☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
American Depositary Shares, each representing one Class A ordinary share, par value US$0.0005 per share
|
SE
|
New York Stock Exchange
|
Class A ordinary share, par value US$0.0005 per share*
|
Large accelerated filer ☒
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Emerging growth company ☐
|
|
Page
|
|||
● |
“active users” refers to the number of unique accounts that interacted with our mobile and PC online games or Shopee marketplace, as applicable, in a particular period. A single account that plays more than one online game or in more than one market is counted as more than one active user. “DAUs” refers to the aggregate number of active users during the daily period, and “QAUs” refers to the aggregate number of active users during the quarterly period;
|
● |
“China” or “PRC” refers to the People’s Republic of China excluding, for the purpose of this annual report only, Taiwan, Hong Kong and Macau;
|
● |
“our region” comprises the seven distinct markets of Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia and Singapore;
|
● |
“gross merchandise value” or “GMV” refers to the value of orders of products and services on our Shopee marketplace. Our calculation of GMV for our e-commerce platform includes shipping and other charges;
|
● |
“orders” refers to each confirmed order from a transaction between a buyer and a seller for products and services on our e-commerce platform, even if such order includes multiple items, during the specified period, regardless of whether the transaction is settled or if the item is returned;
|
● |
“paying users” refers to the number of unique accounts through which a payment is made in our online games in a particular period. A unique account through which payments are made in more than one online game or in more than one market is counted as more than one paying user. “QPUs” refers to the aggregate number of paying users during the quarterly period;
|
● |
“shares” or “ordinary shares” refer to our Class A and Class B ordinary shares, par value US$0.0005 per share; and
|
● |
“we,” “us,” “our company,” “our group,” “our” or “Sea” refers to Sea Limited, a Cayman Islands company, its consolidated subsidiaries and its consolidated affiliated entities, including its VIEs and their subsidiaries.
|
● |
our goals and strategies;
|
● |
our future business development, financial condition, financial results, and results of operations;
|
● |
the expected growth in, and market size of, the digital entertainment, e-commerce and digital financial services industries in the markets where we operate, including segments within those industries;
|
● |
expected changes in our revenue, costs or expenditures;
|
● |
our ability to continue to source, develop and offer new and attractive online games and to offer other engaging digital entertainment content;
|
● |
the expected growth of our digital entertainment, e-commerce and digital financial services businesses;
|
● |
our expectations regarding growth in our user base, level of engagement and monetization;
|
● |
our ability to continue to develop new technologies and/or upgrade our existing technologies;
|
● |
our expectation regarding the use of proceeds from our financing activities, including our follow-on equity offering and convertible notes offerings;
|
● |
growth and trends of our markets and competition in our industries;
|
● |
government policies and regulations relating to our industries;
|
● |
general economic and business conditions in our markets; and
|
● |
the impact of widespread health developments, including the recent COVID-19 pandemic, and the responses thereto (such as voluntary and in some cases, mandatory quarantines as well as shut downs and other restrictions on travel and commercial, social and other activities) which could materially and adversely affect, among other things, the business and manufacturing activities of our sellers, merchants and logistics providers, the global supply chain including those of our sellers’ and merchants’, and consumer discretionary spending.
|
A. |
Selected Financial Data
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||||||
(US$ thousands, except for number of shares and per share data)
|
||||||||||||||||||||
Selected Consolidated Statements of Operations Data:
|
||||||||||||||||||||
Revenue:
|
||||||||||||||||||||
Service revenue
|
||||||||||||||||||||
Digital Entertainment
|
281,963
|
327,985
|
365,167
|
462,464
|
1,136,017
|
|||||||||||||||
E-commerce and other services
|
10,161
|
17,675
|
47,444
|
270,049
|
822,659
|
|||||||||||||||
Sales of goods
|
—
|
10
|
1,579
|
94,455
|
216,702
|
|||||||||||||||
Total revenue
|
292,124
|
345,670
|
414,190
|
826,968
|
2,175,378
|
|||||||||||||||
Cost of revenue:
|
||||||||||||||||||||
Cost of service
|
||||||||||||||||||||
Digital Entertainment
|
(160,267
|
)
|
(185,314
|
)
|
(217,986
|
)
|
(267,359
|
)
|
(435,905
|
)
|
||||||||||
E-commerce and other services
|
(24,031
|
)
|
(47,284
|
)
|
(107,260
|
)
|
(446,281
|
)
|
(907,518
|
)
|
||||||||||
Cost of goods sold
|
—
|
—
|
(1,632
|
)
|
(98,570
|
)
|
(227,035
|
)
|
||||||||||||
Total cost of revenue
|
(184,298
|
)
|
(232,598
|
)
|
(326,878
|
)
|
(812,210
|
)
|
(1,570,458
|
)
|
||||||||||
Gross profit
|
107,826
|
113,072
|
87,312
|
14,758
|
604,920
|
|||||||||||||||
Operating income (expenses):
|
||||||||||||||||||||
Other operating income
|
3,063
|
2,103
|
3,497
|
9,799
|
15,890
|
|||||||||||||||
Sales and marketing expenses
|
(89,015
|
)
|
(187,372
|
)
|
(425,974
|
)
|
(705,015
|
)
|
(969,543
|
)
|
||||||||||
General and administrative expenses
|
(87,202
|
)
|
(112,383
|
)
|
(137,868
|
)
|
(240,781
|
)
|
(385,865
|
)
|
||||||||||
Research and development expenses
|
(17,732
|
)
|
(20,809
|
)
|
(29,323
|
)
|
(67,529
|
)
|
(156,634
|
)
|
||||||||||
Total operating expenses
|
(190,886
|
)
|
(318,461
|
)
|
(589,668
|
)
|
(1,003,526
|
)
|
(1,496,152
|
)
|
||||||||||
Operating loss
|
(83,060
|
)
|
(205,389
|
)
|
(502,356
|
)
|
(988,768
|
)
|
(891,232
|
)
|
||||||||||
Interest income
|
545
|
741
|
2,922
|
11,520
|
33,935
|
|||||||||||||||
Interest expense
|
(32
|
)
|
(23
|
)
|
(26,501
|
)
|
(31,295
|
)
|
(48,208
|
)
|
||||||||||
Investment gain, net
|
—
|
9,434
|
33,591
|
8,603
|
11,794
|
|||||||||||||||
Changes in fair value of convertible notes
|
—
|
—
|
(51,950
|
)
|
41,259
|
(472,877
|
)
|
|||||||||||||
Foreign exchange (loss) gain
|
(4,911
|
)
|
(1,649
|
)
|
(4,215
|
)
|
4,801
|
(2,031
|
)
|
|||||||||||
Loss before income tax and share of results of equity investees
|
(87,458
|
)
|
(196,886
|
)
|
(548,509
|
)
|
(953,880
|
)
|
(1,368,619
|
)
|
||||||||||
Income tax expense
|
(11,730
|
)
|
(8,546
|
)
|
(10,745
|
)
|
(4,088
|
)
|
(85,864
|
)
|
||||||||||
Share of results of equity investees
|
(8,148
|
)
|
(19,523
|
)
|
(1,912
|
)
|
(3,066
|
)
|
(3,239
|
)
|
||||||||||
Net loss
|
(107,336
|
)
|
(224,955
|
)
|
(561,166
|
)
|
(961,034
|
)
|
(1,457,722
|
)
|
||||||||||
Net loss (profit) attributable to non-controlling interests
|
3,970
|
2,088
|
681
|
(207
|
)
|
(5,077
|
)
|
|||||||||||||
Net loss attributable to Sea Limited’s ordinary shareholders
|
(103,366
|
)
|
(222,867
|
)
|
(560,485
|
)
|
(961,241
|
)
|
(1,462,799
|
)
|
||||||||||
Loss per share:
|
||||||||||||||||||||
Basic and diluted
|
(0.63
|
)
|
(1.30
|
)
|
(2.72
|
)
|
(2.84
|
)
|
(3.35
|
)
|
||||||||||
Weighted average shares used in loss per share computation:
|
||||||||||||||||||||
Basic and diluted
|
164,625,286
|
171,127,788
|
205,727,195
|
338,472,987
|
436,601,801
|
|||||||||||||||
Non-GAAP Financial Measure:
|
||||||||||||||||||||
Net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes(1)
|
(86,772
|
)
|
(196,114
|
)
|
(480,580
|
)
|
(944,172
|
)
|
(867,776
|
)
|
(1) |
To see how we define and calculate “net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes,” a reconciliation between such item and net loss (the most directly comparable U.S. GAAP financial measure) and a discussion of the limitations of non-GAAP financial measures, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Non-GAAP Financial Measures.”
|
|
As of December 31,
|
|||||||||||||||||||
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||
Selected Consolidated Balance Sheets Data:
|
||||||||||||||||||||
Total current assets
|
229,695
|
309,884
|
1,720,713
|
1,710,713
|
4,410,139
|
|||||||||||||||
Cash and cash equivalents
|
116,203
|
170,078
|
1,347,361
|
1,002,841
|
3,118,988
|
|||||||||||||||
Prepaid expenses and other assets
|
52,458
|
79,443
|
186,181
|
312,387
|
535,187
|
|||||||||||||||
Total non-current assets
|
200,175
|
175,891
|
267,567
|
481,956
|
814,030
|
|||||||||||||||
Property and equipment, net
|
32,876
|
31,123
|
74,348
|
192,357
|
318,620
|
|||||||||||||||
Operating lease right-of-use assets, net
|
—
|
—
|
—
|
—
|
182,965
|
|||||||||||||||
Intangible assets, net
|
50,857
|
29,963
|
37,333
|
12,887
|
15,020
|
|||||||||||||||
Long-term investments
|
41,410
|
45,072
|
28,216
|
111,022
|
113,797
|
|||||||||||||||
Prepaid expenses and other assets
|
39,465
|
32,299
|
46,297
|
69,065
|
65,684
|
|||||||||||||||
Deferred tax assets
|
33,374
|
35,295
|
48,104
|
63,302
|
70,340
|
|||||||||||||||
Total assets
|
429,870
|
485,775
|
1,988,280
|
2,192,669
|
5,224,169
|
|||||||||||||||
Total current liabilities
|
244,345
|
263,756
|
637,705
|
1,186,493
|
2,362,366
|
|||||||||||||||
Accrued expenses and other payables
|
42,147
|
102,086
|
285,248
|
636,880
|
980,805
|
|||||||||||||||
Advances from customers
|
17,564
|
15,459
|
27,155
|
29,355
|
65,062
|
|||||||||||||||
Deferred revenue
|
162,638
|
122,218
|
268,241
|
426,675
|
1,097,868
|
|||||||||||||||
Total non-current liabilities
|
101,327
|
142,594
|
875,444
|
1,245,631
|
1,689,151
|
|||||||||||||||
Deferred revenue
|
89,120
|
137,259
|
133,481
|
171,262
|
160,708
|
|||||||||||||||
Convertible notes
|
—
|
—
|
—
|
1,061,796
|
1,356,332
|
|||||||||||||||
Total liabilities
|
345,672
|
406,350
|
1,513,149
|
2,432,124
|
4,051,517
|
|||||||||||||||
Total mezzanine equity
|
10,500
|
205,075
|
—
|
—
|
—
|
|||||||||||||||
Total Sea Limited shareholders’ equity (deficit)
|
71,655
|
(125,670
|
)
|
469,025
|
(243,139
|
)
|
1,162,424
|
|||||||||||||
Total shareholders’ equity (deficit)
|
73,698
|
(125,650
|
)
|
475,131
|
(239,455
|
)
|
1,172,652
|
|||||||||||||
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
429,870
|
485,775
|
1,988,280
|
2,192,669
|
5,224,169
|
|
For the Three Months Ended
|
|||||||||||||||||||||||||||||||
March 31,
2018
|
June 30,
2018
|
September 30,
2018
|
December 31,
2018
|
March 31,
2019
|
June 30,
2019
|
September 30,
2019
|
December 31,
2019
|
|||||||||||||||||||||||||
(millions)
|
||||||||||||||||||||||||||||||||
Digital Entertainment
|
||||||||||||||||||||||||||||||||
Game QAUs
|
126.7
|
160.6
|
176.1
|
216.2
|
271.6
|
310.5
|
321.1
|
354.7
|
||||||||||||||||||||||||
Game QPUs
|
7.2
|
6.6
|
7.2
|
11.9
|
20.7
|
26.1
|
29.2
|
33.3
|
||||||||||||||||||||||||
E-commerce
|
||||||||||||||||||||||||||||||||
GMV (US$)
|
1,941.4
|
2,221.8
|
2,690.9
|
3,425.2
|
3,529.3
|
3,827.8
|
4,573.2
|
5,645.9
|
||||||||||||||||||||||||
Orders
|
111.4
|
127.8
|
158.5
|
206.9
|
203.5
|
246.3
|
321.4
|
440.5
|
B. |
Capitalization and Indebtedness
|
C. |
Reasons for the Offer and Use of Proceeds
|
D. |
Risk Factors
|
● |
we fail to maintain the popularity of our platforms among users;
|
● |
we are unable to maintain the quality of our existing content and services;
|
● |
we are unsuccessful in innovating or introducing new, best-in-class content and services;
|
● |
we fail to adapt to changes in user preferences, market trends or advancements in technology;
|
● |
technical or other problems prevent us from delivering our content or services in a timely and reliable manner or otherwise affect the user experience;
|
● |
there are user concerns related to privacy, safety, fund security or other factors;
|
● |
aggressive monetization measures by us cause users to shift to other platforms;
|
● |
our new games cause players to shift from our existing games without growing the overall size of our user base or online games platform;
|
● |
there are adverse changes to our platforms that are mandated by, or that we elect to make to address, legislation, regulation, or litigation, including settlements or consent decrees;
|
● |
we fail to maintain the brand image of our platforms or our reputation is damaged; or
|
● |
there are unexpected changes to the demographic trends or economic development of or affecting our markets.
|
● |
recruiting and retaining talented and capable management and employees in various markets;
|
● |
limited technology infrastructure and low levels of use of the Internet;
|
● |
challenges caused by distance, language and cultural differences;
|
● |
providing content and services that appeal to the tastes and preferences of users in multiple markets;
|
● |
implementing our businesses in a manner that complies with local laws and practices, which may differ significantly from market to market, including, without limitation, laws regarding data protection, privacy, network security, encryption and payments;
|
● |
maintaining adequate internal and accounting control across various markets, each with its own accounting principles that must be reconciled to U.S. GAAP upon consolidation;
|
● |
compliance with privacy laws and data security laws, including the European Union General Data Protection Regulation, or GDPR, and compliance costs across different legal systems;
|
● |
currency exchange rate fluctuations;
|
● |
protectionist laws and business practices that could, among other things, hinder our ability to execute our business strategies and put us at a competitive disadvantage relative to domestic companies, including restriction on foreign ownership;
|
● |
complex local tax regimes;
|
● |
differing, complex and potentially adverse customs, import/export laws, tax rules and regulations or other trade barriers or restrictions which may be applicable to transactions conducted through cross-border e-commerce business, related compliance obligations and consequences of non-compliance, and any new developments in these areas;
|
● |
potential political, economic and social instability; and
|
● |
higher costs associated with doing business in multiple markets.
|
● |
we may fail to successfully achieve the intended objectives;
|
● |
our investment or acquisitions may be viewed negatively by customers, financial markets or investors;
|
● |
the costs of identifying and consummating these transactions may be significant;
|
● |
acquisitions and the subsequent integration of new assets and businesses into our own could require significant management attention and could divert resources from our existing business;
|
● |
we may have difficulty in transitioning and integrating the business, technologies, products, personnel or operations of the acquired businesses;
|
● |
we may face unforeseen operating challenges;
|
● |
our relationships with existing employees, customers and business partners of our group, or those of the target, may be impaired;
|
● |
we may enter markets or types of businesses in which we have no or limited direct prior experience and where competitors have stronger market positions and which are highly competitive;
|
● |
we may assume pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business;
|
● |
an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;
|
● |
we may face challenges associated with managing additional, geographically remote businesses;
|
● |
investments and acquisitions could result in the use of substantial amounts of cash or significant capital contributions, which could limit other potential uses for our cash;
|
● |
investments and acquisitions could result in increased leverage, dilutive issuances of equity securities, adverse tax consequences, goodwill impairment charges or write-offs, amortization expenses for other intangible assets;
|
● |
if we incur debt to fund any investment or acquisitions, such debt may subject us to material restrictions on our ability to conduct our business, including financial maintenance covenants;
|
● |
we may assume unknown material liabilities of acquired companies, or may be exposed to claims and disputes by shareholders and third parties, including intellectual property claims and disputes;
|
● |
we may not be successful in accurately projecting revenue of the invested or acquired entity in the due diligence process;
|
● |
the invested or acquired assets or businesses may not generate the financial results we expect; and
|
● |
the market value of our investments or acquisitions may fluctuate, particularly in volatile markets.
|
● |
retain existing users, attract new users, and increase user engagement and monetization;
|
● |
maintain growth rates across our businesses in multiple markets;
|
● |
maintain and expand our network of domestic, regional and global industry value chain partners;
|
● |
upgrade our technology and infrastructure to support increased traffic and expanded offerings of content and services;
|
● |
anticipate and adapt to changing user preferences;
|
● |
implement our strategy to expand our offerings on our platforms;
|
● |
increase awareness of our brand;
|
● |
adapt to competitive market conditions;
|
● |
maintain adequate control of our expenses; and
|
● |
attract and retain qualified personnel.
|
● |
the growth rate of internet, broadband, personal computer, and smartphone penetration and usage in our region;
|
● |
the trust and confidence level of e-commerce consumers, as well as changes in customer demographics and consumer tastes and preferences;
|
● |
the selection, pricing and popularity of products that online sellers offer;
|
● |
whether alternative retail channels or business models that better address the needs of consumers emerge; and
|
● |
the development of logistics, payment and other ancillary services associated with e-commerce.
|
● |
revoking the business licenses and/or operating licenses of such entities;
|
● |
discontinuing or placing restrictions or onerous conditions on the operations of our VIEs or Thai subsidiaries, or on our operations through any transactions between our company or our Cayman Islands or Singapore subsidiaries on the one hand and our VIEs, subsidiaries of such VIEs or our Thai subsidiaries on the other hand;
|
● |
imposing fines, prohibiting payments by our VIEs or their shareholders to us as contemplated in the contractual arrangements with our VIEs, confiscating income from us, our Cayman Islands or Singapore subsidiaries, VIEs or Thai subsidiaries, or imposing other requirements with which such entities may not be able to comply;
|
● |
imposing criminal penalties, including fines and imprisonment on our VIEs or Thai subsidiaries, their shareholders or directors;
|
● |
requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and their shareholders, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIEs or Thai subsidiaries; or
|
● |
restricting or prohibiting us from providing funding to our business and operations in Vietnam and Thailand.
|
● |
imposing fines between NT$120,000 (US$4,012) to NT$25,000,000 (US$835,841) and further fines if the non-compliance is not rectified as ordered;
|
● |
ordering us to reduce any direct or indirect ownership or control by PRC investors in our company;
|
● |
requesting us to divest some or all of our ownership or control in our operating entities in Taiwan;
|
● |
suspending the rights of shareholders of our Taiwan operating entities; and
|
● |
discontinuing the operations and revoking the business licenses of our Taiwan operating entities.
|
● |
variations in our quarterly or annual revenue, earnings and cash flow;
|
● |
announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
|
● |
announcements of new content and services or plan of expansions by us or our competitors;
|
● |
changes in financial estimates by securities analysts;
|
● |
detrimental adverse publicity about us, our businesses or our industries;
|
● |
additions or departures of key personnel;
|
● |
release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;
|
● |
current class action, potential litigation or regulatory investigations; and
|
● |
volatility in the stock market.
|
● |
we have failed to timely provide the depositary with our notice of meeting and related voting materials;
|
● |
we have instructed the depositary that we do not wish a discretionary proxy to be given;
|
● |
we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;
|
● |
a matter to be voted on at the meeting would have a material adverse impact on shareholders; or
|
● |
voting at the meeting is made on a show of hands.
|
A. |
History and Development of the Company
|
B. |
Business Overview
|
● |
Our people define us. Sea shall be a place where talented people thrive at scale, enjoy freedom of ideas and achieve the unimaginable. It shall be a magnet for the smartest, the most creative and the most driven.
|
● |
Our products and services differentiate us. We aspire to better every life we touch and make the world an ever more connected community through innovative products and services.
|
● |
Our institution will outlast us. We strive to build an institution that will last for generations and evolve with time, and that is founded upon our core values.
|
● |
We serve. Our customers are the sole arbiter of the value of our products and services. We strive to meet unmet needs and serve the underserved.
|
● |
We adapt. Rapid change is the only constant in the digital age of ours. We embrace change, celebrate it and always strive to be a thought leader that influences it.
|
● |
We run. We are in a constant race to success while grappling with rapidly shifting forces. We move faster, better and with more urgency every day.
|
● |
We commit. Our work is our commitment. We commit to our values, institution, customers and partners. We commit to each other. Above all, we commit to doing the best we can and being the best we are.
|
● |
We stay humble. We have traveled a long way from our humble beginning and yet, we never lose our humility in our continual quest for greater heights.
|
● |
Our digital entertainment business, Garena, is a global game developer and publisher with a significant presence in Southeast Asia, Taiwan and Latin America and a global footprint. It was number one in market share in our region by revenue in the combined PC and mobile game market in 2019, as estimated by Newzoo and Niko Partners. Garena provides access to popular and engaging mobile and PC online games that we develop, curate and localize for each market. Free Fire, our first self-developed mobile game, was the most downloaded mobile game globally for the full year of 2019 across the Google Play and iOS App Stores combined, according to App Annie. Garena also exclusively licenses and publishes games developed by third parties. In addition, Garena provides access to other entertainment content, such as livestreaming of online gameplay, as well as social features, such as user chat and online forums. We believe we are the leader in esports in Southeast Asia, Taiwan and Brazil, which strengthens our game ecosystem and increases user engagement.
|
● |
Our Shopee e-commerce platform was the largest e-commerce platform in our region in 2019 by GMV and total orders, according to Frost & Sullivan. Since its inception, Shopee has adopted a mobile-first approach and is a highly scalable marketplace platform that connects buyers and sellers. Shopee provides users with a convenient, safe and trusted shopping environment that is supported by integrated payment, logistics, fulfillment, and other value-added services. Our users enjoy the social nature of Shopee’s platform, where users can follow, rate, play micro-games with one another and easily browse for discovery to enhance their retail experience. We also empower sellers with various tools and support such as livestreaming and other value added services for them to better engage with their buyers. We monetize Shopee mainly by offering sellers paid advertising services, charging transaction based-fees, and charging sellers for certain value-added services. We also purchase products from manufacturers and third parties and sell them directly to buyers on our Shopee platform.
|
● |
Our SeaMoney business is a leading digital financial services provider in our region in 2019, according to the International Data Corporation. SeaMoney currently offers e-wallet services, payment processing, credit related digital financial offerings, and other financial products. These services and products are offered in various markets in Southeast Asia under AirPay, ShopeePay, ShopeePayLater, and other digital financial services brands.
|
|
For the three months ended
|
|||||||||||||||
March 31, 2019
|
June 30, 2019
|
September 30, 2019
|
December 31, 2019
|
|||||||||||||
(millions)
|
||||||||||||||||
Game QAUs
|
271.6
|
310.5
|
321.1
|
354.7
|
||||||||||||
Game QPUs
|
20.7
|
26.1
|
29.2
|
33.3
|
|
For the three months ended
|
|||||||||||||||
March 31, 2019
|
June 30, 2019
|
September 30, 2019
|
December 31, 2019
|
|||||||||||||
(millions)
|
||||||||||||||||
GMV (US$)
|
3,529.3
|
3,827.8
|
4,573.2
|
5,645.9
|
||||||||||||
Orders
|
203.5
|
246.3
|
321.4
|
440.5
|
● |
Seller Verification. Everyone that registers to become a seller on the Shopee platform is subject to our verification process and must agree to our standard terms of service before opening a seller account.
|
● |
Listing Screening. Shopee has adopted a set of policies and procedures to prevent and remove listings of inappropriate or illegal goods and to screen out repeat offenders. All listings on the Shopee platform first undergo automated screenings against a list of illegal product names, categories and descriptions. We have developed this list based on local regulations and it is frequently updated by our local teams to reflect the latest regulatory requirements. Listings posted by sellers which are deemed to be of high risk based on our screening will not be visible on our platform until they are manually cleared by our operations and compliance teams. Listings that are not cleared due to regulatory violations or other violations of our terms of use will be permanently removed, and the seller will not be able to edit or re-submit the same product listing. We may suspend or remove accounts that repeatedly submit illegal or inappropriate listings. Moreover, users and other third parties may report listings that they believe to be illegal, inappropriate or offensive for our further review.
|
● |
Shopee Guarantee. We provide “Shopee Guarantee,” a free service to facilitate transactions on the Shopee platform. Under Shopee Guarantee, we hold payments made by buyers in certain designated Shopee Guarantee account held by us until the ordered products are received or deemed to have been received by the buyer. After this, we release the payment to the seller. If the purchased products are never delivered to or received by the buyer, we will return the funds to them. Shopee Guarantee is available for all transactions executed through the Shopee platform. We believe that Shopee Guarantee reduces settlement risks and improves transaction efficiency and security.
|
● |
Dispute Resolution. We have on-the-ground teams to help resolve disputes between buyers and sellers. In the case of a dispute, a buyer may submit supporting evidence through our dispute resolution system and seek compensation from the seller.
|
● |
imposing fines between NT$120,000 (US$4,012) and NT$25,000,000 (US$835,841) and further fines if the non-compliance is not rectified as ordered;
|
● |
ordering the violator to reduce any direct or indirect ownership or control by PRC investors;
|
● |
requesting the violator to divest some or all of its investment or control in its invested entities in Taiwan;
|
● |
suspending the rights of shareholders; and
|
● |
discontinuing the operations, and revoking the business licenses of its invested entities in Taiwan.
|
Foreign investment into Vietnam is regulated by both domestic legislation and international agreements, with the primary regulations being the Law on Investment and Vietnam’s WTO commitments. Foreign investment is generally divided into three categories: unrestricted, restricted, and prohibited. With respect to the “restricted” category, restrictions can take the form of a specific foreign ownership ceiling in a foreign-invested company, a general requirement to enter into a joint venture with a Vietnamese party with no mandated maximum foreign ownership ceiling, or the requirement to obtain certain government approvals for foreign ownership with respect to the industries that the Vietnam government has not committed to opening to foreign investment. For example, foreign ownership in companies engaging in online game business may not exceed 49%, and companies with foreign ownership engaging in e-payment or e-commerce business have to obtain certain government approvals. We have obtained approvals from competent authorities of Vietnam for direct ownership of equity interests in our online game, e-commerce and e-payment businesses as a foreign investor, including approval for 100% direct ownership in our e-commerce business.
|
E-commerce businesses are mainly governed by the Law on E-Transactions, Decree No.52/2013/ND-CP, or Decree 52, Circular 47/2014/TT-BCT, or Circular 47, and Circular No.59/2015/TT-BCT, or Circular 59.
|
Vietnam does not have a comprehensive data protection law. Instead, data protection provisions are prescribed across various legislation, which include the Vietnam Civil Code, the Law on Protection of Consumers’ Rights, the Law on Information Technology, the Law on E-commerce, etc. which are all issued by the National Assembly of Vietnam. While there is no unified definition, personal data may generally be defined as information that is adequate to accurately identify a data subject, covering at least one of the following types of information: full name, date of birth, ID number/passport number, profession, title, contact address, e-mail address, and telephone number. A subject’s right to privacy is protected by laws. Any collection, publication, processing, transfer to a third party or any other use of a subject’s personal information may require the consent of such subject.
|
Intellectual property rights in Vietnam are governed by the Law on Intellectual Property, together with certain international agreements to which Vietnam is a signatory (such as Vietnam’s WTO commitments on Trade-Related Aspects of Intellectual Property, and the Madrid Agreement Concerning the International Registration of Marks).
|
In order for certain intellectual property rights to be recognized and enforceable in Vietnam, intellectual property owners must register those rights. Copyrights will be registered with the Department of Copyright of Vietnam (COV) but the registration is not compulsory. As a member of Bern Convention, all copyrights will be protected automatically. Industrial property, such as patents, trademarks (except for well-known trademarks) and industrial design, must be registered with the National Office of Intellectual Property of Vietnam (NOIP) in order to be protected in Vietnam. A well-known trademark may be protected based on the use without registration. From November 1, 2019, the agreement of trademark license is not required to register with NOIP in order to have the validity with third party.
|
The Department of Anti-Money Laundering established under the State Bank of Vietnam monitors and regulates Vietnam’s anti-money laundering regime. Entities subject to the anti-money laundering regime must report certain transactions to the Department of Anti-Money Laundering, including high-value transactions of no less than 300 million Vietnamese dong (US$13,378), suspicious transactions, and transactions involving companies or individuals in the countries and territories on the “black list” published by the Ministry of Public Security. Moreover, apart from the know-your-customer procedures required by Vietnamese law, entities subject to the anti-money laundering regime must perform an enhanced due diligence investigation on high-risk parties, which includes foreign individuals on the list of “politically influenced persons” provided by the State Bank of Vietnam or individuals or entities conducting transactions using new technologies that enable such persons to conduct transactions without meeting in person with a member or staff of the reporting subjects.
|
Vietnam has a particularly employee friendly labor law regime. Employees are entitled to statutory benefits payable by the employer, including health, social and unemployment insurance. Since 2009, unemployment insurance replaced the employer’s compensation of severance to an employee upon the termination of employment. Moreover, non-compete, non-solicitation and any other labor contract clauses which may be deemed to interfere in a person’s right to seek employment are difficult, if not impossible, to enforce.
|
(i) |
a natural person who is not a citizen of Thailand;
|
(ii) |
a juristic person not established in Thailand;
|
(iii) |
a juristic person established in Thailand with half or more of the shares constituting its capital held by (i) or (ii) or half or more of the total capital of such juristic person invested by (i) or (ii); and
|
(iv) |
a juristic person established in Thailand with half or more of the shares constituting its capital held by (i), (ii) or (iii), or half or more of the total capital of such juristic person invested by (i), (ii) or (iii).
|
C. |
Organizational Structure
|
● |
Garena Online Private Limited, our subsidiary established in Singapore on May 8, 2009, is an operating entity in our digital entertainment business in Singapore;
|
● |
AirPay Joint Stock Company, our VIE established in Vietnam on June 9, 2009, is an operating entity in our digital financial services business in Vietnam;
|
● |
Vietnam Esports and Entertainment Joint Stock Company, our VIE established in Vietnam on May 10, 2011, is an operating entity in our digital entertainment business in Vietnam;
|
● |
Garena Online (Thailand) Co., Ltd., our subsidiary established in Thailand on August 18, 2011, is an operating entity in our digital entertainment business in Thailand;
|
● |
PT. Garena Indonesia, our subsidiary established in Indonesia on December 6, 2012, is an operating entity in our digital entertainment business in Indonesia;
|
● |
AirPay (Thailand) Co., Ltd., our subsidiary established in Thailand on June 16, 2014, is an operating entity in our digital financial services business in Thailand;
|
● |
Shopee (Thailand) Co., Ltd., our subsidiary established in Thailand on February 2, 2015, is an operating entity in our e-commerce business in Thailand;
|
● |
Shopee Singapore Private Limited, our subsidiary established in Singapore on February 5, 2015, is an operating entity in our e-commerce business in Singapore;
|
● |
Shopee Company Limited, our subsidiary established in Vietnam on February 10, 2015, is an operating entity in our e-commerce business in Vietnam;
|
● |
Garena Ventures Private Limited, our subsidiary established in Singapore on February 23, 2015, is our entity for making minority investments;
|
● |
Shopee (Taiwan) Co., Ltd., our subsidiary established in Taiwan on March 4, 2015, is an operating entity in our e-commerce business in Taiwan;
|
● |
PT. Shopee International Indonesia, our subsidiary established in Indonesia in on August 5, 2015, is an operating entity in our e-commerce business in Indonesia; and
|
● |
Garena Technology Private Limited Taiwan Branch, our branch office established in Taiwan on July 31, 2017 that currently operates our digital entertainment business in Taiwan.
|
_____ |
Direct ownership (or effective ownership in the case of our Thai entities)
|
- - - - |
Contractual arrangements. See “—Contractual Arrangements among Our VIEs, Their Shareholders and Us.”
|
(1) |
See “—Thailand Shareholding Structure.”
|
(2) |
For each of these entities, the equity interests directly owned by us are held through our wholly-owned subsidiaries in Singapore, and the remaining equity interests are controlled by us through contractual arrangements.
|
(3) |
Held through a wholly-owned subsidiary in Singapore.
|
● |
exercise effective control over our VIEs;
|
● |
receive substantially all of the economic benefits and absorb losses of our VIEs; and
|
● |
have an exclusive call option to purchase all or part of the equity interests in and/or assets of our VIEs when and to the extent permitted by the relevant laws.
|
● |
the VIE structure in Vietnam, currently in effect, do not and will not result in any violation of the laws or regulations currently in effect in Vietnam; and
|
● |
the contractual arrangements among us, our VIEs in Vietnam and/or the shareholders governed by the laws of Vietnam, currently in effect, are valid, binding and enforceable, and do not and will not result in any violation of such laws or regulations currently in effect.
|
D. |
Property, Plants and Equipment
|
A. |
Operating Results
|
● |
In our digital entertainment business, our primary source of revenue is the sale of in-game items. We focus on developing and curating the best content and localizing that content to cater to the tastes and preferences of each of our unique markets. We maximize the in-game user experience to keep our users highly engaged and increase the likelihood of in-game spending so as to maximize revenue. To do so, we provide a high-quality entertainment experience, adopt effective pricing strategies for each market and game, and leverage our platform’s cross-selling tools to support long-term user engagement with our games.
|
● |
In our e-commerce business, we closely monitor the number of transactions per active buyer. We optimize the assortment of our product categories on our marketplace and build convenient tools to attract sellers. We monetize our e-commerce business mainly by offering sellers paid advertising services, charging transaction based-fees, and charging sellers for certain value-added services. As our e-commerce marketplace grows, we may consider other monetization methods in order to capture additional revenue streams. We also purchase products from manufacturers and third parties and sell them directly to buyers on Shopee platform.
|
● |
In our digital financial services business, we mainly monetize by charging commissions to third-party merchants with respect to our e-wallet services, and by earning interests from borrowers with respect to our consumer credit business. We continually expand the number of use cases that accept our e-wallet services to create greater convenience for our users. We believe that increasing the variety of use cases, together with our efforts to increase our e-wallet user numbers and engagement, will lead to increases in the number of transactions through our e-wallet business, and in turn the gross transaction value and commission income.
|
|
For the Year Ended December 31,
|
|||||||||||||||||||||||
2017
|
2018
|
2019
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Service revenue
|
||||||||||||||||||||||||
Digital Entertainment
|
365,167
|
88.2
|
462,464
|
55.9
|
1,136,017
|
52.2
|
||||||||||||||||||
E-commerce and other services
|
47,444
|
11.4
|
270,049
|
32.7
|
822,659
|
37.8
|
||||||||||||||||||
Sales of goods
|
1,579
|
0.4
|
94,455
|
11.4
|
216,702
|
10.0
|
||||||||||||||||||
Total revenue
|
414,190
|
100.0
|
826,968
|
100.0
|
2,175,378
|
100.0
|
|
For the Year Ended December 31,
|
|||||||||||||||||||||||
2017
|
2018
|
2019
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Southeast Asia
|
279,167
|
67.4
|
581,336
|
70.3
|
1,378,141
|
63.4
|
||||||||||||||||||
Rest of Asia
|
133,173
|
32.2
|
229,773
|
27.8
|
489,291
|
22.5
|
||||||||||||||||||
Latin America
|
1,850
|
0.4
|
14,713
|
1.8
|
282,618
|
13.0
|
||||||||||||||||||
Rest of the world
|
–
|
–
|
1,146
|
0.1
|
25,328
|
1.1
|
||||||||||||||||||
Total revenue
|
414,190
|
100.0
|
826,968
|
100.0
|
2,175,378
|
100.0
|
|
For the Year Ended December 31,
|
|||||||||||||||||||||||
2017
|
2018
|
2019
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Other operating income
|
(3,497
|
)
|
(0.8
|
)
|
(9,799
|
)
|
(1.2
|
)
|
(15,890
|
)
|
(0.7
|
)
|
||||||||||||
Sales and marketing expenses
|
425,974
|
102.8
|
705,015
|
85.3
|
969,543
|
44.6
|
||||||||||||||||||
General and administrative expenses
|
137,868
|
33.3
|
240,781
|
29.1
|
385,865
|
17.7
|
||||||||||||||||||
Research and development expenses
|
29,323
|
7.1
|
67,529
|
8.2
|
156,634
|
7.2
|
||||||||||||||||||
Total operating expenses
|
589,668
|
142.4
|
1,003,526
|
121.4
|
1,496,152
|
68.8
|
|
For the Year Ended December 31,
|
|||||||||||||||||||||||
2017
|
2018
|
2019
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Selected Consolidated Statements of Operations Data:
|
||||||||||||||||||||||||
Revenue:
|
||||||||||||||||||||||||
Service revenue
|
||||||||||||||||||||||||
Digital Entertainment
|
365,167
|
88.2
|
462,464
|
55.9
|
1,136,017
|
52.2
|
||||||||||||||||||
E-commerce and other services
|
47,444
|
11.4
|
270,049
|
32.7
|
822,659
|
37.8
|
||||||||||||||||||
Sales of goods
|
1,579
|
0.4
|
94,455
|
11.4
|
216,702
|
10.0
|
||||||||||||||||||
Total revenue
|
414,190
|
100.0
|
826,968
|
100.0
|
2,175,378
|
100.0
|
||||||||||||||||||
Cost of revenue:
|
||||||||||||||||||||||||
Cost of service
|
||||||||||||||||||||||||
Digital Entertainment
|
(217,986
|
)
|
(52.6
|
)
|
(267,359
|
)
|
(32.3
|
)
|
(435,905
|
)
|
(20.0
|
)
|
||||||||||||
E-commerce and other services
|
(107,260
|
)
|
(25.9
|
)
|
(446,281
|
)
|
(54.0
|
)
|
(907,518
|
)
|
(41.7
|
)
|
||||||||||||
Cost of goods sold
|
(1,632
|
)
|
(0.4
|
)
|
(98,570
|
)
|
(11.9
|
)
|
(227,035
|
)
|
(10.4
|
)
|
||||||||||||
Total cost of revenue
|
(326,878
|
)
|
(78.9
|
)
|
(812,210
|
)
|
(98.2
|
)
|
(1,570,458
|
)
|
(72.2
|
)
|
||||||||||||
Gross profit
|
87,312
|
21.1
|
14,758
|
1.8
|
604,920
|
27.8
|
||||||||||||||||||
Operating income (expenses):
|
||||||||||||||||||||||||
Other operating income
|
3,497
|
0.8
|
9,799
|
1.2
|
15,890
|
0.7
|
||||||||||||||||||
Sales and marketing expenses
|
(425,974
|
)
|
(102.8
|
)
|
(705,015
|
)
|
(85.3
|
)
|
(969,543
|
)
|
(44.6
|
)
|
||||||||||||
General and administrative expenses
|
(137,868
|
)
|
(33.3
|
)
|
(240,781
|
)
|
(29.1
|
)
|
(385,865
|
)
|
(17.7
|
)
|
||||||||||||
Research and development expenses
|
(29,323
|
)
|
(7.1
|
)
|
(67,529
|
)
|
(8.2
|
)
|
(156,634
|
)
|
(7.2
|
)
|
||||||||||||
Total operating expenses
|
(589,668
|
)
|
(142.4
|
)
|
(1,003,526
|
)
|
(121.4
|
)
|
(1,496,152
|
)
|
(68.8
|
)
|
||||||||||||
Operating loss
|
(502,356
|
)
|
(121.3
|
)
|
(988,768
|
)
|
(119.6
|
)
|
(891,232
|
)
|
(41.0
|
)
|
||||||||||||
Interest income
|
2,922
|
0.7
|
11,520
|
1.4
|
33,935
|
1.6
|
||||||||||||||||||
Interest expense
|
(26,501
|
)
|
(6.4
|
)
|
(31,295
|
)
|
(3.8
|
)
|
(48,208
|
)
|
(2.2
|
)
|
||||||||||||
Investment gain, net
|
33,591
|
8.1
|
8,603
|
1.0
|
11,794
|
0.5
|
||||||||||||||||||
Changes in fair value of convertible notes
|
(51,950
|
)
|
(12.5
|
)
|
41,259
|
5.0
|
(472,877
|
)
|
(21.7
|
)
|
||||||||||||||
Foreign exchange (loss) gain
|
(4,215
|
)
|
(1.0
|
)
|
4,801
|
0.6
|
(2,031
|
)
|
(0.1
|
)
|
||||||||||||||
Loss before income tax and share of results of equity investees
|
(548,509
|
)
|
(132.4
|
)
|
(953,880
|
)
|
(115.3
|
)
|
(1,368,619
|
)
|
(62.9
|
)
|
||||||||||||
Income tax expense
|
(10,745
|
)
|
(2.6
|
)
|
(4,088
|
)
|
(0.5
|
)
|
(85,864
|
)
|
(3.9
|
)
|
||||||||||||
Share of results of equity investees
|
(1,912
|
)
|
(0.5
|
)
|
(3,066
|
)
|
(0.4
|
)
|
(3,239
|
)
|
(0.1
|
)
|
||||||||||||
Net loss
|
(561,166
|
)
|
(135.5
|
)
|
(961,034
|
)
|
(116.2
|
)
|
(1,457,722
|
)
|
(67.0
|
)
|
||||||||||||
Non-GAAP Financial Measure:
|
||||||||||||||||||||||||
Net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes(1)
|
(480,580
|
)
|
(116.0
|
)
|
(944,172
|
)
|
(114.2
|
)
|
(867,776
|
)
|
(39.9
|
)
|
(1) |
To see how we define and calculate net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, a reconciliation between such item and net loss (the most directly comparable U.S. GAAP financial measure) and a discussion of the limitations of non-GAAP financial measures, see “—Non-GAAP Financial Measures” below.
|
● |
Digital Entertainment: Our digital entertainment revenue increased by 145.6% from US$462.5 million in 2018 to US$1,136.0 million in 2019. This increase was primarily due to the increase of our active user base as well as the deepened paying user penetration as we continue to bring new and engaging content to our users and enhance the game and monetization features based on a deep understanding of local preferences and conditions as well as our strong efforts in esports and community-building.
|
● |
E-commerce and other services: Our e-commerce and other services revenue increased by 204.6% from US$270.0 million in 2018 to US$822.7 million in 2019. This increase was primarily driven by the growth of our e-commerce marketplace, and positive development in each of our marketplace revenue streams – transaction-based fees, value-added services, and advertising. It is a result of our commitment to ever enhance our service offerings as we seek to create greater value for our platform users.
|
● |
Sales of goods: Revenue increased by 129.4% from US$94.5 million in 2018 to US$216.7 million in 2019. This increase was primarily due to the increase in our product offerings.
|
● |
Digital Entertainment: Cost of revenue increased by 63.0% from US$267.4 million in 2018 to US$435.9 million in 2019. The increase was largely in line with revenue growth in our digital entertainment business. Improvement in gross profit margins was largely due to higher revenue contribution from our self-developed game.
|
● |
E-commerce and other services: Cost of revenue for our e-commerce and other services combined increased by 103.4%, from US$446.3 million in 2018 to US$907.5 million in 2019. The increase was primarily due to costs incurred in line with growth of our e-commerce marketplace, including, among other costs, higher bank transaction fees driven by GMV growth, higher costs associated with value-added services and other ancillary services we provided to our e-commerce platform users, as well as higher staff compensation and benefit costs.
|
● |
Cost of goods sold: Cost of goods sold increased by 130.3% from US$98.6 million in 2018 to US$227.0 million in 2019. The increase was largely in line with the increase in our product offerings.
|
● |
Digital Entertainment: Our digital entertainment revenue increased by 26.6% from US$365.2 million in 2017 to US$462.5 million in 2018. This increase was primarily due to the growth of our user base in 2018, as we launched new games and increased the number of paying users.
|
● |
E-commerce and other services: Our e-commerce and other services revenue increased by 469.2% from US$47.4 million in 2017 to US$270.0 million in 2018. This increase was primarily driven by the expansion of our e-commerce marketplace. As we deepened our relationships and engagement with our sellers and buyers, and enhanced our e-commerce ecosystem, more users are using our integrated and value-added services, as well as ancillary services we provide.
|
● |
Sales of goods: Revenue increased by 5,882.0% from US$1.6 million in 2017 to US$94.5 million in 2018. The increase was primarily due to increase in our product offerings.
|
● |
Digital Entertainment: Cost of revenue increased by 22.6% from US$218.0 million in 2017 to US$267.4 million in 2018. The increase was largely in line with revenue growth in our digital entertainment business.
|
● |
E-commerce and other services: Cost of revenue for our e-commerce and other services combined increased by 316.1%, from US$107.3 million in 2017 to US$446.3 million in 2018. The increase was primarily due to costs incurred in line with the expansion of our e-commerce marketplace, higher bank transaction fees driven by GMV growth from our e-commerce business, higher costs associated with other ancillary services we provided to our e-commerce platform users, as well as higher staff compensation and benefit costs.
|
● |
Cost of goods sold: Cost of goods sold increased by 5,939.8% from US$1.6 million in 2017 to US$98.6 million in 2018. The increase was primarily due to an increase in our product offerings.
|
|
For the Year Ended December 31,
|
|||||||||||
2017
|
2018
|
2019
|
||||||||||
(US$ thousands)
|
||||||||||||
Net loss
|
(561,166
|
)
|
(961,034
|
)
|
(1,457,722
|
)
|
||||||
Add: Share-based compensation
|
28,636
|
58,121
|
117,069
|
|||||||||
Add: Changes in fair value of the 2017 convertible notes
|
51,950
|
(41,259
|
)
|
472,877
|
||||||||
Net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes
|
(480,580
|
)
|
(944,172
|
)
|
(867,776
|
)
|
|
For the Year ended December 31, 2019
|
|||||||||||||||||||||||
Digital
Entertainment
|
E-commerce
|
Digital Financial
Services
|
Other
Services(1)
|
Unallocated
expenses(2)
|
Consolidated
|
|||||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||||||
Revenue
|
1,136,017
|
834,295
|
9,223
|
195,843
|
–
|
2,175,378
|
||||||||||||||||||
Operating income (loss)
|
529,524
|
(1,131,771
|
)
|
(116,309
|
)
|
(39,864
|
)
|
(132,812
|
)
|
(891,232
|
)
|
|||||||||||||
Non-operating loss, net
|
(477,387
|
)
|
||||||||||||||||||||||
Income tax expense
|
(85,864
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(3,239
|
)
|
||||||||||||||||||||||
Net loss
|
(1,457,722
|
)
|
|
For the Year ended December 31, 2018
|
|||||||||||||||||||||||
Digital
Entertainment
|
E-commerce
|
Digital Financial
Services
|
Other
Services(1)
|
Unallocated
expenses(2)
|
Consolidated
|
|||||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||||||
Revenue
|
462,464
|
269,578
|
11,458
|
83,468
|
–
|
826,968
|
||||||||||||||||||
Operating income (loss)
|
69,449
|
(893,489
|
)
|
(34,056
|
)
|
(62,548
|
)
|
(68,124
|
)
|
(988,768
|
)
|
|||||||||||||
Non-operating income, net
|
34,888
|
|||||||||||||||||||||||
Income tax expense
|
(4,088
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(3,066
|
)
|
||||||||||||||||||||||
Net loss
|
(961,034
|
)
|
|
For the Year ended December 31, 2017
|
|||||||||||||||||||||||
Digital
Entertainment
|
E-commerce
|
Digital Financial
Services
|
Other
Services(1)
|
Unallocated
expenses(2)
|
Consolidated
|
|||||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||||||
Revenue
|
365,167
|
9,034
|
16,270
|
23,719
|
–
|
414,190
|
||||||||||||||||||
Operating income (loss)
|
45,637
|
(452,233
|
)
|
(38,038
|
)
|
(21,199
|
)
|
(36,523
|
)
|
(502,356
|
)
|
|||||||||||||
Non-operating loss, net
|
(46,153
|
)
|
||||||||||||||||||||||
Income tax expense
|
(10,745
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(1,912
|
)
|
||||||||||||||||||||||
Net loss
|
(561,166
|
)
|
(1) |
A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as “Other Services.”
|
(2) |
Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed by the chief operation decision maker as part of segment performance.
|
B. |
Liquidity and Capital Resources
|
|
For the Year Ended December 31,
|
|||||||||||
2017
|
2018
|
2019
|
||||||||||
(US$ thousands)
|
||||||||||||
Net cash (used in) generated from operating activities
|
(259,228
|
)
|
(495,220
|
)
|
69,865
|
|||||||
Net cash used in investing activities
|
(118,614
|
)
|
(224,528
|
)
|
(363,219
|
)
|
||||||
Net cash generated from financing activities
|
1,623,843
|
546,628
|
2,579,595
|
|||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
8,153
|
(12,546
|
)
|
25,025
|
||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
1,254,154
|
(185,666
|
)
|
2,311,266
|
||||||||
Cash, cash equivalents and restricted cash at beginning of year
|
190,824
|
1,444,978
|
1,259,312
|
|||||||||
Cash, cash equivalents and restricted cash at the end of the year
|
1,444,978
|
1,259,312
|
3,570,578
|
|
Revenue(1)
|
|||||||||||
For the Year Ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
Our company and our subsidiaries
|
51.4
|
%
|
58.5
|
%
|
79.6
|
%
|
||||||
Our VIEs(2)
|
48.6
|
%
|
41.5
|
%
|
20.4
|
%
|
(1) |
The percentages given exclude inter-company transactions among Sea Limited, our subsidiaries and our VIEs.
|
(2) |
For the purpose of this table, our digital entertainment entity and e-commerce entity in Taiwan are included as VIE as they remained as VIEs during 2018.
|
|
Total Assets(1)
|
|||||||
As of December 31,
|
||||||||
2018
|
2019
|
|||||||
Our company and our subsidiaries
|
80.0
|
%
|
89.2
|
%
|
||||
Our VIEs(2)
|
20.0
|
%
|
10.8
|
%
|
(1) |
The percentages given exclude inter-company balances among Sea Limited, our subsidiaries and our VIEs.
|
(2) |
For the purpose of this table, our digital entertainment entity and e-commerce entity in Taiwan are included as VIE as they remained as VIEs during 2018.
|
● |
Item-based revenue model. Virtual items have different lifespan patterns: time-based, consumable and durable. Time-based virtual items are items with a stated expiration time, for which revenue is recognized ratably over the period based on the time unit of the virtual items. Consumable virtual items are items that can be consumed by a specific user action and have limitations on repeated use. Revenue attributable to consumable virtual items is recognized upon consumption. Durable virtual items are items that provide the user with continuing benefits over an extended period of time. Revenue attributable to durable virtual items is recognized ratably over their average lifespan, which is estimated based on users’ historical usage patterns and playing behaviors for the virtual items. We assess the estimated average lifespan of durable virtual items on a quarterly basis.
|
● |
User-based revenue model. We track paying users’ activeness within each game where the user-based revenue model is used to estimate paying users’ average lifespan. Paying users are defined as inactive in a game when they have reached a period of inactivity for which it is reasonable to believe that these users will not return to that game. We determine the inactive rate of these paying users and revise the estimated paying users’ average lifespan on a quarterly basis.
|
● |
Game-based revenue model. Revenue is recognized ratably over the estimated game licensing periods if there are no better estimation alternatives.
|
● |
loan agreements;
|
● |
exclusive option agreements;
|
● |
exclusive business cooperation agreements;
|
● |
financial support confirmation letters;
|
● |
powers of attorney; and
|
● |
equity interest pledge agreements.
|
|
As of December 31,
|
|||||||||||
2017
|
2018
|
2019
|
||||||||||
Number of options granted
|
1,915,000
|
26,500,000
|
15,327,884
|
|||||||||
Weighted average exercise price (US$)
|
14.19
|
15.00
|
15.00
|
|||||||||
Weighted average grant date fair value (US$)
|
5.26
|
3.02
|
12.05
|
|
Granted in
|
||||
|
2017
|
|
2018
|
|
2019
|
Risk-free interest rates
|
1.99% - 2.25%
|
|
2.75% - 2.92%
|
|
2.34% - 2.68%
|
Expected term
|
5.5 - 7 years
|
|
5 - 7 years
|
|
5.5 - 8.5 years
|
Expected volatility
|
34.3% - 37.0 %
|
|
33.3% - 35.2%
|
|
33.0% - 35.0%
|
Expected dividend yield
|
—
|
|
—
|
|
—
|
|
As of December 31,
|
|||||||||||
2017
|
2018
|
2019
|
||||||||||
Number of restricted share awards and restricted share units granted
|
950,000
|
4,983,162
|
6,249,313
|
|||||||||
Weighted average grant date fair value (US$)
|
15.15
|
12.30
|
20.50
|
C. |
Research and Development, Patents and Licenses, etc.
|
D. |
Trend Information
|
E. |
Off-balance Sheet Arrangements
|
F. |
Tabular Disclosure of Contractual Obligations
|
|
Payment Due by Period
|
|||||||||||||||||||
Total
|
Less Than
1 Year |
1-3 Years
|
3-5 Years
|
More Than
5 Years |
||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||
Operating lease obligations, including imputed interest(1)
|
246,330
|
59,410
|
110,506
|
58,318
|
18,096
|
|||||||||||||||
Obligations for leases that have not yet commenced, including imputed interest(1)
|
12,968
|
1,812
|
7,088
|
4,068
|
—
|
|||||||||||||||
Finance lease obligations, including imputed interest(1)
|
8,869
|
2,719
|
5,090
|
1,060
|
—
|
|||||||||||||||
Debt, including scheduled interest(2)
|
1,829,914
|
26,204
|
49,241
|
1,754,469
|
—
|
|||||||||||||||
Purchase obligations
|
38,313
|
36,413
|
—
|
—
|
1,900
|
|||||||||||||||
Minimum guarantee commitments(3)
|
31,733
|
15,333
|
16,000
|
—
|
400
|
|||||||||||||||
Total
|
2,168,127
|
141,891
|
187,925
|
1,817,915
|
20,396
|
(1) |
For further information, refer to Note 8 of the audited financial statements included in this annual Report on Form 20-F.
|
(2) |
The principal balances of the 2018 convertible notes and 2019 convertible notes are reflected in the payment period in the table above based on the contractual maturity assuming no conversion.
|
(3) |
We have commitments to pay minimum royalty fees to game developers for certain online games we have licensed.
|
G. |
Safe Harbor
|
A. |
Directors and Senior Management
|
Directors and Executive Officers
|
Age
|
Position/Title
|
||
Forrest Xiaodong Li
|
42
|
Chairman and Group Chief Executive Officer
|
||
Gang Ye
|
39
|
Director and Group Chief Operating Officer
|
||
Yuxin Ren
|
44
|
Director
|
||
Tony Tianyu Hou
|
41
|
Director and Group Chief Financial Officer
|
||
David Heng Chen Seng
|
53
|
Director
|
||
Khoon Hua Kuok
|
41
|
Director
|
||
David Jingye Chen
|
39
|
Chief Product Officer of Shopee
|
||
Chris Zhimin Feng
|
37
|
Chief Executive Officer of Shopee and Chief Executive Officer of SeaMoney
|
||
Yanjun Wang
|
39
|
Group Chief Corporate Officer, Group General Counsel and Company Secretary
|
||
Maneerut Anulomsombut (Nok)
|
41
|
Chief Executive Officer of Thailand
|
||
Terry Feng Zhao
|
36
|
President of Garena
|
B. |
Compensation
|
Name
|
Class A Ordinary Shares
Underlying Outstanding Awards Granted |
Price
(US$/Share) |
Date of Grant
|
Date of Expiration
|
||||
Forrest Xiaodong Li
|
4,600,000(1)(4)
|
15.0
|
April 30, 2018
|
April 30, 2028
|
||||
10,000,000(1)(4)
|
15.0
|
April 30, 2019
|
April 30, 2029
|
|||||
1,216(3)
|
—
|
January 31, 2018
|
—
|
|||||
Gang Ye
|
275,011(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
||||
10,000,000(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
973(3)
|
—
|
January 31, 2018
|
—
|
|||||
45,000(3)
|
—
|
February 28, 2018
|
—
|
|||||
Tony Tianyu Hou
|
*(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
||||
*(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
*(3)
|
—
|
January 31, 2018
|
—
|
|||||
*(3)
|
—
|
February 28, 2018
|
—
|
|||||
David Heng Chen Seng
|
*(3)
|
—
|
October 19, 2019
|
—
|
||||
Khoon Hua Kuok
|
10,000(3)
|
—
|
October 19, 2019
|
—
|
||||
David Jingye Chen
|
802,140(1)
|
1.8
|
January 11, 2014
|
January 11, 2024
|
||||
400,000(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
|||||
2,000,000(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
973(3)
|
—
|
January 31, 2018
|
—
|
|||||
45,000(3)
|
—
|
February 28, 2018
|
—
|
|||||
Chris Zhimin Feng
|
*(1)
|
0.5
|
January 10, 2014
|
January 10, 2024
|
||||
*(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
|||||
*(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
*(1)
|
15.0
|
February 28, 2019
|
February 28, 2029
|
|||||
*(2)
|
—
|
December 30, 2016
|
—
|
|||||
*(3)
|
—
|
January 31, 2018
|
—
|
|||||
Yanjun Wang
|
*(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
||||
*(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
*(3)
|
—
|
January 31, 2018
|
—
|
|||||
*(3)
|
—
|
February 28, 2018
|
—
|
|||||
Maneerut Anulomsombut (Nok)
|
*(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
||||
*(3)
|
—
|
January 31, 2018
|
—
|
|||||
*(3)
|
—
|
February 28, 2018
|
—
|
|||||
Terry Feng Zhao
|
*(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
||||
*(1)
|
15.0
|
January 31, 2019
|
January 31, 2029
|
|||||
*(3)
|
—
|
January 31, 2018
|
—
|
|||||
*(3)
|
—
|
February 28, 2018
|
—
|
|||||
All directors and executive officers as a group
|
44,455,566
|
* |
Each of these directors and executive officers beneficially owns less than 1% of our total outstanding shares as of December 31, 2019.
|
(1) |
Represents options to purchase Class A ordinary shares.
|
(2) |
Represents unvested restricted Class A ordinary shares.
|
(3) |
Represents unvested restricted shares units for Class A ordinary shares.
|
(4) |
Granted pursuant to the previously disclosed authorization by our board of directors on April 8, 2018 of options to purchase a total of twenty million Class A ordinary shares, to be granted to Forrest between April 2018 and April 2020 and to vest between April 2019 and April 2022.
|
C. |
Board Practice
|
● |
selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm;
|
● |
reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response;
|
● |
reviewing and approving related party transactions;
|
● |
discussing the annual audited financial statements with management and our independent registered public accounting firm;
|
● |
meeting periodically with the management and our internal auditor and our independent registered public accounting firm; and
|
● |
reviewing and discussing our accounting and control policies and procedures and any steps taken to monitor and control major financial risk exposure.
|
● |
reviewing and approving the compensation package for our chief executive officer;
|
● |
reviewing the annual bonus, long-term incentive compensation, stock option, employee pension and welfare benefit plans of our company;
|
● |
reviewing annually and administering all long-term incentive compensation or equity plans; and
|
● |
selecting and receiving advice from compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management.
|
● |
identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy;
|
● |
reviewing annually with our board of directors its current composition in light of the characteristics of independence, qualification, experience and availability of service to us;
|
● |
review the performance of our board of directors and management and will make appropriate recommendations for improving performance; and
|
● |
monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
|
● |
convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;
|
● |
declaring dividends and distributions;
|
● |
appointing officers and determining the term of office of officers;
|
● |
exercising the borrowing powers of our company and mortgaging the property of our company; and
|
● |
approving the transfer of shares of our company, including the registering of such shares in our share register.
|
D. |
Employees
|
Function
|
Number of Employees
|
|||
General operation
|
18,900
|
|||
Sales and marketing
|
5,700
|
|||
General and administrative
|
2,400
|
|||
Research and development
|
2,800
|
|||
Total
|
29,800
|
E. |
Share Ownership
|
● |
each of our directors and executive officers; and
|
● |
each person known to us to beneficially own more than 5% of our ordinary shares.
|
|
Class A
Ordinary Shares
|
Class B
Ordinary Shares
|
Percentage of
Total Class A
and Class B
Ordinary
Shares†
|
Percentage of
Total Voting
Power Held
††
|
||||||||||||
Directors and Executive Officers:(1)
|
||||||||||||||||
Forrest Xiaodong Li(2)
|
32,916,092
|
92,101,446
|
25.4
|
38.8
|
||||||||||||
Gang Ye(3)
|
31,364,481
|
—
|
6.7
|
3.2
|
||||||||||||
Yuxin Ren
|
*
|
—
|
*
|
*
|
||||||||||||
Tony Tianyu Hou
|
*
|
—
|
*
|
*
|
||||||||||||
David Heng Chen Seng
|
*
|
—
|
*
|
*
|
||||||||||||
Khoon Hua Kuok(4)
|
17,549,838
|
—
|
3.8
|
2.3
|
||||||||||||
David Jingye Chen(5)
|
10,450,485
|
—
|
2.2
|
1.1
|
||||||||||||
Chris Zhimin Feng
|
*
|
—
|
*
|
*
|
||||||||||||
Yanjun Wang
|
*
|
—
|
*
|
*
|
||||||||||||
Maneerut Anulomsombut (Nok)
|
*
|
—
|
*
|
*
|
||||||||||||
Terry Feng Zhao
|
*
|
—
|
*
|
*
|
||||||||||||
All directors and executive officers as a group
|
88,616,602
|
92,101,446
|
36.6
|
45.7
|
||||||||||||
Principal Shareholders:
|
||||||||||||||||
Tencent entities(6)
|
12,829,584
|
106,647,910
|
25.6
|
25.1
|
||||||||||||
Blue Dolphins Venture Inc(7)
|
—
|
45,527,793
|
9.8
|
17.7
|
* |
Less than 1% of our total outstanding shares on an as converted basis.
|
† |
For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group, including shares that such person or group has the right to acquire within 60 days after March 15, 2020, by the sum of Class A and Class B ordinary shares, and the number of Class A ordinary shares that such person or group has the right to acquire beneficial ownership within 60 days after March 15, 2020.
|
†† |
For each person and group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares beneficially owned by such person or group with respect to all of our outstanding Class A and Class B ordinary shares as one single class. Holders of Class A ordinary shares are entitled to one vote per share and holders of Class B ordinary shares are entitled to three votes per share on all matters subject to a shareholders’ vote.
|
(1) |
Unless otherwise indicated, the business address of our directors and executive officers is c/o 1 Fusionopolis Place, #17-10, Galaxis, Singapore 138522.
|
(2) |
Represents (i) 45,527,793 Class B ordinary shares held by Blue Dolphins Venture Inc, a British Virgin Islands company wholly-owned by Mr. Li, (ii) 459,750 Class A ordinary shares beneficially owned by Mr. Li, (iii) 9,600,000 Class A Ordinary Shares issuable upon exercise of options held by Mr. Li within 60 days from March 15, 2020, (iv) 136 Class A Ordinary Shares issuable upon vesting of restricted share units held by Mr. Li within 60 days from March 15, 2020, (v) an aggregate of 22,856,206 Class A Ordinary Shares held by the directors and employees of the Issuer and Garena ESOP Program (PTC) Limited that have given Mr. Li an irrevocable proxy to vote such shares, including 16,581,313 Class A Ordinary Shares issuable upon exercise of options within 60 days from March 15, 2020 and 472,350 Class A Ordinary Shares issuable upon vesting of restricted shares and restricted share units within 60 days from March 15, 2020, and (vi) 46,573,653 Class B ordinary shares held by Tencent for which it has given Mr. Li an irrevocable proxy to vote such Class B ordinary shares (such Class B ordinary shares do not include those shares covered solely by an irrevocable proxy giving Mr. Li the voting rights only over matters relating to our board size and composition).
|
(3) |
Represents (i) 26,089,361 Class A ordinary shares held or beneficially owned by Mr. Ye, and (ii) 5,275,120 Class A ordinary shares issuable upon exercise of options or vesting of restricted share units held by Mr. Ye within 60 days from March 15, 2020. With respect to 6,562,675 Class A ordinary shares, Forrest Xiaodong Li, our founder, chairman and group chief executive officer, has been given an irrevocable proxy with regard to all matters that are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Ye.
|
(4) |
Includes (i) 2,160,283 Class A ordinary shares held or beneficially owned by Bright Magic Investments Limited, a British Virgin Islands company, (ii) 1,851,860 Class A ordinary shares held by Paxton Ventures Limited, a British Virgin Islands company, (iii) 6,593,750 Class A ordinary shares held by Super Class Ventures Limited, a British Virgin Islands company, (iv) 1,270,000 Class A ordinary shares beneficially owned by Crystal White Limited, a Hong Kong company, (v) 4,300,000 Class A ordinary shares beneficially owned by Velmar Company Limited, a Hong Kong company, and (vi) 1,363,945 Class A ordinary shares issuable upon conversion of US$27 million principal amount of our 2018 convertible notes held by Macromind Investments Limited, which is currently convertible. Bright Magic Investments Limited, Crystal White Limited, Macromind Investments Limited, and Velmar Company Limited are all wholly-owned subsidiaries of Kerry Group Limited. Paxton Ventures Limited and Super Class Ventures Limited are associates of Kerry Group Limited. Mr. Kuok is a director of Kerry Group Limited and Super Class Ventures Limited and has indirect minority interests in all of the aforesaid entities. Mr. Kuok may be deemed to have beneficial interests in the shares beneficially owned by all of the aforesaid entities, but he disclaims beneficial ownership of such shares for all other purposes. The business address of Kerry Group Limited is 32/F, Kerry Centre, 683 King’s Road, Quarry Bay, Hong Kong. Shares beneficially owned by Mr. Kuok do not include the shares issuable upon conversion of the US$100 million principal amount of our 2019 convertible notes currently held by Macromind Investments Limited, subject to the terms and conditions of such notes.
|
(5) |
Represents (i) 8,248,236 Class A ordinary shares held or beneficially owned by Mr. Chen, and (ii) 2,202,249 Class A ordinary shares issuable upon exercise of options or vesting of restricted share units held by Mr. Chen within 60 days from March 15, 2020. With respect to 2,293,113 Class A ordinary shares, Forrest Xiaodong Li has been given an irrevocable proxy with regard to all matters that are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Chen.
|
(6) |
According to the latest information available to us (including Tencent’s Schedule 13D filed on March 12, 2019), represents (i) 5,333,333 Class A ordinary shares beneficially owned by Tencent Holdings Limited through Huang River Investment Limited, (ii) 106,647,910 Class B ordinary shares beneficially owned by Tencent Holdings Limited through Tencent Limited and another Tencent entity, which are both wholly-owned by Tencent Holdings Limited, and (iii) 7,496,251 Class A ordinary shares held by Tencent Limited. With respect to 46,573,653 Class B ordinary shares, Forrest Xiaodong Li has been given an irrevocable proxy with regard to matters that are subject to the vote of shareholders, and such numbers are excluded from the total voting power of the Tencent entities. Such Class B ordinary shares do not include those shares covered solely by an irrevocable proxy giving Mr. Li the voting rights only over matters relating to our board size and composition. Tencent Holdings Limited is a limited liability company organized and existing under the laws of the Cayman Islands and is currently listed on Hong Kong Stock Exchange. The registered office of Tencent Holdings Limited is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.
|
(7) |
Represents 45,527,793 Class B ordinary shares held by Blue Dolphins Venture Inc, a company wholly owned by Mr. Li. The registered address of Blue Dolphins Venture Inc is Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.
|
A. |
Major Shareholders
|
B. |
Related Party Transactions
|
C. |
Interest of Experts and Counsel
|
A. |
Consolidated Statement and Other Financial Information
|
B. |
Significant Changes
|
A. |
Offer and Listing Details
|
B. |
Plan of Distribution
|
C. |
Markets
|
D. |
Selling Shareholders
|
E. |
Dilution
|
F. |
Expenses of the Issue
|
A. |
Share Capital
|
B. |
Memorandum and Articles of Association
|
● |
an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;
|
● |
an exempted company is not required to open its register of members for inspection;
|
● |
an exempted company does not have to hold an annual general meeting;
|
● |
an exempted company may issue no par value, negotiable or bearer shares;
|
● |
an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
|
● |
an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
|
● |
an exempted company may register as a limited duration company; and
|
● |
an exempted company may register as a segregated portfolio company.
|
● |
the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) of the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rights are conditional;
|
● |
the date on which the name of any person was entered on the register as a member; and
|
● |
the date on which any person ceased to be a member.
|
● |
the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;
|
● |
the instrument of transfer is in respect of only one class of shares;
|
● |
the instrument of transfer is properly stamped, if required;
|
● |
in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; or
|
● |
the ordinary shares transferred are free of any lien in favor of us; or
|
● |
a fee of such maximum sum as the New York Stock Exchange may determine to be payable, or such lesser sum as the board of directors may from time to time require, is paid to us in respect thereof.
|
● |
the designation of the series;
|
● |
the number of shares of the series;
|
● |
the dividend rights, dividend rates, conversion rights, voting rights; and
|
● |
the rights and terms of redemption and liquidation preferences.
|
● |
increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution prescribes;
|
● |
consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
|
● |
convert all or any of its paid up shares into stock and reconvert the stock into paid up shares of any denomination;
|
● |
sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our Eighth Amended and Restated Memorandum of Association; provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share will be the same as it was in case of the share from which the reduced share is derived; and
|
● |
cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so canceled.
|
C. |
Material Contracts
|
D. |
Exchange Controls
|
E. |
Taxation
|
● |
a citizen or individual resident of the United States;
|
● |
a corporation, or other entity treated as a corporation that is created in or organized under the laws of the United States, any state thereof or the District of Columbia;
|
● |
an estate whose income is subject to U.S. federal income tax regardless of its source; or
|
● |
a trust if either (1) a United States court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect to be treated as a U.S. person under applicable Treasury regulations.
|
● |
the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;
|
● |
amounts allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (a “pre-PFIC year”) will be subject to tax as ordinary income; and
|
● |
amounts allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year, and such amounts will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to such years.
|
F. |
Dividends and Paying Agents
|
G. |
Statement by Experts
|
H. |
Documents on Display
|
I. |
Subsidiary Information
|
A. |
Debt Securities
|
B. |
Warrants and Rights
|
C. |
Other Securities
|
D. |
American Depositary Shares
|
Persons depositing or withdrawing shares
or holders of ADSs must pay: |
For:
|
|
US$5.00 (or less) per 100 ADSs (or portion thereof)
|
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
Cancelation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
|
US$.05 (or less) per ADS (or portion thereof)
|
Any cash distribution to ADS holders
|
|
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs
|
Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
|
|
US$.05 (or less) per ADSs (or portion thereof) per annum
|
Depositary services
|
|
Registration or transfer fees
|
Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
|
|
Expenses of the depositary
|
Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
Converting foreign currency to U.S. dollars
|
|
Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes
|
As necessary
|
|
Any charges incurred by the depositary or its agents for servicing the deposited securities
|
As necessary
|
|
For the Year Ended December 31,
|
|||||||
2018
|
2019
|
|||||||
(US$ thousands)
|
||||||||
Audit fees(1)
|
3,400
|
2,700
|
||||||
Tax fees(2)
|
25
|
78
|
||||||
Audit related fees(3)
|
444
|
346
|
||||||
Other fees (4)
|
275
|
-
|
(1) |
“Audit fees” means the aggregate fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements. This category also included professional services rendered by our independent registered public accounting firm for statutory audits required by non-U.S. jurisdictions. In 2019, the audit refers to financial audit and audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
|
(2) |
“Tax fees” means the aggregate fees billed for the tax services provided with respect to tax consulting and tax audit assistance.
|
(3) |
“Audit-related fees” means the aggregate fees billed in each fiscal years listed for professional services rendered by our principal auditors related to the audit of our financial statements that are not reported under “audit fees.”
|
(4) |
“Other fees” means the aggregate fees billed for transaction advisory services with respect to our 2018 convertible notes offering.
|
Exhibit
Number |
Description of Document
|
|
1.1
|
||
2.1
|
||
2.2
|
||
2.3
|
||
2.4*
|
||
3.1
|
||
4.1
|
||
4.2
|
||
4.3
|
||
4.4
|
||
4.5†
|
||
4.6
|
||
4.7
|
||
4.8
|
Exhibit
Number |
Description of Document
|
|
4.9
|
||
4.10
|
||
4.11
|
||
4.12
|
||
4.13†
|
||
4.14
|
||
4.15†
|
||
4.16*
|
||
8.1*
|
||
11.1
|
||
12.1*
|
||
12.2*
|
||
13.1**
|
||
13.2**
|
||
15.1*
|
||
15.2*
|
||
15.3*
|
Exhibit
Number |
Description of Document
|
|
15.4*
|
||
15.5*
|
||
15.6*
|
||
101.INS
|
Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
104
|
Cover Page Interactive Data File (embedded within the Exhibit 101 Inline XBRL document)
|
* |
Filed with this annual report on Form 20-F.
|
** |
Furnished with this annual report on Form 20-F.
|
† |
Confidential treatment has been granted by the U.S. Securities and Exchange Commission with respect to portions of the exhibit that have been redacted.
|
|
Sea Limited
|
||
By:
|
/s/ Forrest Xiaodong Li
|
||
Name:
|
Forrest Xiaodong Li
|
||
Title:
|
Chairman and Group Chief Executive Officer
|
|
Page
|
Description of the Matter
|
For the year ended December 31, 2019, the Company’s revenue arising from DE was $1,136.0 million.
As outlined in Note 2(o) of the consolidated financial statements, DE revenue is recognized over the performance obligation period. The Company has determined that an implied obligation exists to the paying users to continue providing access to the purchased virtual goods within the online games over an estimated delivery obligation period. Such delivery obligation period is determined in accordance with the estimated average lifespan of the virtual goods sold, estimated average lifespan of the paying users or the estimated game licensing periods of the said games or similar games.
Auditing the DE revenue recognition process is complex and involves judgement to determine the historical paying users’ inactive rate, usage patterns and playing behavior, in estimating the average lifespan of the virtual goods sold and average lifespan of the paying users of the said games or similar games. In addition, the Company utilizes various operating systems to process user data and transactions and relies on automated processes and controls over the completeness and accuracy of the historical user and game data, which are key inputs to the above-mentioned estimates.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s DE revenue recognition process. For example, we tested the automated controls of the related operating systems. We also tested the effectiveness of management’s review controls over assessing the completeness and accuracy of the historical user and game data and the appropriateness of the judgements regarding the most relevant historical user and game data to be applied in their estimates.
To test the recognition of DE revenue, our audit procedures included, among others, testing the completeness and accuracy of the above-mentioned underlying historical user and game data and assessing the reasonableness of the historical data applied in estimating the average lifespan of the virtual goods sold and average lifespan of the paying users of the said games or similar games. We also recalculated the amount of revenue to be deferred based on management’s estimated delivery obligation periods and compared those amounts with the amounts recorded by the Company.
|
Description of the Matter
|
As at December 31, 2019, the Company’s long-lived assets in EC and DFS segments amounted to approximately 73.7% and 4.6% of the Company’s long-lived assets, respectively. The long-lived assets include property and equipment and intangible assets.
As outlined in Note 2(m) to the consolidated financial statements, the Company evaluates its long-lived assets for impairment when there are events or changes in circumstances which indicate that the carrying amounts of the long-lived assets may not be recoverable. Due to the continued losses incurred by the EC and DFS segments, the Company evaluated the related long-lived assets for impairment at the asset group level by comparing the carrying amounts of the respective asset groups to the recoverable values determined by forecasted undiscounted cash flows expected to be generated by those asset groups.
Auditing management’s long-lived assets impairment test was highly judgmental due to the magnitude of the carrying amount of long-lived assets and management’s judgement in estimating the recoverable values (undiscounted cash flows) of the asset groups, which are sensitive to key assumptions such as projected revenue and sales incentives.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s long-lived asset impairment process to determine the recoverable values of the asset groups. For example, we tested controls over management’s review of the key assumptions used in estimating the recoverable values.
To test the impairment of long-lived assets, our audit procedures included, among others, obtaining an understanding from management regarding the basis of which the undiscounted cash flows were prepared and assessing the reasonableness of the forecasted undiscounted cash flows by comparing them against the Company’s business strategies and underlying key assumptions over the forecast periods, taking into consideration current industry and economic trends. We performed sensitivity analyses over the key assumptions described above to evaluate the changes to the estimated recoverable values for the asset groups that would result from changes in the assumptions.
|
|
As of December 31,
|
|||||||||||
|
Note
|
2018
$
|
2019
$
|
|||||||||
ASSETS
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
1,002,841
|
3,118,988
|
||||||||||
Restricted cash
|
254,100
|
434,938
|
||||||||||
Accounts receivable, net
|
5
|
97,782
|
187,035
|
|||||||||
Prepaid expenses and other assets
|
6
|
312,387
|
535,187
|
|||||||||
Inventories, net
|
37,689
|
26,932
|
||||||||||
Short-term investments
|
10
|
690
|
102,324
|
|||||||||
Amounts due from related parties
|
20
|
5,224
|
4,735
|
|||||||||
|
||||||||||||
Total current assets
|
1,710,713
|
4,410,139
|
||||||||||
|
||||||||||||
Non-current assets
|
||||||||||||
Property and equipment, net
|
7
|
192,357
|
318,620
|
|||||||||
Operating lease right-of-use assets, net
|
8
|
–
|
182,965
|
|||||||||
Intangible assets, net
|
9
|
12,887
|
15,020
|
|||||||||
Long-term investments
|
10
|
111,022
|
113,797
|
|||||||||
Prepaid expenses and other assets
|
6
|
69,065
|
65,684
|
|||||||||
Restricted cash
|
2,371
|
16,652
|
||||||||||
Deferred tax assets
|
18
|
63,302
|
70,340
|
|||||||||
Goodwill
|
4
|
30,952
|
30,952
|
|||||||||
|
||||||||||||
Total non-current assets
|
481,956
|
814,030
|
||||||||||
|
||||||||||||
Total assets
|
2,192,669
|
5,224,169
|
|
As of December 31,
|
|||||||||||
|
Note
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||||||
Current liabilities
|
||||||||||||
Accounts payable (including accounts payable of the Consolidated VIEs without recourse to the primary beneficiaries of $5,095 and $11,274 as of December 31, 2018 and 2019, respectively)
|
37,163
|
69,370
|
||||||||||
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without recourse to the primary beneficiaries of $236,883 and $93,146 as of December 31, 2018 and 2019, respectively)
|
11
|
636,880
|
980,805
|
|||||||||
Advances from customers (including advances from customers of the Consolidated VIEs without recourse to the primary beneficiaries of $4,832 and $6,116 as of December 31, 2018 and 2019, respectively)
|
29,355
|
65,062
|
||||||||||
Amount due to related parties (including amount due to related parties of the Consolidated VIEs without recourse to the primary beneficiaries of $1,297 and $1,569 as of December 31, 2018 and 2019, respectively)
|
20
|
46,025
|
34,990
|
|||||||||
Short-term borrowings (including short-term borrowings of the Consolidated VIEs without recourse to the primary beneficiaries of $856 and $1,258 as of December 31, 2018 and 2019, respectively)
|
12
|
856
|
1,258
|
|||||||||
Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of nil and $8,797 as of December 31, 2018 and 2019, respectively)
|
8
|
–
|
56,320
|
|||||||||
Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primary beneficiaries of $119,219 and $133,362 as of December 31, 2018 and 2019, respectively)
|
426,675
|
1,097,868
|
||||||||||
Convertible notes (including convertible notes of the Consolidated VIEs without recourse to the primary beneficiaries of nil and nil as of December 31, 2018 and 2019, respectively)
|
13
|
–
|
29,481
|
|||||||||
Income tax payable (including income tax payable of the Consolidated VIEs without recourse to the primary beneficiaries of $1,785 and $5,850 as of December 31, 2018 and 2019, respectively)
|
9,539
|
27,212
|
||||||||||
|
||||||||||||
Total current liabilities
|
1,186,493
|
2,362,366
|
||||||||||
|
||||||||||||
Non-current liabilities
|
||||||||||||
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without recourse to the primary beneficiaries of $1,630 and $1,357 as of December 31, 2018 and 2019, respectively)
|
11
|
7,894
|
25,802
|
|||||||||
Long-term borrowings (including long-term borrowings of the Consolidated VIEs without recourse to the primary beneficiaries of $1,026 and $358 as of December 31, 2018 and 2019, respectively)
|
12
|
1,026
|
358
|
|||||||||
Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of nil and $20,129 as of December 31, 2018 and 2019, respectively)
|
8
|
–
|
144,000
|
|||||||||
Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primary beneficiaries of $72,439 and $49,325 as of December 31, 2018 and 2019, respectively)
|
171,262
|
160,708
|
||||||||||
Convertible notes (including convertible notes of the Consolidated VIEs without recourse to the primary beneficiaries of nil and nil as of December 31, 2018 and 2019, respectively)
|
13
|
1,061,796
|
1,356,332
|
|||||||||
Deferred tax liabilities (including deferred tax liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of nil and nil as of December 31, 2018 and 2019, respectively)
|
18
|
679
|
975
|
|||||||||
Unrecognized tax benefits (including unrecognized tax benefits of the Consolidated VIEs without recourse to the primary beneficiaries of $2,522 and $976 as of December 31, 2018 and 2019, respectively)
|
2,974
|
976
|
||||||||||
|
||||||||||||
Total non-current liabilities
|
1,245,631
|
1,689,151
|
||||||||||
|
||||||||||||
Total liabilities
|
2,432,124
|
4,051,517
|
||||||||||
|
||||||||||||
Commitments and contingencies
|
23
|
|
|
|
As of December 31,
|
|||||||||||
|
Note
|
2018
$
|
2019
$
|
|||||||||
Shareholders’ equity
|
||||||||||||
Class A Ordinary shares (Par value of US$0.0005 per share; Authorized: 14,800,000,000 and 14,800,000,000 shares as of December 31, 2018 and 2019, respectively; Issued and outstanding: 190,423,065 and 311,068,949 shares as of December 31, 2018 and 2019, respectively)
|
15
|
94
|
154
|
|||||||||
Class B Ordinary shares (Par value of US$0.0005 per share; Authorized: 200,000,000 and 200,000,000 shares as of December 31, 2018 and 2019, respectively; Issued and outstanding: 152,175,703 and 152,175,703 shares as of December 31, 2018 and 2019, respectively)
|
15
|
76
|
76
|
|||||||||
Additional paid-in capital
|
1,809,232
|
4,687,284
|
||||||||||
Accumulated other comprehensive income
|
16
|
15,199
|
5,449
|
|||||||||
Statutory reserves
|
17
|
46
|
46
|
|||||||||
Accumulated deficit
|
(2,067,786
|
)
|
(3,530,585
|
)
|
||||||||
|
||||||||||||
Total Sea Limited shareholders’ (deficit) equity
|
(243,139
|
)
|
1,162,424
|
|||||||||
Non-controlling interests
|
3,684
|
10,228
|
||||||||||
|
||||||||||||
Total shareholders’ (deficit) equity
|
(239,455
|
)
|
1,172,652
|
|||||||||
|
||||||||||||
Total liabilities and shareholders’ (deficit) equity
|
2,192,669
|
5,224,169
|
|
Year ended December 31,
|
|||||||||||||||
|
Note
|
2017
$
|
2018
$
|
2019
$
|
||||||||||||
|
||||||||||||||||
Revenue
|
||||||||||||||||
Service revenue
|
||||||||||||||||
Digital entertainment
|
365,167
|
462,464
|
1,136,017
|
|||||||||||||
E-commerce and other services
|
47,444
|
270,049
|
822,659
|
|||||||||||||
|
||||||||||||||||
Sales of goods
|
1,579
|
94,455
|
216,702
|
|||||||||||||
|
||||||||||||||||
Total revenue
|
414,190
|
826,968
|
2,175,378
|
|||||||||||||
|
||||||||||||||||
Cost of revenue
|
||||||||||||||||
Cost of service
|
||||||||||||||||
Digital entertainment
|
(217,986
|
)
|
(267,359
|
)
|
(435,905
|
)
|
||||||||||
E-commerce and other services
|
(107,260
|
)
|
(446,281
|
)
|
(907,518
|
)
|
||||||||||
|
||||||||||||||||
Cost of goods sold
|
(1,632
|
)
|
(98,570
|
)
|
(227,035
|
)
|
||||||||||
|
||||||||||||||||
Total cost of revenue
|
(326,878
|
)
|
(812,210
|
)
|
(1,570,458
|
)
|
||||||||||
|
||||||||||||||||
Gross profit
|
87,312
|
14,758
|
604,920
|
|||||||||||||
|
||||||||||||||||
Operating income (expenses)
|
||||||||||||||||
Other operating income
|
3,497
|
9,799
|
15,890
|
|||||||||||||
Sales and marketing expenses
|
(425,974
|
)
|
(705,015
|
)
|
(969,543
|
)
|
||||||||||
General and administrative expenses
|
(137,868
|
)
|
(240,781
|
)
|
(385,865
|
)
|
||||||||||
Research and development expenses
|
(29,323
|
)
|
(67,529
|
)
|
(156,634
|
)
|
||||||||||
|
||||||||||||||||
Total operating expenses
|
(589,668
|
)
|
(1,003,526
|
)
|
(1,496,152
|
)
|
||||||||||
|
||||||||||||||||
Operating loss
|
(502,356
|
)
|
(988,768
|
)
|
(891,232
|
)
|
||||||||||
Interest income
|
2,922
|
11,520
|
33,935
|
|||||||||||||
Interest expense
|
(26,501
|
)
|
(31,295
|
)
|
(48,208
|
)
|
||||||||||
Investment gain, net
|
33,591
|
8,603
|
11,794
|
|||||||||||||
Changes in fair value of convertible notes
|
13(a
|
)
|
(51,950
|
)
|
41,259
|
(472,877
|
)
|
|||||||||
Foreign exchange (loss) gain
|
(4,215
|
)
|
4,801
|
(2,031
|
)
|
|||||||||||
|
||||||||||||||||
Loss before income tax and share of results of equity investees
|
(548,509
|
)
|
(953,880
|
)
|
(1,368,619
|
)
|
||||||||||
Income tax expense
|
18
|
(10,745
|
)
|
(4,088
|
)
|
(85,864
|
)
|
|||||||||
Share of results of equity investees
|
10
|
(1,912
|
)
|
(3,066
|
)
|
(3,239
|
)
|
|||||||||
|
||||||||||||||||
Net loss
|
(561,166
|
)
|
(961,034
|
)
|
(1,457,722
|
)
|
||||||||||
|
||||||||||||||||
Net loss (profit) attributable to non-controlling interests
|
681
|
(207
|
)
|
(5,077
|
)
|
|||||||||||
|
||||||||||||||||
Net loss attributable to Sea Limited’s ordinary shareholders
|
(560,485
|
)
|
(961,241
|
)
|
(1,462,799
|
)
|
|
Year ended December 31,
|
|||||||||||||||
|
Note
|
2017
$
|
2018
$
|
2019
$
|
||||||||||||
Loss per share:
|
||||||||||||||||
Basic and diluted
|
19
|
(2.72
|
)
|
(2.84
|
)
|
(3.35
|
)
|
|||||||||
|
||||||||||||||||
Weighted average shares used in loss per share computation:
|
||||||||||||||||
Basic and diluted
|
205,727,195
|
338,472,987
|
436,601,801
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Net loss
|
(561,166
|
)
|
(961,034
|
)
|
(1,457,722
|
)
|
||||||
|
||||||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation adjustments:
|
||||||||||||
Translation gain (loss)
|
1,973
|
(13,858
|
)
|
3,230
|
||||||||
Reclassification adjustment for net translation adjustments realized in net income
|
144
|
–
|
-
|
|||||||||
|
||||||||||||
Net change
|
2,117
|
(13,858
|
)
|
3,230
|
||||||||
|
||||||||||||
Available-for-sale investments:
|
||||||||||||
Change in unrealized gain (loss)
|
–
|
18,269
|
(12,869
|
)
|
||||||||
|
||||||||||||
Net change
|
–
|
18,269
|
(12,869
|
)
|
||||||||
|
||||||||||||
Total other comprehensive income, net of tax
|
2,117
|
4,411
|
(9,639
|
)
|
||||||||
|
||||||||||||
Less: total comprehensive income (loss) attributable to non-controlling interests
|
678
|
(120
|
)
|
(5,188
|
)
|
|||||||
|
||||||||||||
Total comprehensive loss attributable to Sea Limited’s ordinary shareholders
|
(558,371
|
)
|
(956,743
|
)
|
(1,472,549
|
)
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Cash flows from operating activities
|
||||||||||||
Net loss
|
(561,166
|
)
|
(961,034
|
)
|
(1,457,722
|
)
|
||||||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Amortization of intangible assets
|
17,569
|
23,826
|
4,849
|
|||||||||
Depreciation of property and equipment
|
23,353
|
54,902
|
116,783
|
|||||||||
Gain on disposal of investments
|
(23,857
|
)
|
(7,685
|
)
|
(129
|
)
|
||||||
Gain on re-measurement of equity interests
|
(10,881
|
)
|
–
|
(4,500
|
)
|
|||||||
Impairment loss on intangible assets
|
922
|
5,166
|
–
|
|||||||||
Impairment loss on investments
|
1,147
|
3,416
|
1,155
|
|||||||||
Prepaid licensing fees written-off
|
–
|
4,544
|
–
|
|||||||||
Share of results of equity investees
|
1,912
|
3,066
|
3,239
|
|||||||||
Share-based compensation
|
28,636
|
58,121
|
117,069
|
|||||||||
Unrecognized tax benefits
|
2,334
|
–
|
(1,824
|
)
|
||||||||
Deferred income tax
|
(8,753
|
)
|
(19,797
|
)
|
(4,333
|
)
|
||||||
Changes in fair value of 2017 Convertible Notes
|
51,950
|
(41,259
|
)
|
472,877
|
||||||||
Amortization of discount on 2018 Convertible Notes and 2019 Convertible Notes
|
–
|
14,154
|
33,334
|
|||||||||
Net foreign exchange differences
|
5,214
|
(10,230
|
)
|
(292
|
)
|
|||||||
Others
|
2,571
|
4,778
|
7,296
|
|||||||||
|
||||||||||||
Operating cash flows before changes in working capital:
|
(469,049
|
)
|
(868,032
|
)
|
(712,198
|
)
|
||||||
|
||||||||||||
Inventories
|
(5,970
|
)
|
(28,465
|
)
|
11,762
|
|||||||
Accounts receivable
|
(24,547
|
)
|
(38,524
|
)
|
(86,546
|
)
|
||||||
Prepaid expenses and other assets
|
(107,847
|
)
|
(159,025
|
)
|
(214,926
|
)
|
||||||
Amounts due from related parties
|
(1,835
|
)
|
(3,306
|
)
|
538
|
|||||||
Operating lease right-of-use assets
|
–
|
–
|
(62,140
|
)
|
||||||||
Accounts payable
|
1,822
|
29,733
|
31,381
|
|||||||||
Accrued expenses and other payables
|
183,436
|
354,946
|
354,151
|
|||||||||
Advances from customers
|
9,967
|
2,727
|
34,263
|
|||||||||
Operating lease liabilities
|
–
|
–
|
70,901
|
|||||||||
Deferred revenue
|
125,102
|
204,161
|
637,214
|
|||||||||
Income tax payable
|
2,599
|
(75
|
)
|
17,207
|
||||||||
Amount due to related parties
|
27,094
|
10,640
|
(11,742
|
)
|
||||||||
|
||||||||||||
Net cash (used in) generated from operating activities
|
(259,228
|
)
|
(495,220
|
)
|
69,865
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Cash flows from investing activities
|
||||||||||||
Purchase of property and equipment
|
(67,361
|
)
|
(177,343
|
)
|
(239,844
|
)
|
||||||
Purchase of intangible assets
|
(12,385
|
)
|
(1,142
|
)
|
(7,254
|
)
|
||||||
Purchase of investments
|
(23,428
|
)
|
(69,641
|
)
|
(118,462
|
)
|
||||||
Acquisition of businesses, net of cash acquired
|
(18,094
|
)
|
–
|
–
|
||||||||
Loan to related parties
|
(402
|
)
|
–
|
–
|
||||||||
Repayment of loans from related parties
|
2,737
|
–
|
–
|
|||||||||
Proceeds from disposal of property and equipment
|
314
|
668
|
1,236
|
|||||||||
Proceeds from disposal of intangible assets
|
5
|
245
|
–
|
|||||||||
Proceeds from disposal of investments
|
–
|
22,685
|
640
|
|||||||||
Distributions from investments
|
–
|
–
|
465
|
|||||||||
|
||||||||||||
Net cash used in investing activities
|
(118,614
|
)
|
(224,528
|
)
|
(363,219
|
)
|
||||||
|
||||||||||||
Cash flows from financing activities
|
||||||||||||
Proceeds from issuance of convertible notes, net
|
674,300
|
564,938
|
1,041,440
|
|||||||||
Proceeds from borrowings
|
3,888
|
2,055
|
868
|
|||||||||
Repayment of borrowings
|
(3,888
|
)
|
(2,698
|
)
|
(1,136
|
)
|
||||||
Proceeds from issuance of ordinary shares, net
|
960,924
|
4,574
|
1,538,802
|
|||||||||
Acquisition of non-controlling interests
|
(11,381
|
)
|
(25,768
|
)
|
–
|
|||||||
Proceeds from partial disposal of a subsidiary without a loss in control
|
–
|
3,527
|
–
|
|||||||||
Contribution by non-controlling interest
|
–
|
–
|
1,356
|
|||||||||
Principal payments under finance lease obligations
|
–
|
–
|
(1,735
|
)
|
||||||||
|
||||||||||||
Net cash generated from financing activities
|
1,623,843
|
546,628
|
2,579,595
|
|||||||||
|
||||||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
8,153
|
(12,546
|
)
|
25,025
|
||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
1,254,154
|
(185,666
|
)
|
2,311,266
|
||||||||
Cash, cash equivalents and restricted cash at beginning of the year
|
190,824
|
1,444,978
|
1,259,312
|
|||||||||
|
||||||||||||
Cash, cash equivalents and restricted cash at end of the year
|
1,444,978
|
1,259,312
|
3,570,578
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Supplement disclosures of cash flow information:
|
||||||||||||
|
||||||||||||
Income taxes paid
|
(13,999
|
)
|
(23,961
|
)
|
(74,349
|
)
|
||||||
Interest paid
|
(741
|
)
|
(42,901
|
)
|
(13,501
|
)
|
||||||
Interest received
|
2,922
|
11,520
|
33,934
|
|||||||||
|
||||||||||||
Supplement disclosures of non-cash activities:
|
||||||||||||
|
||||||||||||
Purchase of property and equipment included in accrued expenses and other payables
|
2,549
|
7,579
|
(9,804
|
)
|
||||||||
Purchase of intangible assets included in accrued expenses and other payables
|
867
|
(444
|
)
|
(422
|
)
|
|||||||
Purchase of property and equipment included in prepayments
|
(4,913
|
)
|
(6,104
|
)
|
3,851
|
|||||||
Purchase of intangible assets included in prepayments
|
(353
|
)
|
4,547
|
51
|
||||||||
Conversion of a mezzanine equity into ordinary shares
|
(205,075
|
)
|
–
|
–
|
||||||||
Conversion of 2017 convertible notes into ordinary shares
|
–
|
(48,975
|
)
|
(1,080,112
|
)
|
|
Note
|
No of
ordinary shares |
Ordinary
shares
$
|
Additional
paid-in capital
$
|
Accumulated
other comprehensive income
$
|
Statutory
reserves
$
|
Accumulated
deficit
$
|
Total Sea
Limited shareholders’ equity (deficit)
$
|
Non-
controlling interests
$
|
Total
Shareholders’ equity (deficit)
$
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2017
|
176,592,650
|
88
|
370,615
|
8,587
|
46
|
(505,006
|
)
|
(125,670
|
)
|
20
|
(125,650
|
)
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||
Net loss for the year
|
–
|
–
|
–
|
–
|
–
|
(560,485
|
)
|
(560,485
|
)
|
(681
|
)
|
(561,166
|
)
|
|||||||||||||||||||||||||||
Foreign currency translation adjustments
|
–
|
–
|
–
|
2,114
|
–
|
–
|
2,114
|
3
|
2,117
|
|||||||||||||||||||||||||||||||
Acquisition of subsidiaries
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
8,787
|
8,787
|
|||||||||||||||||||||||||||||||
Acquisition of non-controlling interests
|
–
|
–
|
(546
|
)
|
–
|
–
|
–
|
(546
|
)
|
(2,055
|
)
|
(2,601
|
)
|
|||||||||||||||||||||||||||
Cancellation of ordinary shares
|
10
|
(2,777,780
|
)
|
(1
|
)
|
–
|
–
|
–
|
(41,054
|
)
|
(41,055
|
)
|
–
|
(41,055
|
)
|
|||||||||||||||||||||||||
Disposal of interest in a subsidiary without change in control
|
–
|
–
|
32
|
–
|
–
|
–
|
32
|
32
|
64
|
|||||||||||||||||||||||||||||||
Exercise of share options
|
7,288,275
|
4
|
25,387
|
–
|
–
|
–
|
25,391
|
–
|
25,391
|
|||||||||||||||||||||||||||||||
Restricted share awards issued
|
1,572,500
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||||
Share-based compensation
|
–
|
–
|
28,636
|
–
|
–
|
–
|
28,636
|
–
|
28,636
|
|||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares, net of issuance costs
|
15
|
65,954,538
|
33
|
935,500
|
–
|
–
|
–
|
935,533
|
–
|
935,533
|
||||||||||||||||||||||||||||||
Conversion of convertible preference shares into Class A and Class B ordinary shares
|
15
|
86,336,030
|
43
|
205,032
|
–
|
–
|
–
|
205,075
|
–
|
205,075
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2017
|
334,966,213
|
167
|
1,564,656
|
10,701
|
46
|
(1,106,545
|
)
|
469,025
|
6,106
|
475,131
|
|
Note
|
No of
ordinary shares |
Ordinary
shares
$
|
Additional
paid-in capital
$
|
Accumulated
other comprehensive income
$
|
Statutory
reserves
$
|
Accumulated
deficit
$
|
Total
Sea Limited shareholders’ equity (deficit)
$
|
Non-
controlling interests
$
|
Total
Shareholders’
equity (deficit)
$
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2018
|
334,966,213
|
167
|
1,564,656
|
10,701
|
46
|
(1,106,545
|
)
|
469,025
|
6,106
|
475,131
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||
Net loss for the year
|
–
|
–
|
–
|
–
|
–
|
(961,241
|
)
|
(961,241
|
)
|
207
|
(961,034
|
)
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
–
|
–
|
–
|
(13,771
|
)
|
–
|
–
|
(13,771
|
)
|
(87
|
)
|
(13,858
|
)
|
|||||||||||||||||||||||||||
Net change in unrealized gain on available-for-sale investments
|
–
|
–
|
–
|
18,269
|
–
|
–
|
18,269
|
–
|
18,269
|
|||||||||||||||||||||||||||||||
Acquisition of non-controlling interests
|
–
|
–
|
(21,047
|
)
|
–
|
–
|
–
|
(21,047
|
)
|
(4,721
|
)
|
(25,768
|
)
|
|||||||||||||||||||||||||||
Disposal of interest in a subsidiary without change in control
|
–
|
–
|
1,348
|
–
|
–
|
–
|
1,348
|
2,179
|
3,527
|
|||||||||||||||||||||||||||||||
Conversion of convertible notes into Class A ordinary shares
|
13(a
|
)
|
3,592,415
|
2
|
48,973
|
–
|
–
|
–
|
48,975
|
–
|
48,975
|
|||||||||||||||||||||||||||||
Equity component of 2018 convertible notes
|
13(b
|
)
|
–
|
–
|
152,714
|
–
|
–
|
–
|
152,714
|
–
|
152,714
|
|||||||||||||||||||||||||||||
Shares issued to depositary bank
|
3,200,000
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||||
Exercise of share options
|
1,705,147
|
1
|
4,573
|
–
|
–
|
–
|
4,574
|
–
|
4,574
|
|||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued
|
68,000
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||||
Share-based compensation
|
–
|
–
|
58,015
|
–
|
–
|
–
|
58,015
|
–
|
58,015
|
|||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank
|
(933,007
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
342,598,768
|
170
|
1,809,232
|
15,199
|
46
|
(2,067,786
|
)
|
(243,139
|
)
|
3,684
|
(239,455
|
)
|
|
Note
|
No of
ordinary shares |
Ordinary
shares
$
|
Additional
paid-in capital
$
|
Accumulated
other comprehensive income
$
|
Statutory
reserves
$
|
Accumulated
deficit
$
|
Total
Sea Limited
shareholders’ equity (deficit)
$
|
Non-
controlling interests
$
|
Total
Shareholders’
equity
(deficit)
$
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2019
|
342,598,768
|
170
|
1,809,232
|
15,199
|
46
|
(2,067,786
|
)
|
(243,139
|
)
|
3,684
|
(239,455
|
)
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||
Net loss for the year
|
-
|
-
|
-
|
-
|
-
|
(1,462,799
|
)
|
(1,462,799
|
)
|
5,077
|
(1,457,722
|
)
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
-
|
-
|
3,119
|
-
|
-
|
3,119
|
111
|
3,230
|
|||||||||||||||||||||||||||||||
Net change in unrealized gain on available-for-sale investments
|
-
|
-
|
-
|
(12,869
|
)
|
-
|
-
|
(12,869
|
)
|
-
|
(12,869
|
)
|
||||||||||||||||||||||||||||
Conversion of convertible notes into Class A ordinary shares
|
13(a
|
)
|
45,645,884
|
23
|
1,080,089
|
-
|
-
|
-
|
1,080,112
|
-
|
1,080,112
|
|||||||||||||||||||||||||||||
Issuance of Class A ordinary shares, net of issuance costs
|
15
|
69,000,000
|
35
|
1,517,923
|
-
|
-
|
-
|
1,517,958
|
-
|
1,517,958
|
||||||||||||||||||||||||||||||
Capital contributed by non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,356
|
1,356
|
|||||||||||||||||||||||||||||||
Equity component of 2019 convertible notes
|
13(b
|
)
|
-
|
-
|
240,582
|
-
|
-
|
-
|
240,582
|
-
|
240,582
|
|||||||||||||||||||||||||||||
Purchase of capped calls related to issuance of 2019 convertible notes
|
13(b
|
)
|
-
|
-
|
(97,060
|
)
|
-
|
-
|
-
|
(97,060
|
)
|
-
|
(97,060
|
)
|
||||||||||||||||||||||||||
Shares issued to depositary bank
|
6,000,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||
Exercise of share options
|
3,736,976
|
2
|
20,843
|
-
|
-
|
-
|
20,845
|
-
|
20,845
|
|||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued
|
1,983,639
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||
Share-based compensation
|
-
|
-
|
115,675
|
-
|
-
|
-
|
115,675
|
-
|
115,675
|
|||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank
|
(5,720,615
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2019
|
463,244,652
|
230
|
4,687,284
|
5,449
|
46
|
(3,530,585
|
)
|
1,162,424
|
10,228
|
1,172,652
|
(a) |
As of December 31, 2019, significant subsidiaries of the Company and its consolidated variable interest entities (the “VIEs”) where the Company or its wholly-owned subsidiaries is the primary beneficiary (collectively refers to as the “Primary Beneficiary”) include the following entities:
|
Entity
|
|
Date of
Incorporation/ Acquisition |
|
Place of
incorporation
|
|
Percentage of
direct ownership
by the Company
|
|
Principal activities
|
||
|
|
|
|
|
|
2018
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiaries held by the Company:
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Garena Limited (“Garena Cayman”)
|
|
March 4, 2015
|
|
Cayman Islands
|
|
100
|
|
100
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
Shopee Southeast Asia Limited (“Shopee Cayman”)
|
|
January 16, 2015
|
|
Cayman Islands
|
|
100
|
|
100
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
SeaMoney (Payment) Limited (“SeaMoney (Payment) Cayman” formerly known as Airpay Limited)
|
|
March 27, 2015
|
|
Cayman Islands
|
|
100
|
|
100
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
Garena Online Private Limited (“Garena Online”)
|
|
May 8, 2009
|
|
Singapore
|
|
100
|
|
100
|
|
Game operations and software development
|
|
|
|
|
|
|
|
|
|
|
|
Garena Ventures Private Limited
|
|
February 23, 2015
|
|
Singapore
|
|
100
|
|
100
|
|
Investment holding company
|
|
|
|
|
|
|
|
|
|
|
|
PT. Garena Indonesia
|
|
December 6, 2012
|
|
Indonesia
|
|
100
|
|
100
|
|
Game operations
|
Entity
|
|
Date of
Incorporation/ Acquisition |
|
Place of
incorporation
|
|
Percentage of
direct ownership
by the Company
|
|
Principal
activities
|
||
|
|
|
|
|
|
2018
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary held by Garena Cayman:
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Garena Online (Thailand) Co., Ltd. <3
|
|
August 18, 2011
|
|
Thailand
|
|
100
|
|
100
|
|
Game operations
|
|
|
|
|
|
|
|
|
|
|
|
Garena Technology Private Limited Taiwan branch
|
|
July 31, 2017
|
|
Taiwan
|
|
100
|
|
100
|
|
Game operations
|
|
|
|
|
|
|
|
|
|
|
|
Variable interest entities held by Garena Cayman:
|
||||||||||
Vietnam Esports and Entertainment Joint Stock Company <1
|
|
May 10, 2011
|
|
Vietnam
|
|
30
|
|
30
|
|
Game operations
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiaries held by Shopee Cayman:
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Shopee (Thailand) Co., Ltd.<3
|
|
February 2, 2015
|
|
Thailand
|
|
100
|
|
100
|
|
Online platform
|
|
|
|
|
|
|
|
|
|
|
|
PT. Shopee International Indonesia
|
|
August 5, 2015
|
|
Indonesia
|
|
100
|
|
100
|
|
Online platform
|
|
|
|
|
|
|
|
|
|
|
|
Shopee Singapore Private Limited (“Shopee Singapore”)
|
|
February 5, 2015
|
|
Singapore
|
|
100
|
|
100
|
|
Online platform
|
|
|
|
|
|
|
|
|
|
|
|
Shopee Company Limited
|
|
February 10, 2015
|
|
Vietnam
|
|
100
|
|
100
|
|
Online platform
|
Entity
|
|
Date of
Incorporation/ Acquisition |
|
Place of
incorporation
|
|
Percentage of
direct ownership
by the Company
|
|
Principal
activities |
||
|
|
|
|
|
|
2018
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary held by Happymall Limited
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Shopee (Taiwan) Co., Ltd (“Shopee Taiwan”) <4
|
|
March 4, 2015
|
|
Taiwan
|
|
–
|
|
100
|
|
Online platform
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary held by SeaMoney (Payment) Cayman:
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
AirPay (Thailand) Co., Ltd.<3
|
|
June 16, 2014
|
|
Thailand
|
|
100
|
|
100
|
|
Electronic payment services
|
|
|
|
|
|
|
|
|
|
|
|
Variable interest entity held by SeaMoney (Payment) Cayman:
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Airpay Joint Stock Company (formerly known as Vietnam Esports Development Joint Stock Company) <2
|
|
June 9, 2009
|
|
Vietnam
|
|
30
|
|
18
|
|
Electronic payment services
|
1. |
ORGANIZATION (continued)
|
(b) |
VIE structure
|
1. |
ORGANIZATION (continued)
|
(b) |
VIE structure (continued)
|
1. |
ORGANIZATION (continued)
|
(b) |
VIE structure (continued)
|
1. |
ORGANIZATION (continued)
|
(b) |
VIE structure (continued)
|
● |
the ownership structures of our material VIEs in Vietnam, currently in effect, do not and will not result in any violation of the laws or regulations currently in effect in Vietnam; and
|
● |
the contractual arrangements among the Company, the VIEs and/or the VIE shareholders governed by the laws of Vietnam, currently in effect, are valid, binding and enforceable, and do not result in any violation of such laws or regulations currently in effect.
|
1. |
ORGANIZATION (continued)
|
(b) |
VIE structure (continued)
|
(c) |
VIE disclosures
|
1. |
ORGANIZATION (continued)
|
(c) |
VIE disclosures (continued)
|
|
As of December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
ASSETS:
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
144,155
|
111,831
|
||||||
Restricted cash
|
111,433
|
237,874
|
||||||
Accounts receivable, net
|
5,635
|
8,672
|
||||||
Prepaid expenses and other assets
|
74,954
|
25,586
|
||||||
Inventories, net
|
8,635
|
6,517
|
||||||
Short-term investments
|
690
|
30,324
|
||||||
Amounts due from intercompanies(1)
|
40,209
|
34,718
|
||||||
|
||||||||
Total current assets
|
385,711
|
455,522
|
||||||
|
||||||||
Non-current assets:
|
||||||||
Property and equipment, net
|
29,404
|
54,092
|
||||||
Operating lease right-of-use assets, net
|
–
|
27,637
|
||||||
Intangible assets, net
|
438
|
300
|
||||||
Long-term investments
|
12,131
|
13,961
|
||||||
Prepaid expenses and other assets
|
17,869
|
14,312
|
||||||
Restricted cash
|
100
|
–
|
||||||
Deferred tax assets
|
33,602
|
32,903
|
||||||
|
||||||||
Total non-current assets
|
93,544
|
143,205
|
||||||
|
||||||||
TOTAL ASSETS (2)
|
479,255
|
598,727
|
1. |
ORGANIZATION (continued)
|
(c) |
VIE disclosures (continued)
|
|
As of December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
LIABILITIES:
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
5,095
|
11,274
|
||||||
Accrued expenses and other payables
|
236,883
|
93,146
|
||||||
Advances from customers
|
4,832
|
6,116
|
||||||
Amount due to related parties
|
1,297
|
1,569
|
||||||
Short-term borrowings
|
856
|
1,258
|
||||||
Operating lease liabilities
|
–
|
8,797
|
||||||
Deferred revenue
|
119,219
|
133,362
|
||||||
Income taxes payable
|
1,785
|
5,850
|
||||||
Amount due to intercompanies(1)
|
83,927
|
367,537
|
||||||
|
||||||||
Total current liabilities
|
453,894
|
628,909
|
||||||
|
||||||||
Non-current liabilities:
|
||||||||
Accrued expenses and other payables
|
1,630
|
1,357
|
||||||
Long-term borrowings
|
1,026
|
358
|
||||||
Operating lease liabilities
|
-
|
20,129
|
||||||
Deferred revenue
|
72,439
|
49,325
|
||||||
Amount due to intercompanies(1)
|
258,183
|
12,980
|
||||||
Unrecognized tax benefits
|
2,522
|
976
|
||||||
|
||||||||
Total non-current liabilities
|
335,800
|
85,125
|
||||||
|
||||||||
Total liabilities
|
789,694
|
714,034
|
|
For the Years Ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
Revenue
|
||||||||||||
- Third party customers
|
201,413
|
342,800
|
443,401
|
|||||||||
- Intercompanies
|
27,038
|
52,325
|
118,833
|
|||||||||
Net loss
|
(91,124
|
)
|
(67,816
|
)
|
(2,108
|
)
|
|
For the Years Ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
Net cash (used in) generated from operating activities
|
(42,446
|
)
|
67,275
|
(77,708
|
)
|
|||||||
Net cash used in investing activities
|
(22,509
|
)
|
(27,434
|
)
|
(69,181
|
)
|
||||||
Net cash generated from financing activities
|
149,435
|
97,398
|
199,406
|
(1) |
Amounts due from or to intercompanies consist of intercompany receivables or payables to the other companies within the group arising from intercompany transactions, and funds advanced for working capital purpose.
|
(2) |
These assets can be used only to settle the obligations of the respective VIEs.
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
- Computers
|
3 to 4 years
|
- Office equipment
|
3 years
|
- Furniture and fittings
|
3 years
|
- Leasehold improvements
|
Over the shorter of lease term or the estimated useful lives of the assets
|
- Motor vehicles
|
6 to 10 years
|
- Warehouse equipment
|
5 to 8 years
|
- Land use right
|
20 years
|
- Building
|
15 years
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
- Licensing fee
|
Over the shorter of licensing period or the estimated useful lives of the intangible assets
|
- Trademarks
|
10 years
|
- IP right
|
1 to 6 years
|
- Software
|
3 to 6 years
|
- Customer relationships
|
3 years
|
- Software platforms
|
3 years
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(l) |
Investments (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(o) |
Revenue recognition (continued)
|
(i) |
Digital entertainment revenue
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(o) |
Revenue recognition (continued)
|
(i) |
Digital entertainment revenue (continued)
|
a) |
Item-based revenue model
|
b) |
User-based revenue model
|
c) |
Game-based revenue model
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(o) |
Revenue recognition (continued)
|
(ii) |
E-commerce
|
(iii) |
Digital financial services
|
(iv) |
Rendering of services
|
(v) |
Sales of goods
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(s) |
Leases (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(za) |
Recent accounting pronouncements (continued)
|
(a) |
Credit risk
|
(b) |
Business, supplier, customer and economic risk
|
(i) |
Business risk - The Company derives a significant portion of its net revenues from its digital entertainment and e-commerce operations. If competitors introduce new online games or new marketplace platform that compete with, or surpass the online games or marketplace platform operated by the Company, the Company’s operating performance in its digital entertainment or e-commerce operations will be affected.
|
(ii) |
Supplier risk - The Company’s digital entertainment operations are dependent upon online games licensed from game developers. The term of the game license agreements with the game developers varies and is renewable upon both parties’ consent. There is no assurance that the Company will be able to renew these game licenses. There is also no assurance that the Company will be able to source for new popular games. Even if new popular games were successfully sourced, there is no assurance that the Company will be able to enter into commercially acceptable terms. The top five licensed games contributed 76.6%, 78.0% and 51.8% of digital entertainment revenue of the Company for the years ended December 31, 2017, 2018 and 2019, respectively.
|
(iii) |
Customer risk - No individual customer accounted for more than 10% of net revenues for the three years ended December 31, 2017, 2018 and 2019.
|
(iv) |
Political, economic and social uncertainties - The Company’s businesses could be adversely affected by the varying political, economic and social uncertainties in the diverse markets that it operates in. In addition, there is no assurance that the Company is able to operate seamlessly across the borders as a single market.
|
(v) |
Regulatory restrictions - Certain laws, rules and regulations currently prohibit foreign ownership of companies in markets like Vietnam, one of the Company’s significant markets. As a result, the Company consolidates these entities through the use of VIE agreements.
|
3. |
CONCENTRATION OF RISKS (continued)
|
(c) |
Currency convertibility risk
|
(d) |
Foreign currency risk
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
|
||||||||
Accounts receivable
|
100,182
|
191,118
|
||||||
Allowance for doubtful accounts
|
(2,400
|
)
|
(4,083
|
)
|
||||
|
97,782
|
187,035
|
|
For the year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Balance at the beginning of the year
|
195
|
1,830
|
2,400
|
|||||||||
Charged to expenses
|
1,867
|
2,205
|
4,687
|
|||||||||
Reversal
|
(245
|
)
|
(47
|
)
|
(1,431
|
)
|
||||||
Write-off of accounts receivable
|
(26
|
)
|
(1,588
|
)
|
(1,537
|
)
|
||||||
Exchange differences
|
39
|
–
|
(36
|
)
|
||||||||
|
||||||||||||
Balance at the end of the year
|
1,830
|
2,400
|
4,083
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Current:
|
||||||||
Deferred channel costs
|
71,707
|
232,384
|
||||||
Employee loans and advances
|
2,394
|
2,175
|
||||||
Other receivables
|
171,459
|
211,244
|
||||||
Prepaid cost of revenue, sales and marketing expense and others
|
23,669
|
41,311
|
||||||
Security deposits
|
2,144
|
1,902
|
||||||
Tax receivable
|
41,014
|
46,171
|
||||||
|
312,387
|
535,187
|
||||||
|
||||||||
Non-current:
|
||||||||
Deferred channel costs
|
29,956
|
29,162
|
||||||
Other receivables
|
7,852
|
4,849
|
||||||
Prepaid licensing fee
|
56
|
5
|
||||||
Prepayment for purchase of property and equipment (including renovation-in-progress)
|
11,857
|
8,006
|
||||||
Security deposits
|
19,344
|
22,476
|
||||||
Others
|
–
|
1,186
|
||||||
|
69,065
|
65,684
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
|
||||||||
Computers
|
208,435
|
339,221
|
||||||
Office equipment, furniture and fittings
|
15,451
|
24,883
|
||||||
Leasehold improvements
|
63,781
|
129,298
|
||||||
Motor vehicles
|
5,074
|
14,624
|
||||||
Warehouse equipment
|
–
|
3,464
|
||||||
Land use right
|
–
|
20,598
|
||||||
Building
|
–
|
814
|
||||||
|
292,741
|
532,902
|
||||||
Less: accumulated depreciation
|
(100,384
|
)
|
(214,282
|
)
|
||||
|
192,357
|
318,620
|
|
For the year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Cost of revenue
|
12,407
|
31,203
|
80,245
|
|||||||||
Sales and marketing expenses
|
1,198
|
3,712
|
3,200
|
|||||||||
General and administrative expenses
|
9,248
|
19,009
|
31,282
|
|||||||||
Research and development expenses
|
500
|
978
|
2,056
|
|||||||||
|
23,353
|
54,902
|
116,783
|
|
For the year ended
|
|||
December 31, 2019
|
||||
Operating lease cost:
|
_$_
|
|||
Operating lease cost
|
51,403
|
|||
Short-term lease cost
|
4,669
|
|||
56,072
|
||||
Finance lease cost:
|
||||
Amortization of lease assets
|
1,168
|
|||
Interest on lease liabilities
|
532
|
|||
1,700
|
||||
Total lease cost
|
57,772
|
Supplemental cash flow information
|
||||
Operating cash flows from operating leases
|
41,237
|
|||
Right-of-use obtained in exchange for new operating lease liabilities
|
99,129
|
|||
Right-of-use obtained in exchange for new finance lease liabilities
|
8,558
|
Weighted-average remaining lease term (years)
|
||||
Operating leases
|
4.43
|
|||
Finance leases
|
3.42
|
|
Operating leases
|
Finance leases
|
||||||
As of December 31, 2019:
|
_$_
|
_$_
|
||||||
Maturities of lease liabilities
|
||||||||
2020
|
59,410
|
2,719
|
||||||
2021
|
58,378
|
2,545
|
||||||
2022
|
52,128
|
2,545
|
||||||
2023
|
44,222
|
1,060
|
||||||
2024
|
14,096
|
–
|
||||||
After 2024
|
18,096
|
–
|
||||||
Total lease payments
|
246,330
|
8,869
|
||||||
Less: Imputed interest
|
(46,010
|
)
|
(1,607
|
)
|
||||
Present value of lease liabilities
|
200,320
|
7,262
|
|
Licensing fee
$
|
IP right
$
|
Trademarks
$
|
Others
$
|
Total
$
|
|||||||||||||||
Balance at January 1, 2018
|
16,312
|
9,248
|
10,145
|
1,628
|
37,333
|
|||||||||||||||
Additions
|
3,221
|
406
|
–
|
1,618
|
5,245
|
|||||||||||||||
Amortization expense
|
(17,573
|
)
|
(4,348
|
)
|
(1,068
|
)
|
(837
|
)
|
(23,826
|
)
|
||||||||||
Impairment
|
(112
|
)
|
(5,054
|
)
|
–
|
–
|
(5,166
|
)
|
||||||||||||
Disposal
|
–
|
–
|
–
|
(245
|
)
|
(245
|
)
|
|||||||||||||
Exchange differences
|
(280
|
)
|
(128
|
)
|
–
|
(46
|
)
|
(454
|
)
|
|||||||||||
|
||||||||||||||||||||
Balance at January 1, 2019
|
1,568
|
124
|
9,077
|
2,118
|
12,887
|
|||||||||||||||
Additions
|
6,045
|
–
|
–
|
838
|
6,883
|
|||||||||||||||
Amortization expense
|
(2,653
|
)
|
(124
|
)
|
(1,068
|
)
|
(1,004
|
)
|
(4,849
|
)
|
||||||||||
Written-off
|
–
|
–
|
–
|
(2
|
)
|
(2
|
)
|
|||||||||||||
Exchange differences
|
85
|
–
|
–
|
16
|
101
|
|||||||||||||||
Balance at December 31, 2019
|
5,045
|
–
|
8,009
|
1,966
|
15,020
|
9. |
INTANGIBLE ASSETS, NET (continued)
|
|
Licensing fee
$
|
IP right
$
|
Trademarks
$
|
Others
$
|
Total
$
|
|||||||||||||||
|
||||||||||||||||||||
2020
|
2,838
|
–
|
1,068
|
904
|
4,810
|
|||||||||||||||
2021
|
1,314
|
–
|
1,068
|
609
|
2,991
|
|||||||||||||||
2022
|
440
|
–
|
1,068
|
382
|
1,890
|
|||||||||||||||
2023
|
258
|
–
|
1,068
|
71
|
1,397
|
|||||||||||||||
2024
|
195
|
–
|
1,068
|
–
|
1,263
|
|||||||||||||||
Thereafter
|
–
|
–
|
2,669
|
–
|
2,669
|
|||||||||||||||
|
5,045
|
–
|
8,009
|
1,966
|
15,020
|
10. |
INVESTMENTS (continued)
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Current:
|
||||||||
Accrued cost of revenue and sales and marketing expenses
|
122,679
|
242,268
|
||||||
Accrued interest for convertible notes
|
–
|
1,374
|
||||||
Accrued office-related operating expenses
|
15,134
|
2,745
|
||||||
Business and other taxes payables
|
8,687
|
19,345
|
||||||
Other payables
|
76,542
|
92,590
|
||||||
Escrow payables
|
333,768
|
513,864
|
||||||
Payroll and welfare payable
|
36,592
|
65,969
|
||||||
Payable for property and equipment
|
28,246
|
18,020
|
||||||
Others
|
15,232
|
22,677
|
||||||
Finance lease liability
|
–
|
1,953
|
||||||
|
636,880
|
980,805
|
||||||
|
||||||||
Non-current:
|
||||||||
Others
|
7,894
|
20,493
|
||||||
Finance lease liability
|
–
|
5,309
|
||||||
|
7,894
|
25,802
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
|
||||||||
Current
|
856
|
1,258
|
||||||
Non-current
|
1,026
|
358
|
||||||
|
1,882
|
1,616
|
|
2018
|
2019
|
|
|
|
Interest rate (%) per annum
|
9.00 to 12.29
|
8.00 to 12.69
|
Repayment date
|
From October 2020 to August 2021
|
From October 2020 to August 2021
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Current:
|
||||||||
2017 Convertible Notes
|
–
|
29,481
|
||||||
|
–
|
29,481
|
||||||
|
||||||||
Non-current:
|
||||||||
2017 Convertible Notes
|
636,716
|
–
|
||||||
2018 Convertible Notes
|
425,080
|
453,215
|
||||||
2019 Convertible Notes
|
–
|
903,117
|
||||||
|
1,061,796
|
1,356,332
|
(a) |
2017 Convertible Notes
|
13. |
CONVERTIBLE NOTES (continued)
|
(a) |
2017 Convertible Notes (continued)
|
13. |
CONVERTIBLE NOTES (continued)
|
(b) |
2018 Convertible Notes and 2019 Convertible Notes
|
13. |
CONVERTIBLE NOTES (continued)
|
(b) |
2018 Convertible Notes and 2019 Convertible Notes (continued)
|
|
2018 Convertible Notes
|
2019 Convertible Notes
|
||||||
Liability component
|
$
|
410,926
|
$
|
897,918
|
||||
Effective interest rate
|
9.38
|
%
|
6.03
|
%
|
||||
Equity component
|
$
|
152,714
|
$
|
240,582
|
||||
Debt issuance cost, allocated in proportion to the allocation of proceeds
|
$
|
11,360
|
$
|
11,500
|
14. |
SHARE BASED COMPENSATION (continued)
|
(a) |
Option granted to Eligible Persons
|
|
Number of
options |
Weighted
average exercise price |
Weighted
average remaining contractual term |
Aggregate
intrinsic value |
||||||||||||
|
_$_
|
Years
|
_$_
|
|||||||||||||
Outstanding, January 1, 2017
|
17,946,980
|
3.05
|
||||||||||||||
Granted
|
1,915,000
|
14.19
|
||||||||||||||
Exercised
|
(7,288,275
|
)
|
2.57
|
|||||||||||||
Forfeited
|
(920,192
|
)
|
4.01
|
|||||||||||||
Outstanding, December 31, 2017
|
11,653,513
|
5.11
|
6.90
|
97,415
|
||||||||||||
Vested and expected to vest at December 31, 2017
|
11,653,513
|
5.11
|
||||||||||||||
Exercisable as of December 31, 2017
|
7,136,252
|
3.02
|
6.28
|
73,599
|
||||||||||||
Outstanding, January 1, 2018
|
11,653,513
|
5.11
|
||||||||||||||
Granted
|
26,500,000
|
15.00
|
||||||||||||||
Exercised
|
(2,117,647
|
)
|
2.16
|
|||||||||||||
Forfeited
|
(328,984
|
)
|
14.03
|
|||||||||||||
Outstanding, December 31, 2018
|
35,706,882
|
12.54
|
8.38
|
58,007
|
||||||||||||
Vested and expected to vest at December 31, 2018
|
35,706,882
|
12.54
|
||||||||||||||
Exercisable as of December 31, 2018
|
8,748,351
|
5.25
|
6.03
|
56,918
|
||||||||||||
Outstanding, January 1, 2019
|
35,706,882
|
12.54
|
||||||||||||||
Granted
|
15,327,884
|
15.00
|
||||||||||||||
Exercised
|
(3,736,976
|
)
|
5.58
|
|||||||||||||
Forfeited
|
(109,236
|
)
|
14.24
|
|||||||||||||
Outstanding, December 31, 2019
|
47,188,554
|
13.89
|
8.18
|
1,242,496
|
||||||||||||
Vested and expected to vest at December 31, 2019
|
47,188,554
|
13.89
|
||||||||||||||
Exercisable as of December 31, 2019
|
19,664,736
|
12.35
|
7.35
|
548,035
|
14. |
SHARE BASED COMPENSATION (continued)
|
(a) |
Option granted to Eligible Persons (continued)
|
|
|
Granted in 2017
|
|
Granted in 2018
|
|
Granted in 2019
|
|
|
|
|
|
|
|
Risk-free interest rates
|
|
1.99% – 2.25%
|
|
2.75% – 2.92%
|
|
2.34% – 2.68%
|
Expected term
|
|
5.5 – 7 years
|
|
5 – 7 years
|
|
5.5 – 8.5 years
|
Expected volatility
|
|
34.3% – 37.0%
|
|
33.3% – 35.2%
|
|
33.0% – 35.0%
|
Expected dividend yield
|
|
–
|
|
–
|
|
–
|
Fair value of share options
|
|
$4.84 – $6.57
|
|
$2.52 – $3.52
|
|
$4.58 – $13.59
|
14. |
SHARE BASED COMPENSATION (continued)
|
(b) |
RSAs/RSUs granted to Eligible Persons
|
|
Number of
RSAs/RSUs |
Weighted
average grant date fair value |
Weighted
average remaining contractual life |
Aggregate
intrinsic value |
||||||||||||
|
_$_
|
Years
|
_$_
|
|||||||||||||
|
||||||||||||||||
Unvested, January 1, 2017
|
313,330
|
12.97
|
9.80
|
4,184
|
||||||||||||
Granted
|
950,000
|
15.15
|
||||||||||||||
Vested
|
(435,623
|
)
|
14.96
|
|||||||||||||
Forfeited
|
(7,500
|
)
|
13.05
|
|||||||||||||
|
||||||||||||||||
Unvested, December 31, 2017 and January 1, 2018
|
820,207
|
14.43
|
9.60
|
10,933
|
||||||||||||
Granted
|
4,983,162
|
12.30
|
||||||||||||||
Vested
|
(309,644
|
)
|
13.93
|
|||||||||||||
Forfeited
|
(738,753
|
)
|
13.75
|
|||||||||||||
|
||||||||||||||||
Unvested, December 31, 2018 and January 1, 2019
|
4,754,972
|
12.34
|
9.17
|
53,826
|
||||||||||||
Granted
|
6,249,313
|
20.50
|
||||||||||||||
Vested
|
(2,131,415
|
)
|
13.67
|
|||||||||||||
Forfeited
|
(791,433
|
)
|
15.22
|
|||||||||||||
|
||||||||||||||||
Unvested, December 31, 2019
|
8,081,437
|
18.02
|
8.93
|
325,035
|
14. |
SHARE BASED COMPENSATION (continued)
|
|
For the year ended December 31,
|
|||||||||||
|
2017
|
2018
|
2019
|
|||||||||
|
_$_
|
_$_
|
_$_
|
|||||||||
Share options:
|
||||||||||||
|
||||||||||||
Cost of revenue
|
1,213
|
1,292
|
244
|
|||||||||
Sales and marketing expenses
|
689
|
795
|
156
|
|||||||||
General and administrative expenses
|
18,512
|
39,654
|
71,787
|
|||||||||
Research and development expenses
|
1,407
|
1,142
|
567
|
|||||||||
|
21,821
|
42,883
|
72,754
|
|||||||||
Cash received for the exercise in the respective years
|
18,708
|
4,574
|
20,867
|
|||||||||
|
||||||||||||
RSAs/ RSUs:
|
||||||||||||
|
||||||||||||
Cost of revenue
|
446
|
2,018
|
1,714
|
|||||||||
Sales and marketing expenses
|
–
|
1,899
|
3,017
|
|||||||||
General and administrative expenses
|
6,369
|
7,670
|
26,761
|
|||||||||
Research and development expenses
|
–
|
3,545
|
11,429
|
|||||||||
|
6,815
|
15,132
|
42,921
|
|||||||||
SARs:
|
||||||||||||
|
||||||||||||
Cost of revenue
|
–
|
24
|
319
|
|||||||||
Sales and marketing expenses
|
–
|
52
|
749
|
|||||||||
General and administrative expenses
|
–
|
30
|
313
|
|||||||||
Research and development expenses
|
–
|
–
|
13
|
|||||||||
|
–
|
106
|
1,394
|
|
Unrealized
fair value gain (loss) on available-for- sale investments |
Foreign
currency translation |
Total
|
||
|
-$
|
-$
|
-$
|
||
|
|
|
|
||
Balance as of January 1, 2017
|
–
|
8,587
|
8,587
|
||
Current year other comprehensive income
|
–
|
1,970
|
1,970
|
||
Reclassification adjustments for net gain and translation adjustments realized in net income
|
–
|
144
|
144
|
||
Balance as of December 31, 2017
|
–
|
10,701
|
10,701
|
||
Current year other comprehensive income (loss)
|
18,269
|
(13,771)
|
4,498
|
||
Balance as of December 31, 2018
|
18,269
|
(3,070)
|
15,199
|
||
Current year other comprehensive (loss) income
|
(12,869)
|
3,119
|
(9,750)
|
||
Balance as of December 31, 2019
|
5,400
|
49
|
5,449
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
|
||||||||
At the beginning of the financial year
|
46
|
46
|
||||||
Transferred from retained earnings
|
–
|
–
|
||||||
At the end of the financial year
|
46
|
46
|
|
For the year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Current income tax
|
6,903
|
7,949
|
56,296
|
|||||||||
Deferred tax
|
(8,753
|
)
|
(19,797
|
)
|
(4,333
|
)
|
||||||
Withholding tax expense
|
12,595
|
15,936
|
33,901
|
|||||||||
|
10,745
|
4,088
|
85,864
|
18. |
TAXATION (continued)
|
|
For the year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Loss before income tax and share of results of equity investees
|
(548,509
|
)
|
(953,880
|
)
|
(1,368,619
|
)
|
||||||
|
||||||||||||
Tax expense computed at tax rate of 17%
|
(93,247
|
)
|
(162,160
|
)
|
(232,665
|
)
|
||||||
Changes in valuation allowance
|
91,017
|
197,257
|
265,776
|
|||||||||
Non-deductible expenses
|
2,211
|
1,797
|
4,207
|
|||||||||
Effect of concessionary tax rate and tax reliefs
|
(3,072
|
)
|
(6,139
|
)
|
(42,404
|
)
|
||||||
Withholding tax expense
|
12,595
|
15,936
|
33,901
|
|||||||||
Foreign earnings at different tax rates
|
4,104
|
(38,099
|
)
|
60,721
|
||||||||
Others
|
(2,863
|
)
|
(4,504
|
)
|
(3,672
|
)
|
||||||
|
10,745
|
4,088
|
85,864
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Deferred tax assets:
|
||||||||
Property and equipment
|
1,291
|
4,380
|
||||||
Advances from customers
|
283
|
507
|
||||||
Deferred revenue
|
72,970
|
93,956
|
||||||
Unutilized tax losses and unused capital allowances
|
346,369
|
586,944
|
||||||
Others
|
6,681
|
16,922
|
||||||
Valuation allowance
|
(354,462
|
)
|
(619,272
|
)
|
||||
Total deferred tax assets
|
73,132
|
83,437
|
||||||
|
||||||||
Property and equipment
|
(954
|
)
|
(1,002
|
)
|
||||
Intangible assets
|
(1,998
|
)
|
(2,577
|
)
|
||||
Deferred channel costs
|
(7,300
|
)
|
(9,448
|
)
|
||||
Others
|
(257
|
)
|
(1,045
|
)
|
||||
Total deferred tax liabilities
|
(10,509
|
)
|
(14,072
|
)
|
||||
Net deferred tax assets
|
62,623
|
69,365
|
18. |
TAXATION (continued)
|
|
For the year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
Numerator:
|
||||||||||||
Net loss attributable to ordinary shareholders
|
(560,485
|
)
|
(961,241
|
)
|
(1,462,799
|
)
|
||||||
|
||||||||||||
Denominator:
|
||||||||||||
Weighted-average number of shares outstanding—basic and diluted
|
205,727,195
|
338,472,987
|
436,601,801
|
|||||||||
|
||||||||||||
Basic and diluted loss per share:
|
(2.72
|
)
|
(2.84
|
)
|
(3.35
|
)
|
Name of related parties
|
Relationship with the Company
|
|
|
i) Tencent Limited and its affiliates (“Tencent”)
|
A shareholder of the Company
|
ii) Vietnam Payment Solutions JSC (“VN Pay”) (2)
|
An associated company
|
iii) Shanghai Wuju Information Technology Co., Ltd. (“Wuju”)
|
An associated company
|
iv) Vexere Joint Stock Company (“Vexere”)
|
An associated Company
|
v) Directors and the key management
|
Key Management
|
(1) |
These are the related parties that have engaged in significant transactions with the Company for the years ended December 31, 2017, 2018 and 2019.
|
(2) |
VN Pay ceased to be a related party of the Company as of August 31, 2017.
|
(b) |
The Company had the following significant related party transactions for the years ended December 31, 2017, 2018 and 2019:
|
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
Royalty fee and license fee to:
|
||||||||||||
- Tencent
|
70,470
|
96,713
|
122,234
|
|||||||||
Royalty fee and license fee from:
|
||||||||||||
- Tencent
|
262
|
3,629
|
1,602
|
|||||||||
|
||||||||||||
Rack rental income from:
|
||||||||||||
- Tencent
|
1,007
|
677
|
438
|
|||||||||
|
||||||||||||
Services provided by:
|
||||||||||||
- VN Pay
|
149
|
–
|
–
|
|||||||||
- Tencent
|
1,012
|
13,066
|
19,005
|
|||||||||
Purchase of merchandise goods from:
|
||||||||||||
- VN Pay
|
2,898
|
–
|
–
|
|||||||||
Sales of goods to:
|
||||||||||||
- VN Pay
|
679
|
–
|
–
|
|||||||||
|
||||||||||||
Loans provided to:
|
||||||||||||
- Wuju
|
422
|
–
|
–
|
|||||||||
Repayment of loans from:
|
||||||||||||
- Wuju
|
953
|
–
|
–
|
|||||||||
- VN Pay
|
1,784
|
–
|
–
|
|||||||||
|
||||||||||||
Issuance of convertible notes to:
|
||||||||||||
- Tencent
|
100,000
|
50,000
|
–
|
|||||||||
Interest expense to:
|
||||||||||||
- Tencent
|
4,153
|
2,092
|
563
|
|||||||||
|
||||||||||||
Conversion of convertible notes (principal amount) by:
|
||||||||||||
- Tencent
|
–
|
–
|
100,000
|
|||||||||
|
||||||||||||
Promissory notes extended to:
|
||||||||||||
- Key management
|
9,768
|
–
|
–
|
|||||||||
Repayment of promissory notes from:
|
||||||||||||
- Key management
|
16,178
|
–
|
–
|
|||||||||
Interest income received from:
|
||||||||||||
- Key management
|
774
|
–
|
–
|
20. |
RELATED PARTY TRANSACTIONS (continued)
|
(c) |
The Company had the following significant related party balances for the years ended December 31, 2018 and 2019:
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Amounts due from related parties:
|
||||||||
Current:
|
||||||||
- Tencent
|
5,224
|
477
|
||||||
|
||||||||
Convertible notes (principal amount) due to:
|
||||||||
Non-current:
|
||||||||
- Tencent
|
150,000
|
–
|
||||||
|
||||||||
Amount due to related parties:
|
||||||||
Current:
|
||||||||
- Tencent
|
46,025
|
34,970
|
21. |
SEGMENT REPORTING (continued)
|
|
For the Year ended December 31, 2017
|
|||||||||||||||||||||||
|
Digital
Entertainment
$
|
E-Commerce
$
|
Digital Financial
Services
$
|
Other
Services
$
|
Unallocated
expenses(1)
$
|
Consolidated
$
|
||||||||||||||||||
|
||||||||||||||||||||||||
Revenue
|
365,167
|
9,034
|
16,270
|
23,719
|
–
|
414,190
|
||||||||||||||||||
|
||||||||||||||||||||||||
Operating income (loss)
|
45,637
|
(452,233
|
)
|
(38,038
|
)
|
(21,199
|
)
|
(36,523
|
)
|
(502,356
|
)
|
|||||||||||||
Non-operating loss, net
|
(46,153
|
)
|
||||||||||||||||||||||
Income tax expense
|
(10,745
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(1,912
|
)
|
||||||||||||||||||||||
Net loss
|
(561,166
|
)
|
|
For the Year ended December 31, 2018
|
|||||||||||||||||||||||
|
Digital
Entertainment
$
|
E-Commerce
$
|
Digital Financial
Services
$
|
Other
Services
$
|
Unallocated
expenses(1)
$
|
Consolidated
$
|
||||||||||||||||||
|
||||||||||||||||||||||||
Revenue
|
462,464
|
269,578
|
11,458
|
83,468
|
–
|
826,968
|
||||||||||||||||||
|
||||||||||||||||||||||||
Operating income (loss)
|
69,449
|
(893,489
|
)
|
(34,056
|
)
|
(62,548
|
)
|
(68,124
|
)
|
(988,768
|
)
|
|||||||||||||
Non-operating income, net
|
34,888
|
|||||||||||||||||||||||
Income tax expense
|
(4,088
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(3,066
|
)
|
||||||||||||||||||||||
Net loss
|
(961,034
|
)
|
|
For the Year ended December 31, 2019
|
|||||||||||||||||||||||
|
Digital
Entertainment
$
|
E-Commerce
$
|
Digital Financial
Services
$
|
Other
Services
$
|
Unallocated
expenses(1)
$
|
Consolidated
$
|
||||||||||||||||||
|
||||||||||||||||||||||||
Revenue
|
1,136,017
|
834,295
|
9,223
|
195,843
|
-
|
2,175,378
|
||||||||||||||||||
|
||||||||||||||||||||||||
Operating income (loss)
|
529,524
|
(1,131,771
|
)
|
(116,309
|
)
|
(39,864
|
)
|
(132,812
|
)
|
(891,232
|
)
|
|||||||||||||
Non-operating loss, net
|
(477,387
|
)
|
||||||||||||||||||||||
Income tax expense
|
(85,864
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(3,239
|
)
|
||||||||||||||||||||||
Net loss
|
(1,457,722
|
)
|
(1) |
Unallocated expenses are mainly relating to share-based compensation, general and corporate administrative costs, such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are excluded from segments results as they are not reviewed by the CODM as part of segment performance.
|
21. |
SEGMENT REPORTING (continued)
|
|
For the Year Ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
Revenue
|
||||||||||||
Southeast Asia
|
279,167
|
581,336
|
1,378,141
|
|||||||||
Latin America
|
1,850
|
14,713
|
282,618
|
|||||||||
Rest of Asia
|
133,173
|
229,773
|
489,291
|
|||||||||
Rest of the world
|
–
|
1,146
|
25,328
|
|||||||||
Consolidated revenue
|
414,190
|
826,968
|
2,175,378
|
|
As at December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Long-lived assets
|
||||||||
Southeast Asia
|
181,882
|
389,997
|
||||||
Rest of Asia
|
23,350
|
119,043
|
||||||
Rest of the world
|
12
|
7,565
|
||||||
|
205,244
|
516,605
|
22. |
FAIR VALUE MEASUREMENTS (continued)
|
|
Fair value measurement at December 31, 2018
|
|||||||||||||||
|
Quoted prices in
active markets for
identical assets
(Level 1)
$
|
Significant other
observable inputs
(Level 2)
$
|
Unobservable
inputs
(Level 3)
$
|
Total
$
|
||||||||||||
|
||||||||||||||||
Cash equivalents
|
10,137
|
–
|
–
|
10,137
|
||||||||||||
Money market funds
|
304,335
|
–
|
–
|
304,335
|
||||||||||||
Short-term investments
|
690
|
–
|
–
|
690
|
||||||||||||
Available-for-sale investments – non-current
|
–
|
–
|
70,374
|
70,374
|
||||||||||||
2017 Convertible Notes
|
–
|
–
|
(636,716
|
)
|
(636,716
|
)
|
||||||||||
Share appreciation rights
|
(106
|
)
|
–
|
–
|
(106
|
)
|
||||||||||
|
315,056
|
–
|
(566,342
|
)
|
(251,286
|
)
|
|
Fair value measurement at December 31, 2019
|
|||||||||||||||
|
Quoted prices in
active markets for
identical assets
(Level 1)
$
|
Significant other
observable inputs
(Level 2)
$
|
Unobservable
inputs
(Level 3)
$
|
Total
$
|
||||||||||||
|
||||||||||||||||
Cash equivalents
|
55,723
|
–
|
–
|
55,723
|
||||||||||||
Money market funds
|
537,615
|
–
|
–
|
537,615
|
||||||||||||
Short-term investments
|
30,324
|
–
|
72,000
|
102,324
|
||||||||||||
Time deposits – non-current
|
216
|
–
|
–
|
216
|
||||||||||||
Available-for-sale investments – non-current
|
–
|
–
|
56,418
|
56,418
|
||||||||||||
2017 Convertible Notes
|
–
|
–
|
(29,481
|
)
|
(29,481
|
)
|
||||||||||
Share appreciation rights
|
(1,500
|
)
|
–
|
–
|
(1,500
|
)
|
||||||||||
|
622,378
|
–
|
98,937
|
721,315
|
|
Level 3
instruments
measured at
fair value on
a recurring basis
$
|
|||
Assets:
|
||||
Available-for-sale investments
|
||||
|
||||
Current:
|
||||
Balance at January 1, 2017 and January 1, 2018
|
–
|
|||
Investment during 2019
|
72,000
|
|||
Balance at December 31, 2019
|
72,000
|
|||
Non-current:
|
||||
Balance at January 1, 2017
|
2,388
|
|||
Investment during 2017
|
18,000
|
|||
Impairment loss
|
(1,147
|
)
|
||
Exchange differences
|
8
|
|||
Balance at December 31, 2017
|
19,249
|
|||
Investment during 2018
|
33,000
|
|||
Impairment loss
|
(144
|
)
|
||
Unrealized fair value gain included in other comprehensive loss
|
18,269
|
|||
Balance at December 31, 2018
|
70,374
|
|||
Impairment loss
|
(1,087
|
)
|
||
Unrealized fair value loss included in other comprehensive loss
|
(12,869
|
)
|
||
Balance at December 31, 2019
|
56,418
|
|||
|
||||
Liabilities:
|
||||
Convertible notes
|
||||
Balance at January 1, 2017
|
–
|
|||
Convertible notes issued during the year
|
(675,000
|
)
|
||
Fair value loss
|
(51,950
|
)
|
||
Balance at December 31, 2017
|
(726,950
|
)
|
||
Fair value gain
|
41,259
|
|||
Conversion into Class A ordinary shares (Note 13(a))
|
48,975
|
|||
Balance at December 31, 2018
|
(636,716
|
)
|
||
Fair value loss
|
(472,877
|
)
|
||
Conversion into Class A ordinary shares (Note 13(a))
|
1,080,112
|
|||
Balance at December 31, 2019
|
(29,481
|
)
|
22. |
FAIR VALUE MEASUREMENTS (continued)
|
Condensed balance sheets
|
As of December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
519,107
|
1,898,588
|
||||||
Prepaid expenses and other assets
|
24,329
|
28,343
|
||||||
Amounts due from subsidiaries
|
2,052,292
|
3,613,656
|
||||||
Total current assets, representing total assets
|
2,595,728
|
5,540,587
|
||||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Accrued expenses and other payables
|
8,467
|
9,797
|
||||||
Amounts due to subsidiaries
|
41,638
|
42,582
|
||||||
Convertible notes
|
–
|
29,481
|
||||||
Total current liabilities
|
50,105
|
81,860
|
||||||
|
||||||||
Non-current liabilities
|
||||||||
Loss in excess of investments
|
1,726,966
|
2,939,971
|
||||||
Convertible notes
|
1,061,796
|
1,356,332
|
||||||
Total non-current liabilities
|
2,788,762
|
4,296,303
|
||||||
Total liabilities
|
2,838,867
|
4,378,163
|
||||||
Shareholders’ equity
|
||||||||
Class A Ordinary shares (Par value of US$0.0005 per share; Authorized: 14,800,000,000 and 14,800,000,000 shares as of December 31, 2018 and 2019, respectively; Issued and outstanding: 190,423,065 and 311,068,949 shares as of December 31, 2018 and 2019, respectively)
|
94
|
154
|
||||||
Class B Ordinary shares (Par value of US$0.0005 per share; Authorized: 200,000,000 and 200,000,000 shares as of December 31, 2018 and 2019, respectively; Issued and outstanding: 152,175,703 and 152,175,703 shares as of December 31, 2018 and 2019, respectively)
|
76
|
76
|
||||||
Additional paid-in capital
|
1,809,232
|
4,687,284
|
||||||
Accumulated other comprehensive loss
|
15,199
|
5,449
|
||||||
Statutory reserves
|
46
|
46
|
||||||
Accumulated deficit
|
(2,067,786
|
)
|
(3,530,585
|
)
|
||||
Total shareholders’ (deficit) equity
|
(243,139
|
)
|
1,162,424
|
|||||
Total liabilities and shareholders’ (deficit) equity
|
2,595,728
|
5,540,587
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Operating expenses
|
(41,369
|
)
|
(62,671
|
)
|
(124,197
|
)
|
||||||
Interest income
|
1,538
|
7,447
|
18,934
|
|||||||||
Other income
|
983
|
1,797
|
1,860
|
|||||||||
Interest expense
|
(26,460
|
)
|
(31,142
|
)
|
(47,644
|
)
|
||||||
Foreign exchange gain (loss)
|
1,072
|
(45
|
)
|
14
|
||||||||
Investment gain
|
3,374
|
4,335
|
371,289
|
|||||||||
Fair value (loss) gain on convertible notes
|
(51,950
|
)
|
41,259
|
(472,877
|
)
|
|||||||
Loss before income tax and share of results of equity investees
|
(112,812
|
)
|
(39,020
|
)
|
(252,621
|
)
|
||||||
Income tax expense
|
–
|
–
|
–
|
|||||||||
Share of results of equity investees
|
(447,673
|
)
|
(922,221
|
)
|
(1,210,178
|
)
|
||||||
Net loss
|
(560,485
|
)
|
(961,241
|
)
|
(1,462,799
|
)
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Net loss
|
(560,485
|
)
|
(961,241
|
)
|
(1,462,799
|
)
|
||||||
|
||||||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation adjustments:
|
||||||||||||
Translation gain (loss)
|
1,970
|
(13,771
|
)
|
3,119
|
||||||||
Reclassification adjustment for net translation adjustments realized in net income
|
144
|
–
|
-
|
|||||||||
Net change
|
2,114
|
(13,771
|
)
|
3,119
|
||||||||
|
||||||||||||
Available-for-sale investments:
|
||||||||||||
Change in unrealized gain (loss)
|
–
|
18,269
|
(12,869
|
)
|
||||||||
Net change
|
–
|
18,269
|
(12,869
|
)
|
||||||||
Total comprehensive loss, net of tax
|
(558,371
|
)
|
(956,743
|
)
|
(1,472,549
|
)
|
|
Year ended December 31,
|
|||||||||||
|
2017
$
|
2018
$
|
2019
$
|
|||||||||
|
||||||||||||
Net cash generated from (used in) operating activities
|
6,845
|
(34,930
|
)
|
354,050
|
||||||||
Net cash used in investing activities
|
(664,483
|
)
|
(1,060,969
|
)
|
(1,554,811
|
)
|
||||||
Net cash generated from financing activities
|
1,635,224
|
569,510
|
2,580,242
|
|||||||||
Net increase (decrease) in cash
|
977,586
|
(526,389
|
)
|
1,379,481
|
||||||||
Cash at beginning of the year
|
67,910
|
1,045,496
|
519,107
|
|||||||||
Cash at end of the year
|
1,045,496
|
519,107
|
1,898,588
|
(a) |
Basis of preparation
|
24. |
PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (continued)
|
(b) |
Convertible notes
|
|
December 31,
|
|||||||
|
2018
$
|
2019
$
|
||||||
Current:
|
||||||||
2017 Convertible Notes
|
–
|
29,481
|
||||||
–
|
29,481
|
|||||||
Non-Current:
|
||||||||
2017 Convertible Notes
|
636,716
|
–
|
||||||
2018 Convertible Notes
|
425,080
|
453,215
|
||||||
2019 Convertible Notes
|
–
|
903,117
|
||||||
|
1,061,796
|
1,356,332
|
(i) |
2017 Convertible Notes
|
24. |
PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (continued)
|
(b) |
Convertible notes (continued)
|
(i) |
2017 Convertible Notes (continued)
|
24. |
PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (continued)
|
(b) |
Convertible notes (continued)
|
(i) |
2017 Convertible Notes (continued)
|
(ii) |
2018 Convertible Notes and 2019 Convertible Notes
|
|
2018 Convertible Notes
|
2019 Convertible Notes
|
||||||
Issuance date
|
-June 18, 2018
|
-November 18, 2019
|
||||||
Maturity date
|
July 1, 2023
|
December 1, 2024
|
||||||
Principal amount
|
$
|
575,000
|
$
|
1,150,000
|
||||
Interest rate
|
2.25
|
%
|
1.00
|
%
|
||||
Initial conversion rate
|
50.5165 ADSs
per $1 principal
amount, equivalent
to $19.80 per ADS
|
19.9475 ADSs
per $1 principal
amount, equivalent
to $50.13 per ADS
|
||||||
Agreed conversion date
|
January 1, 2023
|
June 1, 2024
|
24. |
PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (continued)
|
(b) |
Convertible notes (continued)
|
(ii) |
2018 Convertible Notes and 2019 Convertible Notes (continued)
|
|
2018 Convertible Notes
|
2019 Convertible Notes
|
||||||
Liability component
|
$
|
410,926
|
$
|
897,918
|
||||
Effective interest rate
|
9.38
|
%
|
6.03
|
%
|
||||
Equity component
|
$
|
152,714
|
$
|
240,582
|
||||
Debt issuance cost, allocated in proportion to the allocation of proceeds
|
$
|
11,360
|
$
|
11,500
|
24. |
PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (continued)
|
(b) |
Convertible notes (continued)
|
(ii) |
2018 Convertible Notes and 2019 Convertible Notes (continued)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
American depositary shares, each representing one Class A ordinary share, par value US$0.0005 per share
|
SE
|
New York Stock Exchange LLC
|
||
Class A ordinary share, par value US$0.0005 per share*
|
|
• |
the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) of the amount paid or agreed to be
considered as paid, on the shares of each member, (ii) the number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of
the company, and if so, whether such voting rights are conditional;
|
|
• |
the date on which the name of any person was entered on the register as a member; and
|
|
• |
the date on which any person ceased to be a member.
|
|
• |
the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may
reasonably require to show the right of the transferor to make the transfer;
|
|
• |
the instrument of transfer is in respect of only one class of shares;
|
|
• |
the instrument of transfer is properly stamped, if required;
|
|
• |
in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four;
|
|
• |
the ordinary shares transferred are free of any lien in favor of us; or
|
|
• |
a fee of such maximum sum as the New York Stock Exchange may determine to be payable, or such lesser sum as the board of directors may from time to time require, is paid to us in
respect thereof.
|
|
• |
the designation of the series;
|
|
• |
the number of shares of the series;
|
|
• |
the dividend rights, dividend rates, conversion rights, voting rights; and
|
|
• |
the rights and terms of redemption and liquidation preferences.
|
|
• |
increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution prescribes;
|
|
• |
consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
|
|
• |
convert all or any of its paid up shares into stock and reconvert the stock into paid up shares of any denomination;
|
|
• |
sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our eighth amended and restated memorandum of association; provided that in the
subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share will be the same as it was in case of the share from which the reduced share is derived; and
|
|
• |
cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the
amount of the shares so canceled.
|
|
• |
the statutory provisions as to the required majority vote have been met;
|
|
• |
the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests
adverse to those of the class;
|
|
• |
the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
|
|
• |
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.
|
|
• |
a company acts or proposes to act illegally or ultra vires;
|
|
• |
the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and
|
|
• |
those who control the company are perpetrating a “fraud on the minority.”
|
|
• |
we do not wish to receive a discretionary proxy;
|
|
• |
there is substantial shareholder opposition to the particular question; or
|
|
• |
the particular question would have an adverse impact on our shareholders.
|
Persons depositing or withdrawing shares or ADS
holders must pay:
|
For:
|
|
US$5.00 (or less) per 100 ADSs (or portion thereof)
|
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
|
|
Cancelation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
||
US$0.05 (or less) per ADS (or portion thereof)
|
Any cash distribution to ADS holders
|
|
A fee equivalent to the fee that would be payable if securities distributed to ADS holders had been shares and the shares had been deposited for issuance of ADSs
|
Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
|
|
US$0.05 (or less) per ADS (or portion thereof) per annum
|
Depositary services
|
|
Registration or transfer fees
|
Transfer and registration of shares on our share register to or from the name of the depositary or its agent when ADS holders deposit or withdraw shares
|
|
Expenses of the depositary
|
Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
|
|
Converting foreign currency to U.S. dollars
|
||
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or
withholding taxes
|
As necessary
|
|
Any charges incurred by the depositary or its agents for servicing the deposited securities
|
As necessary
|
|
• |
60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment;
|
|
• |
we delist the ADSs from an exchange on which they were listed and do not list the ADSs on another exchange;
|
|
• |
we appear to be insolvent or enter insolvency proceedings;
|
|
• |
all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;
|
|
• |
there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or
|
|
• |
there has been a replacement of deposited securities.
|
|
• |
are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;
|
|
• |
are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with reasonable care or effort from
performing our or its obligations under the deposit agreement;
|
|
• |
are not liable if we or it exercises discretion permitted under the deposit agreement;
|
|
• |
are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of
the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;
|
|
• |
have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on an ADS holder’s behalf or on behalf of any other person;
|
|
• |
are not liable for the acts or omissions of any securities depository, clearing agency or settlement system;
|
|
• |
may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person; and
|
|
• |
the depositary has no duty to make any determination or provide any information as to our tax status, or any liability for any tax consequences that may be incurred by ADS
holders as a result of owning or holding ADSs.
|
|
• |
payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other
deposited securities;
|
|
• |
satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
|
|
• |
compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.
|
|
• |
when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit
voting at a shareholders’ meeting; or (iii) we are paying a dividend on our shares;
|
|
• |
when such holders owe money to pay fees, taxes and similar charges; or
|
|
• |
when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited
securities.
|
Page | ||
ARTICLE 1
|
||
Definitions
|
||
Section 1.01.
|
Definitions
|
1
|
Section 1.02.
|
References to Interest
|
14
|
ARTICLE 2
|
||
Issue, Description, Execution, Registration and Exchange of Notes
|
||
Section 2.01.
|
Designation and Amount
|
14
|
Section 2.02.
|
Form of Notes
|
14
|
Section 2.03.
|
Date and Denomination of Notes; Payments of Interest and Defaulted Amounts
|
15
|
Section 2.04.
|
Execution, Authentication and Delivery of Notes
|
17
|
Section 2.05.
|
Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary
|
18
|
Section 2.06.
|
Mutilated, Destroyed, Lost or Stolen Notes
|
25
|
Section 2.07.
|
Temporary Notes
|
26
|
Section 2.08.
|
Cancellation of Notes Paid, Converted, Etc
|
26
|
Section 2.09.
|
CUSIP Numbers
|
27
|
Section 2.10.
|
Additional Notes; Repurchases
|
27
|
ARTICLE 3
|
||
Satisfaction and Discharge
|
||
Section 3.01.
|
Satisfaction and Discharge
|
27
|
ARTICLE 4
|
||
Particular Covenants of the Company
|
||
Section 4.01.
|
Payment of Principal and Interest
|
28
|
Section 4.02.
|
Maintenance of Office or Agency
|
28
|
Section 4.03.
|
Appointments to Fill Vacancies in Trustee’s Office
|
29
|
Section 4.04.
|
Provisions as to Paying Agent
|
29
|
Section 4.05.
|
Existence
|
30
|
Section 4.06.
|
Rule 144A Information Requirement and Annual Reports
|
30
|
Section 4.07.
|
Additional Amounts
|
32
|
Section 4.08.
|
Stay, Extension and Usury Laws
|
34
|
Section 4.09.
|
Compliance Certificate; Statements as to Defaults
|
34
|
Section 4.10.
|
Further Instruments and Acts
|
35
|
ARTICLE 5
|
||
Lists of Holders and Reports by the Company and the Trustee
|
||
Section 5.01.
|
Lists of Holders
|
35 |
Section 5.02.
|
Preservation and Disclosure of Lists | 35 |
ARTICLE 6
|
||
Defaults and Remedies
|
||
Section 6.01.
|
Events of Default
|
35
|
Section 6.02.
|
Acceleration; Rescission and Annulment
|
37 |
Section 6.03.
|
Additional Interest
|
38 |
Section 6.04.
|
Payments of Notes on Default; Suit Therefor
|
39 |
Section 6.05.
|
Application of Monies Collected by Trustee
|
40 |
Section 6.06.
|
Proceedings by Holders
|
41 |
Section 6.07.
|
Proceedings by Trustee
|
42 |
Section 6.08.
|
Remedies Cumulative and Continuing
|
42 |
Section 6.09.
|
Direction of Proceedings and Waiver of Defaults by Majority of Holders
|
42 |
Section 6.10.
|
Notice of Defaults and Events of Default
|
43 |
Section 6.11.
|
Undertaking to Pay Costs
|
43 |
ARTICLE 7
|
||
Concerning the Trustee
|
||
Section 7.01.
|
Duties and Responsibilities of Trustee
|
44 |
Section 7.02.
|
Reliance on Documents, Opinions, Etc.
|
46 |
Section 7.03.
|
No Responsibility for Recitals, Etc.
|
47 |
Section 7.04.
|
Trustee, Paying Agents, Conversion Agents, Bid Solicitation Agent or Note Registrar May Own Notes
|
47 |
Section 7.05.
|
Monies and ADSs to Be Held in Trust
|
47 |
Section 7.06.
|
Compensation and Expenses of Trustee
|
47 |
Section 7.07.
|
Officer’s Certificate as Evidence
|
49 |
Section 7.08.
|
Eligibility of Trustee
|
49 |
Section 7.09.
|
Resignation or Removal of Trustee
|
49 |
Section 7.10.
|
Acceptance by Successor Trustee
|
50 |
Section 7.11.
|
Succession by Merger, Etc.
|
51 |
Section 7.12.
|
Trustee’s Application for Instructions from the Company
|
51 |
ARTICLE 8
|
||
Concerning the Holders
|
||
Section 8.01.
|
Action by Holders
|
51 |
Section 8.02.
|
Proof of Execution by Holders
|
52 |
Section 8.03.
|
Who Are Deemed Absolute Owners
|
52 |
Section 8.04.
|
Company-Owned Notes Disregarded
|
52 |
Section 8.05.
|
Revocation of Consents; Future Holders Bound
|
53 |
ARTICLE 9
|
||
Holders’ Meetings
|
||
Section 9.01.
|
Purpose of Meetings
|
53 |
Section 9.02.
|
Call of Meetings by Trustee
|
53 |
Section 9.03.
|
Call of Meetings by Company or Holders
|
54 |
Section 9.04.
|
Qualifications for Voting
|
54 |
Section 9.05.
|
Regulations
|
54 |
Section 9.06.
|
Voting
|
55 |
Section 9.07.
|
No Delay of Rights by Meeting
|
55 |
ARTICLE 10
|
||
Supplemental Indentures
|
||
Section 10.01.
|
Supplemental Indentures Without Consent of Holders
|
55 |
Section 10.02.
|
Supplemental Indentures with Consent of Holders
|
56 |
Section 10.03.
|
Effect of Supplemental Indentures
|
57
|
Section 10.04.
|
Notation on Notes
|
58
|
Section 10.05.
|
Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee
|
58
|
ARTICLE 11
|
||
Consolidation, Merger, Sale, Conveyance and Lease
|
||
Section 11.01.
|
Company May Consolidate, Etc. On Certain Terms
|
58 |
Section 11.02.
|
Successor Corporation to Be Substituted
|
58 |
Section 11.03.
|
Opinion of Counsel to Be Given to Trustee
|
59 |
ARTICLE 12
|
||
Immunity of Incorporators, Stockholders, Officers and Directors
|
||
Section 12.01.
|
Indenture and Notes Solely Corporate Obligations
|
59
|
ARTICLE 13
|
||
Intentionally Omitted
|
||
ARTICLE 14
|
||
Conversion of Notes
|
||
Section 14.01.
|
Conversion Privilege
|
60 |
Section 14.02.
|
Conversion Procedure; Settlement Upon Conversion
|
62 |
Section 14.03.
|
Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes
|
67 |
Section 14.04.
|
Adjustment of Conversion Rate
|
69 |
Section 14.05.
|
Adjustments of Prices
|
80 |
Section 14.06.
|
Class A Ordinary Shares to Be Fully Paid
|
80 |
Section 14.07.
|
Effect of Recapitalizations, Reclassifications and Changes of the Class A Ordinary Shares
|
80 |
Section 14.08.
|
Certain Covenants
|
82 |
Section 14.09.
|
Responsibility of Trustee
|
82 |
Section 14.10.
|
Notice to Holders Prior to Certain Actions
|
83 |
Section 14.11.
|
Stockholder Rights Plans
|
84 |
Section 14.12.
|
Limit on Issuance of ADSs Upon Conversion
|
84 |
Section 14.13.
|
Termination of Depositary Receipt Program
|
84 |
Section 14.14.
|
Exchange In Lieu Of Conversion
|
85 |
ARTICLE 15
|
||
Repurchase of Notes at Option of Holders
|
||
Section 15.01.
|
Intentionally Omitted
|
85 |
Section 15.02.
|
Repurchase at Option of Holders Upon a Fundamental Change
|
85 |
Section 15.03.
|
Withdrawal of Fundamental Change Repurchase Notice
|
88 |
Section 15.04.
|
Deposit of Fundamental Change Repurchase Price
|
88 |
Section 15.05.
|
Covenant to Comply with Applicable Laws Upon Repurchase of Notes
|
89 |
ARTICLE 16
|
||
Optional Redemption, Cleanup Redemption and Tax Redemption
|
||
Section 16.01.
|
Optional Redemption
|
90 |
Section 16.02.
|
Cleanup Redemption
|
91 |
Section 16.03.
|
Tax Redemption
|
91 |
Section 16.04.
|
Redemption Notice
|
92 |
Section 16.05.
|
Conversion Election
|
93 |
ARTICLE 17
|
||
Miscellaneous Provisions
|
||
Section 17.01.
|
Provisions Binding on Company’s Successors
|
93 |
Section 17.02.
|
Official Acts by Successor Corporation
|
93 |
Section 17.03.
|
Addresses for Notices, Etc.
|
93 |
Section 17.04.
|
Governing Law; Jurisdiction
|
94 |
Section 17.05.
|
Submission to Jurisdiction; Service of Process
|
95 |
Section 17.06.
|
Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee
|
95 |
Section 17.07.
|
Legal Holidays
|
96 |
Section 17.08.
|
No Security Interest Created
|
96 |
Section 17.09.
|
Benefits of Indenture
|
96 |
Section 17.10.
|
Table of Contents, Headings, Etc.
|
96 |
Section 17.11.
|
Execution in Counterparts.
|
96 |
Section 17.12.
|
Severability
|
96 |
Section 17.13.
|
Waiver of Jury Trial
|
96 |
Section 17.14.
|
Force Majeure
|
96 |
Section 17.15.
|
Calculations
|
97 |
Section 17.16.
|
USA PATRIOT Act
|
97 |
Exhibit A
|
Form of Note
|
A-1
|
(1)
|
REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) LOCATED OUTSIDE THE UNITED STATES AND IS NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT AN AFFILIATE OF SEA LIMITED (THE “COMPANY”) (OTHER THAN AN ENTITY AFFILIATED WITH ONE OF THE COMPANY’S DIRECTORS THAT PURCHASED NOTES OF THE COMPANY CONVERTED FOR DELIVERY OF THE ADSs), AND
|
|
(2) |
AGREES FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THE ADSs OR THE SHARES OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER
THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
|
(A)
|
TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
|
|
(B) |
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
|
|
(C) |
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
|
|
(D) |
TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
|
|
(E) |
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
|
ADS price
|
||||||||||||||||||||||||||||||||||||||||||||||||
Effective Date
|
US$ 35.18
|
US$40.00
|
US$45.00
|
US$
50.13
|
US$
55.00
|
US$
60.00
|
US$
65.17
|
US$
80.00
|
US$
100.00
|
US$
125.00
|
US$
150.00
|
US$
200.00
|
||||||||||||||||||||||||||||||||||||
November 18, 2019
|
8.4777
|
6.8990
|
5.4769
|
4.3862
|
3.5936
|
2.9577
|
2.4398
|
1.4595
|
0.7736
|
0.3611
|
0.1595
|
0.0000
|
||||||||||||||||||||||||||||||||||||
December 1, 2020
|
8.4777
|
6.8333
|
5.3289
|
4.1901
|
3.3738
|
2.7278
|
2.2099
|
1.2570
|
0.6242
|
0.2689
|
0.1089
|
0.0000
|
||||||||||||||||||||||||||||||||||||
December 1, 2021
|
8.4777
|
6.6345
|
5.0431
|
3.8594
|
3.0276
|
2.3832
|
1.8779
|
0.9875
|
0.4415
|
0.1648
|
0.0548
|
0.0000
|
||||||||||||||||||||||||||||||||||||
December 1, 2022
|
8.4777
|
6.2900
|
4.5869
|
3.3545
|
2.5165
|
1.8905
|
1.4194
|
0.6509
|
0.2424
|
0.0687
|
0.0127
|
0.0000
|
||||||||||||||||||||||||||||||||||||
December 1, 2023
|
8.4777
|
5.7193
|
3.8262
|
2.5270
|
1.7080
|
1.1492
|
0.7704
|
0.2600
|
0.0653
|
0.0078
|
0.0000
|
0.0000
|
||||||||||||||||||||||||||||||||||||
December 1, 2024
|
8.4777
|
5.0525
|
2.2747
|
0.0006
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
CR0 |
=
|
the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for the ADSs of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable; |
CR1 |
=
|
the Conversion Rate in effect after the open of business on such Ex-Dividend Date or Effective Date, as applicable; |
OS0 |
=
|
the number of Class A Ordinary Shares outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date, as applicable (before giving effect to any such dividend, distribution, split or combination) ; and |
OS1 |
=
|
the number of Class A Ordinary Shares outstanding immediately after giving effect to such dividend, distribution, share split or share combination. |
CR0 |
=
|
the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for the ADSs for such issuance; |
CR1 |
=
|
the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date; |
OS0 |
=
|
the number of Class A Ordinary Shares outstanding immediately prior to the open of business on such Ex-Dividend Date; |
X
|
=
|
the total number of Class A Ordinary Shares (directly or in the form of ADSs) deliverable pursuant to such rights, options or warrants; and |
Y
|
=
|
the number of Class A Ordinary Shares equal to (i) the aggregate price payable to exercise such rights, options or warrants, divided by (ii) the quotient of (a) the average of the Last Reported Sale Prices of the ADSs over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants divided by (b) the number of Class A Ordinary Shares then represented by one ADS. |
CR0 |
=
|
the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; |
CR1 |
=
|
the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date; |
SP0 |
=
|
the average of the Last Reported Sale Prices of the ADSs (divided by the number of Class A Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and |
FMV
|
=
|
the fair market value (as determined by the Board of Directors) of the Distributed Property with respect to each outstanding Class A Ordinary Share (directly or in the form of ADSs) on the Ex-Dividend Date for the ADSs for such distribution. |
CR0 |
=
|
the Conversion Rate in effect immediately prior to the end of the Valuation Period; |
CR1 |
=
|
the Conversion Rate in effect immediately after the end of the Valuation Period; |
FMV0 |
=
|
the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Class A Ordinary Shares (directly or in the form of ADSs) applicable to one Class A Ordinary Share (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.01 as if references therein to the ADSs were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and |
MP0 |
=
|
the average of the Last Reported Sale Prices of the ADSs (divided by the number of Class A Ordinary Shares then represented by one ADS) over the Valuation Period. |
CR0 |
=
|
the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for the ADSs for such dividend or distribution; |
CR1 |
=
|
the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date; |
SP0 |
=
|
the Last Reported Sale Price of the ADSs (divided by the number of Class A Ordinary Shares then represented by one ADS) on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and |
C
|
=
|
the amount in cash per Class A Ordinary Share the Company distributes to all or substantially all holders of the Class A Ordinary Shares (directly or in the form of ADSs). |
CR0 |
=
|
the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; |
CR1 |
=
|
the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; |
AC
|
=
|
the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for Class A Ordinary Shares or ADSs, as the case may be, purchased in such tender or exchange offer; |
OS0 |
=
|
the number of Class A Ordinary Shares outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all Class A Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer); |
OS1 |
=
|
the number of Class A Ordinary Shares outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all Class A Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer); and |
SP1 |
=
|
the average of the Last Reported Sale Prices of the ADSs (divided by the number of Class A Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires. |
SEA LIMITED
|
||
By:
|
/s/ Forrest Xiaodong Li
|
|
|
Name: Forrest Xiaodong Li
|
|
|
Title: Chairman and Group Chief Executive Officer
|
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
|
||
By:
|
/s/ Nedine P. Sutton
|
|
|
Name: Nedine P. Sutton
|
|
|
Title: Vice President
|
No. [_____] | [Initially]1 US$_________ |
CUSIP No. [_________] | |
ISIN No. [___________] |
1
|
Include if a Global Note.
|
2
|
Include if a Global Note.
|
3
|
Include if a Physical Note.
|
4
|
Include if a Global Note.
|
5
|
Include if a Physical note.
|
SEA LIMITED
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Dated:
|
|
|
|
TRUSTEE’S CERTIFICATE OF AUTHENTICATION |
|
WILMINGTON TRUST, NATIONAL ASSOCIATION,
|
|
as Trustee, certifies that this is one of the Notes described
|
|
in the within-named Indenture. |
By: |
|
|
|
|
Authorized signatory |
|
Date of exchange
|
Amount of
decrease in
principal amount
of this Global Note
|
Amount of
increase in
principal amount
of this Global Note
|
Principal amount
of this Global Note
following such
decrease or
increase
|
Signature of
authorized
signatory of
Trustee
|
||||||
6
|
Include if a global note.
|
To:
|
SEA LIMITED
|
THE BANK OF NEW YORK MELLON, as Depositary for the ADSs
|
|
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Conversion Agent
|
7
|
Include if a Restricted Security.
|
Dated:
|
|
|
||
|
||||
Signature(s)
|
Signature Guarantee
|
||
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities
and Exchange Commission Rule 17Ad-15 if ADSs are to be issued, or Notes are to be delivered, other than to and in the name of the registered holder.
|
||
Fill in for registration of ADSs if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder:
|
||
|
||
(Name)
|
||
|
||
(Street Address)
|
||
|
||
(City, State and Zip Code)
|
||
Please print name and address
|
||
Principal amount to be converted (if less than all): US$______,000
|
||
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
|
|
|||
Social Security or Other Taxpayer
|
|||
Identification Number
|
To:
|
SEA LIMITED
|
Certificate Number(s):
|
Dated:
|
|
|
||
|
||||
Signature(s)
|
|
|
Signature Guarantee
|
|
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities
and Exchange Commission Rule 17Ad-15 if ADSs are to be issued, or Notes are to be delivered, other than to and in the name of the registered holder.
|
|
Fill in for registration of ADSs if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder:
|
|||
|
|||
(Name)
|
|||
|
|||
(Street Address)
|
|||
|
|||
(City, State and Zip Code)
|
|||
Please print name and address
|
|||
|
|||
Social Security or Other Taxpayer
|
|||
Identification Number
|
|||
Principal amount to be repaid (if less than all): US$______,000
|
|||
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
|
8
|
Include if Regulation S Note.
|
Dated:
|
|||
|
|||
|
|||
Signature(s)
|
|||
|
|||
Signature Guarantee
|
|||
|
|||
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and
credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if Notes are to be delivered, other than to and in the name of the registered holder.
|
|||
Subsidiaries and Branch Offices
|
Place of Incorporation
|
|
Garena Limited
|
Cayman Islands
|
|
Shopee Southeast Asia Limited
|
Cayman Islands
|
|
Wahoo Holding Limited
|
Cayman Islands
|
|
SeaMoney (Payment) Limited
|
Cayman Islands
|
|
Foody Limited
|
Cayman Islands
|
|
Sea Ventures Limited
|
Cayman Islands
|
|
SCommerce Southeast Asia Limited
|
Cayman Islands
|
|
SeaMoney (Credit) Limited
|
Cayman Islands
|
|
Garena China Pte. Ltd.
|
Singapore
|
|
Moco Studios Private Limited
|
Singapore
|
|
Garena Mobile Private Limited
|
Singapore
|
|
Garena Online Private Limited
|
Singapore
|
|
Garena Ventures Private Limited
|
Singapore
|
|
Good Mobile Games Private Limited
|
Singapore
|
|
Shopee Singapore Private Limited
|
Singapore
|
|
Shopee Logistics Services Private Limited
|
Singapore
|
|
Shopee International Private Limited
|
Singapore
|
|
Shopee Ventures Private Limited
|
Singapore
|
|
SeaMoney (Payment) Private Limited
|
Singapore
|
|
Airview Investment Pte. Ltd.
|
Singapore
|
|
SeaTalk Private Limited
|
Singapore
|
|
Hevolve Private Limited
|
Singapore
|
|
PT Commerce Finance
|
Indonesia
|
|
PT Gudang SPE Indonesia
|
Indonesia
|
|
PT. Garena Indonesia
|
Indonesia
|
|
PT. Shopee International Indonesia
|
Indonesia
|
|
Garena Technology Private Limited Taiwan Branch
|
Taiwan
|
|
Shopee (Taiwan) Co., Ltd.
|
Taiwan
|
|
Aipei (Taiwan) Co., Ltd.
|
Taiwan
|
|
Shopee Company Limited
|
Vietnam
|
|
Ocha Company Limited
|
Vietnam
|
|
Garena Online (Thailand) Co., Ltd.
|
Thailand
|
|
Garena Holding 1 (Thailand) Co., Ltd.
|
Thailand
|
|
Shopee (Thailand) Co., Ltd.
|
Thailand
|
|
Shopee Express (Thailand) Co., Ltd.
|
Thailand
|
|
Unicorn (Thailand) Co., Ltd.
|
Thailand
|
|
AirPay (Thailand) Co., Ltd.
|
Thailand
|
|
Foody Services Co., Ltd.
|
Thailand
|
|
Shopee Philippines Inc.
|
Philippines
|
|
Garena Malaysia Sdn. Bhd.
|
Malaysia
|
|
Shopee Mobile Malaysia Sdn. Bhd.
|
Malaysia
|
|
ShopeePay Malaysia Sdn. Bhd.
|
Malaysia
|
|
Shenzhen Shopee Information Technology Co., Ltd.
|
China
|
|
Garena Hong Kong Limited
|
Hong Kong
|
|
Shopee Hong Kong Limited
|
Hong Kong
|
|
Turbo Cash Hong Kong Limited
|
Hong Kong
|
|
Consolidated Affiliated Entities
|
||
Garena (Taiwan) Co., Ltd.
|
Taiwan
|
|
Happymall SCommerce (Taiwan) Co., Ltd.
|
Taiwan
|
|
Vietnam Esports and Entertainment Joint Stock Company
|
Vietnam
|
|
AirPay Joint Stock Company
|
Vietnam
|
|
S-Trading Co., Ltd.
|
Vietnam
|
|
Busy Bee Company Limited
|
Vietnam
|
|
Garena Philippines, Inc.
|
Philippines
|
|
Dongjing Investment Co., Ltd.
|
China
|
|
Shanghai Dongrui Information Technology Co., Ltd.
|
China
|
|
Shanghai Jingle Information Technology Co., Ltd.
|
China
|
By:
|
/s/ Forrest Xiaodong Li
|
||
Name:
|
Forrest Xiaodong Li
|
||
Title:
|
Group Chief Executive Officer
|
By:
|
/s/ Tony Tianyu Hou
|
||
Name:
|
Tony Tianyu Hou
|
||
Title:
|
Group Chief Financial Officer
|
By:
|
/s/ Forrest Xiaodong Li
|
||
Name:
|
Forrest Xiaodong Li
|
||
Title:
|
Group Chief Executive Officer
|
By:
|
/s/ Tony Tianyu Hou
|
||
Name:
|
Tony Tianyu Hou
|
||
Title:
|
Group Chief Financial Officer
|
To:
|
Sea Limited
|
1 Fusionopolis Place
|
|
#17-10, Galaxis
|
|
Singapore 138522
|
Sincerely yours,
|
|
/s/ LCS & Partners
|
|
LCS & PARTNERS
|
TO:
|
Sea Limited
|
DATE: 14 April 2020
|
1 Fusionopolis Place
|
||
#17-10, Galaxis
|
||
Singapore 138522
|
FROM:
|
Kudun and Partners Limited
|
|
23rd Floor, Unit C and F
|
||
Gaysorn Tower, 127 Ratchadamri Road
|
||
Lumpini, Pathumwan, Bangkok, 10330, Thailand
|
SEA LIMITED
|
|
Private and Confidential
|
1 Fusionopolis Place
|
|
|
#17-10, Galaxis
|
||
Singapore 138522
|
SENDER’S REF
|
|
RECIPIENT’S REF
|
|
DATE
|
|
PAGE
|
TQY/337339/00017
|
|
-
|
|
14 April 2020
|
|
1/1
|