DDC Enterprise CEO Norma Chu Provides Corporate Update in Letter to Shareholders

Rhea-AI Summary

DDC Enterprise (NYSEAM: DDC), a leading multi-brand Asian consumer food company, announced a 1:25 reverse stock split following trading halt due to share price falling below $0.10. The split will take effect on April 21, 2025, reducing outstanding shares from 79 million to 3.2 million.

The company revealed that 80% of its 2024 revenue came from China's domestic market, with US contributing 20%. A new Joint Venture in China is expected to generate $15 million in net profit over 5 years. CEO Norma Chu plans to increase her stake by subscribing to 10 million additional pre-split shares.

DDC also announced plans to diversify corporate reserves through Bitcoin injection at $0.50 per share (pre-split), with additional injections planned at more favorable prices. The company emphasizes its insulation from US-China trade tensions due to its China-centric model and Southeast Asian export focus.

Positive

• CEO shows confidence by purchasing 10 million additional pre-split shares
• New Joint Venture in China committed to $15 million net profit over 5 years
• 80% of revenue from stable Chinese domestic market reduces US-China trade risk
• Company regained full SEC and NYSE compliance
• Strategic Bitcoin reserve diversification planned at favorable share prices

Negative

• Trading halted after share price fell below $0.10
• Need for 1:25 reverse split indicates significant share price deterioration
• High dependency on Chinese market (80% of revenue) presents concentration risk

Insights

Financial Restructuring Analyst

DDC Enterprise's shareholder letter reveals significant corporate maneuvering amid serious financial pressure. The company's stock has fallen below $0.10, triggering a NYSE trading halt – a clear sign of distress despite management's optimistic framing. The board's implementation of a previously approved 1:25 reverse split will artificially boost the share price but represents a defensive measure rather than organic growth.

The CEO's letter carefully frames this as proactive management, but reverse splits are typically last-resort actions to maintain listing compliance. The reduction from 79 million to 3.2 million shares doesn't change underlying fundamentals but does prevent immediate delisting.

Two aspects warrant attention: First, the company's geographic revenue distribution (80% China, 20% US) potentially insulates it from tariff concerns, and the mentioned $15 million profit from a China joint venture provides a modest growth avenue. Second, the planned cryptocurrency reserves strategy, while innovative, represents an unusual and speculative approach for a consumer food company.

The CEO's personal purchase of 10 million pre-split shares at what appears to be deeply discounted prices might signal insider confidence but could also represent an inexpensive option on potential recovery. The company's emphasis on its China-centric model suggests a strategic pivot away from US markets as it seeks stability.

While management is taking definitive actions, the fundamental question remains whether these financial engineering efforts can successfully address the underlying issues that drove the stock to sub-$0.10 territory in the first place.

Corporate Strategy Expert

This shareholder letter details an intricate corporate rescue attempt characterized by both conventional and unconventional approaches. The 1:25 reverse split represents standard financial engineering to maintain listing requirements, but the Bitcoin investment strategy signals a company willing to embrace significant risk amid uncertainty.

The most revealing aspect is DDC's geographic revenue concentration. With 80% of revenue from China's domestic operations and core growth expected from Southeast Asian expansion, the company has effectively positioned itself as a primarily Asian consumer business with US exposure. This strategic orientation provides insulation from US-China trade tensions while capitalizing on regional growth.

The China joint venture with $15 million in committed profit over five years ($3 million annually) offers modest but reliable earnings in the core market, though this represents a relatively small contribution given the company's market capitalization.

Most striking is the planned cryptocurrency strategy, with Bitcoin purchases at $0.50 per share (pre-split) - significantly above current trading prices. This unconventional approach suggests a company exploring creative financing alternatives when traditional options may be

The reverse split mechanics (25:1 with par value change from $0.016 to $0.40) are straightforward, but investors should recognize this doesn't address fundamental issues driving the price decline. While the CEO's additional investment provides some confidence signal, the overall picture is of a company implementing substantial financial restructuring to navigate through a critical period rather than demonstrating organic operational strength.

NEW YORK--(BUSINESS WIRE)-- DDC Enterprise, Ltd. (NYSEAM: DDC), (“DayDayCook,” “DDC,” or the “Company”), a leading multi-brand Asian consumer food company, today issued a corporate update in a Letter to Shareholders from CEO Norma Chu.

Dear Valued Shareholders,

As your Founder, Chairwoman, and CEO, I write to you today with clarity, conviction, and optimism about the future of DDC Enterprise (NYSE: DDC). The past week has been one of unprecedented volatility in global markets, and our stock was not immune to these forces. Last Friday, amid a broad market selloff and trading below $0.10 per share, the NYSE-American halted trading of our shares. While such market movements are disconcerting, I want to assure you that your Board and leadership team acted decisively to safeguard shareholder value.

Proactive Measures to Strengthen Our Position; Reverse Stock Split
Over the weekend, the Board unanimously approved the previously shareholder ratified 1:25 reverse stock split (the “Reverse Split”). This action is designed to elevate our share price to a more acceptable trading range. We anticipate that the trading halt will be lifted and our shares will start trading post-split on April 21, 2025 under the current symbol “DDC” but with a new CUSIP.

Resilience Amid Macro Uncertainty
Recent headlines about tariffs and geopolitical tensions have created noise in the market. Let me address this directly: DDC is well-insulated from these risks. In 2024, 80% of our revenue came from China’s domestic market where we produce and sell locally. Our growing export business is focused on Southeast Asia—not the U.S.—further shielding us from tariff-related disruptions. In addition, our recently announced Joint Venture in China – with committed net profit of USD 15 million over 5-years—will accelerate growth in our core market. While the U.S. contributed 20% of revenue last year, we expect the U.S. segment to remain a smaller, stable contributor with a separate U.S. domestic supply chain as we also pursue growth opportunities in our Asia markets.

2025: A Transformational Year Ahead
The current share price does not reflect DDC’s progress or potential. Consider our recent milestones:

1. Regained Full SEC and NYSE Compliance: A testament to our operational and financial discipline.
2. Leadership Commitment: I am personally increasing my stake in DDC by subscribing to 10 million additional shares (pre-reverse split), aligning my interests with yours.
3. Strategic Innovation: We’ve developed a strategy to diversify corporate reserves with crypto currency through an innovative injection of Bitcoin at a favorable share price starting at USD 0.50 (pre-25:1 reverse split). We plan to complete the initial Bitcoin injection in the next 30 days and moving forward we have a commitment for additional injections of Bitcoin at even more favorable share prices as we grow.
4. Growth Catalysts: Our profit generating majority-owned JV, which we plan to complete in the coming weeks, should create value in the coming years.

These initiatives strategies will enable us to deliver shareholders value, even in an unstable macro environment.

More Information on the Reverse Split

The shareholders of the Company approved the Reverse Split at the Company’s Extraordinary General Meeting of Shareholders on November 29, 2024. In connection with approving the Reverse Split, the Company’s shareholders granted authority to the Company’s Board of Directors (the “Board”) to determine, at its discretion, a ratio within the range of no split to 1-for-25, at which to effectuate the Reverse Split. The Reverse Split was approved by the Board on April 4, 2025.

As a result of the Reverse Split, every 25 pre-split Class A Ordinary Shares outstanding will automatically combine into one new Class A Ordinary Share without any action on the part of the holders and with a change in the par value per share from $0.016 to $0.40. The Reverse Split will proportionately reduce the number of Class A Ordinary Shares available for issuance under the Company’s incentive compensation plan and proportionately reduce the number of Class A Ordinary Shares issuable upon the exercise or conversion of stock options, warrants, and restricted stock units outstanding immediately prior to the effectiveness of the Reverse Split.

The Reverse Split reduces the number of the Company’s outstanding Class A Ordinary Shares from approximately 79 million pre-Reverse Split shares to approximately 3.2 million post-Reverse Split shares. Pursuant to the prior shareholder approval, no fractional shares will be issued as a result of the Reverse Split. Fractional shares that would have resulted from the Reverse Split will be cancelled and returned to the pool of authorized but unissued shares.

No action is required by the shareholders as the Class A Ordinary Shares are held in electronic book-entry form which will be adjusted to reflect the Reverse Split. Additional information about the Reverse Split can be found in the Company’s Form 6-K filed with the Securities and Exchange Commission on October 31, 2024, a copy of which is available at www.sec.gov.

A Final Note of Confidence
Market fluctuations often obscure fundamentals. Today, DDC is stronger operationally, financially, and strategically than at any point in our history. Our China-centric model, fortified by strong local demand and regional exports, offers stability and growth in uncertain times. While I cannot dictate market sentiment, I urge you to focus on our execution: we are controlling what we can, with urgency and precision.

Thank you for your trust. My team and I are relentlessly focused on ensuring that 2025 becomes a landmark year for DDC—and for you, our shareholders.

For questions, contact our investor relations Jeff Ervin (jeffervin@daydaycook.com).

Sincerely,
/s/ Norma Chu
Norma Chu
Founder, Chairwoman & CEO
DDC Enterprise

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250409744983/en/

Jeff Ervin

jeffervin@daydaycook.com

Source: DDC Enterprise, Ltd.

FAQ

What is the ratio and timing of DDC's reverse stock split?

DDC approved a 1:25 reverse stock split, effective April 21, 2025, reducing shares from 79 million to 3.2 million, with no fractional shares issued.

How much revenue does DDC generate from China versus US markets?

In 2024, 80% of DDC's revenue came from China's domestic market, while the US contributed 20%.

What is DDC's new Bitcoin strategy?

DDC plans to diversify corporate reserves through Bitcoin injection starting at $0.50 per share pre-split, with additional injections planned at more favorable prices.

How much profit is DDC's new Chinese Joint Venture expected to generate?

The new Joint Venture in China is committed to generating $15 million in net profit over a 5-year period.

How is DDC addressing the recent trading halt and low share price?

DDC implemented a 1:25 reverse split to elevate share price to an acceptable trading range and CEO is purchasing 10 million additional pre-split shares.