2,096,926	)	(13,009,966	)	(2,014,987	)	(10,220,468	)	(69,326,588	)	(10,737,321	)
Net cash provided by financing activities	206,231,758		76,854,480		11,903,245		42,176,952		90,968,322		14,089,199

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TRADING MARKET AND DIVIDENDS

ACBA Units, ACBA Shares, and ACBA Warrants are each quoted on the Nasdaq Stock Market, under the symbols “ACBAU,” “ACBA,” and “ACBAW,” respectively. Each of ACBA Units consist of one ACBA Share and one ACBA Warrant. ACBA Units commenced trading on April 8, 2021. ACBA Shares and ACBA Warrants commenced separate trading on May 21, 2021.

Ace has not paid any cash dividends on its ordinary shares to date and does not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon Ace’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of its then board of directors. It is the present intention of Ace’s board of directors to retain all earnings, if any, for use in its business operations and, accordingly, Ace’s board does not anticipate declaring any dividends in the foreseeable future.

DDC’s securities are not publicly traded.

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RISK FACTORS

Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the relevant proposals described in this proxy statement/prospectus.

Risks Related to DDC’s Business and Industry

Unless the context otherwise requires, all references in this subsection to “we,” “us” or “our” refer to the current business and operations of DDC, its subsidiaries and its variable interest entities (namely, Shanghai Weishi Information Technology Co., Ltd., Shanghai City Modern Agriculture Development Co., Ltd., Shanghai City Vegetable Production and Distribution Co-op, Shanghai Jiapin Vegetable Planting Co-op, Shanghai Jiapin Ecological Agriculture Co-op) and their consolidated entities before and after giving effect to the business combination.

Our business and future growth prospects rely on consumer demand for our products. Any shift in consumer demand, or any unexpected situation with a negative impact on consumer demand may materially and adversely affect our business and results of operations.

Our business relies on consumer demand for our products, which depends substantially on factors such as (i) economic growth and increasing disposable income; (ii) diversified consumption scenarios and increasing consumption frequency; (iii) continuous product innovation and upgrade; and (iv) increasing development and improvement of sales channels. Changes in any of the above at any time could result in decline in consumer demand for our products. Our business development will depend partially on our ability to (i) anticipate, identify or adapt to such changes, (ii) introduce new attractive products and marketing strategies in a timely manner, and (iii) develop an effective sales network accordingly.

Although we dedicate substantial resources to consumer-centric market research and data analysis to upgrade our existing products and to develop, design and launch new products, in order to cater to consumer preferences, we cannot assure you that our product portfolio will continuously lead or capture the market trends. Any changes in consumer preferences and tastes, or any of our failure to anticipate, identify or adapt to market trends, may impose downward pressure on sales and pricing of our products or lead to increases in selling and distribution expenses, and therefore materially and adversely affect our business and results of operations.

In order to promptly respond to rapidly developing market trends and changing tastes, preferences and lifestyle of consumers, our sales and development teams regularly observe the changing trends in our target markets and launch new products or different serving sizes and flavors from time to time. While we have in the past successfully developed, promoted and achieved market acceptance of our products, we cannot assure you that we will be able to continuously develop new products or our existing or new products in the future will continue to generate sufficient consumer demand to be profitable.

If we fail to retain existing customers, derive revenue from existing customers consistent with historical performance or acquire new customers cost-effectively, our business could be adversely affected.

Our ability to increase revenues depends in part on our ability to retain and keep existing customers engaged so that they continue to purchase products from us, and to acquire new customers cost-effectively. We intend to continue to expand our number of customers as part of our growth strategy. If we fail to retain existing customers and to attract and retain new customers, our business, financial condition and results of our operations could be adversely affected.

Further, if customers do not perceive our product offerings to be of sufficient value, quality, or innovation, or if we fail to offer innovative and relevant product offerings, we may not be able to attract or retain customers or engage existing customers so that they continue to purchase products or increase the amount of products purchased from us. We may lose current customers to competitors if the competitors offer superior products or if we are unable to satisfy its customers’ orders in a timely manner.

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The market for ready-to-heat, ready-to-cook, plant-based meal products, private-label and fresh products in China is continuously evolving and may not grow as quickly as expected, or at all, which could negatively affect our business and prospects.

Our business and prospects depend on the continuous development and growth of the markets for ready-to-cook, ready-to-heat, plant-based meal products, private-label and fresh products in China. The growth and development of these markets are impacted by numerous factors and subject to uncertainties that are beyond our control, such as the macroeconomic environment, per capita spending, consumers’ interest, consumers’ purchasing frequency, demand for ready-to-heat, ready-to-cook, plant-based meal products, private-label and fresh products from consumers in lower tier cities, regulatory changes, technological innovations, cultural influences and changes in tastes and preferences. We cannot assure you that the market will continue to grow as rapidly as it has in the past, in ways that are consistent with other markets, such as that of the United States, or at all. If the markets for ready-to-heat, ready-to-cook, plant-based meal products, private-label and fresh products in China do not grow as quickly as expected or at all, or if we fail to benefit from such growth by successfully implementing our business strategies, our business and prospects may be negatively affected.

Changes to the pricing of our products could adversely affect our results of operations.

We aim to bring to consumers affordable, healthy, and convenient food products. The pricing of our products is based on multiple factors, including, without limitation, the pricing of the components, ingredients and raw materials, costs of product development, anticipated sales volume, manufacturing costs and logistics service expenditures. Benefiting from our deep engagement with our customers, we are in a good position to analyze consumers’ preferences and demands, evaluate the market acceptance and potential sales volume of our new products to be launched, which enables us to price our products at a competitive rate. Nevertheless, we cannot ascertain that we will adopt a competitive pricing strategy for our products at all times. If we price our products too low, our profit margin will suffer. If we price our products higher than consumers’ expected price, we may not achieve the sales volume we expect, in which case revenues from the corresponding products may be negatively affected.

Even if we properly price our products at their launch time, we may need to offer substantial discounts, especially during the major shopping festivals such as “618,” “Singles’ Day” and “Double Twelve,” to promote our brand awareness and to drive sales volume, or cut down the price as our products advance in their life cycles to maintain such products’ attractiveness to consumers. We may also need to reduce the prices to sell excess inventory in the event that we fail to accurately forecast demands. Any such price cuts may not lead to the sales volume we expect and may negatively impact the demand for our other newly launched or higher-end products, in which case our revenues could be negatively impacted. Furthermore, some customers may purchase our products in bulk when we offer substantially discounted or promotional prices and then re-sell them through their proprietary or third-party channels. The market and pricing for our products may be interrupted by the secondary sale pricing strategies adopted by such resellers and the possible negative shopping experience they provide to consumers, which may negatively impact our brand image and our business.

Our business and prospects depend on our ability to build our brands and reputation, which could be harmed by negative publicity with respect to us, our products and operations, our management, brand ambassadors, key opinion leaders (“KOLs”), or other business partners.

We believe that maintaining and enhancing the reputation of our brands is of significant importance to the success of our business and that our financial success is directly dependent on consumer perception of our brands. Well-recognized brands are important to enhancing our attractiveness to consumers. Since we operate in a highly competitive market, brand maintenance and enhancement directly affect our ability to maintain our market position. As a young company, our brand awareness among consumers may not be as strong as the more established food brands, and maintaining and enhancing the recognition and reputation of our brand is critical to our business and future growth.

Our ability to maintain our reputation and brand is affected by many factors, some of which are beyond our control. These factors include our ability to provide a satisfactory consumer experience, which in turn depends on our ability to bring products to the market at competitive prices that respond to consumer demands and preferences, our ability and that of our manufacturing and service partners to comply with ethical and social standards and various and evolving rules and standards related to product quality and safety, labor and environmental protection, our ability to produce safe and healthy products, our ability to provide satisfactory order fulfillment services, and our ability to

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provide responsive and superior customer services. Failure to succeed in any of these areas could damage our customer experience, our reputation and brand image and our ability to retain and attract customers. The success of our brand may also suffer if our marketing plans or product initiatives do not have the desired impact on our brand’s image or its ability to attract consumers. If we are unable to conduct our sales and marketing efforts in a cost-effective and efficient manner, our results of operations and financial conditions may be materially and adversely affected.” We cannot assure you, however, that these activities are and will be successful or that we can achieve the brand promotion effect we expect. If we are unable to preserve our reputation, enhance our brand recognition or increase positive awareness of our products, it may be difficult for us to maintain and grow our consumer base, and our business, financial condition and results of operations may be materially and adversely affected.

In addition, any failure by our third-party manufacturers or raw material suppliers to comply with ethical, social, product, labor and environmental laws, regulations or standards could negatively impact our reputations and lead to various adverse consequences, including decreased sales and consumer boycotts. Also, we may face customer complaints or negative publicity about us, our products, our management, our business partners or the KOLs we collaborate with from time to time, which may adversely affect our brand, reputation and business and diminish the appeal of our brand to consumers. Certain of such negative publicity may come from malicious harassment or unfair acts by third parties or our competitors, which are beyond our control

Damage to our reputation or the reputations of our business partners or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional resources to rebuild our brand and reputation.

Our products are subject to food safety standards and the failure to satisfy such mandated food safety standards would have a material and adverse effect on our business, results of operations and prospects.

Our products are subject to food safety standards in China. To comply with the applicable food safety laws and regulations, new food product shall be submitted to the applicable People’s Republic of China (“PRC”) regulatory authorities for food safety inspections and sell of product is prohibited if relevant product is uninspected or fails to pass the inspection. Failure to satisfy such mandated food safety standards would delay the launch of our new products and may cost us additional resources in time, capital and human power to modify the product to comply with the food safety standards, which may have a material and adverse effect on our business, results of operations and prospects.

After we launch the products, our products are still subject to those mandated food safety standards. We have adopted internal procedures to run tests on our launched products from time to time to make sure they comply with the mandated food safety standards. However, there can be no assurance that we could satisfy such standards at all times. In the event that our products fail to continue to satisfy the mandated food safety standards, we are required to stop selling such products and may need to initiate callbacks for those products. In addition, we may be subject to negative publicity for such failure. Moreover, as the food safety is crucial to our business, the customers’ confidence in our brand may be impaired. As a result, our reputation, brand image, business, results of operations may be materially and adversely affected.

We may be subject to claims under consumer protection laws, including health and safety claims and product liability claims, if people are harmed by the products sold by us.

The PRC government, media outlets and public advocacy groups have been increasingly focused on consumer protection in recent years. The products sold by us or may be defectively designed, manufactured or of quality issue, or cause harm and adverse effect to the health of our customers. The offerings of such products by us may expose us to liabilities associated with consumer protection laws. Pursuant to the Law of PRC on the Protection of Rights and Interests of Consumers (the “Consumer Protection Law”), business operators must guarantee that the commodities they sell satisfy the requirements for personal safety, provide consumers with authentic information about the commodities, and guarantee the quality, function, usage and term of validity of the commodities. Failure to comply with the Consumer Protection Law may subject business operators to civil liabilities such as refunding purchase prices, replacement of commodities, repairing, ceasing damages, compensation, and restoring reputation, and even subject the business operators or to criminal penalties when personal damages are involved or if the circumstances are severe. Although we would have legal recourse against the manufacturer of such products under PRC law if the liabilities are attributable to the manufacturer, attempting to enforce our rights against the manufacturer may be expensive, time-consuming and ultimately futile.

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We do not maintain product liability insurance for products we sold. Even unsuccessful claims could result in significant expenditure of funds and diversion of management time and resources, which could materially and adversely affect our business, financial condition and prospects.

We face risks related to instances of food-borne illnesses, health epidemics, natural disasters and other catastrophic events. The outbreak of any severe contagious diseases, if uncontrolled, could adversely affect our business and results of operation.

Our business is susceptible to food-borne illnesses, health epidemics and other outbreaks. We cannot guarantee that our internal controls and trainings will be fully effective in preventing all food-borne illnesses. Furthermore, we rely on third-party suppliers in our operations, which may increase such risk. New illnesses resistant to any precautions or diseases with long incubation periods could arise on a retroactive basis. Reports in the media of instances of food-borne illnesses could, if highly publicized, negatively affect our industry and us. This risk exists even if it were later determined that the illness in fact were not spread by our products. We also face risks related to health epidemics. Past occurrences of epidemics or pandemics, depending on their scale of occurrence, have caused different degrees of damage to the national and local economies in China. An outbreak of any epidemics or pandemics in China may adversely affect the local economy and willingness to spend in local areas and result in a decrease in the number of our customers in such areas. Any of the above may cause material disruptions to our operations, which in turn may materially and adversely affect our financial condition and results of operations, and may continue to affect the demand for our products, our business operations and financial conditions. Our operations are also vulnerable to natural disasters and other catastrophic events, including wars, terrorist attacks, earthquakes, typhoons, fires, floods, extreme high temperature events, power failures and shortages, water shortages, information system failures, and similar events that may or may not be foreseeable.

Our business could be materially and adversely affected by the outbreaks of contagious diseases such as Severe Acute Respiratory Syndrome, or SARS, influenza A (including H1N1, H7N9 and H10N8), Ebola and COVID-19 that spread across China and the world in recent years. In the future, if a contagious disaster occurs in the regions where we operate, our operations may be materially and adversely affected as a result of loss of personnel, damages to property or decreased demand for our products.

In addition, if any of our employees is infected or affected by any severe infectious diseases, it could adversely affect or disrupt our business operations as we may be required to close our production facilities to prevent the spread of the disease. If any of such diseases occur, our ability to operate our facilities may be restricted and we may have to incur substantial additional expenses for the well-being of our employees. The spread of any severe infections disease in China may also affect the operations of our suppliers, distributors and customers, causing delivery disruptions, which could in turn adversely affect our operating results.

We may be liable for improper collection, use or appropriation of personal information provided by our customers.

Our business involves collecting and retaining large volumes of customer data, including personal information as our various information technology systems enter, process, summarize and report such data. We also maintain information about various aspects of our operations. The integrity and protection of our customer and company data is critical to our business. Our customers expect that we will adequately protect their personal information. We are required by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures to safeguard such information.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained during the course of performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides main legal basis for privacy and personal information infringement claims under the

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Chinese civil laws. PRC regulators, including the Cyberspace Administration of China, MIIT, and the Ministry of Public Security have been increasingly focused on regulation in the areas of data security and data protection. The PRC regulatory requirements regarding cybersecurity are constantly evolving. For instance, various regulatory bodies in China, including the Cyberspace Administration of China, the Ministry of Public Security and State Administration for Market Regulation, or the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June 1, 2020. According to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. In July 2021, the Cyberspace Administration of China and other related authorities released the draft amendment to the Cybersecurity Review Measures for public comments through July 25, 2021. The draft amendment proposes the following key changes: (i) companies who are engaged in data processing are also subject to the regulatory scope; (ii) the China Securities Regulatory Commission, or the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism; (iii) the operators (including both operators of critical information infrastructure and relevant parties who are engaged in data processing) holding personal information of more than one million users and seeking a listing outside China shall file for cybersecurity review with the Cybersecurity Review Office; and (iv) the risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity review process. If the draft amendment is adopted into law in the future, we may become subject to the enhanced cybersecurity review. Very recently, certain internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this proxy statement, we have not been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. However, if we are deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review. As there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we cannot assure you that we would not be subject to such cybersecurity review requirement, and if so, that we would be able to pass such review in relation to the Business Combination. In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations.

On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which took effect on September 1, 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information. As uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. We may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations and financial condition.

On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the PRC Personal Information Protection Law, or the PIPL, which will take effect in November 2021. In addition to other rules and principles of personal information processing, the PIPL specifically provides rules for processing sensitive personal information. Sensitive personal information refers to personal information that, once leaked or illegally used, could easily lead to the infringement of human dignity or harm to the personal or property safety of an individual, including biometric recognition, religious belief, specific identity, medical and health, financial account, personal whereabouts and other information of an individual, as well as any personal information of a minor under the age of 14. Only where there is a specific purpose and sufficient necessity, and under circumstances where strict protection measures are

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taken, may personal information processors process sensitive personal information. A personal information processor shall inform the individual of the necessity of processing such sensitive personal information and the impact thereof on the individual’s rights and interests. As uncertainties remain regarding the interpretation and implementation of the PIPL, we cannot assure you that we will comply with the PIPL in all respects and regulatory authorities may order us to rectify or terminate our current practice of collecting and processing sensitive personal information. We may also become subject to fines and/or other penalties which may have material adverse effect on our business, operations and financial condition.

While we take various measures to comply with all applicable data privacy and protection laws and regulations, there is no guarantee that our current security measures and those of our third-party service providers may always be adequate for the protection of our customer or company data. In addition, we may be a particularly attractive target for computer hackers, foreign governments or cyber terrorists. Unauthorized access to our proprietary internal and customer data may be obtained through break-ins, sabotage, breach of our secure network by an unauthorized party, computer viruses, computer denial-of-service attacks, employee theft or misuse, breach of the security of the networks of our third-party service providers, or other misconduct. Because the techniques used by computer programmers who may attempt to penetrate and sabotage our proprietary internal and customer data change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques. Unauthorized access to our proprietary internal and customer data may also be obtained through inadequate use of security controls. Any of such incidents may harm our reputation and adversely affect our business and results of operations. In addition, we may be subject to negative publicity about our security and privacy policies, systems, or measurements from time to time.

Any failure to prevent or mitigate security breaches, cyber-attacks or other unauthorized access to our systems or disclosure of our customers’ data, including their personal information, could result in loss or misuse of such data, interruptions to our service system, diminished customer experience, loss of customer confidence and trust, impairment of our technology infrastructure, and harm our reputation.

If the content we produce and distribute through online social and content platforms, or content available on our website, is deemed to violate PRC laws or regulations, our business and results of operations may be materially and adversely affected.

We produce and distribute professionally generated food and cooking related content on third party online social and content platforms such as Weixin, Kuaishou, Bilibili, and RED to promote healthy lifestyle, to improve our brand awareness and to generate consumers interest in our products. Under PRC laws, we are required to monitor content we produce and distribute for items that are factually incorrect, socially destabilizing, obscene or defamatory, and promptly take actions with respect to such content items. Sometimes, it is arguable as to whether a piece of information is factually incorrect or involved other types of illegality, and it may be difficult to determine the type of content that may result in liability to us. If we are found to be liable, we may be subject to fines, revocation of our relevant licenses and other administrative and civil actions, which may interrupt our business. We have implemented measures to review content in light of the relevant laws and regulations before any of them is published. However, such procedures may not prevent all illegal or impropriate contents from being distributed, especially content created during living streaming by KOLs we collaborate with.

We currently utilize third-party suppliers for our products. Loss of these suppliers could harm our business and impede growth.

The termination of a supplier relationship may leave us with periods during which it has limited or no ability to manufacture certain products. An interruption in, or the loss of operations at, any of these manufacturing facilities, which may be caused by work stoppages, production disruptions, product quality issues, disease outbreaks or pandemics (such as the recent coronavirus (COVID-19) pandemic), acts of war, terrorism, fire, earthquakes, weather, flooding or other natural disasters, could delay, postpone or reduce production of our products, which could adversely affect our business, results of operations and financial condition until the interruption is resolved or an alternate source of production is secured. Moreover, we are exposed to concentration risks of heavy reliance on our major suppliers. There is no assurance that our major suppliers will continue to supply their products in the quantities and within the timeframes required by us to meet the needs of our customers. If our major suppliers terminate their agreement with us, or do not supply products to us in a timely manner or in sufficient quantities, our business and results of operations will be adversely affected.

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We believe that there are a limited number of competent, high-quality suppliers in the industry that meet our quality and control standards, and as we seek to obtain additional or alternative supply arrangements in the future, or alternatives to bring this manufacturing capability in-house, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. Therefore, the loss of one or more suppliers, any disruption or delay at a supplier or any failure to identify and engage a supplier for products could delay, postpone or reduce production of products, which could adversely affect our business, results of operations and financial condition.

Our growth may be limited if we are unable to expand our distribution channels and secure additional retail space for its products.

Our results will depend on its ability to drive revenue growth, in part, by expanding the distribution channels for its products and the number of products carried by each retailer. Our ability to do so, however, may be limited by an inability to secure additional retail space for its products. Retail space for ready-to-heat, ready-to-cook and plant-based meal products is limited and is subject to competitive and other pressures, and there can be no assurance that retail stores will provide sufficient space to enable us to meet its growth objectives.

We rely in part on third-party distributors to place our products into the market and we may not be able to control our distributors.

We rely in part on third-party distributors to sell our products. As of December 31, 2020, our distribution and sales network in China consisted of 6 offline distributors. Purchases by distributors accounted for the substantial majority of our sales. In 2020, our offline consumer product sales accounted for 29.65% of our revenue. As we sell and distribute our products through distributors, any one of the following events could cause fluctuations or declines in our revenue and could have an adverse effect on our financial condition and results of operations:

• reduction, delay or cancelation of orders from one or more of our distributors;

• selection or increased sales by our distributors of our competitors’ products;

• failure to renew distribution agreements and maintain relationships with our existing distributors;

• failure to establish relationships with new distributors on favorable terms; and

• inability to timely identify and appoint additional or replacement distributors upon the loss of one or more of our distributors.

We may not be able to compete successfully against larger and better-funded sales and marketing campaigns of some of our current or future competitors, especially if these competitors provide their distributors with more favorable arrangements. We cannot assure you that we will not lose any of our distributors to our competitors, which could cause us to lose some or all of our favorable arrangements with such distributors and may result in the termination of our relationships with other distributors. In addition, we may not be able to successfully manage our distributors and the cost of any consolidation or further expansion of our distribution and sales network may exceed the revenue generated from these efforts. There can be no assurance that we will be successful in detecting any non-compliance by our distributors with the provisions of their distribution agreements. Non-compliance by our distributors could, among other things, negatively affect our brand, demand for our products and our relationships with other distributors. Furthermore, if the sales volumes of our products to consumers are not maintained at a satisfactory level or if distributor orders fail to track consumers demand, our distributors may not place orders for new products from us, or decrease the quantity of their usual orders. The occurrence of any of these factors could result in a significant decrease in the sales volume of our products and therefore adversely affect our financial condition and results of operations.

Adverse publicity involving us, our products, our raw materials, our directors, our management team, our competitors or our industry could materially and adversely impact our business and results of operations.

The food industry in China as a whole is particularly sensitive to concerns over food safety and quality related issues and can be materially and adversely affected by negative publicity or news reports, whether accurate or not, regarding food safety and quality and public health concerns. Any such negative publicity on our industry, whether targeting us in particular or not, could materially harm our brand, business and results of operations. Complaints or claims against us, if any, even if without any sufficient evidence, could force us to divert our resources, which may adversely affect our business, operations and financial performance.

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We operate in a highly competitive industry. Failure to compete effectively could adversely affect our market share, growth and profitability.

We operate in China’s food industry, in particular the ready-to-cook food industry, which is highly competitive, and the competition may further intensify. Some of our competitors, may have been in their respective businesses longer than we have and may have substantially greater financial, research and development and other resources than us. We also cannot assure you that our current or potential competitors will not market products comparable or superior to those we provide or adapt more quickly to evolving industry trends or changing market demand. Our competitors in certain regional markets may also benefit from raw material sources or production facilities that are closer to these markets. It is also possible that there will be a consolidation trend in the ready-to-cook and plant-based food industry, integration of upstream and downstream businesses or alliances among competitors; and as a result, our competitors may rapidly acquire significant market share. Any of these events may cause our market share, business and results of operations to be adversely affected.

Furthermore, competition may cause our competitors to substantially increase their advertising and promotional activities or to engage in irrational or predatory pricing behavior. We cannot guarantee that our marketing efforts will be sufficient to compete with our competitors. An increase in competition could require us to continue to increase our promotion and advertising expenses, which might place pressure on our margins and affect our profitability. Additionally, competition may result in price reductions, reduced margins and loss of market shares for us, any of which could have an adverse impact on our results of operations. We also cannot assure you that our competitors will not actively engage in activities, whether legal or illegal, designed to undermine our brands and product quality or to influence consumer confidence in our products.

The ready-to-heat and ready-to-cook industry is intensely competitive with respect to, among other things, brand recognition, flavor, product quality and consistency, services, prices, availability, selection and accessibility. Furthermore, new competitors may emerge from time to time, which may further intensify the competition. In particular, competitors may start to offer products that are similar to our products. There are also many well-established competitors with substantially greater financial, marketing, personnel and other resources than ours.

Our ability to effectively compete will depend on various factors, including the successful implementation of our sales network expansion strategy, and our ability to improve existing products, to develop and launch new products, and to enhance production capacity and efficiency. Failure to successfully compete may prevent us from increasing or sustaining our revenue and profitability and potentially lead to a loss of market share, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows.

We may not be able to successfully implement our growth strategy.

Our future growth, profitability and cash flows depend upon our ability to successfully implement our business strategy, which, in turn, is dependent upon a number of factors, including our ability to:

• further penetrate our targeted markets by attracting new consumers and retaining and further engaging our existing customers;

• capture the industry trends and develop and launch new products and expand into relevant adjacencies in answer to such trends;

• integrate offline and online experience to provide a seamless omni-channel environment for our customers;

• effectively manage the quality and efficiency of our ODM/OEM and packaging supply partners and logistics and other third-party service providers’ performance;

• continue to broaden and diversify our online and offline distribution channels;

• pursue strategic investments and collaborations to complement our existing capabilities and expand our product portfolio and geographic reach; and

• leverage our high performance team culture to drive margins.

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There can be no assurance that we can successfully achieve any or all of the above initiatives in the manner or time period that we expect. Further, achieving these objectives will require investments which may result in short-term costs without generating any current net sales and therefore may be dilutive to our earnings. We cannot provide any assurance that we will realize, in full or in part, the anticipated benefits we expect our strategy will achieve. The failure to realize those benefits could have a material adverse effect on our business, financial condition and results of operations.

We may be unable to manage our growth effectively or efficiently.

Growing our business rapidly will place a strain on our management team, financial and information systems, supply chain and distribution capacity and other resources. To manage growth effectively, we must continue to enhance our operational, financial and management systems, including our warehouse management and inventory control; maintain and improve our internal controls and disclosure controls and procedures; maintain and improve our information technology systems and procedures; and expand, train and manage our employee base.

We may not be able to effectively manage this expansion in any one or more of these areas, and any failure to do so could significantly harm our business, financial condition and results of operations. Growing our business rapidly may make it difficult for us to adequately predict the expenditures we will need to make in the future. If we do not make the necessary overhead expenditures to accommodate our future growth, we may not be successful in executing our growth strategy, and our results of operations would suffer.

We have incurred net loss in the past, and we may not be able to achieve or maintain profitability in the future.

We incurred net loss of RMB157.79 million in 2019, net loss of RMB114.44 million (US$17.73 million) in 2020 and net loss of RMB 346.11 million (US$53.61 million) for the six months ended 30 June 2021. We also had negative cash flows from operating activities of RMB177.55 million, RMB48.75 million (US$7.55 million), and RMB 44.72million (US$6.93 million) in the fiscal years/ six months period ended December 31, 2019, 2020 and 30 June 2021, respectively. We cannot assure you that we will be able to generate net profits or positive cash flow from operating activities in the future. Our ability to maintain profitability will depend in large part on our ability to maintain or increase our operating margin, either by growing our revenues at a rate faster than our costs and operating expenses increase, or by reducing our costs and operating expenses as a percentage of our net revenues. We also expect to continue to make significant future expenditures related to the continuous development and expansion of our business, including:

• investments in our product development team and research and development team and in the development of new products;

• investments in sales and marketing, enlarging our customer base and promoting market awareness of our brands and products;

• investments in expansion of our online and offline distribution channels in a measured manner, including the buildout of our offline experience store footprint;

• investment in enhancing data and information technology and improving operating efficiency, including improving the efficiency in supply chain management, warehouse management and inventory control; and

• incurring costs associated with general administration, including legal, accounting and other expenses related to being a public company.

As a result of these significant expenses, we will have to generate sufficient revenue to remain profitable in future periods. We may not generate sufficient revenue for a number of reasons, including potential lack of demand for our products, increasing competition, challenging macro-economic environment, the ramifications of the COVID-19 pandemic, as well as other risks discussed elsewhere in this prospectus. If we fail to sustain or increase profitability, our business and results of operations could be adversely affected.

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Our historical financial conditions and results of operations are not representative of our future performance. We may be unable to effectively manage our future growth and expansion, and may not achieve growth in revenue and profit. If we are unable to manage our growth effectively, we may not be able to capitalize on new business opportunities and our business and financial results may be materially and adversely affected.

We have experienced stable growth and plan to further expand in the future. Our total revenue increased by8.67% from RMB155.64 million in 2019 to RMB169.14 million in 2020. We achieved RMB 88.14million of revenue for the six months ended 30 June 2021. Our planned expansion may place substantial demands on our resources. However, historical period-over-period comparisons of our sales and operating results are not necessarily indicative of future quarter-to-quarter and period-over-period results. You should not rely on the results of a single quarter or period as an indication of our annual results or its future performance.

Our ability to further increase our research and development capabilities, selling and marketing capacity is critical to supporting our stable and continuous business growth, which involves additional costs and uncertainties. In addition, to manage and support our growth, we must improve our existing operational and administrative systems as well as our financial and management controls. Our continued success also depends on our ability to recruit, train and retain qualified management personnel as well as other administrative and sales and marketing personnel, particularly when we expand into new markets. We also need to continue to manage our relationships with our suppliers and customers. All of these endeavors will require substantial management resources. As a result, our revenue and results of operations in future may fluctuate significantly and our results for a given fiscal period are not necessarily indicative of results to be expected for our operations in future. We cannot assure you that we will be able to manage any future growth effectively and efficiently, and any failure to do so may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material and adverse effect on our business and financial performance.

Furthermore, we may not be able to achieve our expansion goals or effectively ramp up the sales of our new products. If we encounter any difficulty in expanding our distributors and sales network, our growth prospects may be adversely affected, which could in turn have a material and adverse effect on our business, financial condition and results of operations.

Our future growth may result from improving our research and development capabilities, introducing new products, expanding our sales and distribution network and entering new markets or new sales channels. Our ability to achieve growth will be subject to a range of factors, including:

• expanding our sales network;

• enhancing our research and development capabilities;

• hiring and training qualified personnel;

• controlling our costs and maintaining sufficient liquidity;

• prioritizing our financial and management controls in an efficient and effective manner;

• exercising effective quality control;

• managing our various suppliers and leveraging our purchasing power;

• maintaining our high food-safety standards; and

• strengthening our existing relationships with distributors.

We face increased risks when we enter new markets, or enter new sales channels, including social media and e-commerce channels. New markets and sales channels may have different regulatory requirements, competitive conditions, consumer preferences and different spending patterns from our existing markets and sales channels. Consumers in new markets and sales channels are likely to be unfamiliar with our brands and products and we may need to build or increase brand awareness in the relevant markets and sales channels by increasing investments in advertising and promotional activities than we originally planned. We may find it more difficult in new markets to hire, train and retain

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qualified employees who share our business philosophy and culture. In addition, we may have difficulty in finding reliable suppliers with adequate supplies of raw materials meeting our quality standards or distributors with efficient distribution networks. As a result, any products we introduce in new markets may be more expensive to produce and/or distribute and may take longer to reach expected sales and profit levels than in our existing markets, which could affect the viabilities of these new operations or our overall profitability.

We also sell our products to major e-commerce platforms and online distributors. Our development of the e-commerce channel depends on many factors, most of which are beyond our control, including: the trust and confidence level of China’s online consumers, as well as changes in consumer consumption patterns, tastes and preferences; the growth of internet usage in China; and the development of fulfillment, payment and other ancillary services associated with e-commerce sales. Any failure to respond to trends and consumer requirements in the e-commerce channel may adversely affect our sales and our business and growth prospects in this sales channel.

Additionally, our expansion plans and business growth could strain our managerial, operational and financial resources. Our ability to manage future growth will depend on our ability to continue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manage our workforce. We cannot assure you that our personnel, systems, procedures and controls will be adequate to support our future growth. Failure to effectively manage our expansion may lead to increased costs and reduced profitability and may adversely affect our growth prospects. In addition, as we expand our operations, we may encounter regulatory, personnel and other difficulties that may also increase our costs of operations.

We depend on a stable and adequate supply of raw materials which are subject to price volatility and other risks. Inadequate or interrupted supply and price fluctuation for raw materials and packaging materials could adversely affect our profitability.

The raw materials and packaging materials are subject to price volatility caused by external factors, such as commodity price fluctuations, changes in supply and demand, logistics and processing costs, our bargaining power with suppliers, inflation, and governmental regulations and policies. Our production volume, quality of products and profit margins may be adversely affected. There is no assurance that raw material costs will not increase significantly in the future. As is customary in our industry, we typically are not able to immediately pass raw material price increases onto our customers. As a result, any significant price increase of raw materials may have an adverse effect on our profitability and results of operations. Also, if we were to increase price, we may not be able to completely pass on the increase in raw materials to consumers. Also, such an increase in price may adversely affect our demand. If all or a significant number of our suppliers are unable or unwilling to meet our requirements, we could suffer shortages or significant cost increases. Our suppliers could fail to meet our needs for various reasons, including fires, natural disasters, weather, manufacturing problems, epidemic, crop failure, strikes, transportation interruptions, or government regulation. A failure of supply could also occur due to suppliers’ financial difficulties, including insolvency. Changing suppliers may require long lead time. We may not be able to locate alternative suppliers in sufficient quantities, of suitable quality, or at an acceptable price. Continued supply disruptions could exert pressure on our costs, and we cannot assure you that all or part of any increased costs can be passed along to our customers in a timely manner or at all, which could negatively affect our business, overall profitability and financial performance.

The development of online sales network and marketing activities may not meet expectations, or we may fail to manage the coordination of our offline and online sales channels, which may adversely affect our operation results.

Our revenue generated by online sales channels had been growing significantly due to the increasing sales online. However, as online and social media platforms continue to grow in popularity, any significant growth in our sales through online sales channels in the future may give rise to competition between offline and online sale channels. If we fail to balance the marketing efforts or optimize product mix and pricing strategies among our online and offline sales channels, or otherwise fail to effectively manage the integration of these channels, the competition among these channels may adversely affect our business, financial condition and results of operations.

We expect to further enhance our online strategies and increase sales from our online channels. However, we may not be able to maintain a high growth rate of our online sales, and if we fail to manage the continuous development of our online sales, our business, financial condition and results of operations may be adversely affected.

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Our online sales depend on the proper operation of third-party online platforms and any serious interruptions of these platforms could adversely affect our operations.

The development of sales through third-party online platforms is part of our business strategy. We have launched profile pages and sales channels on our third-party online platforms. However, we do not have control over the operation of third-party online platforms and such platform may be vulnerable to damage or interruptions such as power failure, computer viruses, acts of hacking, vandalism and similar events. Any serious interruption or damage to the online platforms may have an adverse effect on our business, financial condition and results of operations. There is no assurance that our online sales strategy will be implemented in accordance with our plan or at all.

Our operating results depend on the effectiveness of our marketing and promotional programs. Improper marketing activities may adversely affect our brand image.

Our operating results are dependent on our brand marketing efforts and advertising activities. We continuously invest in our brands to further raise brand recognition and acceptance and engage in marketing campaigns to promote our products. We utilize tailored and creative branding and marketing strategies, which have achieved positive results. We expect to continue to adopt such strategies in the future. However, if our marketing and advertising strategies do not continue to be successful, our business and operating results may be materially and adversely affected. In addition, we believe marketing trends in China are evolving, which requires us to experiment with new marketing strategies to keep pace with industry developments and consumer preferences. Moreover, as we continue to build up our online platform, we expect our marketing expenses relating to cooperation with online channels to continue to increase.

If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in China, or if we are required to take compliance actions that are time-consuming or costly, our business, results of operations and financial condition may be materially and adversely affected.

Our business is subject to governmental supervision and regulation by the relevant PRC governmental authorities, including but not limited to the State Council, the SAMR, the Ministry of Industry and Information Technology, or MIIT, the National Radio and Television Administration, the Ministry of Commerce(“MOC”), the Ministry of Culture and Tourism, the State Internet Information Office and other governmental authorities in charge of the relevant services provided by us. These government authorities promulgate and enforce regulations that cover various aspects of the operation of value-added telecommunications services, food products and e-commerce, including entry into these industries, scope of permitted business activities, licenses and permits for various business activities, and restriction on foreign investments. Violations of regulations may lead to the imposition of significant penalties which may affect our business, operations, reputation and financial prospects. In respect of the food industry, in particular, any violation of the relevant laws, rules and regulations may result in penalties and, under certain circumstances, lead to criminal prosecution.

We have obtained food operation licenses, liquor wholesale licenses, ICP license for the provision of internet information services, online culture operating license for operation of music entertainment products and animation products, publication business permit for retail of books, newspapers and periodicals. However, we cannot assure you that we can successfully renew these licenses in a timely manner or that these licenses are sufficient to conduct all of our present or future business.

New laws and regulations may be adopted from time to time, and substantial uncertainties exist regarding interpretation and implementation of current and future PRC laws and regulations applicable to our business operations. For example, in August 2018, the standing committee of the National People’s Congress promulgated the E-Commerce Law, which took effect in January 2019. We have to cooperate with e-commerce platforms and be in full compliance with E-Commerce Law in order to continue to operate on those e-commerce platforms. We cannot assure you that our current business activities will not be found in violation of any future laws and regulations or any of the laws and regulations currently in effect due to changes in the relevant authorities’ interpretation of these laws and regulations.

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If we fail to adapt to any new regulatory requirement or any competent government authority considers that we operate our business operation without any requisite license, permit or approval, or otherwise fails to comply with applicable regulatory requirements, we may be subject to administrative actions and penalties against us, including fines, confiscation of our incomes, revocation of our licenses or permits, or, in severe cases, cessation of certain business. Any of these actions may have a material and adverse effect on our business, financial condition and results of operations.

In addition, we have not timely obtained certain approvals, licenses and permits that may be required for some aspects of our business operations. For example, we offer original short videos created by ourselves and users on mobile app. According to the PRC Administrative Provisions on Internet Audio-Visual Program Services, a provider of online audio-visual service is required to obtain a license for online transmission of audio-visual programs, or Audio-Visual License. We have not obtained the Audio-Visual License for providing internet audio-visual program services and content through our mobile app in China and we may not be eligible for the Audio-Visual License since the current PRC laws and regulations require an applicant to be a wholly state-owned or state-controlled entity. As of the date of this proxy statement, we have not received any notice of warning or been subject to penalties or other disciplinary action from the relevant governmental authorities for lack of approvals and permits. However, we cannot assure you that we will not be subject to any warning, investigations or penalties in the future. If the PRC government deems us as operating without proper approvals, licenses or permits, promulgates new laws and regulations that require additional approvals or licenses or impose additional restrictions on the operation of any part of our business, we may be required to apply for additional approvals, license or permits, or subject to various penalties, including fines, termination or restrictions of the part of our business or revoking of our business licenses, which may adversely affect our business and materially and adversely affect our business, financial conditions and results of operations.

As we expand into different business models and introduce new products and services to our customers, we may be required to comply with additional laws and regulations that are yet to be determined. To comply with such additional laws and regulations, we may be required to obtain necessary certificates, licenses or permits, as well as allocate additional resources to monitor regulatory and policy developments. Our failure to adequately comply with such additional laws and regulations may delay, or possibly prevent, some of our products or services from being offered to our customers, which may have a material adverse effect on our business, results of operations and financial condition.

We are subject to PRC Advertising Law and related regulations, rules and measures applicable to advertising.

Certain amounts of our revenue is derived from online advertising services. In July 2016, the former State Administration for Industry and Commerce promulgated the Interim Administrative Measures on Internet Advertising, or the Internet Advertising Measures, effective in September 2016, pursuant to which internet advertisements are defined as any commercial advertising that directly or indirectly promotes goods or services through internet media in any form including paid-for search results. Under the Internet Advertising Measures, our online advertising services may constitute internet advertisement.

PRC advertising laws, rules and regulations require advertisers, advertising operators and advertising distributors to ensure that the content of the advertisements they prepare or distribute is fair and accurate and is in full compliance with applicable law. In 2019 and 2020, 13.53% and 6.55% of our revenues were derived from online advertising services. Violation of these laws, rules or regulations may result in penalties, including fines, confiscation of advertising fees and orders to cease dissemination of the advertisements. In circumstances involving serious violations, the PRC government may suspend or revoke a violator’s business license or license for operating advertising business. Complying with these requirements and any penalties or fines for any failure to comply may significantly reduce the attractiveness of our platform and increase our costs and could have a material adverse effect on our business, financial condition and results of operations.

In addition, for advertising content related to specific types of products and services, advertisers, advertising agencies and advertising distributors must confirm that the advertisers have obtained requisite government approvals, including the advertiser’s operating qualifications, proof of quality inspection of the advertised products, and, with respect to certain industries, government approval of the content of the advertisement and filing with the local authorities. Pursuant to the Internet Advertising Measures, we are required to take steps to monitor the content of advertisements displayed by us. This requires considerable resources and time, and could significantly affect the operation of our

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business, while at the same time also exposing us to increased liability under the relevant laws, rules and regulations. The costs associated with complying with these laws, rules and regulations, including any penalties or fines for our failure to so comply if required, could have a material adverse effect on our business, financial condition and results of operations. Any further change in the classification of our online advertising and other related services by the PRC government may also significantly disrupt our operations and materially and adversely affect our business and prospects.

Our acquisition activities and other strategic transactions may present managerial, integration, operational and financial risks, which may prevent us from realizing the full intended benefit of the acquisitions we undertake.

We have in the past and may continue to seek acquisitions that we believe strengthen our competitive position in our key segments and geographies or accelerate our ability to grow into adjacent product categories and channels and emerging markets or which otherwise fit our strategies.

In addition, investments and acquisitions could result in distraction of management from current operations, greater than expected liabilities and expenses, unidentified issues not discovered in our due diligence, the use of substantial amounts of cash, potentially dilutive issuances of equity securities, significant amortization expenses related to goodwill or intangible assets and exposure to potential unknown liabilities of the acquired business. If the goodwill or intangible assets become impaired, we may be required to record a significant charge to our results of operations.

Further, the assumptions we use to evaluate acquisition opportunities may not prove to be accurate and our investments or acquisitions may not yield the results we expect. Even if our assumption is accurate, the integration of acquired businesses into ours may be costly and disruptive to our existing business operations. The integration process involves certain risks and uncertainties, some of which are outside our control, and there can be no assurance that we will be able to realize the anticipated benefits, synergies, cost savings or efficiencies. In the event that our investments and acquisitions are not successful, our results of operations and financial condition may be materially and adversely affected.

We rely on third-party logistics companies to deliver our products. Any delivery delay, improper handling of goods or increase in transportation costs of our logistic service providers could adversely affect our business and results of operations. If the third-party logistics business is interrupted, we may not have sufficient resources to support our product transportation and face the risk of rising transportation prices.

We engage logistics service providers to store and transport products to our customers. In 2019 and 2020, our fulfillment expenses were RMB 9.94 million and RMB 9.09 million, respectively, which represented 6.38% and 5.37% of our total revenue, respectively. The vast majority of our products are delivered by trucks or trains. The services provided by our logistics service providers may be suspended or cancelled due to unforeseen events, which could cause interruption to the sales or delivery of our products. In addition, delivery delays may occur for various reasons beyond our control, including improper handling by our logistics service providers, labor disputes or strikes, acts of war or terrorism, outbreaks of epidemics, earthquakes and other natural disasters. For example, we experienced some delay in the transportation of our products due to logistics constraints during the COVID-19 outbreak.

The majority of our product transportation was provided by independent third-party logistics service providers. Disputes with or a termination of our contractual relationships with one or more of our logistics companies could result in delayed delivery of products or increased costs. There can be no assurance that we can continue or extend relationships with our current logistics companies on terms acceptable to us, or that we will be able to establish relationships with new logistics companies or expand our logistics team to ensure accurate, timely and cost-efficient delivery services. If we are unable to maintain or develop good relationships with logistics companies or expand our logistics team to cover new territories, it may inhibit our ability to offer products in sufficient quantities, on a timely basis, or at prices acceptable to our customers. In addition, as we do not have any direct control over these logistics companies, we cannot guarantee their quality of services. If there is any delay in delivery, damage to products or any other issue, our sales and brand image may be affected.

Any improper handling of our products by the logistics service providers could also result in product contamination or damage, which may in turn lead to product recalls, product liabilities, increased costs and damage to our reputation, which may in turn adversely affect our business, financial condition and results of operations.

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The transportation costs of our logistics service providers are subject to factors beyond our control, such as the fluctuation in the gasoline price, increases in road tolls and bridge tolls, and changes in transportation regulations. Any increase in the service costs of our logistics service providers may lead to an increase to our fulfillment expenses, which may in turn negatively affect our results of operations.

We may face the risk of inventory obsolescence.

As of December 31, 2020, we had inventories of RMB4.97 million. Our inventory turnover days for 2020 were 16 days. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of DDC.” Our business relies on consumer demand for our products, which depends substantially on factors such as (i) consumer spending patterns, (ii) consumer preferences and tastes, (iii) consumer income, (iv) consumer perceptions of and confidence in our product quality and food safety, and (v) consumer lifestyle. Any change in consumer demand for our products or the occurrences of catastrophic events may have an adverse impact on our product sales, which may in turn lead to inventory obsolescence, decline in inventory value or inventory write-off.

We may not be able to adequately protect our intellectual property, which could adversely affect our business and operations.

We regard our trademarks, copyrights, domain names, know-how, patents, and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others, to protect our proprietary rights As of the date of this proxy statement, we had registered 250 trademarks, one work copyright, three computer software copyrights and four registered domain names in China. We may fail to own or apply for key trademarks in a timely fashion, or at all. For example, several logos we have used for years cannot be registered as trademarks in certain trademark categories in China because a company unaffiliated to us has already registered similar logos as trademarks in such categories. As a result, we will not be able to use such logos in areas covered by such trademark categories and if such third party actually use such trademarks in product or service similar to us in the future, consumers may be confused and associate any quality issue on the products and services such third party provides with us, which will have an adverse impact on our brand image We may become an attractive target for certain copycat websites that attempt to cause confusion or diversion of traffic from us in the future because of our brand recognition as a food-related content-driven lifestyle brand in China. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition, there can be no assurance that (i) our application for registration of trademarks, patents, and other intellectual property rights will be approved, (ii) any intellectual property rights will be adequately protected, or (iii) such intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Further, because of the rapid pace of technological changes in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.

It is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment and non-compete] agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the infringement or misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our management and financial resources, and could put our intellectual property at risk of being invalidated or narrowed in scope. We can provide no assurance that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful recovery. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.

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We may be accused of infringing intellectual property rights of others and content restrictions of relevant laws.

Third parties may claim that the content posted by us or our products and services infringe upon their intellectual property rights. For example, while offering our advertising services, we may be subject to liabilities such as infringement of copyrights or trademarks and to other claims based on the materials and content posted by us or used on our products and services. The possibility of intellectual property claims against us increases as we continue to grow. Such claims, whether or not having merit, may result in our expenditure of significant financial and management resources, injunctions against us or payment of damages. We may need to obtain licenses from third parties who allege that we have infringed their rights, but such licenses may not be available on terms acceptable to us or at all. These risks have been amplified by the increase in the number of third parties whose sole or primary business is to assert such claims.

China has enacted laws and regulations governing internet access and the distribution of products, services, news, information, audio-video programs and other content through the internet. The PRC government has prohibited the distribution of information through the internet that it deems to be in violation of PRC laws and regulations. If any of the information disseminated by us or our user communities were deemed by the PRC government to violate any content restrictions, we would not be able to continue displaying such content and could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations.

The outcome of any claims, investigations and proceedings is inherently uncertain, and in any event, defending against these claims could be both costly and time-consuming and could significantly divert the efforts and resources of our management and other personnel. An adverse determination in any such litigation or proceedings could cause us to pay damages, legal fees and other costs, as well as limit our ability to conduct business or require us to change the manner in which we operate. Even if such assertions against us are unsuccessful, they may cause us to lose existing and future business and incur reputational harm and substantial legal fees.

Failure to successfully operate our information systems and implement new technology effectively could disrupt our business or reduce our profitability.

We increasingly rely on information technology systems to process, transmit and store information in relation to our operations. A portion of the communications between our personnel and our suppliers, distributors and consumers depends on information technology. Our information technology systems may be vulnerable to interruption due to a variety of events beyond our control, including but not limited to, natural disasters, telecommunications failures, computer viruses, hackers and other security issues. Any such interruption to our information technology system could disrupt our operations and negatively impact our production and ability to fulfill sales orders, which could have an adverse effect on our business, financial condition and results of operations.

In addition, we may from time to time implement, modify and upgrade our information technology systems and procedures to support our growth and the development of our e-commerce business. These modifications and upgrades could require substantial investment and may not improve our profitability at a level that outweighs their costs, or at all.

Our success depends on the continuing efforts of our senior management team and key personnel and our business may be harmed if we lose their services and cannot timely find proper candidates for substitution.

Our current business performance and future success depend substantially on the abilities and contributions of our senior management members, including our founder, Ms. Ka Yin Norma Chu, all of our executive directors and other key personnel with industry expertise, know-how or experience in areas such as research and development, manufacturing, sales, marketing, financial management, human resources and risk management. If any member of our senior management is unable or ceases to serve in his or her present position, we may not be able to find replacement in a timely basis due to local conditions. As a result, our business may be disrupted, our management quality may deteriorate and our results of operations may be materially and adversely affected. In addition, if any member of our senior management team joins a competitor or forms a competing business, we may lose trade secrets and business know-how as a result. Competition for experienced management in our industry is intense, and the pool of qualified candidates is limited. We may not be able to retain the services of our senior management or attract and retain additional

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high quality senior executives in the future. Moreover, we rely on our sales personnel to effectively operate our retail network. As we expand our operations, we may not be able to retain such skilled sales personnel at a reasonable cost and our business and results of operations may be materially and adversely affected.

Our performance depends on favorable labor relations with our employees, and any deterioration in labor relations, shortage of labor or material increase in wages may have an adverse effect on our results of operation.

Our success depends on our ability to hire, train, retain and motivate our employees. We consider favorable labor relations as a significant factor that can affect our performance, and any deterioration of our labor relations could cause labor disputes, which could result in disruption of production and operations.

Since the reform and opening up, China has experienced rapid economic growth, which has resulted in significantly increased labor costs. Average labor wages are expected to increase. In addition, we may need to increase our total compensations to attract and retain experienced personnel required to achieve our business objectives. Any material increase in our labor costs may have an adverse effect on our results of operations.

We may not be able to detect or prevent fraud, bribery, or other misconduct committed by our employees, customers or other third parties.

We may be exposed to fraud, bribery, or other misconduct committed by our employees, customers or other third parties, which could subject us to financial losses and penalties from governmental authorities. Although our internal control procedures are designed to monitor our operations and ensure overall compliance, our internal control procedures may be unable to identify all non-compliances, suspicious transactions, fraud, corruption or bribery in a timely manner. If such misconduct occurs, we may suffer from negative publicity and reputation damages.

We may be subject to legal proceedings in the ordinary course of our business. Any adverse outcome of these legal proceedings could have a material adverse effect on our business, results of operations and financial condition.

We may from time to time become a party to various litigations, arbitrations, legal disputes, claims or administrative proceedings arising in the ordinary course of our business. For example, we may be required to negotiate with, or institute litigation when negotiation fails, against our suppliers for the losses arising out of contaminated raw materials. The compensation clauses in the supply contract may not be adequate enough to remedy our damages. Such litigation could result in substantial costs and diversion of resources, which could negatively affect our sales, profitability and prospects. Even if any such litigation is resolved in our favor, we may not be able to successfully enforce the judgment and remedies awarded by the court and such remedies may not be adequate to compensate us for our actual or anticipated related losses, whether tangible or intangible. Negative publicity relating to such litigation, arbitrations, legal disputes, claims or administrative proceedings may damage our reputation and adversely affect the image of our brands and services. In addition, ongoing litigation, arbitrations, legal disputes, claims or administrative proceedings may distract our management’s attention and consume our time and other resources. Furthermore, any litigations, arbitrations, legal disputes, claims or administrative proceedings which are not of material importance may escalate due to the various factors involved, such as the facts and circumstances of the cases, the likelihood of winning or losing, the monetary amount at stake, and the parties concerned continue to evolve in the future, and such factors may result in these cases becoming of material importance to us. We were subject to several legal proceedings in the past and may continue to subject to legal proceedings in the future. We cannot assure you that the outcome of the legal proceedings in the future, if any, will be favorable to us. If any verdict or award is rendered against us or if we decide to settle the disputes, we may be required to incur monetary damages or other liabilities. Even if we can successfully defend ourselves, we may have to incur substantial costs and spend substantial time and efforts in these lawsuits. Consequently, any ongoing or future litigation, legal disputes, claims or administrative proceedings could materially and adversely affect our business, financial condition and results of operations.

We have limited insurance to cover our potential losses and claims.

We maintained limited statutory insurance, which we believe is customary for businesses of our size and type and in line with the standard commercial practice in our industry. See “DDC’s Business — Insurance.” If we were held liable for uninsured losses, our business and results of operations may be materially and adversely affected. In addition, we are not insured against product liability or business interruptions resulting from natural disasters such as droughts,

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floods, earthquakes or severe weather conditions, any suspension or cessation in the supply of utilities or other calamities. Any liability claims for damages relating to our products, interruption to our operations, and the resulting losses or damages, could materially and adversely affect our business, results of operations and financial condition.

We may require additional financing to achieve its goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate its product manufacturing and development, and other operations.

We believe that we will continue to expend substantial resources for the foreseeable future as we expand into additional markets that we may choose to pursue. These expenditures are expected to include costs associated with research and development, the acquisition or expansion of manufacturing and supply capabilities, as well as marketing and selling existing and new products. In addition, other unanticipated costs may arise.

Our operating plan may change because of factors currently unknown to us, and we may need to seek additional funds sooner than planned, including through public equity or debt financings or other sources, such as strategic collaborations. Such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Our future capital requirements depend on many factors, including:

• the number and characteristics of any additional products or manufacturing processes we develop or acquires to serve new or existing markets;

• the expenses associated with our marketing initiatives;

• the costs required to fund domestic and international growth, including acquisitions;

• the scope, progress, results and costs of researching and developing future products or improvements to existing products;

• any lawsuits related to our products or commenced against us;

• the expenses needed to attract and retain skilled personnel;

• the costs associated with being a public company; and

• the timing, receipt and amount of sales of future products.

Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may be required to:

• delay, limit, reduce or terminate our research and development activities or growth and expansion plans; and

• delay, limit, reduce or terminate the expansion of sales and marketing capabilities or other activities that may be necessary to generate revenue and increase profitability.

Risks Relating to Our Corporate Structure

If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

We are a Cayman Islands company and one of our PRC subsidiaries, Shanghai DayDayCook Information Technology Co., Ltd., (“Shanghai DayDayCook”), has entered into a series of contractual arrangements with Shanghai Weishi Information Technology Co., Ltd. (“Weishi”), Shanghai City Modern Agriculture Development Co., Ltd. (“City Modern”) and their respective shareholders. City Modern has entered into contractual arrangements with Shanghai City Vegetable Production and Distribution Co-op, Shanghai Jiapin Vegetable Planting Co-op, Shanghai Jiapin

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Ecological Agriculture Co-op (together with Weishi and City Modern, our “VIEs”) and their respective members, which enable us to (i) exercise effective control over our VIEs, (ii) receive substantially all of the economic benefits of our VIEs, and (iii) have an exclusive option to purchase all or part of the equity interests and assets in our VIEs when and to the extent permitted by PRC law. As a result of these contractual arrangements, we have control over and are the primary beneficiary of our VIEs and hence consolidate their financial results into our consolidated financial statements under U.S. GAAP.

We are of the view that, (i) the ownership structure of our VIEs in China, both currently and immediately after giving effect to the Business Combination, complies with all existing PRC laws and regulations; and (ii) the contractual arrangements among Shanghai DayDayCook, City Modern, our VIEs and its shareholder governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of us. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or our VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

• revoking the business licenses and/or operating licenses of such entities;

• discontinuing or placing restrictions or onerous conditions on our operations through any transactions between Shanghai DayDayCook, City Modern and our VIEs;

• imposing fines, confiscating the income from Shanghai DayDayCook, City Modern or our VIEs, or imposing other requirements with which we or our VIEs may not be able to comply;

• requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and deregistering the equity pledges of our VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIEs; or

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of our VIEs in our consolidated financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violation of PRC laws and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of our VIEs or our right to receive substantially all the economic benefits and residual returns from our VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of our VIEs in our consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, would have a material adverse effect on our financial condition and results of operations.

We rely on contractual arrangements with our VIEs and their shareholders for certain portions of our business operations, which may not be as effective as direct ownership in providing operational control.

We have relied and expect to continue to rely on contractual arrangements with our VIEs and their shareholders to conduct certain of our key businesses. These contractual arrangements may not be as effective as direct ownership in providing us with control over our VIEs. For example, our VIEs and their shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of our VIEs, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of our VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by our VIEs and their shareholders of their obligations under the contracts to exercise control over our VIEs. However, the shareholders of our consolidated VIE may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the contractual arrangements with our VIEs. If any disputes relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC

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law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. See “— Any failure by our VIEs or its shareholder to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Therefore, our contractual arrangements with our VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

Any failure by our VIEs or its shareholder to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

We refer to the shareholders of our VIEs as their nominee shareholders because although such shareholders remain the holders of equity interests on record in our VIEs, pursuant to the terms of the relevant contractual arrangements, the nominee shareholders of our VIEs has irrevocably authorized Shanghai DayDayCook or City Modern to exercise their rights as shareholders of the relevant VIEs. However, if our VIEs or their shareholders fails to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure will be effective under PRC law. For example, if the shareholders of our VIEs were to refuse to transfer their equity interests in our VIEs to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

All of the agreements under our contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our VIEs, and our ability to conduct our business may be negatively affected.

The shareholders of our VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

The shareholders of our VIEs may have potential conflicts of interest with us. The shareholders may breach, or cause our VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and our VIEs, which would have a material and adverse effect on our ability to effectively control our VIEs and receive economic benefits from them. For example, the shareholders may be able to cause our agreements with our VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise such shareholders will act in the best interests of our company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between such shareholders. We rely on the shareholders to abide by the laws of the China and to act in good faith and in what such shareholders believes to be the best interests of the company and not to use their position for personal gains. If we cannot resolve any conflict of interest or dispute between us and the shareholders of our VIEs, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

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We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders for services of any debt we may incur. If any of our PRC subsidiaries incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries may pay dividends only out of its respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of their respective registered capital. Such reserve funds cannot be distributed to us as dividends.

Our PRC subsidiaries generate primarily all of their revenue in RMB, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our applicable PRC subsidiaries to use their RMB revenues to pay dividends to us.

The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our applicable PRC subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises (having no institution or establishment within China or whose incomes have no actual connection to its institution or establishment within China) unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We are a Cayman Islands holding company conducting our operations in China through our PRC subsidiaries and our VIEs. We may make loans to our PRC subsidiaries and VIEs subject to the approval or registration from governmental authorities and limitation of amount, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in China. Any loans to our subsidiaries in China are subject to foreign debt registrations. In addition, an FIE shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of an FIE shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities unless otherwise provided by relevant laws and regulations; (iii) directly or indirectly used for granting entrusted RMB loans (unless permitted in the business scope), repaying loans (including the third-party advances) between enterprises, or repaying RMB bank loans that have been re-lent to a third party; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises). On October 23, 2019, SAFE promulgated the Circular Regarding Further Promotion of the Facilitation of Cross-Border Trade and Investment, or SAFE Circular No. 28, under which non-investing foreign-invested enterprises are permitted to make equity investments in the PRC with their capital funds in accordance with applicable PRC laws and regulations under the premise that the domestic investment projects are true and in compliance with applicable PRC laws and regulations. As the SAFE Circular No. 28 is newly promulgated and the relevant government authorities have broad discretion in interpreting the regulation, it is unclear whether SAFE will permit such capital funds to be used for equity investments in the PRC in actual practice.

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In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or filing on a timely basis, if at all, with respect to future loans by us to our PRC subsidiaries or VIEs or with respect to future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or filing, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Contractual arrangements in relation to our VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or our VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the VIEs contractual arrangements were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of our VIEs in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by our VIEs for PRC tax purposes, which could in turn increase its tax liabilities without reducing Shanghai DayDayCook or City Modern’s tax expenses. In addition, the PRC tax authorities may impose late payment fees and other penalties on our VIEs for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if our VIEs’ tax liabilities increase or if it is required to pay late payment fees and other penalties.

We may lose the ability to use and enjoy assets held by our VIEs that are material to the operation of certain portion of our business if our VIEs goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

As part of our contractual arrangements with our VIEs, our VIEs holds certain assets that are material to the operation of certain portion of our business, including without limitation, permits and intellectual property. If our VIEs goes bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. Under the contractual arrangements, our VIEs may not, in any manner, sell, transfer, mortgage or dispose of their assets or legal or beneficial interests in the business without our prior consent. If our VIEs undergoes a voluntary or involuntary liquidation proceeding, independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

If the chops of our PRC subsidiaries and our VIEs are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiaries and VIEs are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. In addition, if the chops are misused by unauthorized persons, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

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We face uncertainties with respect to the interpretation and implementation of the newly enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law (the “FIL”), which took effect on January 1, 2020 (with the Implementation Rules to the FIL come into effect from the same day) and replaced the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations, to become the legal foundation for foreign investment in the PRC.

However, uncertainties still exist in relation to interpretation and implementation of the FIL, especially in regard to, including, among other things, the nature of variable interest entities contractual arrangements and specific rules regulating the organization form of foreign-invested enterprises within the five-year transition period. The FIL does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises, but it has a catch-all provision under the definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or rules of the State Council, so there is still a possibility for future laws, administrative regulations or provisions of the State Council to stipulate contractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our control over our VIEs through contractual arrangements will not be deemed as foreign investment in the future. In the event that any possible implementing regulations of the FIL, any other future laws, administrative regulations or provisions deem contractual arrangements as a way of foreign investment, or if any of our operations through contractual arrangements is classified in the “restricted” or “prohibited” industry in the future “negative list” under the FIL, our contractual arrangements may be deemed as invalid and illegal, and we may be required to unwind the variable interest entity contractual arrangements and/or dispose of any affected business, any of which may have a material adverse effect on our business operation. Also, if future laws, administrative regulations or provisions mandate further actions to be taken with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Furthermore, under the FIL, foreign investors and foreign-invested enterprises will be subject to legal liabilities if they fail to report investment information in accordance with the FIL. In addition, the FIL provides that foreign-invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within a five-year transition period, which means that we may be required to adjust the structure and corporate governance of certain of our PRC subsidiaries in such transition period. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, corporate governance and business operations.

Risks Relating to Doing Business in the PRC

There are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities.

We conduct most of our business operations in China, and a majority of our directors and senior management are based in China, which is an emerging market. The SEC, U.S. Department of Justice and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain emerging markets, including China. Additionally, our public shareholders may have limited rights and few practical remedies in emerging markets where we operate, as shareholder claims that are common in the United States, including class action securities law and fraud claims, generally are difficult to pursue as a matter of law or practicality in many emerging markets, including China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation with the securities regulatory authorities in the Unities States has not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no foreign securities regulator is

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allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to foreign securities regulators.

As a result, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC entities) to register with SAFE or its local branches in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles (“SPV”), will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015 and was further amended in December 2019. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be registered with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE or its local branch.

However, we may not be informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurance that these PRC residents will comply with our request to make or obtain any applicable registrations or comply with other requirements under SAFE Circular 37 and other applicable laws and regulations or compel all such PRC residents to do so. The failure or inability of our PRC resident shareholders to comply with the registration procedures set forth in such regulations may subject us to fines and legal sanctions, restrict our cross-border investment activities, limit the ability of our wholly foreign-owned subsidiaries in China to distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us, and we may also be prohibited from injecting additional capital into these subsidiaries. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under PRC law for circumventing applicable foreign exchange restrictions. As a result, our business operations and prospects and our ability to distribute profits to you could be materially and adversely affected.

Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies due to their position as director, senior management or employees of the PRC subsidiaries of the overseas companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. Our directors, executive officers and other employees who are PRC residents and who were granted options may follow SAFE Circular 37 to apply for the foreign exchange registration before our company became an overseas listed company. Once our company become an overseas listed company upon completion of the Business Combination, we and directors, executive officers and other employees of our PRC subsidiaries and consolidated VIEs and who have been granted options will be subject to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed

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Company, issued by SAFE in February 2012, or SAFE Circular 7, according to which, among others, employees, directors, supervisors and other management members of PRC companies participating in any stock incentive plan of an overseas publicly listed company who are domestic individuals as defined therein are required to register and make regular periodic filings with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. Failure to complete the SAFE registrations or meet other requirements may subject relevant participants in our share incentive plans to fines and legal sanctions and may also limit the ability to make payment under our share incentive plans or receive dividends or sales proceeds related thereto, or our ability to contribute additional capital into our wholly-foreign owned enterprises in China and limit our wholly-foreign owned enterprises’ ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional share incentive plans for our directors and employees under PRC law.

Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.

Most of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are subject to economic, political and legal developments in China. Although the Chinese economy is no longer a planned economy, the PRC government continues to exercise significant control over China’s economic growth through direct allocation of resources, monetary and tax policies, and a host of other government policies such as those that encourage or restrict investment in certain industries by foreign investors, control the exchange between RMB and foreign currencies, and regulate the growth of the general or specific market.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. Such unpredictability towards our contractual, property (including intellectual property) and procedural rights could adversely affect our business and impede our ability to continue our operations.

These government involvements have been instrumental in China’s significant growth in the past 30 years. In response to the recent global and Chinese economic downturn, the PRC government has adopted policy measures aimed at stimulating the economic growth in China. If the PRC government’s current or future policies fail to help the Chinese economy achieve further growth or if any aspect of the PRC government’s policies limits the growth of our industry or otherwise negatively affects our business, our growth rate or strategy, our results of operations could be adversely affected as a result.

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations.

All of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry

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development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity in China, and since 2012, China’s economic growth has slowed down. Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations.

If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational performance by senior management and senior management department of their duties is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

We believe that DDC is not a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that DDC or any of its subsidiaries outside of China is a PRC resident enterprise for enterprise income tax purposes, they would be subject to a 25% enterprise income tax on their global income. If these entities derive income other than dividends from their wholly-owned subsidiaries in the PRC, a 25% enterprise income tax on their global income may increase our tax burden. If DDC or any of its subsidiaries outside of China is classified as a PRC resident enterprise, dividends paid to it from its wholly-owned subsidiaries in China may be regarded as tax-exempted income if such dividends are deemed to be “dividends between qualified PRC resident enterprises” under the PRC Enterprise Income Tax Law and its implementation rules. However, we cannot assure you that such dividends will not be subject to PRC withholding tax, as the PRC tax authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC income tax purposes.

In addition, if DDC is classified as a PRC resident enterprise for PRC tax purposes and unless a tax treaty or similar arrangement provides otherwise, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, unless a tax treaty or similar arrangement provides otherwise, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of ordinary shares, if such income is treated as sourced from within the PRC. Furthermore, unless a tax treaty or similar arrangement provides otherwise, gains derived by our non-PRC individual shareholders from the sale of our shares may be subject to a 20% PRC withholding tax. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends obtained by such non-PRC individual shareholders in the

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event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of DDC would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that DDC is treated as a PRC resident enterprise.

Under the Arrangement Between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, the dividend withholding tax rate may be reduced to 5%, if a Hong Kong resident enterprise is considered a non-PRC tax resident enterprise and holds at least 25% of the equity interests in the PRC enterprise distributing the dividends, subject to approval of the PRC local tax authority. However, if the Hong Kong resident enterprise is not considered to be the beneficial owner of such dividends under applicable PRC tax regulations, such dividends may remain subject to withholding tax at a rate of 10%. In October 2009, SAT issued a circular, known as Circular 601, which provides guidance on determining whether an enterprise is a “beneficial owner” under China’s tax treaties and tax arrangements. Circular No. 9 provides that, in order to be a beneficial owner, an entity generally must be engaged in substantive business activities, and that a company that is set up for the purpose of avoiding or reducing taxes or transferring or accumulating profits will not be regarded as a beneficial owner and will not qualify for treaty benefits such as preferential dividend withholding tax rates. In February 2018, the SAT issued Announcement on Issues Relating to “Beneficial Owner” in Tax Treaties (Circular No.9), which came into effect on April 1, 2018. Circular No. 9 provides a more flexible framework in determining whether an applicant engages in substantive business activities. In addition, in the event that an enterprise does not satisfy the criteria for “beneficial owner,” but the person who holds 100% ownership interests in the enterprise directly or indirectly satisfies the criteria for “beneficial owner” and the circumstances fall under Circular No. 9, the enterprise will be deemed as a “beneficial owner.” If our Hong Kong subsidiaries are, in the light of Circular No. 9, considered to be a non-beneficial owner for purposes of the tax arrangement mentioned above, any dividends paid to them by our wholly foreign-owned PRC subsidiaries would not qualify for the preferential dividend withholding tax rate of 5%, but rather would be subject to a rate of 10%.

We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies, and heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

The SAT has issued several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued in December 2009, or SAT Circular 698, the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises promulgated issued in March 2011, or SAT Circular 24, and the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises issued in February 2015, or SAT Circular 7. Pursuant to these rules and notices, if a non-PRC resident enterprise, by implementing an arrangement lacking reasonable commercial purpose, indirectly transfers PRC taxable properties, referring to properties of an establishment or a place in the PRC, real estate properties in the PRC or equity investments in a PRC tax resident enterprise, by disposing of equity interest in an overseas holding company or other similar equity, such indirect transfer should be deemed as a direct transfer of PRC taxable properties and gains derived from such indirect transfer may be subject to the PRC withholding tax at a rate of up to 10%. SAT Circular 7 sets out several factors to be taken into consideration by tax authorities in determining whether an indirect transfer has a reasonable commercial purpose. Except as otherwise stipulated under SAT Circular 7, an indirect transfer satisfying all the following criteria will be deemed to lack reasonable commercial purpose and be taxable under PRC law: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from the PRC taxable properties; (ii) at any time during the one-year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC, or during the one-year period before the indirect transfer, 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC taxable properties are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC taxable properties is lower than the potential PRC income tax on the direct transfer of such assets. Nevertheless, the indirect transfer falling into the safe harbor available under SAT Circular 7 may not be subject to PRC tax and the scope of the safe harbor includes qualified group restructuring as specifically set out in SAT Circular 7, public market trading (both bought and sold on the public market) and tax treaty exemptions. The China indirect transfer rules do not apply to gains recognized by individual stockholders. However, the PRC Individual Income Tax Law and

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relevant regulations (“IITL”), revised effective January 1, 2019, impose general anti-avoidance tax rules (“GAAR”) on transactions conducted by individuals. As a result, if the China tax authority invokes the GAAR and deems that indirect transfers made by individual stockholders lack reasonable commercial purposes, any gains recognized on such transfers might be subject to individual income tax in China at the standard rate of 20%.

On October 17, 2017, the SAT released the Public Notice Regarding Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Public Notice 37, effective from December 1, 2017 and amended on June 15, 2018. SAT Public Notice 37 replaced a series of important circulars, including but not limited to SAT Circular 698, and revised the rules governing the administration of withholding tax on China-source income derived by a non-resident enterprise. SAT Public Notice 37 provides for certain key changes to the previous withholding regime, such as (i) the withholding obligation for a non-resident enterprise deriving dividend arises on the date on which the payment is actually made rather than on the date of the resolution that declared the dividends, (ii) non-resident enterprises are obligated to report to the taxes authorities if their withholding agents fail to perform the withholding obligation.

Under SAT Circular 7 and SAT Public Notice 37, the entities or individuals obligated to pay the transfer price to the transferor are the withholding agents and must withhold the PRC income tax from the transfer price if the indirect transfer is subject to the PRC enterprise income tax. If the withholding agent fails to do so, the transferor should report to and pay the tax to the PRC tax authorities. In the event that neither the withholding agent nor the transferor fulfills their obligations under SAT Circular 7 and SAT Public Notice 37, according to the applicable law, apart from imposing penalties such as late payment interest on the transferor, the tax authority may also hold the withholding agent liable and impose a penalty of 50% to 300% of the unpaid tax on the withholding agent. The penalty imposed on the withholding agent may be reduced or waived if the withholding agent has submitted the relevant materials in connection with the indirect transfer to the PRC tax authorities in accordance with SAT Circular 7.

However, as there is a lack of clear statutory interpretation, we face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises, or sale or purchase of shares in other non-PRC resident companies or other taxable assets by us. Our company and other non-resident enterprises in our group may be subject to filing obligations or being taxed if our company and other non-resident enterprises in our group are transferors in such transactions, and may be subject to withholding obligations if our company and other non-resident enterprises in our group are transferees in such transactions. For the transfer of shares in our company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under the rules and notices. As a result, we may be required to expend valuable resources to comply with these rules and notices or to request the relevant transferors from whom we purchase taxable assets to comply, or to establish that our company and other non-resident enterprises in our group should not be taxed under these rules and notices, which may have a material adverse effect on our financial condition and results of operations. There is no assurance that the tax authorities will not apply the rules and notices to our offshore restructuring transactions where non-PRC residents were involved if any of such transactions were determined by the tax authorities to lack reasonable commercial purpose. As a result, we and our non-PRC resident investors may be at risk of being taxed under these rules and notices and may be required to comply with or to establish that we should not be taxed under such rules and notices, which may have a material adverse effect on our financial condition and results of operations or such non-PRC resident investors’ investments in us. We have conducted acquisition transactions in the past and may conduct additional acquisition transactions in the future. We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing obligations on us or require us to provide assistance for the investigation of PRC tax authorities with respect thereto. Heightened scrutiny over acquisition transactions by the PRC tax authorities may also have a negative impact on potential acquisitions we may pursue in the future.

We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.

In connection with the Business Combination, we will become subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We are also subject to Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. We have operations agreements with third parties, and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized payments or offers of payments by one of our franchisees and their employees, consultants or distributors, because these parties are not always subject to our control. Our franchisees are independent operators and are not subject to our control regarding to our FCPA practice.

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Although we believe, to date, we have complied in all material respects with the provisions of the FCPA and Chinese anti-corruption law, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, franchisees or distributors of our franchisees may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption law may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.

We conduct our business primarily through our PRC subsidiaries and consolidated VIEs in China. Our operations in China are governed by PRC laws and regulations. Our PRC subsidiaries are subject to laws and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. The PRC legal system is evolving rapidly, and the interpretation of many laws, regulations and rules may contain inconsistencies and enforcement of these laws, regulations and rules involves uncertainties.