|
|
|
|
|
|
|
|
|
|
Cayman Islands
|
7372
|
Not Applicable
|
(State or Other Jurisdiction of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
|
|
|
Floor 8, Building 12
Phase III of ChuangZhiTianDi
333 Songhu Road
Yangpu District, Shanghai
People’s Republic of China
+86-400-632-6626
|
|
|
|
|
|
|
|
|
|
Title of each class
of securities to be registered |
Amount to be registered(2)(3)
|
Proposed maximum offering price per share(3)
|
Proposed maximum
aggregate offering price(2)(3) |
Amount of
registration fee |
Class A ordinary shares, par value US$0.0001 per share(1)
|
80,500,000
|
US$4.50
|
US$362,250,000
|
US$47,021(4)
|
(1)
|
American depositary shares, or ADSs, issuable upon deposit of the Class A ordinary shares registered hereby, will be registered under a separate registration statement on Form F-6 (Registration No. 333-239274). Each ADS represents four Class A ordinary shares.
|
(2)
|
Includes (a) Class A ordinary shares represented by ADSs that are issuable upon the exercise of the underwriters’ over-allotment option and (b) all Class A ordinary shares represented by ADSs initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public.
|
(3)
|
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
|
(4)
|
The Registrant previously paid US$12,980 in connection with a prior filing of this Registration Statement on June 5, 2020, and the additional amount of US$34,041 is being paid herewith.
|
|
|
|
|
|
|
Price to
Public |
|
Underwriting Discounts
and Commissions(1) |
|
Proceeds to Us
|
Per ADS
|
US$
|
|
US$
|
|
US$
|
Total
|
US$
|
|
US$
|
|
US$
|
(1)
|
See “Underwriters” beginning on page 195 of this prospectus for additional information regarding underwriting compensation.
|
|
MORGAN STANLEY
|
BofA SECURITIES
|
NEEDHAM & COMPANY
|
|
Page
|
|
Page
|
•
|
Social, Education, Entertainment and Gaming, which includes one-to-one and group video and voice chat, remote classroom, live interactive streaming and video or voice interactions in multi-player games.
|
•
|
Enterprise Solutions, which includes video conferencing and engagement-oriented workflows such as sales, customer support and consultation.
|
•
|
Internet of Things (IoT), which includes the use of real-time video and voice engagement across IoT devices to optimize operations, enhance public safety and increase employee productivity.
|
•
|
Public Internet is not Ideal for RTE. The public internet as it stands is an open and best efforts network with no assurance of service quality, which is not ideal for RTE. Network conditions vary across time of day,
|
•
|
Multi-way RTE is Significantly more Complex than One-way Content Delivery. Real-time engagement is by definition at least two-way and involves transmission of data back and forth between users under varying network conditions, sometimes across distant geographies. As more users join an engagement, the amount of data transmitted and the associated technical complexity increase significantly. Even more challenging is the low latency requirement. To deliver effective real-time video or voice engagement, multiple data streams need to be created, transmitted, synchronized and consumed simultaneously with millisecond end-to-end latency.
|
•
|
Convergence of Adoption Trends. The pace of RTE-PaaS adoption varies across regions. In the United States, enterprise applications drive the market, with digital transformation, omni-channel customer interactions and integrated platform tools being the key technology growth drivers. In China and other countries in the Asia Pacific region, consumer applications in social, education, entertainment and gaming drive adoption of RTE-PaaS solutions. Over time, it is expected that adoption across enterprise and consumer use cases will converge globally.
|
•
|
Organic Growth from Applications Built upon RTE-PaaS solutions. Applications that RTE-PaaS solutions enable have benefited from strong organic growth as end users demand a more immersive and high-quality video and voice engagement experience. As the number of applications built upon RTE proliferates and the end-user base and usage of these applications continue to increase, the demand for RTE-PaaS should continue to expand.
|
•
|
Rollout of 5G Will Likely Accelerate Innovation and Proliferation of RTE Use Cases. As 5G networks continue to be deployed, internet infrastructure will improve generally and, in particular, end users will benefit from a better connection between their devices and the internet backbone. This will allow RTE-PaaS providers to significantly improve the quality of the end-user experience, which could drive popularity and usage of existing use cases and enable new ones, particularly centered on real-time video engagement.
|
•
|
Further Conversion from In-house. In-house developers often lack the requisite expertise to develop RTE solutions, especially real-time video engagement. Even where the expertise exists, building the underlying infrastructure and maintaining compatibility with various hardware and software is time-consuming and expensive. With the rapid pace at which organizations are required to enhance their software applications to stay competitive and meet the evolving needs of their end users, RTE-PaaS solutions are expected to continue to displace in-house developed technologies.
|
•
|
Quality and Reliability. The most important reason why developers choose the Agora platform is the quality and reliability of real-time engagement we power. Our platform delivers industry-leading performance around latency and media quality, and works under challenging network conditions with up to 70% packet loss. Our customers can take comfort from our service level agreements that provide assurances on availability (uptime) levels and, increasingly, experience levels such as latency.
|
•
|
Comprehensive Features. We offer a breadth of product features that go beyond just enabling the video and voice aspects of real-time engagement. We provide a spectrum of building blocks through hundreds of APIs, use case products and third-party plug-ins that improve our customers’ offerings and enhance end-user experience, such as content moderation in social applications, interactive whiteboard in education and voice masking in gaming. Developers often find that they can build a significant portion of their applications with our software modules and services.
|
•
|
Easy to Integrate. Our SDK is designed to be easy to learn, simple to embed and highly customizable. We also provide detailed documentation, programming tools and a wide range of code samples. Compared with
|
•
|
Scalability. Our advanced architecture and global infrastructure allow applications to scale rapidly to serve millions of end users across geographies while maintaining the quality of the user experience.
|
•
|
Cost Efficiency. Our usage-based pricing model with no upfront fee allows customers to minimize initial investment and efficiently manage costs. Given our scale and the fact that peak usage of applications that use our platform usually occur at different times, we can support more usage with the same bandwidth, enabling us to offer our customers attractive pricing. We believe our ability to offer this benefit will be enhanced as we continue to scale.
|
•
|
Compatibility. Our SDK is broadly compatible with major operating systems, development frameworks and programming languages, and a wide variety of phones, PCs and other connected devices, including older and less sophisticated models. Our SDK is also designed to be compact in size and efficient in CPU usage and power consumption.
|
•
|
Transparency. Our platform is built with real-time analytics at the core, which allow customers to easily monitor and analyze the quality of each video and voice engagement session, manage billings and usage, and gain clear insights on user experience.
|
•
|
RTE-PaaS Pioneer and Global Leader. We pioneered RTE-PaaS and we are the global leader in this rapidly growing industry. Our platform is developed by a talented engineering team led by our founder and chief executive officer with extensive expertise in real-time engagement technology. As the industry leader we power more and more minutes for a growing number of customers and end users, which enables us to further improve the quality of experience of our products and in turn attract even more customers and end users. We believe the time and resources required to replicate our level of quality will only increase as we continue to scale our business.
|
•
|
Advanced Network Architecture. The SD-RTN is designed to handle the most demanding task in real-time engagement: real-time video. It runs on commodity hardware and adopts a globally distributed and all-software architecture, instead of relying on a few physical or private transmission lines. We believe our architecture is cost-effective, scalable, resilient and allows for highly flexible routing optimization, making it particularly suitable for enabling real-time video and voice engagement at massive scale.
|
•
|
Pure-Play and Independent Platform. Our singular focus on real-time engagement means we prioritize our entire platform for minimizing latency, which is challenging for a full-service cloud provider given the competing needs of its non-real-time products. By being focused we are able to “go deeper” and offer more comprehensive features, more control and more visibility, thereby making us more developer-friendly. Our positioning as an independent platform is also attractive to developers and partners who want to avoid conflicts of interest or reliance on a single cloud provider.
|
•
|
Developer Mind Share. We have cultivated a large and engaged developer community, with more than 180,000 applications that have registered on our platform from our inception through March 31, 2020. We believe we are recognized by developers as the leading platform for real-time engagement. We set the standard for integrating and operating real-time engagement within software applications in China, and increasingly in other markets.
|
•
|
Loyal Customer Base . Once developers have integrated our SDK and experienced the quality and reliability of our platform, we believe they are less inclined to try alternatives and incur potentially high switching cost. We rarely lose customers to competitors and their loyalty is reflected in our Constant Currency Dollar-Based Net Expansion Rate, which was 133% and 131% for 2018 and 2019, respectively. Our Net Promoter Score, or NPS, was 64 in our most recent measurement period ended May 31, 2020, which likewise demonstrates a high level of customer satisfaction with our platform.
|
•
|
investing in our technology;
|
•
|
growing our developer community;
|
•
|
investing in our partnership ecosystem;
|
•
|
expanding our focus on enterprises; and
|
•
|
accelerating our international expansion.
|
•
|
If our market does not grow as we expect, or if we cannot expand our services to meet the demands of this market, our revenue may decline, or fail to grow, and we may incur operating losses.
|
•
|
Our operating results and growth prospects depend on acquiring and retaining customers and increasing usage of customers’ applications that integrate our products.
|
•
|
The COVID-19 pandemic has severely disrupted our business and operations and may continue to do so.
|
•
|
The market in which we participate is competitive, and if we do not compete effectively, our business, operating results and financial condition could be harmed.
|
•
|
We may not successfully manage growth.
|
•
|
Our limited operating history and our history of operating losses makes it difficult to evaluate our current business and prospects and may increase the risks associated with your investment.
|
•
|
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements or preferences, our products may become less competitive.
|
•
|
We rely on contractual arrangements with our VIE and its shareholders to operate our business, which may not be as effective as direct ownership in providing operational control and could adversely affect our business, operating results and financial condition.
|
•
|
If the PRC government deems that the contractual arrangements in relation to our VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
|
•
|
Complexities of, and changes in, the political, legal, regulatory and economic policies of the PRC government could adversely affect our business, operating results and financial condition, and may result in our inability to sustain our growth and expansion strategies.
|
•
|
Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
|
•
|
The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct how the Class A ordinary shares which are represented by your ADSs are voted.
|
•
|
As a foreign private issuer and “emerging growth company” as defined under SEC rules, and as a “controlled company” as defined under the Nasdaq Stock Market corporate governance rules, we are exempt from a number of rules under the U.S. securities laws and the Nasdaq Stock Market corporate governance rules, and are permitted to file less information with the SEC than U.S. domestic public companies, all of which may limit the information available to holders of the ADSs.
|
(1)
|
Mr. Zhao, our founder, chief executive officer and chairman, holds 90% of the equity interests in our VIE, and Ms. Wenjing Ma, a nominee shareholder, holds the remaining 10%.
|
•
|
“ADSs” refer to American depositary shares, each of which represents four of our Class A ordinary shares;
|
•
|
“ADRs” refer to the American depositary receipts that evidence our ADSs;
|
•
|
“Agora,” “we,” “us,” “our company” and “our” refer to Agora, Inc., a Cayman Islands exempted company and its subsidiaries and, in the context of describing our operations and consolidated financial information, also include our VIE.
|
•
|
“China” or “PRC” refer to the People’s Republic of China, excluding, for the purposes of this prospectus only, Taiwan, Hong Kong and Macau;
|
•
|
“Class A ordinary shares” refer to our Class A ordinary shares, par value US$0.0001 per share;
|
•
|
“Class B ordinary shares” refer to our Class B ordinary shares, par value US$0.0001 per share;
|
•
|
“NPS” refers to our Net Promoter Score. NPS is a customer satisfaction and service quality metric based on a single survey question that asks developers how likely they are to recommend our platform to a friend or colleague. Developers respond using a numeric scale of zero to ten. The final NPS ranges from negative 100 to positive 100, and is calculated by subtracting the percent of detractors (those who respond with a six or lower) from the percent of promoters (those who respond with a nine or ten). NPS benchmarks vary significantly by industry, but a score greater than zero represents having more promoters than detractors. Our methodology of calculating NPS reflects responses from developers who use our platform and choose to respond to our NPS survey. In particular, it reflects responses given between May 19, 2020 and May 31, 2020, which is our most recent NPS measurement period, and reflects a sample size of 174 responses received from developers over that period. NPS gives no weight to developers who decline to answer the survey question;
|
•
|
“RMB” and “Renminbi” refers to the legal currency of China; and
|
•
|
“US$,” “U.S. dollars,” or “dollars” refer to the legal currency of the United States.
|
Offering price
|
|
We currently estimate that the initial public offering price will be between US$16.00 and US$18.00 per ADS.
|
|
|
|
ADSs offered by us
|
|
17,500,000 ADSs (or 20,125,000 ADSs if the underwriters exercise their over-allotment option in full).
|
|
|
|
ADSs outstanding immediately after this offering
|
|
17,500,000 ADSs (or 20,125,000 ADSs if the underwriters exercise their over-allotment option in full).
|
|
|
|
Concurrent private placement of Class A ordinary shares
|
|
Immediately following the closing of this offering, Coatue CPP 10 LLC, which is an affiliate of one of our existing shareholders, Neumann Capital and an entity affiliated with Vitruvian Partners have agreed to purchase US$50.0 million, US$30.0 million and US$30.0 million of our Class A ordinary shares, respectively, from us in a private placement at a price per share equal to the initial public offering price adjusted for the ADS-to-Class A ordinary share ratio. Based on an assumed initial public offering price of US$17.00 per ADS, which is the mid-point of the price range set forth on the cover page of this prospectus, Coatue CPP 10 LLC, Neumann Capital and an entity affiliated with Vitruvian Partners will purchase 11,764,705, 7,058,823 and 7,058,823 of our Class A ordinary shares, respectively, or 25,882,351 Class A ordinary shares in the aggregate. We will receive the full proceeds and will not pay any underwriting discounts or commissions with respect to the Class A ordinary shares that we sell in the concurrent private placement. The sale of the Class A ordinary shares in the concurrent private placement is contingent upon the completion of this offering but will not be registered in this offering. The Class A ordinary shares we sell in the concurrent private placement will be subject to lock-up agreements with the underwriters for a period of 180 days after the date of this prospectus. We refer to the private placement of these Class A ordinary shares as the concurrent private placement.
|
|
|
|
Class A ordinary shares to be outstanding immediately after this offering and the concurrent private placement
|
|
324,600,342 shares (or 335,100,342 shares if the underwriters exercise their over-allotment option in full).
|
|
|
|
Class B ordinary shares to be outstanding immediately after this offering and the concurrent private placement
|
|
76,179,938 shares.
|
|
|
|
Total Class A ordinary shares and Class B ordinary shares to be outstanding immediately after this offering and the concurrent private placement
|
|
400,780,280 shares (or 411,280,280 shares if the underwriters exercise their over-allotment option in full).
|
|
|
|
Indication of interest
|
|
Entities affiliated with Dragoneer Investment Group, LLC have indicated an interest in purchasing up to US$50.0 million of the ADSs being offered in this offering at the initial public offering price. Because this indication of interest is not a binding agreement or commitment to purchase, such entities may determine to purchase more, fewer or no ADSs in this offering, or the underwriters may determine to sell more, fewer or no ADSs to such entities. The underwriters will receive the same discount from any ADSs sold to such entities as they will from any other ADSs sold to the public in this offering.
|
|
|
|
The ADSs
|
|
Each ADS represents four Class A ordinary shares.
The depositary will be the holder of the underlying Class A ordinary shares represented by the ADSs and you will have the rights of an ADR holder as provided in the deposit agreement among us, the depositary and registered holders and beneficial owners of ADSs from time to time.
You may surrender your ADSs to the depositary to withdraw the underlying Class A ordinary shares represented by your ADSs. The depositary will charge you a fee for any such exchange.
We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.
To better understand the terms of the ADSs, see the section of this prospectus captioned “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.
|
|
|
|
Over-allotment option
|
|
We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of 2,625,000 additional ADSs at the initial public offering price, less underwriting discounts and commissions.
|
|
|
|
Use of proceeds
|
|
We estimate that we will receive net proceeds of approximately US$384.4 million from this offering and the concurrent private placement (or US$425.9 million if the underwriters exercise their over-allotment option in full), assuming an initial public offering price of US$17.00 per ADS, the mid-point of the price range shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to create a public market for our shares, increase our visibility in our markets and facilitate our future access to the public equity markets for us and our shareholders. We intend to use the net proceeds of this offering and the concurrent private placement for research and development, marketing and branding, investment in technology infrastructure as well as for working capital and other general corporate purposes. See the section of this prospectus captioned “Use of Proceeds” for more information.
|
|
|
|
Voting rights
|
|
Upon the completion of this offering, our issued and outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to 20 votes and is convertible into one Class A ordinary share. Immediately following this offering and the concurrent private placement, the issued and outstanding Class B ordinary shares, all of which will be held by our chief executive officer, will represent approximately 82.4% of the voting power of our issued and outstanding share capital. See the section of this prospectus captioned “Description of Share Capital.”
|
|
|
|
Lock-up
|
|
We, our directors and executive officers, and all of our existing shareholders and the concurrent private placement purchasers have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ADSs, ordinary shares or similar securities or any securities convertible into or exchangeable or exercisable for our ordinary shares or ADSs, for a period of 180 days after the date of this prospectus. In addition, we will not authorize or permit The Bank of New York Mellon, as depositary, to accept any deposit of any Class A ordinary shares or issue any ADSs for 180 days after the date of this prospectus unless we expressly consent to such deposit or issuance and we have agreed not to provide such consent without the prior written consent of the representatives on behalf of the underwriters. The foregoing does not affect the right of ADS holders to cancel their ADSs and withdraw the underlying Class A ordinary shares. See the sections of this prospectus captioned “Shares Eligible for Future Sale” and “Underwriters.”
|
|
|
|
Risk factors
|
|
See the section of this prospectus captioned “Risk Factors” and other information included in this prospectus for a discussion of the risks related to investing in the ADSs. You should carefully consider these risks before deciding to invest in our ADSs.
|
|
|
|
Listing
|
|
We have applied to list the ADSs on the Nasdaq Global Select Market under the symbol “API.” Our Class A ordinary shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system.
|
|
|
|
Payment and settlement
|
|
The underwriters expect to deliver the ADSs against payment on , 2020, through the facilities of the Depository Trust Company, or DTC.
|
|
|
|
Depositary
|
|
The Bank of New York Mellon.
|
|
|
|
Directed ADS Program
|
|
At our request, the underwriters have reserved up to 5% of the ADSs offered by this prospectus, for sale at the initial public offering price to our directors, non-executive employees and customers, to the extent permitted by local securities laws and regulations. If purchased by these persons, these ADSs will not be subject to a lock-up restriction except in the case of ADSs purchased by any director, which will be subject to a 180-day lock-up restriction. See the section of this prospectus captioned “Underwriters—Directed ADS Program.”
|
•
|
43,694,845 Class A ordinary shares issuable upon the vesting of outstanding options;
|
•
|
716,035 Class A ordinary shares reserved for future issuance under our 2014 Equity Incentive Plan, or the 2014 Plan;
|
•
|
16,000,000 Class A ordinary shares reserved for future issuance under our Global Equity Incentive Plan, or the Global Plan, which will become effective one business day prior to the effectiveness of the registration statement of which this prospectus forms a part; and
|
•
|
3,000,000 Class A ordinary shares reserved for future issuance under our Employee Stock Purchase Plan, or the ESPP.
|
•
|
the re-designation of 76,179,938 ordinary shares beneficially owned by our chief executive officer into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering;
|
•
|
the re-designation of all of the remaining issued and outstanding ordinary shares (that are not beneficially owned by our chief executive officer) into Class A ordinary shares on a one-for-one basis immediately prior to the completion of this offering;
|
•
|
the automatic conversion and the re-designation of all of our issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares immediately prior to the completion of this offering;
|
•
|
the issuance of 25,882,351 Class A ordinary shares in the concurrent private placement immediately following the closing of this offering, based on an assumed initial public offering price of US$17.00 per ADS, which is the mid-point of the price range set forth on the cover page of this prospectus;
|
•
|
the completion of the Corporate Reorganization through which Agora, Agora IO and their shareholders entered into a share swap agreement and undertook mutual share repurchases, ultimately resulting in Agora IO becoming a wholly owned subsidiary of Agora and Agora becoming wholly owned by former Agora IO shareholders, as further described in the section of this prospectus captioned “Corporate History and Structure”; and
|
•
|
no exercise of the underwriters’ over-allotment option.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except for share and per share data)
|
||||||||||||||
Real-time engagement service revenues
|
$
|
43,199
|
|
|
$
|
63,925
|
|
|
$
|
13,287
|
|
|
$
|
35,446
|
|
Other revenues
|
458
|
|
|
503
|
|
|
75
|
|
|
114
|
|
||||
Total revenues
|
43,657
|
|
|
64,429
|
|
|
13,362
|
|
|
35,560
|
|
||||
Cost of revenues(1)
|
(12,635
|
)
|
|
(20,417
|
)
|
|
(4,152
|
)
|
|
(11,082
|
)
|
||||
Gross profit
|
31,022
|
|
|
44,011
|
|
|
9,211
|
|
|
24,478
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses(1)
|
(14,426
|
)
|
|
(23,623
|
)
|
|
(4,200
|
)
|
|
(11,688
|
)
|
||||
Sales and marketing expenses(1)
|
(11,986
|
)
|
|
(19,408
|
)
|
|
(4,006
|
)
|
|
(6,002
|
)
|
||||
General and administrative expenses(1)
|
(5,373
|
)
|
|
(7,177
|
)
|
|
(1,562
|
)
|
|
(3,545
|
)
|
||||
Total operating expenses
|
(31,785
|
)
|
|
(50,208
|
)
|
|
(9,768
|
)
|
|
(21,236
|
)
|
||||
Other operating income
|
1,025
|
|
|
108
|
|
|
5
|
|
|
23
|
|
||||
Income (loss) from operations
|
263
|
|
|
(6,089
|
)
|
|
(552
|
)
|
|
3,266
|
|
||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income (loss) before income taxes
|
481
|
|
|
(5,376
|
)
|
|
(528
|
)
|
|
3,356
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Net income (loss)
|
376
|
|
|
(6,177
|
)
|
|
(718
|
)
|
|
2,987
|
|
||||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961
|
)
|
|
(9,961
|
)
|
|
(2,490
|
)
|
|
(3,399
|
)
|
||||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,235
|
)
|
|
(50,715
|
)
|
|
(10,179
|
)
|
|
(35,964
|
)
|
||||
Net income (loss) attributable to ordinary shareholders
|
$
|
(42,820
|
)
|
|
$
|
(66,854
|
)
|
|
$
|
(13,387
|
)
|
|
$
|
(36,376
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(749
|
)
|
|
(358
|
)
|
|
321
|
|
|
(501
|
)
|
||||
Total comprehensive income (loss) attributable to Agora, Inc.’s ordinary shareholders
|
(43,569
|
)
|
|
(67,212
|
)
|
|
(13,066
|
)
|
|
(36,877
|
)
|
||||
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted(2)
|
(0.39
|
)
|
|
(0.58
|
)
|
|
(0.12
|
)
|
|
(0.30
|
)
|
||||
Weighted average number of ordinary shares—basic and diluted(2)
|
109,141,311
|
|
|
115,716,392
|
|
|
113,245,308
|
|
|
119,882,136
|
|
||||
Pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Denominator for pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
295,848,199
|
|
||||||
Denominator for pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
331,484,554
|
|
(1)
|
S hare-based compensation expense was allocated to cost of revenue and operating expenses as follows :
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Cost of revenues
|
$
|
50
|
|
|
$
|
80
|
|
|
$
|
19
|
|
|
$
|
31
|
|
Research and development expenses
|
920
|
|
|
1,473
|
|
|
327
|
|
|
292
|
|
||||
Sales and marketing expenses
|
975
|
|
|
1,654
|
|
|
363
|
|
|
485
|
|
||||
General and administrative expenses
|
905
|
|
|
1,046
|
|
|
221
|
|
|
639
|
|
||||
Total share-based compensation expense
|
$
|
2,850
|
|
|
$
|
4,253
|
|
|
$
|
930
|
|
|
$
|
1,447
|
|
(2)
|
See Note 14 to our consolidated financial statements and Note 14 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our net income (loss) per share attributable to ordinary shareholders—basic and diluted.
|
(3)
|
See Note 17 to our consolidated financial statements and Note 17 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our pro forma net income (loss) per share attributable to ordinary shareholders—basic and diluted.
|
|
Years Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Net cash used in investing activities
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted shares
|
(556
|
)
|
|
(269
|
)
|
|
194
|
|
|
(303
|
)
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
61,979
|
|
|
(2,915
|
)
|
|
(2,139
|
)
|
|
46,050
|
|
||||
Cash, cash equivalents and restricted cash at beginning of year
|
46,619
|
|
|
108,598
|
|
|
108,598
|
|
|
105,683
|
|
||||
Cash, cash equivalents and restricted cash at end of year
|
108,598
|
|
|
105,683
|
|
|
106,459
|
|
|
151,733
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Dollar-Based Net Expansion Rate(1)
|
135
|
%
|
|
127
|
%
|
Constant Currency Dollar-Based Net Expansion Rate(2)
|
133
|
%
|
|
131
|
%
|
|
As of and for the Year Ended December 31,
|
|
As of and for the Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except values)
|
||||||||||||||
Active customers(3)
|
586
|
|
|
1,041
|
|
|
678
|
|
|
1,176
|
|
||||
Adjusted EBITDA(4)
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
Free Cash Flow(5)
|
$
|
(1,725
|
)
|
|
$
|
(4,096
|
)
|
|
$
|
2,855
|
|
|
$
|
(3,416
|
)
|
(1)
|
Our Dollar-Based Net Expansion Rate measures our ability to increase revenue generated from our existing customer base. To calculate Dollar-Based Net Expansion Rate for a given year, we first identify all customers in the prior year, then calculate the quotient from dividing the revenue generated from such customers in the given year by the revenue generated from the same group of customers in the prior year.
|
(2)
|
Our Constant Currency Dollar-Based Net Expansion Rate is calculated the same way as our Dollar-Based Net Expansion Rate but using fixed exchange rates based on the daily average exchange rates prevailing during the prior year to remove the impact of foreign currency translations. We believe Constant Currency Dollar-Based Net Expansion Rate facilitates operating performance comparisons on a period-to-period basis as we do not consider the impact of foreign currency fluctuations to be indicative of our core operating performance.
|
(3)
|
We define an active customer at the end of any particular period as an organization or individual developer from which we generated more than US$100 of revenue during the preceding 12 months. We count customers based on unique customer account identifiers. Generally, one software application uses the same customer account identifier throughout its life cycle while one account may be used for multiple applications.
|
(4)
|
To provide investors with additional information regarding our financial results, we have disclosed in the table above and elsewhere in this prospectus Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income (loss) before exchange gain (loss), interest income, income taxes, depreciation and amortization, and adjusted to exclude the effects of share-based compensation expense. We have provided a reconciliation below of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
•
|
Adjusted EBITDA does not reflect changes in exchange gain (loss);
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;
|
•
|
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net income (loss)
|
$
|
376
|
|
|
$
|
(6,177
|
)
|
|
$
|
(718
|
)
|
|
$
|
2,987
|
|
Excluding:
|
|
|
|
|
|
|
|
||||||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Depreciation and amortization
|
922
|
|
|
1,868
|
|
|
342
|
|
|
745
|
|
||||
Share-based compensation expense
|
2,850
|
|
|
4,253
|
|
|
930
|
|
|
1,447
|
|
||||
Adjusted EBITDA
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
(5)
|
To provide investors with additional information regarding our financial results, we have also disclosed in the table above and elsewhere in this prospectus free cash flow, a non-GAAP financial measure that we calculate as net cash generated from (used in) operating activities less cash used in purchases of property and equipment. We have provided a reconciliation of free cash flow to net cash generated from (used in) operating activities, the most directly comparable GAAP financial measure.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Purchases of property and equipment
|
(2,261
|
)
|
|
(4,802
|
)
|
|
(764
|
)
|
|
(2,496
|
)
|
||||
Free cash flow
|
(1,725
|
)
|
|
(4,096
|
)
|
|
2,855
|
|
|
(3,416
|
)
|
||||
Net cash used in investing activities(6)
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
(6)
|
Net cash used in investing activities includes payments for purchases of property and equipment, which is also included in our calculation of free cash flow.
|
|
As of March 31, 2020
|
||||||||||
|
Actual
|
|
Pro Forma(1)
|
|
Pro Forma As Adjusted(2)
|
||||||
|
(US$ in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
151,653
|
|
|
$
|
151,653
|
|
|
$
|
536,041
|
|
Working capital(3)
|
155,851
|
|
|
155,851
|
|
|
540,239
|
|
|||
Total assets
|
197,154
|
|
|
197,154
|
|
|
581,542
|
|
|||
Total liabilities
|
30,543
|
|
|
30,543
|
|
|
30,543
|
|
|||
Total Mezzanine equity
|
325,934
|
|
|
—
|
|
|
—
|
|
|||
Total shareholders’ equity (deficit)
|
(159,323
|
)
|
|
166,611
|
|
|
550,999
|
|
(1)
|
The pro forma consolidated balance sheet data gives effect to (a) the re-designation of 76,179,938 ordinary shares (including 623,843 restricted shares unvested as of March 31, 2020) beneficially owned by our chief executive officer into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering, (b) the re-designation of all of the remaining ordinary shares into Class A ordinary shares on a one-for-one basis immediately prior to the completion of this offering and (c) the automatic conversion and the re-designation of all of our issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares immediately prior to the completion of this offering.
|
(2)
|
The pro forma as adjusted balance sheet data gives effect to (a) the pro forma adjustments described in footnote (1) above and (b) the issuance and sale of Class A ordinary shares in the form of ADSs by us in this offering and the issuance and sale of Class A ordinary shares by us in the concurrent private placement, based on an assumed initial public offering price of US$17.00 per ADS, the mid-point of the price range shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information provided above is illustrative only and will depend on the actual initial public offering price and other terms of our initial public offering determined in connection with the pricing of this offering. Each US$1.00 increase (decrease) in the assumed public offering price of US$17.00 per ADS, which is the mid-point of the price range shown on the front cover of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total shareholders’ equity (deficit) by US$16.3 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million ADSs in the number of ADSs offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total shareholders’ equity (deficit) by US$15.8 million, assuming no change in the assumed initial public offering price of US$17.00 per ADS, the mid-point of the price range shown on the front cover of this prospectus per ADS, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
|
(3)
|
Working capital is defined as current assets less current liabilities.
|
•
|
PaaS providers, such as Tencent in China and TokBox (part of Vonage Holdings Corp.) and Twilio Inc. in the United States, as well as smaller software companies, which compete with all or portions of our platform and products;
|
•
|
open-source projects, such as WebRTC, which offer capabilities that compete with some of the functionalities in our SDK; and
|
•
|
network operators or cloud providers that offer private lines on which similar functionalities to ours can be built.
|
•
|
failure to predict market demand accurately in terms of functionality and a failure to supply products that meet this demand in a timely fashion;
|
•
|
defects, errors, or failures;
|
•
|
negative publicity about our platform’s performance or effectiveness;
|
•
|
changes in the legal or regulatory requirements, or increased legal or regulatory scrutiny, adversely affecting our platform;
|
•
|
emergence of a competitor that achieves market acceptance before we do;
|
•
|
delays in releasing enhancements to our platform to the market; and
|
•
|
introduction or anticipated introduction of competing products by our competitors.
|
•
|
our ability to attract, retain and increase revenue from customers;
|
•
|
fluctuations in the amount of revenue from our customers;
|
•
|
market acceptance of our products and our ability to introduce new products and enhance existing products;
|
•
|
end-user demand for applications with real-time engagement features;
|
•
|
competition and the actions of our competitors, including pricing changes and the introduction of new products, services and geographies;
|
•
|
our ability to control costs and operating expenses, including the fees that we pay network- and cloud-service providers for data delivery;
|
•
|
changes in our pricing as a result of our optimization efforts or otherwise;
|
•
|
reductions in pricing as a result of negotiations with our larger customers;
|
•
|
the rate of expansion and productivity of our sales force;
|
•
|
change in the mix of products that our customers use;
|
•
|
changes in end-user and customer demand as end-users increase and decrease their time online due to the imposition or easing of stay-at-home, travel and other government mandates or changes in end-user or customer demand for our products in response to the COVID-19 pandemic;
|
•
|
the expansion of our business, particularly in international markets;
|
•
|
changes in foreign currency exchange rates;
|
•
|
changes in laws, regulations or regulatory enforcement, in China, the United States or other countries, that impact our ability to market, sell or deliver our products;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business, including investments in international expansion;
|
•
|
significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products on our platform;
|
•
|
general economic and political conditions that may adversely affect a prospective customer’s ability or willingness to adopt our products, delay a prospective customer’s adoption decision, reduce the revenue that we generate from the use of our products or impact customer retention;
|
•
|
extraordinary expenses such as litigation or other dispute-related settlement payments;
|
•
|
sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business;
|
•
|
the impact of new accounting pronouncements;
|
•
|
expenses incurred in connection with mergers, acquisitions or other strategic transactions and integrating acquired business, technologies, services, products and other assets; and
|
•
|
fluctuations in share-based compensation expense.
|
•
|
the difficulty of managing and staffing international operations and the increased operations, travel, infrastructure and legal compliance costs associated with numerous international locations;
|
•
|
challenges to our corporate culture resulting from a dispersed workforce;
|
•
|
our ability to effectively price our products in competitive international markets;
|
•
|
new and different sources of competition;
|
•
|
our ability to comply with the General Data Protection Regulation 2016/679, or GDPR;
|
•
|
potentially greater difficulty collecting accounts receivable and longer payment cycles;
|
•
|
the need to adapt and localize our products for specific countries;
|
•
|
the effect of differing governmental responses to the COVID-19 pandemic and the continuing impact of the pandemic on individuals, businesses and economies in various foreign jurisdictions;
|
•
|
the need to offer customer support in various languages;
|
•
|
difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions;
|
•
|
difficulties with differing technical and environmental standards, privacy, cybersecurity, data protection and telecommunications regulations and certification requirements outside China and the United States, which could prevent customers from deploying our products or limit their usage;
|
•
|
export controls and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control;
|
•
|
compliance with various anti-bribery and anti-corruption laws such as the Foreign Corrupt Practices Act of 1977, or FCPA, and the United Kingdom Bribery Act of 2010;
|
•
|
tariffs and other non-tariff trade barriers, such as quotas and local content rules;
|
•
|
more limited protection for intellectual property rights in some countries;
|
•
|
adverse tax consequences;
|
•
|
fluctuations in currency exchange rates, which could increase the price of our products in certain markets, increase the expenses of our international operations and expose us to foreign currency exchange rate risk or the cost and risk of hedging transaction if we choose to enter into such transactions in the future;
|
•
|
currency control regulations, which might restrict or prohibit our conversion of other currencies into U.S. dollars;
|
•
|
restrictions on the transfer of funds;
|
•
|
deterioration of political relations between China, the United States and other countries;
|
•
|
exposure to political developments in the United Kingdom, or the U.K., including the departure of the U.K. from the European Union, or the EU, which has created an uncertain political and economic environment, instability for businesses and volatility in global financial markets; and
|
•
|
political or social unrest or economic instability in a specific country or region in which we operate, which could have an adverse impact on our operations in that location.
|
•
|
issue additional equity securities that would dilute our existing shareholders;
|
•
|
use cash that we may need in the future to operate our business;
|
•
|
incur large charges or substantial liabilities;
|
•
|
incur debt on terms unfavorable to us or that we are unable to repay;
|
•
|
encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; or
|
•
|
become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges. The occurrence of any of these foregoing could adversely affect our business, operating results and financial condition.
|
•
|
revoking our business and operating licenses;
|
•
|
levying fines on us;
|
•
|
confiscating any of our income that they deem to be obtained through illegal operations;
|
•
|
restricting our right to collect revenue;
|
•
|
shutting down our services;
|
•
|
discontinuing or restricting our operations in China;
|
•
|
imposing conditions or requirements with which we may not be able to comply;
|
•
|
requiring us to change our corporate structure and contractual arrangements;
|
•
|
restricting or prohibiting our use of the proceeds from overseas offering to finance our VIE’s business and operations; and
|
•
|
taking other regulatory or enforcement actions that could be harmful to our business.
|
•
|
We operate our business in China through businesses controlled via contractual arrangements versus direct ownership due to restrictions on foreign investment in businesses related to value-added telecommunication services.
|
•
|
Uncertainties relating to the regulation of the internet business in China, including evolving licensing practices, give rise to the risk that some of our permits, licenses or operations may be subject to challenge, which may be disruptive to our business, subject us to sanctions or require us to increase capital, compromise the enforceability of relevant contractual arrangements, or have other adverse effects on us. The numerous and often vague restrictions on acceptable content in China subject us to potential civil and criminal liability, temporary blockage or complete shut-down of our products. For example, the State Secrecy Bureau, which is directly responsible for the protection of state secrets of all Chinese government and Chinese Communist Party organizations, is authorized to block any website or mobile applications it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the distribution of online information. In addition, the newly amended Law on Preservation of State Secrets which became effective on October 1, 2010 provides that whenever an internet service provider detects any leakage of state secrets in the distribution of online information, it should stop the distribution of such information and report to the authorities of state security and public security. As per request of the authorities of state security, public security or state secrecy, the internet service provider should delete any content on its website that may lead to disclosure of state secrets. Failure to do so on a timely and adequate basis may subject the service provider to liability and certain penalties imposed by the State Security Bureau, Ministry of Public Security or MIIT, or their respective local counterparts.
|
•
|
variations in our revenue, earnings and cash flows;
|
•
|
regulatory developments affecting us, our customers, or our industry;
|
•
|
announcements of new products or service offerings and expansions by us or our competitors;
|
•
|
announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
|
•
|
changes in financial estimates by securities analysts;
|
•
|
changes in end-user and customer demand as end-users increase and decrease their time online due to the imposition or easing of stay-at-home, travel and other government mandates or changes in end-user or customer demand for our products in response to the COVID-19 pandemic;
|
•
|
detrimental adverse publicity about us, our products or services or our industry;
|
•
|
additions or departures of key personnel;
|
•
|
detrimental negative publicity about us, our management or our industry;
|
•
|
release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and
|
•
|
actual or potential litigation or regulatory investigations.
|
•
|
we have timely provided the depositary with notice of meeting and related voting materials;
|
•
|
we have instructed the depositary that we wish a discretionary proxy to be given;
|
•
|
we have informed the depositary that there is no substantial opposition as to a matter to be voted on at the meeting; and
|
•
|
a matter to be voted on at the meeting would not have a material adverse impact on shareholders.
|
•
|
the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
|
•
|
the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
|
•
|
the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
|
•
|
the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
|
•
|
our ability to effectively manage our growth and expand our operations;
|
•
|
our ability to attract new developers to our platform and convert them into customers;
|
•
|
our ability to retain existing customers and expand their usage of our platform and products;
|
•
|
our ability to drive popularity and usage of existing use cases and enable new ones, particularly centered on real-time video engagement;
|
•
|
the impact of the COVID-19 pandemic on global markets and our business, operations and customers;
|
•
|
our ability to continue to introduce new products, features and functionalities;
|
•
|
our ability to continue to enhance the quality of the end-user experience and drive demand for RTE through our research and development efforts;
|
•
|
our ability to maintain and enhance our brand;
|
•
|
the growth of the RTE-PaaS market;
|
•
|
the effect of broader technological and market trends, such as the deployment of 5G networks and proliferation of IoT devices, on our business and prospects;
|
•
|
our ability to hire and retain experienced and talented employees as we grow our business;
|
•
|
our ability to remain competitive as we continue to scale our business;
|
•
|
general economic conditions and their impact on customer and end-user demand; and
|
•
|
our anticipated uses of the net proceeds from this offering and the concurrent private placement.
|
•
|
on an actual basis;
|
•
|
on a pro forma basis to reflect (1) the re-designation of 76,179,938 ordinary shares (including 623,843 restricted shares unvested as of March 31, 2020) beneficially owned by our chief executive officer into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering, (2) the re-designation of all of the remaining ordinary shares into Class A ordinary shares on a one-for-one basis immediately prior to the completion of this offering and (3) the automatic conversion and the re-designation of all of our issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares immediately prior to the completion of this offering; and
|
•
|
on a pro forma as adjusted basis to reflect (1) the pro forma adjustments set forth above and (2) the issuance and sale of Class A ordinary shares in the form of ADSs by us in this offering and the issuance and sale of Class A ordinary shares by us in the concurrent private placement, based on an assumed initial public offering price of US$17.00 per ADS, the mid-point of the price range shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
|
|
As of March 31, 2020
|
||||||||||
|
Actual
|
|
Pro Forma
|
|
Pro Forma As Adjusted(1)
|
||||||
|
(US$ in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
151,653
|
|
|
$
|
151,653
|
|
|
$
|
536,041
|
|
Mezzanine equity:
|
|
|
|
|
|
||||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
$
|
123,629
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
30,069
|
|
|
—
|
|
|
—
|
|
|||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
46,375
|
|
|
—
|
|
|
—
|
|
|||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
75,114
|
|
|
—
|
|
|
—
|
|
|||
Series C+ convertible redeemable preferred shares ($0.0001 par value, 15,062,510 shares authorized, issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
50,748
|
|
|
—
|
|
|
—
|
|
|||
Total Mezzanine equity
|
$
|
325,934
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Shareholders’ deficit:
|
|
|
|
|
|
||||||
Ordinary shares, US$0.0001 par value per share, 330,404,847 shares authorized, 120,757,715 shares issued and outstanding, actual; no shares issued and outstanding, pro forma and pro forma as adjusted
|
12
|
|
|
—
|
|
|
—
|
|
|||
Class A ordinary shares, US$0.0001 par value per share, no shares authorized, issued or outstanding, actual; 800,000,000 shares authorized and 228,119,611 shares issued and outstanding, pro forma; 800,000,000 shares authorized and 324,001,962 shares issued and outstanding, pro forma as adjusted
|
—
|
|
|
22
|
|
|
32
|
|
|||
Class B ordinary shares, US$0.0001 par value per share, no shares authorized, issued or outstanding, actual; 76,179,938 shares authorized and 75,556,095 shares, issued and outstanding, pro forma, and pro forma as adjusted
|
—
|
|
|
8
|
|
|
8
|
|
|||
Additional paid-in capital
|
—
|
|
|
325,916
|
|
|
710,294
|
|
|||
Accumulated other comprehensive loss
|
(1,490
|
)
|
|
(1,490
|
)
|
|
(1,490
|
)
|
|||
Accumulated deficit
|
(157,845
|
)
|
|
(157,845
|
)
|
|
(157,845
|
)
|
|||
Total shareholders’ equity (deficit)
|
(159,323
|
)
|
|
166,611
|
|
|
550,999
|
|
|||
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
197,154
|
|
|
197,154
|
|
|
581,542
|
|
(1)
|
Assuming the number of ADSs offered by us as set forth on the cover page of this prospectus remains the same, and after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, a US$1.00 increase (decrease) in the assumed public offering price of US$17.00 per ADS, which is the mid-point of the price range shown on the front cover of this prospectus, would increase (decrease) each of additional paid-in capital, total shareholders’ equity (deficit), total equity and total capitalization by US $16.3 million. The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital, total shareholders’ equity (deficit) and total capitalization following the completion of this
|
•
|
43,694,845 ordinary shares issuable upon the vesting of outstanding options;
|
•
|
716,035 ordinary shares reserved for future issuance under the 2014 Plan;
|
•
|
16,000,000 Class A ordinary shares reserved for future issuance under the Global Plan, which will become effective one business day prior to the effectiveness of the registration statement of which this prospectus forms a part; and
|
•
|
3,000,000 Class A ordinary shares reserved for future issuance under the ESPP.
|
|
Per Ordinary Share
|
|
Per ADS
|
||||
Assumed initial public offering price
|
US$
|
4.25
|
|
|
US$
|
17.00
|
|
Pro forma net tangible book value before this offering
|
0.54
|
|
|
2.16
|
|
||
Increase in pro forma net tangible book value attributable to investors participating in this offering and the concurrent private placement
|
0.84
|
|
|
3.36
|
|
||
Pro forma as adjusted net tangible book value as adjusted for this offering and the concurrent private placement
|
1.38
|
|
|
5.52
|
|
||
Amount of dilution in net tangible book value to new investors in this offering and the concurrent private placement
|
2.87
|
|
|
11.48
|
|
|
Ordinary Shares Purchased
|
|
Total Consideration
|
|
Average Price Per Ordinary Share
|
|
Average Price Per ADS
|
|||||||||||||
|
Number
|
|
Percent
|
|
Amount
|
|
Percent
|
|
||||||||||||
Existing shareholders
|
303,675,706
|
|
|
76
|
%
|
|
US$
|
174,361,114
|
|
|
30
|
%
|
|
US$
|
0.57
|
|
|
US$
|
2.28
|
|
New investors
|
70,000,000
|
|
|
18
|
|
|
297,500,000
|
|
|
51
|
|
|
4.25
|
|
|
17.00
|
|
|||
Concurrent private placement investors
|
25,882,351
|
|
|
6
|
|
|
110,000,000
|
|
|
19
|
|
|
4.25
|
|
|
17.00
|
|
|||
Total
|
399,558,057
|
|
|
100
|
%
|
|
US$
|
581,861,114
|
|
|
100
|
%
|
|
US$
|
1.46
|
|
|
US$
|
5.84
|
|
•
|
the percentage of ordinary shares held by existing shareholders will decrease to 74% of the total number of ordinary shares outstanding after this offering; and
|
•
|
the number of ordinary shares (including in the form of ADSs) held by new investors and the concurrent private placement investors will increase to 106,382,351 shares, or 26% of the total number of ordinary shares outstanding after this offering.
|
•
|
43,694,845 ordinary shares issuable upon the vesting of outstanding options;
|
•
|
716,035 ordinary shares reserved for future issuance under the 2014 Plan
|
•
|
16,000,000 Class A ordinary shares reserved for future issuance under the Global Plan, which will become effective one business day prior to the effectiveness of the registration statement of which this prospectus forms a part; and
|
•
|
3,000,000 Class A ordinary shares reserved for future issuance under the ESPP.
|
•
|
Agora IO contributed all of its shares of Agora HK to Agora in exchange for Agora’s issuance of ordinary shares to Agora IO, resulting in Agora HK becoming a wholly owned subsidiary of Agora.
|
•
|
Each shareholder of Agora IO exchanged all of their ordinary and preferred shares of Agora IO for an equivalent number of ordinary and preferred shares of Agora issued via a share swap agreement, resulting in Agora becoming the sole shareholder of Agora IO, and Agora IO and its former shareholders becoming the shareholders of Agora.
|
•
|
Immediately after the share swap, (1) Agora IO reclassified and re-designated all of the preferred shares of Agora IO held by Agora into ordinary shares of Agora IO, (2) Agora repurchased all ordinary shares of Agora held by Agora IO and (3) Agora IO repurchased an equivalent number of ordinary shares of Agora IO held by Agora, collectively resulting in the former Agora IO shareholders remaining shareholders of Agora and Agora IO becoming a wholly owned subsidiary of Agora and no longer a shareholder of Agora.
|
•
|
Agora assumed all options granted by Agora IO under the 2018 Equity Incentive Plan, or the 2018 Plan, resulting in the shares subject to the options becoming the same number of shares of Agora instead of shares of Agora IO, but without otherwise affecting the number of options granted, the shares subject to the options, the exercise price of each award, the vesting commencement date or schedule, or the other terms and conditions in the respective award agreements. Agora IO then terminated the 2018 Plan without affecting the then-outstanding awards under the 2018 Plan.
|
(1)
|
Mr. Zhao, our founder, chief executive officer and chairman, holds 90% of the equity interests in our VIE, and Ms. Wenjing Ma, a nominee shareholder, holds the remaining 10%.
|
•
|
the ownership structures of our WFOE and our VIE in China, both currently and immediately after giving effect to this offering, do not and will not violate any applicable PRC law, regulation or rule currently in effect; and
|
•
|
the contractual arrangements among our WFOE, our VIE and our VIE’s shareholders governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules and regulations currently in effect, and will not violate any applicable PRC law, regulation or rule currently in effect.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except for share and per share data)
|
||||||||||||||
Real-time engagement service revenues
|
$
|
43,199
|
|
|
$
|
63,925
|
|
|
$
|
13,287
|
|
|
$
|
35,446
|
|
Other revenues
|
458
|
|
|
503
|
|
|
75
|
|
|
114
|
|
||||
Total revenues
|
43,657
|
|
|
64,429
|
|
|
13,362
|
|
|
35,560
|
|
||||
Cost of revenues(1)
|
(12,635
|
)
|
|
(20,417
|
)
|
|
(4,152
|
)
|
|
(11,082
|
)
|
||||
Gross profit
|
31,022
|
|
|
44,011
|
|
|
9,211
|
|
|
24,478
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses(1)
|
(14,426
|
)
|
|
(23,623
|
)
|
|
(4,200
|
)
|
|
(11,688
|
)
|
||||
Sales and marketing expenses(1)
|
(11,986
|
)
|
|
(19,408
|
)
|
|
(4,006
|
)
|
|
(6,002
|
)
|
||||
General and administrative expenses(1)
|
(5,373
|
)
|
|
(7,177
|
)
|
|
(1,562
|
)
|
|
(3,545
|
)
|
||||
Total operating expenses
|
(31,785
|
)
|
|
(50,208
|
)
|
|
(9,768
|
)
|
|
(21,236
|
)
|
||||
Other operating income
|
1,025
|
|
|
108
|
|
|
5
|
|
|
23
|
|
||||
Income (loss) from operations
|
263
|
|
|
(6,089
|
)
|
|
(552
|
)
|
|
3,266
|
|
||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income (loss) before income taxes
|
481
|
|
|
(5,376
|
)
|
|
(528
|
)
|
|
3,356
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Net income (loss)
|
376
|
|
|
(6,177
|
)
|
|
(718
|
)
|
|
2,987
|
|
||||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961
|
)
|
|
(9,961
|
)
|
|
(2,490
|
)
|
|
(3,399
|
)
|
||||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,235
|
)
|
|
(50,715
|
)
|
|
(10,179
|
)
|
|
(35,964
|
)
|
||||
Net income (loss) attributable to ordinary shareholders
|
$
|
(42,820
|
)
|
|
$
|
(66,854
|
)
|
|
$
|
(13,387
|
)
|
|
$
|
(36,376
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(749
|
)
|
|
(358
|
)
|
|
321
|
|
|
(501
|
)
|
||||
Total comprehensive income (loss) attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(43,569
|
)
|
|
$
|
(67,212
|
)
|
|
$
|
(13,066
|
)
|
|
$
|
(36,877
|
)
|
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted(2)
|
(0.39
|
)
|
|
(0.58
|
)
|
|
(0.12
|
)
|
|
(0.30
|
)
|
||||
Weighted average number of ordinary shares—basic and diluted(2)
|
109,141,311
|
|
|
115,716,392
|
|
|
113,245,308
|
|
|
119,882,136
|
|
||||
Pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
(0.02
|
)
|
|
|
|
0.01
|
|
||||||
Denominator for pro forma basic earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
295,848,199
|
|
||||||
Denominator for pro forma diluted earnings per ordinary share (unaudited)(3)
|
|
|
283,571,873
|
|
|
|
|
331,484,554
|
|
(1)
|
Share-based compensation expense was allocated to cost of revenue and operating expenses as follows:
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Cost of revenues
|
$
|
50
|
|
|
80
|
|
|
$
|
19
|
|
|
$
|
31
|
|
|
Research and development expenses
|
920
|
|
|
1,473
|
|
|
327
|
|
|
292
|
|
||||
Sales and marketing expenses
|
975
|
|
|
1,654
|
|
|
363
|
|
|
485
|
|
||||
General and administrative expenses
|
905
|
|
|
1,046
|
|
|
221
|
|
|
639
|
|
||||
Total share-based compensation expense
|
$
|
2,850
|
|
|
$
|
4,253
|
|
|
$
|
930
|
|
|
$
|
1,447
|
|
(2)
|
See Note 14 to our consolidated financial statements and Note 14 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our net income (loss) per share attributable to ordinary shareholders—basic and diluted.
|
(3)
|
See Note 17 to our consolidated financial statements and Note 17 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculation of our pro forma net loss per share attributable to ordinary shareholders—basic and diluted.
|
|
Years Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Net cash used in investing activities
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted shares
|
(556
|
)
|
|
(269
|
)
|
|
194
|
|
|
(303
|
)
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
61,979
|
|
|
(2,915
|
)
|
|
(2,139
|
)
|
|
46,050
|
|
||||
Cash, cash equivalents and restricted cash at beginning of year
|
46,619
|
|
|
108,598
|
|
|
108,598
|
|
|
105,683
|
|
||||
Cash, cash equivalents and restricted cash at end of year
|
108,598
|
|
|
105,683
|
|
|
106,459
|
|
|
151,733
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Dollar-Based Net Expansion Rate(1)
|
135
|
%
|
|
127
|
%
|
Constant Currency Dollar-Based Net Expansion Rate(1)
|
133
|
%
|
|
131
|
%
|
|
As of and for the Year Ended December 31,
|
|
As of and for the Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except values)
|
||||||||||||||
Active customers(1)
|
586
|
|
|
1,041
|
|
|
678
|
|
|
1,176
|
|
||||
Adjusted EBITDA(1)
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
Free cash flow(1)
|
$
|
(1,725
|
)
|
|
$
|
(4,096
|
)
|
|
$
|
2,855
|
|
|
$
|
(3,416
|
)
|
(1)
|
See the section of this prospectus captioned “Prospectus Summary—Summary Consolidated Financial and Operating Data—Key Operating and Financial Metrics” for information on how we define and calculate these measures.
|
|
As of December 31,
|
|
As of March 31,
|
||||||||
|
2018
|
|
2019
|
|
2020
|
||||||
|
(US$ in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
108,518
|
|
|
$
|
105,603
|
|
|
$
|
151,653
|
|
Short-term investments
|
1,457
|
|
|
—
|
|
|
—
|
|
|||
Working capital(1)
|
111,948
|
|
|
104,750
|
|
|
155,851
|
|
|||
Total assets
|
127,308
|
|
|
131,159
|
|
|
197,154
|
|
|||
Total liabilities
|
11,295
|
|
|
18,481
|
|
|
30,543
|
|
|||
Total Mezzanine equity
|
189,255
|
|
|
239,970
|
|
|
325,934
|
|
|||
Total shareholders’ equity (deficit)
|
(73,242
|
)
|
|
(127,293
|
)
|
|
(159,323
|
)
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
•
|
In 2013, our chief executive officer, Mr. Zhao, founded our company in Silicon Valley.
|
•
|
In 2014, we launched our Real-Time Voice product and established our Shanghai office.
|
•
|
In 2015, we launched our Real-Time Video product, signed our first customers and organized the inaugural RTC Conference in Beijing, which was the first conference in Asia focused on real-time engagement technology and which we have hosted every year since.
|
•
|
In 2016, we powered more than 600 million minutes of real-time video and voice engagement through more than 1,000 applications in December alone.
|
•
|
In 2017, our products helped developers revolutionize live interactive streaming and social-based gaming by adding real-time video and voice engagement features.
|
•
|
In 2018, the SD-RTN expanded to more than 100 co-located data centers worldwide and we launched Agora Analytics, a suite of tools that help developers monitor and diagnose quality issues to improve the end-user experience. In the same year, adoption of our products for education use cases accelerated.
|
•
|
In 2019, we expanded the SD-RTN to more than 200 co-located data centers worldwide. Additionally, we launched our Real-Time Messaging product, high-definition video capabilities and the Agora Partner Gallery, our marketplace for third-party solutions and services. We also hosted the inaugural AllThingsRTC conference in San Francisco.
|
•
|
In the month of March 2020 alone we powered more than 40 billion minutes of real-time video and voice engagement for end users in more than 100 countries through more than 10,000 active applications.
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Dollar-Based Net Expansion Rate
|
135
|
%
|
|
127
|
%
|
Constant Currency Dollar-Based Net Expansion Rate
|
133
|
%
|
|
131
|
%
|
|
As of and for the Year Ended December 31,
|
|
As of and for the Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands, except values)
|
||||||||||||||
Active customers
|
586
|
|
|
1,041
|
|
|
678
|
|
|
1,176
|
|
||||
Adjusted EBITDA
|
$
|
4,035
|
|
|
$
|
31
|
|
|
$
|
720
|
|
|
$
|
5,458
|
|
Free cash flow
|
$
|
(1,725
|
)
|
|
$
|
(4,096
|
)
|
|
$
|
2,855
|
|
|
$
|
(3,416
|
)
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Real-time engagement service revenues
|
$
|
43,199
|
|
|
$
|
63,925
|
|
|
$
|
13,287
|
|
|
$
|
35,446
|
|
Other revenues
|
458
|
|
|
503
|
|
|
75
|
|
|
114
|
|
||||
Total revenues
|
43,657
|
|
|
64,429
|
|
|
13,362
|
|
|
35,560
|
|
||||
Cost of revenues(1)
|
(12,635
|
)
|
|
(20,417
|
)
|
|
(4,152
|
)
|
|
(11,082
|
)
|
||||
Gross profit
|
31,022
|
|
|
44,011
|
|
|
9,211
|
|
|
24,478
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses(1)
|
(14,426
|
)
|
|
(23,623
|
)
|
|
(4,200
|
)
|
|
(11,688
|
)
|
||||
Sales and marketing expenses(1)
|
(11,986
|
)
|
|
(19,408
|
)
|
|
(4,006
|
)
|
|
(6,002
|
)
|
||||
General and administrative expenses(1)
|
(5,373
|
)
|
|
(7,177
|
)
|
|
(1,562
|
)
|
|
(3,545
|
)
|
||||
Total operating expenses
|
(31,785
|
)
|
|
(50,208
|
)
|
|
(9,768
|
)
|
|
(21,236
|
)
|
||||
Other operating income
|
1,025
|
|
|
108
|
|
|
5
|
|
|
23
|
|
||||
Income (loss) from operations
|
263
|
|
|
(6,089
|
)
|
|
(552
|
)
|
|
3,266
|
|
||||
Exchange gain (loss)
|
(21
|
)
|
|
87
|
|
|
(18
|
)
|
|
(7
|
)
|
||||
Interest income
|
239
|
|
|
626
|
|
|
43
|
|
|
97
|
|
||||
Income (loss) before income taxes
|
481
|
|
|
(5,376
|
)
|
|
(528
|
)
|
|
3,356
|
|
||||
Income taxes
|
(105
|
)
|
|
(801
|
)
|
|
(190
|
)
|
|
(369
|
)
|
||||
Net income (loss)
|
376
|
|
|
(6,177
|
)
|
|
(718
|
)
|
|
2,987
|
|
(1)
|
Share-based compensation expense was allocated to cost of revenue and operating expenses as follows:
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Cost of revenues
|
$
|
50
|
|
|
$
|
80
|
|
|
$
|
19
|
|
|
$
|
31
|
|
Research and development expenses
|
920
|
|
|
1,473
|
|
|
327
|
|
|
292
|
|
||||
Sales and marketing expenses
|
975
|
|
|
1,654
|
|
|
363
|
|
|
485
|
|
||||
General and administrative expenses
|
905
|
|
|
1,046
|
|
|
221
|
|
|
639
|
|
||||
Total share-based compensation expense
|
$
|
2,850
|
|
|
$
|
4,253
|
|
|
$
|
930
|
|
|
$
|
1,447
|
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||
Real-time engagement service revenues
|
99.0
|
%
|
|
99.2
|
%
|
|
99.4
|
%
|
|
99.7
|
%
|
Other revenues
|
1.0
|
|
|
0.8
|
|
|
0.6
|
|
|
0.3
|
|
Total revenues
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenues
|
(28.9
|
)
|
|
(31.7
|
)
|
|
(31.1
|
)
|
|
(31.2
|
)
|
Gross profit
|
71.1
|
|
|
68.3
|
|
|
68.9
|
|
|
68.8
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development expenses
|
(33.0
|
)
|
|
(36.7
|
)
|
|
(31.4
|
)
|
|
(32.9
|
)
|
Sales and marketing expenses
|
(27.5
|
)
|
|
(30.1
|
)
|
|
(30.0
|
)
|
|
(16.9
|
)
|
General and administrative expenses
|
(12.3
|
)
|
|
(11.1
|
)
|
|
(11.7
|
)
|
|
(10.0
|
)
|
Total operating expenses
|
(72.8
|
)
|
|
(77.9
|
)
|
|
(73.1
|
)
|
|
(59.7
|
)
|
Other operating income
|
2.3
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
Income (loss) from operations
|
0.6
|
|
|
(9.5
|
)
|
|
(4.1
|
)
|
|
9.2
|
|
Exchange gain (loss)
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
Interest income
|
0.5
|
|
|
1.0
|
|
|
0.3
|
|
|
0.3
|
|
Income (loss) before income taxes
|
1.1
|
|
|
(8.3
|
)
|
|
(4.0
|
)
|
|
9.4
|
|
Income taxes
|
(0.2
|
)
|
|
(1.2
|
)
|
|
(1.4
|
)
|
|
(1.0
|
)
|
Net income (loss)
|
0.9
|
%
|
|
(9.6
|
)%
|
|
(5.4
|
)%
|
|
8.4
|
%
|
|
Three Months Ended
March 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2020
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Total revenues
|
$
|
13,362
|
|
|
$
|
35,560
|
|
|
$
|
22,198
|
|
|
166.1
|
%
|
|
Three Months Ended
March 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2020
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Cost of revenues
|
$
|
(4,152
|
)
|
|
$
|
(11,082
|
)
|
|
$
|
(6,930
|
)
|
|
166.9
|
%
|
Gross margin
|
68.9
|
%
|
|
68.8
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Total revenues
|
$
|
43,657
|
|
|
$
|
64,429
|
|
|
$
|
20,772
|
|
|
47.6
|
%
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Cost of revenues
|
$
|
12,635
|
|
|
$
|
20,417
|
|
|
$
|
7,782
|
|
|
61.6
|
%
|
Gross margin
|
71.1
|
%
|
|
68.3
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Research and development expenses
|
$
|
14,426
|
|
|
$
|
23,623
|
|
|
$
|
9,197
|
|
|
63.8
|
%
|
Percentage of total revenues
|
33.0%
|
|
|
36.7
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
Sales and marketing expenses
|
$
|
11,986
|
|
|
$
|
19,408
|
|
|
$
|
7,422
|
|
|
61.9
|
%
|
Percentage of total revenues
|
27.5
|
%
|
|
30.1
|
%
|
|
|
|
|
|
Year Ended
December 31,
|
|
Change
|
|||||||||||
|
2018
|
|
2019
|
|
$
|
|
%
|
|||||||
|
(US$ in thousands)
|
|||||||||||||
General and administrative expenses
|
$
|
5,373
|
|
|
$
|
7,177
|
|
|
$
|
1,804
|
|
|
33.6
|
%
|
Percentage of total revenues
|
12.3
|
%
|
|
11.1
|
%
|
|
|
|
|
|
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
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Real-time engagement service revenues
|
$
|
8,069
|
|
|
$
|
10,377
|
|
|
$
|
12,492
|
|
|
$
|
12,261
|
|
|
$
|
13,287
|
|
|
$
|
14,863
|
|
|
$
|
16,935
|
|
|
$
|
18,840
|
|
|
$
|
35,446
|
|
Other revenues
|
6
|
|
|
132
|
|
|
161
|
|
|
160
|
|
|
75
|
|
|
38
|
|
|
125
|
|
|
265
|
|
|
114
|
|
|||||||||
Total revenues
|
8,074
|
|
|
10,509
|
|
|
12,652
|
|
|
12,421
|
|
|
13,362
|
|
|
14,901
|
|
|
17,061
|
|
|
19,105
|
|
|
35,560
|
|
|||||||||
Cost of revenues(1)
|
(2,355
|
)
|
|
(2,888
|
)
|
|
(3,482
|
)
|
|
(3,909
|
)
|
|
(4,152
|
)
|
|
(4,584
|
)
|
|
(5,248
|
)
|
|
(6,434
|
)
|
|
(11,082
|
)
|
|||||||||
Gross profit
|
5,719
|
|
|
7,621
|
|
|
9,170
|
|
|
8,512
|
|
|
9,211
|
|
|
10,317
|
|
|
11,813
|
|
|
12,671
|
|
|
24,478
|
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Research and development expenses(1)
|
(3,259
|
)
|
|
(3,625
|
)
|
|
(3,511
|
)
|
|
(4,030
|
)
|
|
(4,200
|
)
|
|
(5,708
|
)
|
|
(6,587
|
)
|
|
(7,128
|
)
|
|
(11,688
|
)
|
|||||||||
Sales and marketing expenses(1)
|
(2,152
|
)
|
|
(2,450
|
)
|
|
(3,595
|
)
|
|
(3,789
|
)
|
|
(4,006
|
)
|
|
(5,067
|
)
|
|
(4,778
|
)
|
|
(5,558
|
)
|
|
(6,002
|
)
|
|||||||||
General and administrative expenses(1)
|
(943
|
)
|
|
(1,226
|
)
|
|
(1,429
|
)
|
|
(1,774
|
)
|
|
(1,562
|
)
|
|
(1,535
|
)
|
|
(1,658
|
)
|
|
(2,421
|
)
|
|
(3,545
|
)
|
|||||||||
Total operating expenses
|
(6,354
|
)
|
|
(7,302
|
)
|
|
(8,535
|
)
|
|
(9,594
|
)
|
|
(9,768
|
)
|
|
(12,310
|
)
|
|
(13,024
|
)
|
|
(15,106
|
)
|
|
(21,236
|
)
|
|||||||||
Other operating income
|
(16
|
)
|
|
—
|
|
|
1,012
|
|
|
29
|
|
|
5
|
|
|
14
|
|
|
58
|
|
|
30
|
|
|
23
|
|
|||||||||
Income (loss) from operations
|
(652
|
)
|
|
320
|
|
|
1,647
|
|
|
(1,052
|
)
|
|
(552
|
)
|
|
(1,980
|
)
|
|
(1,153
|
)
|
|
(2,404
|
)
|
|
3,266
|
|
|||||||||
Exchange gain (loss)
|
6
|
|
|
11
|
|
|
—
|
|
|
(37
|
)
|
|
(18
|
)
|
|
31
|
|
|
40
|
|
|
34
|
|
|
(7
|
)
|
|||||||||
Interest income
|
53
|
|
|
92
|
|
|
71
|
|
|
23
|
|
|
43
|
|
|
81
|
|
|
262
|
|
|
240
|
|
|
97
|
|
|||||||||
Income (loss) before income taxes
|
(593
|
)
|
|
423
|
|
|
1,718
|
|
|
(1,066
|
)
|
|
(528
|
)
|
|
(1,868
|
)
|
|
(850
|
)
|
|
(2,131
|
)
|
|
3,356
|
|
|||||||||
Income taxes
|
(10
|
)
|
|
(25
|
)
|
|
(57
|
)
|
|
(13
|
)
|
|
(190
|
)
|
|
(136
|
)
|
|
(264
|
)
|
|
(212
|
)
|
|
(369
|
)
|
|||||||||
Net income (loss)
|
(603
|
)
|
|
398
|
|
|
1,660
|
|
|
(1,079
|
)
|
|
(718
|
)
|
|
(2,004
|
)
|
|
(1,113
|
)
|
|
(2,342
|
)
|
|
2,987
|
|
(1)
|
Share-based compensation expense was allocated to cost of revenue and operating expenses as follows:
|
|
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
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
21
|
|
|
$
|
20
|
|
|
$
|
31
|
|
Research and development expenses
|
161
|
|
|
232
|
|
|
288
|
|
|
238
|
|
|
327
|
|
|
793
|
|
|
169
|
|
|
183
|
|
|
292
|
|
|||||||||
Sales and marketing expenses
|
115
|
|
|
207
|
|
|
329
|
|
|
325
|
|
|
363
|
|
|
549
|
|
|
369
|
|
|
373
|
|
|
485
|
|
|||||||||
General and administrative expenses
|
158
|
|
|
216
|
|
|
284
|
|
|
248
|
|
|
221
|
|
|
295
|
|
|
260
|
|
|
271
|
|
|
639
|
|
|||||||||
Total share-based compensation expense
|
$
|
447
|
|
|
$
|
667
|
|
|
$
|
914
|
|
|
$
|
822
|
|
|
$
|
930
|
|
|
$
|
1,656
|
|
|
$
|
820
|
|
|
$
|
847
|
|
|
$
|
1,447
|
|
|
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
|
|
March 31, 2020
|
|||||||||
|
(Unaudited)
|
|||||||||||||||||||||||||
Real-time engagement service revenues
|
99.9
|
%
|
|
98.7
|
%
|
|
98.7
|
%
|
|
98.7
|
%
|
|
99.4
|
%
|
|
99.7
|
%
|
|
99.3
|
%
|
|
98.6
|
%
|
|
99.7
|
%
|
Other revenues
|
0.1
|
|
|
1.3
|
|
|
1.3
|
|
|
1.3
|
|
|
0.6
|
|
|
0.3
|
|
|
0.7
|
|
|
1.4
|
|
|
0.3
|
|
Total revenues
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenues
|
(29.2
|
)
|
|
(27.5
|
)
|
|
(27.5
|
)
|
|
(31.5
|
)
|
|
(31.1
|
)
|
|
(30.8
|
)
|
|
(30.8
|
)
|
|
(33.7
|
)
|
|
(31.2
|
)
|
Gross profit
|
70.8
|
|
|
72.5
|
|
|
72.5
|
|
|
68.5
|
|
|
68.9
|
|
|
69.2
|
|
|
69.2
|
|
|
66.3
|
|
|
68.8
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development expenses
|
(40.4
|
)
|
|
(34.5
|
)
|
|
(27.7
|
)
|
|
(32.4
|
)
|
|
(31.4
|
)
|
|
(38.3
|
)
|
|
(38.6
|
)
|
|
(37.3
|
)
|
|
(32.9
|
)
|
Sales and marketing expenses
|
(26.7
|
)
|
|
(23.3
|
)
|
|
(28.4
|
)
|
|
(30.5
|
)
|
|
(30.0
|
)
|
|
(34.0
|
)
|
|
(28.0
|
)
|
|
(29.1
|
)
|
|
(16.9
|
)
|
General and administrative expenses
|
(11.7
|
)
|
|
(11.7
|
)
|
|
(11.3
|
)
|
|
(14.3
|
)
|
|
(11.7
|
)
|
|
(10.3
|
)
|
|
(9.7
|
)
|
|
(12.7
|
)
|
|
(10.0
|
)
|
Total operating expenses
|
(78.7
|
)
|
|
(69.5
|
)
|
|
(67.5
|
)
|
|
(77.2
|
)
|
|
(73.1
|
)
|
|
(82.6
|
)
|
|
(76.3
|
)
|
|
(79.1
|
)
|
|
(59.7
|
)
|
Other operating income
|
(0.2
|
)
|
|
—
|
|
|
8.0
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
Income (loss) from operations
|
(8.1
|
)
|
|
3.0
|
|
|
13.0
|
|
|
(8.5
|
)
|
|
(4.1
|
)
|
|
(13.3
|
)
|
|
(6.8
|
)
|
|
(12.6
|
)
|
|
9.2
|
|
Exchange gain (loss)
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
Interest income
|
0.7
|
|
|
0.9
|
|
|
0.6
|
|
|
0.2
|
|
|
0.3
|
|
|
0.5
|
|
|
1.5
|
|
|
1.3
|
|
|
0.3
|
|
Income (loss) before income taxes
|
(7.3
|
)
|
|
4.0
|
|
|
13.6
|
|
|
(8.6
|
)
|
|
(3.9
|
)
|
|
(12.5
|
)
|
|
(5.0
|
)
|
|
(11.2
|
)
|
|
9.4
|
|
Income taxes
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(1.4
|
)
|
|
(0.9
|
)
|
|
(1.5
|
)
|
|
(1.1
|
)
|
|
(1.0
|
)
|
Net income (loss)
|
(7.5
|
)%
|
|
3.8
|
%
|
|
13.1
|
%
|
|
(8.7
|
)%
|
|
(5.4
|
)%
|
|
(13.4
|
)%
|
|
(6.5
|
)%
|
|
(12.3
|
)%
|
|
8.4
|
%
|
|
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
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Other Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Adjusted EBITDA(1)
|
$
|
(45
|
)
|
|
$
|
1,177
|
|
|
$
|
2,815
|
|
|
$
|
88
|
|
|
$
|
720
|
|
|
$
|
105
|
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
5,458
|
|
Free cash flow(1)
|
$
|
(1,220
|
)
|
|
$
|
(3,033
|
)
|
|
$
|
225
|
|
|
$
|
2,303
|
|
|
$
|
2,855
|
|
|
$
|
(6,581
|
)
|
|
$
|
(1,267
|
)
|
|
$
|
897
|
|
|
$
|
(3,416
|
)
|
(1)
|
See the section of this prospectus captioned “Prospectus Summary—Summary Consolidated Financial and Operating Data—Key Operating and Financial Metrics” for information on how we define and calculate these measures.
|
|
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
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Net income (loss)
|
$
|
(603
|
)
|
|
$
|
398
|
|
|
$
|
1,660
|
|
|
$
|
(1,079
|
)
|
|
$
|
(718
|
)
|
|
$
|
(2,004
|
)
|
|
$
|
(1,113
|
)
|
|
$
|
(2,342
|
)
|
|
$
|
2,987
|
|
Excluding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Exchange gain (loss)
|
6
|
|
|
11
|
|
|
—
|
|
|
(37
|
)
|
|
(18
|
)
|
|
31
|
|
|
40
|
|
|
34
|
|
|
(7
|
)
|
|||||||||
Interest income
|
53
|
|
|
92
|
|
|
71
|
|
|
23
|
|
|
43
|
|
|
81
|
|
|
262
|
|
|
240
|
|
|
97
|
|
|||||||||
Income taxes
|
(10
|
)
|
|
(25
|
)
|
|
(57
|
)
|
|
(13
|
)
|
|
(190
|
)
|
|
(136
|
)
|
|
(264
|
)
|
|
(212
|
)
|
|
(369
|
)
|
|||||||||
Depreciation and amortization
|
160
|
|
|
190
|
|
|
254
|
|
|
318
|
|
|
342
|
|
|
429
|
|
|
520
|
|
|
577
|
|
|
745
|
|
|||||||||
Share-based compensation expense
|
447
|
|
|
667
|
|
|
914
|
|
|
822
|
|
|
930
|
|
|
1,656
|
|
|
820
|
|
|
847
|
|
|
1,447
|
|
|||||||||
Adjusted EBITDA
|
$
|
(45
|
)
|
|
$
|
1,177
|
|
|
$
|
2,815
|
|
|
$
|
88
|
|
|
$
|
720
|
|
|
$
|
105
|
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
5,458
|
|
|
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
|
|
March 31, 2020
|
||||||||||||||||||
|
(Unaudited, US$ in thousands)
|
||||||||||||||||||||||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
(1,091
|
)
|
|
$
|
(2,404
|
)
|
|
$
|
1,300
|
|
|
$
|
2,731
|
|
|
$
|
3,619
|
|
|
$
|
(4,935
|
)
|
|
$
|
(54
|
)
|
|
$
|
2,077
|
|
|
$
|
(919
|
)
|
Purchases of property and equipment
|
(129
|
)
|
|
(629
|
)
|
|
(1,075
|
)
|
|
(429
|
)
|
|
(764
|
)
|
|
(1,645
|
)
|
|
(1,213
|
)
|
|
(1,180
|
)
|
|
(2,496
|
)
|
|||||||||
Free cash flow
|
(1,220
|
)
|
|
(3,033
|
)
|
|
225
|
|
|
2,303
|
|
|
2,855
|
|
|
(6,581
|
)
|
|
(1,267
|
)
|
|
897
|
|
|
(3,416
|
)
|
|||||||||
Net cash generated from (used in) investing activities(1)
|
(129
|
)
|
|
(629
|
)
|
|
(1,075
|
)
|
|
(1,941
|
)
|
|
(5,951
|
)
|
|
2,024
|
|
|
(2,644
|
)
|
|
3,219
|
|
|
(2,496
|
)
|
|||||||||
Net cash provided by (used in) financing activities
|
(785
|
)
|
|
—
|
|
|
—
|
|
|
66,557
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
(1)
|
Net cash used in investing activities includes payments for purchases of property and equipment, which is also included in our calculation of free cash flow.
|
|
As of December 31,
|
|
As of March 31,
|
||||||||
|
2018
|
|
2019
|
|
2020
|
||||||
|
(US$ in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
108,518
|
|
|
$
|
105,603
|
|
|
$
|
151,653
|
|
Short-term investments
|
1,457
|
|
|
—
|
|
|
—
|
|
|||
Accounts receivable, net
|
11,659
|
|
|
16,248
|
|
|
31,240
|
|
|||
Working capital(1)
|
$
|
111,948
|
|
|
$
|
104,750
|
|
|
155,851
|
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||||||
|
(US$ in thousands)
|
||||||||||||||
Net cash generated from (used in) operating activities
|
$
|
536
|
|
|
$
|
706
|
|
|
$
|
3,619
|
|
|
$
|
(919
|
)
|
Net cash used in investing activities
|
(3,773
|
)
|
|
(3,353
|
)
|
|
(5,951
|
)
|
|
(2,496
|
)
|
||||
Net cash provided by financing activities
|
65,772
|
|
|
—
|
|
|
—
|
|
|
49,769
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
61,979
|
|
|
$
|
(2,915
|
)
|
|
$
|
(2,139
|
)
|
|
$
|
46,050
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than
5 Years
|
||||||||||
|
(US$ in thousands)
|
||||||||||||||||||
Operating lease obligations
|
$
|
3,834
|
|
|
$
|
1,746
|
|
|
$
|
1,990
|
|
|
$
|
98
|
|
|
$
|
—
|
|
Purchase obligations
|
$
|
4,239
|
|
|
4,239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
8,073
|
|
|
$
|
5,985
|
|
|
$
|
1,990
|
|
|
$
|
98
|
|
|
$
|
—
|
|
(1)
|
Operating leases represent total future minimum rent payments under non-cancelable operating lease agreements.
|
(2)
|
Purchase obligations represent total future minimum payments under contracts with our cloud infrastructure provider, network service providers and other vendors.
|
|
Year Ended December 31,
|
|
Three Months Ended March 31,
|
||||||||
|
2018
|
|
2019
|
|
2019
|
|
2020
|
||||
Exercise price
|
US$0.10-US$1.00
|
|
|
US$0.10-US$0.50
|
|
|
US$0.1-US$0.37
|
|
|
US$0.1-US$1.74
|
|
Fair value of the ordinary shares on the date of option grant
|
US$0.3493-US$0.6989
|
|
|
US$0.6989-US$1.4751
|
|
|
US$0.6989-US$0.8444
|
|
|
1.7358
|
|
Risk-free interest rate(1)
|
2.54%-3.18%
|
|
|
1.80%-2.83%
|
|
|
2.62%-2.83%
|
|
|
1.76
|
%
|
Expected term (in years)
|
10
|
|
|
10
|
|
|
10
|
|
|
10
|
|
Expected dividend yield(2)
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility(3)
|
49.18%-50.36%
|
|
|
47.54%-50.01%
|
|
|
49.31%-50.01%
|
|
|
47.29
|
%
|
Expected forfeiture rate (post-vesting)
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
0%-3%
|
|
(1)
|
The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the U.S. treasury bonds with a maturity life equal to the expected life to expiration.
|
(2)
|
We have no history or expectation of paying dividends on our ordinary shares.
|
(3)
|
Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates.
|
|
|
Tony Zhao
|
Founder, Chairman and CEO of Agora
|
•
|
Social, Education, Entertainment and Gaming. Real-time and immersive experiences promote application usage which leads to higher user retention and increased willingness to pay. Common use cases include one-to-one and group video and voice chat, remote classroom, live interactive streaming and video or voice interactions in multi-player games.
|
•
|
Enterprise Solutions. Increased user engagement and closer collaboration is catalyzing innovation and driving agility across enterprises. Common use cases include video conferencing and engagement-oriented workflows such as sales, customer support and consultation. These workflows span a diversified mix of industries including healthcare, financial services, e-commerce, professional services, field services and utilities.
|
•
|
Internet of Things (IoT). Real-time video and voice engagement across IoT devices is driving operational optimization, enhancing public safety and increasing employee productivity. As 5G deployment accelerates and the commercial and consumer usage of the network expands, real-time video is expected to become mainstream across several emerging IoT use cases.
|
•
|
Video Offerings. Unlike legacy A2P offerings that are unable to provide video solutions, RTE is well positioned to deliver real-time video engagement.
|
•
|
Cost Efficiency. RTE technologies consume bandwidth which is much cheaper than voice minutes and SMS messages purchased from telecom operators.
|
•
|
Immersive and Convenient Application Experiences. Since RTE technologies enable video, voice and chat engagement to occur natively within applications, end users are able to enjoy smoother, more immersive and more convenient experiences.
|
•
|
Privacy. With RTE technologies, end users are able to prevent disclosing their phone numbers through the use of proper in-application masking.
|
•
|
The Public Internet is not Ideal for RTE. The public internet as it stands is an open and best efforts network with no assurance of service quality, which is not ideal for RTE. Network conditions vary across time of day, geographies and network operators, often causing significant data packet loss and high latency. Real-time video engagement is particularly challenging as it requires much higher data volume, bandwidth and computing power than other forms of engagement.
|
•
|
Multi-way RTE is Significantly more Complex than One-way Content Delivery. The majority of public internet traffic flows downstream from content providers to users. One-way content delivery can be addressed by building widely distributed data warehouses and caching data near end users. However, real-time engagement is by definition at least two-way and involves transmission of data back and forth between users under varying network conditions, sometimes across distant geographies. As more users join an engagement, the amount of data transmitted and the associated technical complexity increase significantly. Even more challenging is the low latency requirement. To deliver effective real-time video or voice engagement, multiple data streams need to be created, transmitted, synchronized and consumed simultaneously with millisecond end-to-end latency. A problem at any step would be immediately noticed by end users.
|
•
|
Convergence of Adoption Trends. The pace of RTE-PaaS adoption varies across regions. In the United States, enterprise applications drive the market, with digital transformation, omni-channel customer interactions and integrated platform tools being the key technology growth drivers. In China and other countries in the Asia Pacific region, consumer applications in social, education, entertainment and gaming drive adoption of RTE-PaaS solutions. Over time, it is expected that adoption across enterprise and consumer use cases will converge globally.
|
•
|
Organic Growth from Applications Built upon RTE-PaaS solutions. Applications that RTE-PaaS solutions enable have benefited from strong organic growth as end users demand a more immersive and high-quality video and voice engagement experience. As the number of applications built upon RTE proliferates and the end-user base and usage of these applications continue to increase, the demand for RTE-PaaS should continue to expand.
|
•
|
Rollout of 5G Will Likely Accelerate Innovation and Proliferation of RTE Use Cases. As 5G networks continue to be deployed, internet infrastructure will improve generally and, in particular, end users will benefit from a better connection between their devices and the internet backbone. This will allow RTE-PaaS providers to significantly improve the quality of the end-user experience, which could drive popularity and usage of existing use cases and enable new ones, particularly centered on real-time video engagement.
|
•
|
Further Conversion from In-house. In-house developers often lack the requisite expertise to develop RTE solutions, especially real-time video engagement. Even where the expertise exists, building and maintaining the underlying infrastructure is time-consuming and expensive. In addition, developers must continually customize their applications to address the continuous evolution and innovation of phones, PCs and other connected devices with a myriad of combinations of microphones, speakers, cameras and other components. With the rapid pace at which organizations are required to enhance their software applications to stay competitive and meet the evolving needs of their end users, RTE-PaaS solutions are expected to continue to displace in-house developed technologies.
|
•
|
Quality and Reliability. The most important reason why developers choose the Agora platform is the quality and reliability of real-time engagement we power. Our platform delivers industry-leading performance around latency and media quality, and works under challenging network conditions with up to 70% packet loss. Our customers can take comfort from our service level agreements that provide assurances on availability (uptime) levels and, increasingly, experience levels such as latency.
|
•
|
Comprehensive Features. We offer a breadth of product features that go beyond just enabling the video and voice aspects of real-time engagement. We provide a spectrum of building blocks through hundreds of APIs, use case products and third-party plug-ins that improve our customers’ offerings and enhance end-user experience, such as content moderation in social applications, interactive whiteboard in education and voice masking in gaming. Developers often find that they can build a significant portion of their applications with our software modules and services.
|
•
|
Easy to Integrate. Our SDK is designed to be easy to learn, simple to embed and highly customizable. We also provide detailed documentation, programming tools and a wide range of code samples. Compared with developing real-time engagement solutions in-house, adopting the Agora platform can significantly simplify software development and shorten time to market.
|
•
|
Scalability. Our advanced architecture and global infrastructure allow applications to scale rapidly to serve millions of end users across geographies while maintaining the quality of the user experience.
|
•
|
Cost Efficiency. Our usage-based pricing model with no upfront fee allows customers to minimize initial investment and efficiently manage costs. Given our scale and the fact that peak usage of applications that use our platform usually occur at different times, we can support more usage with the same bandwidth, enabling us to offer our customers attractive pricing. We believe our ability to offer this benefit will be enhanced as we continue to scale.
|
•
|
Compatibility. Our SDK is broadly compatible with major operating systems, development frameworks and programming languages, and a wide variety of phones, PCs and other connected devices, including older and less sophisticated models. Our SDK is also designed to be compact in size and efficient in CPU usage and power consumption.
|
•
|
Transparency. Our platform is built with real-time analytics at the core, which allow customers to easily monitor and analyze the quality of each video and voice engagement session, manage billings and usage, and gain clear insights on user experience.
|
•
|
RTE-PaaS Pioneer and Global Leader. We pioneered RTE-PaaS and we are the global leader in this rapidly growing industry. Our platform is developed by a talented engineering team led by our founder and chief executive officer with extensive expertise in real-time engagement technology. As the industry leader we power more and more minutes for a growing number of customers and end users, which enables us to further improve the quality of experience of our products and in turn attract even more customers and end users. We believe the time and resources required to replicate our level of quality will only increase as we continue to scale our business.
|
•
|
Advanced Network Architecture. The SD-RTN is designed to handle the most demanding task in real-time engagement: real-time video. It runs on commodity hardware and adopts a globally distributed and all-software architecture, instead of relying on a few physical or private transmission lines. We believe our architecture is cost-effective, scalable, resilient and allows for highly flexible routing optimization, making it particularly suitable for enabling real-time video and voice engagement at massive scale.
|
•
|
Pure-Play and Independent Platform. Our singular focus on real-time engagement means we prioritize our entire platform for minimizing latency, which is challenging for a full-service cloud provider given the competing needs of its non-real-time products. By being focused we are able to “go deeper” and offer more comprehensive features, more control and more visibility, thereby making us more developer-friendly. Our positioning as an independent platform is also attractive to developers and partners who want to avoid conflicts of interest or reliance on a single cloud provider.
|
•
|
Developer Mind Share. We have cultivated a large and engaged developer community, with more than 180,000 applications that have registered on our platform from our inception through March 31, 2020. We believe we are recognized by developers as the leading platform for real-time engagement. We set the standard for integrating and operating real-time engagement within software applications in China, and increasingly in other markets.
|
•
|
Loyal Customer Base . Once developers have integrated our SDK and experienced the quality and reliability of our platform, we believe they are less inclined to try alternatives and incur potentially high switching cost. We rarely lose customers to competitors and their loyalty is reflected in our Constant Currency Dollar-Based Net Expansion Rate, which was 133% and 131% for 2018 and 2019, respectively. Our Net Promoter Score, or NPS, was 64 in our most recent measurement period ended May 31, 2020, which likewise demonstrates a high level of customer satisfaction with our platform.
|
•
|
Invest in Technology. We will continue to focus on improving the quality of the end-user experience to drive overall demand for real-time engagement. We also plan to introduce products that complement our current offerings, and in particular, use-case products that support key customer industries such as education and entertainment as well as emerging technologies such as IoT and AR/VR. We have a substantial research and development team, comprising 57% of our headcount as of March 31, 2020. In 2018 and 2019 and the first three months of 2020, we invested US$13.5 million, US$22.2 million and US$11.4 million in research and development, excluding share-based compensation, representing 30.9%, 34.5% and 32.0% of our revenue, respectively.
|
•
|
Grow our Developer Community. We actively work with developers to brainstorm and test innovative ideas. For example, we worked with the developers of Werewolf, a mafia-type party game that requires constant dialogue among players, to develop an online version that was not possible in the absence of our Real-Time Voice product. We will continue to invest our resources to help developers innovate. We will also invest in brand marketing and developer relationships to drive awareness of our platform and attract more developers to our platform.
|
•
|
Invest in Partnership Ecosystem. We believe that in today’s technology landscape, it is imperative that we work with partners to extend our platform’s capabilities. In 2019, we introduced the Agora Partner Gallery, our marketplace for third-party solutions and services, to allow partners to develop specific use case functionalities that work as plugins on our core products. We have relationships with a variety of technology vendors, channel partners, independent software vendors and service integrators, and intend to grow and broaden these relationships. We will continue to invest in this ecosystem to drive adoption of our platform.
|
•
|
Expand Focus on Enterprises. Currently, our customers mainly come from social, education, entertainment and gaming sectors and there is significant room for increased customer penetration in e-commerce, financial services, healthcare, professional services and IoT. We plan to increase our sales effort into these industries and use cases to drive greater adoption.
|
•
|
Accelerate International Expansion. Although we believe that adoption of real-time engagement in China is still in the early stages, it is further advanced there than in other countries, especially for consumer-oriented applications. By expanding our developer engagement efforts and direct sales force in the United States and other markets and collaborating with ecosystem partners, we plan to grow our revenue globally.
|
•
|
Real-Time Video. Our Real-Time Video product enables real-time video interactions at up to full high-definition resolution among multiple users. Our Real-Time Video product offers features such as adaptive compression according to network conditions, perceptual video coding and resolution enhancement. The SDK allows for seamless integration with third-party plugins and functions as well as deep customization of video resolution and layout.
|
•
|
Live Interactive Video Streaming. Our Live Interactive Video Streaming product enables real-time video interactions that are simultaneously streamed to up to millions of users, offering immersive video streaming experiences.
|
•
|
Real-Time Voice. Our Real-Time Voice product enables real-time voice interactions among multiple users. Our Real-Time Voice product offers features such as 3D spatial audio, active speaker detection, audio mixing, noise reduction, echo cancellation, surge control and voice effects.
|
•
|
Live Interactive Audio Streaming. Our Live Interactive Audio Streaming product enables real-time audio interactions that are streamed to up to millions of users.
|
•
|
Real-Time Messaging. Our Real-Time Messaging product provides a highly reliable and low latency messaging service through the SD-RTN, including peer-to-peer messaging as well as channel messaging that can send messages to millions of recipients simultaneously.
|
•
|
Real-Time Recording. Real-Time Recording is an add-on service to our Video and Audio products to record and save video and voice interactions and live interactive streaming, either on our platform or on servers designated by our customers. Our Real-Time Recording product enables a wide range of use cases such as course recording, regulatory compliance, record keeping and customer service quality evaluations.
|
•
|
Real-Time Streaming Acceleration. Our Real-Time Streaming Acceleration product facilitates ultra-low latency transmission of streaming content over the internet. It is intended to be used by developers who have developed their own media processing modules that can otherwise be provided by our SDK but would benefit from access to the SD-RTN to accelerate their streaming transmissions.
|
•
|
Use Case Products. Our use case products provide value-added functionalities for common use cases, such as content moderation to remove inappropriate content in a video stream, interactive whiteboard for education applications and transcription services. In 2019, we introduced the Agora Partner Gallery, our marketplace for third-party solutions and services, to allow partners to develop specific use case functionalities that work as plugins on our core products, which we believe will extend the value and adoption of our platform.
|
•
|
Social. We enable a variety of real-time social interactions online, such as:
|
◦
|
Group Engagements. We enable real-time group video and voice chats that allow users to meet new people, connect with likeminded individuals and build intimate personal relationships. Users can see and talk to each other with low latency and high clarity while picking up non-verbal clues normally absent in online interactions.
|
◦
|
Matchmaking and Dating. For one customer, we enable online sessions in which a matchmaker introduces two potential partners to each other through three-way real-time video engagement. The matchmaker helps make introductions, breaks the ice and guides the conversation, facilitating deeper interactions between the potential partners and an overall more natural dating experience that is similar to traditional offline matchmaking. In other cases, we enable social exploration and dating via 1-on-1 real-time video engagement.
|
◦
|
Online Karaoke. Our technology enables individuals from different locations to sing songs together in a virtual karaoke room. The musical accompaniment, vocal tracks and physical cues of the singers are all important components of the experience and must be in sync throughout.
|
◦
|
The Meet Group, a leading provider of dating applications, is a representative customer in social use cases.
|
•
|
Education. We enable interactive online classes where students and teacher can interact via real-time video or voice, thereby promoting student engagement and enriching learning experiences. For educational service providers, latency and media quality are mission critical to their success, as any noticeable issues with the video or voice can be distracting to the students and negatively impact their ability to interact with teacher and other students. Below are some of the use cases we enable:
|
◦
|
1-on-1 Classes. We enable 1-on-1 online classes that provide exclusive and immersive learning experiences that closely replicate in-person tutoring. For one customer, we support 1-on-1 language classes where teacher and student are located in different countries or even continents. For another customer, we use high definition video for art classes to ensure effective observation and teaching.
|
◦
|
Small Classes. Online education platforms utilize our technology to offer interactive online small classes. Students can see and participate in discussions with other students in the same session in real-time, in addition to the teacher, thus closely replicating an in-person, small-group learning experience.
|
◦
|
Interactive large classes. We have enabled large interactive online classes that can support thousands of participants in one session. Traditionally, large classes utilize one-way video streaming technology which has limited ability for students to interact with the teacher given the high latency in the video. Additionally, class material or whiteboard content are often out of sync with the video given the unstable latency of traditional streaming technology. With our real-time engagement technology, students are able to raise their hand and interact with teachers via video or voice in real-time, and teachers can use an interactive virtual whiteboard that is delivered in real-time and highly synchronized with the main video stream, resulting in a rich learning experience.
|
◦
|
New Oriental Education & Technology Group, a provider of private educational services, is a representative customer in education use cases.
|
•
|
Entertainment (Live Interactive Streaming). Traditional live streaming, such as those involving live performances of a host dancing or singing, offers limited ability for the audience to engage with the host. With our technology, audiences are able to interact with hosts via real-time video or voice as they are performing.
|
•
|
Gaming. Our platform has empowered game developers to enhance multiplayer gaming experiences and create new gaming formats that were not previously possible.
|
◦
|
In-game Collaboration. Competitive online multiplayer games, such as multiplayer online battle arenas, or MOBAs, require close, real-time coordination among teams of players as they face off against each other. Our technologies allow players to seamlessly interact with one another during the heat of battle, execute well-timed strategies on the fly, and share moments of excitement with their teammates in real-time.
|
◦
|
Interaction-dependent Games. Real-time engagement technology allows for online gaming formats that would not have been possible in the past. Players can now view body language and reactions of teammates and competitors in real time to make gameplay decisions. For example, online poker players can now incorporate the critically important aspect of deciphering visual “tells” into their gameplay. Similarly, Werewolf, a popular social deduction game that was previously only playable offline as it requires constant dialogue between players and live deduction based on players’ social and language clues, can now be made playable online through our technology.
|
•
|
Enterprise Solutions. We offer the following enterprise solutions that can be used across industries.
|
◦
|
Customer Service. Businesses rely on our platform to improve the quality and efficiency of their services and increase customer satisfaction. Traditionally, remote customer service has typically been conducted over the phone, which not only lacks video capability but also can be costly and with potential privacy concerns since customers’ actual phone numbers are used. We enable cost effective real-time video and voice solutions that allow companies to provide a differentiated experience for the customers in order to drive sales, answer customer inquiries, and resolve any disputes, among many other uses. For example, an online food delivery customer has their delivery crew use our technology to call their customers through an application-to-application voice call when the delivery arrives, instead of using a traditional phone call. For an online travel agency customer, their customer service representatives use our technology to engage with their customers over application-to-application video or voice instead of traditional phone call.
|
◦
|
Collaboration. Enterprise customers use our technology to enable video and voice conferencing in their internal collaboration software. SaaS providers also adopt our technology to enable collaboration through real-time video and voice in their products.
|
•
|
Financial Services. Our platform also powers use cases within the financial services industry, such as:
|
◦
|
Banking. A leading commercial bank in China leverages our technology to enable video banking. Customers can remotely open accounts or complete transactions with a customer service representative, in a way that closely replicates an in-person bank branch visit. Furthermore, video interactions between customers and service representatives are recorded using our Real-Time Recording product to comply with regulatory requirements.
|
◦
|
Insurance. A leading online-only insurance company in China uses our technology for its automotive insurance claims process. Following a car accident, insurance adjustors can engage with claimants through real-time video without being at the actual accident site, to assess damage and confirm coverage remotely.
|
•
|
Healthcare. Our platform enables medical service providers to offer remote consultation to patients in real-time. Patients benefit from increased flexibility and convenience, and in emergency situations the improved access to medical advice could even potentially save lives.
|
◦
|
Consultation. An online medical aesthetics platform uses our technology to enable real-time video consultation for its patients who might not be able to make in-person appointments. Patients can consult with doctors on their treatment options and conduct follow-up appointments remotely after surgery.
|
◦
|
Emergency. A medical emergency service uses our technology to allow patients to receive first aid directions from a doctor through real-time video while waiting for an ambulance. Once the patient calls the emergency hotline, the service will send the patient the web link for the video connection and the patient does not need to install additional software. This allows the doctors to make critical assessments and give instructions that could save patient lives.
|
•
|
Internet of Things. The number of connected devices globally is expected to grow rapidly. Many of them can benefit from our technology. Our technology has been integrated into various IoT devices and use cases and we believe there is still enormous potential in the future.
|
◦
|
Smart Watches. Our technology has been embedded in smart watches to enable users to conduct video calls directly from their wrists. This is often used as an emergency call for children or elderly people. For example, if they get lost in a shopping mall, they can simply press a button on their smart watch to initiate a video call with their parents or guardians and show them the surroundings.
|
◦
|
Smart Home Appliances. We have partnered with customers to integrate real-time video and voice functionalities into their smart home appliances and devices. For example, smart speakers and smart TVs can use our technology to conduct real-time video and voice calls with family and friends. Home security cameras and smart doorbells can establish real-time video connections with smart TVs, mobile phones and other smart home devices.
|
•
|
Agora SDK. The Agora SDK contains all the software a developer needs to integrate our real-time engagement products into an application, is customizable by the developer and runs on end users’ devices as part of the developer’s application. The main software modules of the Agora SDK include:
|
◦
|
Capturing modules that capture audio and video streams, and rendering modules that combine and synchronize multiple video or audio streams.
|
◦
|
Pre-processing modules that modify the raw streams to reduce background noise, cancel echo, enable users to “beautify” their video appearance and add a variety of video special effects in real time, among other things, as well as post-processing modules that enhance the received streams, including resolution enhancement, noise reduction, image sharpening, concealment of audio or video defects such as jitter and color blocks, and video frame interpolation.
|
◦
|
Encoding and decoding modules that compress and decompress the streams before and after transmission. Our video and audio codecs dynamically adapt the size of video and audio streams based on network transmission environment and end-user device capabilities.
|
◦
|
“First-mile” and “last-mile” transmission modules that transmit data between end-user devices and an edge node of the SD-RTN. Our transmission modules dynamically select the optimal edge nodes based on changes in the network environment, for example, when the end-user device switches from a WiFi to a cellular network connection. Our transmission modules also use adaptive channel coding based on predicted packet-loss rate, as well as other strategies, to compensate for packet loss.
|
•
|
SD-RTN. The SD-RTN is a virtual network overlay on top of the public internet that runs on more than 200 co-located data centers worldwide and handles real-time data transmission between end-user devices when using our SDK. A key distinguishing feature of the SD-RTN is its all-software architecture; we do not own or lease physical or private data transmission lines. We believe our all-software approach is cost-effective, enables highly flexible routing optimization and will continue to improve through iterative development.
|
•
|
PaaS providers, such as Tencent in China and TokBox (part of Vonage Holdings Corp.) and Twilio Inc. in the United States, as well as smaller software companies, which compete with all or portions of our platform and products;
|
•
|
open-source projects, such as WebRTC, which offer capabilities that compete with some of the functionalities in our SDK; and
|
•
|
network operators or cloud providers that offer private lines on which similar functionalities to ours can be built.
|
•
|
quality of data transmission and user experience;
|
•
|
credibility with developers;
|
•
|
global reach;
|
•
|
ease of integration and programmability;
|
•
|
product features;
|
•
|
platform scalability, reliability, compatibility, security and performance;
|
•
|
brand awareness and reputation;
|
•
|
the strength of sales and marketing efforts;
|
•
|
customer support; and
|
•
|
the cost of deploying and using our products.
|
Function
|
|
Number of Employees
|
Research and development
|
|
282
|
Sales and marketing
|
|
92
|
Customer solutions and services
|
|
79
|
General and administrative (including executives)
|
|
45
|
Total
|
|
498
|
•
|
complying with security protection obligations in accordance with tiered requirements with respect to maintenance of the security of internet systems, which include formulating internal security management rules and developing manuals, appointing personnel who will be responsible for internet security, adopting technical measures to prevent computer viruses and activities that threaten internet security, adopting technical measures to monitor and record status of network operations, holding internet security training events, retaining user logs for at least six months, and adopting measures such as data classification, key data backup, and encryption for the purpose of securing networks from interference, vandalism, or unauthorized visits, and preventing network data from leakage, theft, or tampering;
|
•
|
verifying users’ identities before signing agreements or providing services such as network access, domain name registration, landline telephone or mobile phone access, information publishing, or real-time communication services;
|
•
|
clearly indicating the purposes, methods and scope of the information collection, the use of information collection, and obtain the consent of those from whom the information is collected when collecting or using personal information;
|
•
|
strictly preserving the privacy of user information they collect, and establish and maintain systems to protect user privacy; and
|
•
|
strengthening management of information published by users. When the network operators discover information prohibited by laws and regulations from publication or dissemination, they shall immediately stop dissemination of that information, including taking measures such as deleting the information, preventing the information from spreading, saving relevant records, and reporting to the relevant governmental agencies.
|
Name
|
|
Age
|
|
Position
|
Executive Officers
|
|
|
|
|
Bin (Tony) Zhao
|
|
49
|
|
Chief Executive Officer and Chairman
|
Siming Tao
|
|
39
|
|
Senior Vice President of Products
|
Sheng (Shawn) Zhong
|
|
54
|
|
Chief Scientist
|
Regev (Reggie) Yativ
|
|
51
|
|
Chief Revenue Officer and Chief Operating Officer of Agora Lab
|
Jingbo Wang
|
|
39
|
|
Chief Financial Officer
|
Non-Employee Directors
|
|
|
|
|
Qin Liu
|
|
47
|
|
Director
|
Tuck Lye Koh
|
|
48
|
|
Director
|
Eric He*
|
|
60
|
|
Director nominee
|
Jenny Hong Wei Lee*
|
|
48
|
|
Director nominee
|
*
|
Each of Mr. He and Ms. Lee has accepted an appointment to serve on our board of directors effective immediately upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus forms a part.
|
•
|
approving the hiring, discharging and compensation of our independent registered public accounting firm;
|
•
|
overseeing the work of our independent registered public accounting firm;
|
•
|
approving engagements of our independent registered public accounting firm to render any audit or permissible non-audit services;
|
•
|
reviewing the qualifications, independence and performance of our independent registered public accounting firm;
|
•
|
reviewing our consolidated financial statements and reviewing our critical accounting policies and estimates;
|
•
|
developing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;
|
•
|
reviewing the adequacy and effectiveness of our internal controls; and
|
•
|
reviewing and discussing the scope and results of the audit with our independent registered public accounting firm and reviewing, with management and the independent accountants, our interim and annual operating results.
|
•
|
reviewing and recommending policies relating to compensation and benefits of our officers and employees;
|
•
|
reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer and other senior officers;
|
•
|
evaluating the performance of our officers in light of established goals and objectives;
|
•
|
recommending compensation of our officers based on its evaluations; and
|
•
|
administering the issuance of equity awards and other awards under our equity incentive plans.
|
•
|
evaluating and making recommendations regarding the organization and governance of the board of directors and its committees;
|
•
|
assessing the performance of members of the board of directors and making recommendations regarding committee and chair assignments;
|
•
|
recommending desired qualifications for board of directors membership and conducting searches for potential members of the board of directors; and
|
•
|
reviewing and making recommendations with regard to our corporate governance guidelines.
|
•
|
convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings;
|
•
|
declaring dividends and distributions;
|
•
|
appointing officers and determining the term of office of the officers;
|
•
|
exercising the borrowing powers of our company and mortgaging the property of our company; and
|
•
|
approving the transfer of shares in our company, including the registration of such shares in our share register.
|
•
|
30,000,000 shares;
|
•
|
3.5% of the total number of shares of all classes of our ordinary shares outstanding on the last day of our immediately preceding fiscal year; or
|
•
|
such other amount as the administrator of the Global Plan may determine.
|
•
|
6,000,000 shares;
|
•
|
0.5% of our outstanding ordinary shares as of the last day of the immediately preceding fiscal year; or
|
•
|
such other amount as the administrator may determine.
|
•
|
immediately after the grant would own capital shares and/or hold outstanding options to purchase such shares possessing 5% or more of the total combined voting power or value of all classes of capital shares of ours or of any parent or subsidiary of ours; or
|
•
|
holds rights to purchase ordinary shares under all employee share purchase plans of ours or any parent or subsidiary of ours that accrue at a rate that exceeds US$25,000 worth of ordinary shares for each calendar year in which such rights are outstanding at any time.
|
Name
|
|
Number of Ordinary Shares Underlying Options
|
|
Exercise Price
(US$/Share)
|
|
Date of Grant
|
|
Date of Expiration
|
Sheng (Shawn) Zhong
|
|
*
|
|
US$0.10
|
|
March 30, 2018
|
|
February 29, 2028
|
Regev (Reggie) Yativ
|
|
*
|
|
US$0.10
|
|
March 30, 2018
|
|
February 29, 2028
|
Jingbo Wang
|
|
*
|
|
US$0.10
|
|
February 12, 2020
|
|
February 11, 2030
|
*
|
Represents less than 1% of our total outstanding shares.
|
•
|
each of our directors and executive officers; and
|
•
|
each person known to us to own beneficially more than 5% of our ordinary shares on an as-converted basis.
|
|
Ordinary Shares Beneficially Owned Prior to This Offering and the Concurrent Private Placement
|
|
Ordinary Shares Beneficially Owned After This Offering and the Concurrent Private Placement
|
||||||||
|
|
Class A Ordinary Shares
|
|
Class B Ordinary Shares
|
|
Percentage of Beneficial Ownership
|
|
Percentage of Aggregate Voting Power**
|
|||
|
Number
|
|
Percent
|
||||||||
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
Bin (Tony) Zhao(1)
|
83,402,160
|
|
27.4
|
|
7,222,222
|
|
76,179,938
|
|
20.8
|
|
82.8
|
Siming Tao(2)
|
14,900,000
|
|
4.9
|
|
14,900,000
|
|
—
|
|
3.7
|
|
*
|
Sheng (Shawn) Zhong
|
*
|
|
*
|
|
*
|
|
*
|
|
*
|
|
*
|
Regev (Reggie) Yativ
|
*
|
|
*
|
|
*
|
|
*
|
|
*
|
|
*
|
Jingbo Wang
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Qin Liu
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Tuck Lye Koh(3)
|
31,065,548
|
|
10.2
|
|
31,065,548
|
|
—
|
|
7.8
|
|
1.7
|
Eric He†
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Jenny Hong Wei Lee†(4)
|
7,016,595
|
|
2.3
|
|
7,016,595
|
|
—
|
|
1.8
|
|
*
|
All directors and executive officers as a group
|
139,895,667
|
|
45.4
|
|
63,370,274
|
|
76,179,938
|
|
34.6
|
|
85.7
|
Principal Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
Soundscape Limited(1)
|
76,179,938
|
|
25.0
|
|
—
|
|
76,179,938
|
|
19.0
|
|
82.4
|
Entities affiliated with Morningside(5)
|
47,976,514
|
|
15.7
|
|
47,976,514
|
|
—
|
|
12.0
|
|
2.6
|
Entities affiliated with SIG(6)
|
39,074,811
|
|
12.8
|
|
39,074,811
|
|
—
|
|
9.7
|
|
2.1
|
Shunwei Technology II Limited(3)
|
31,065,548
|
|
10.2
|
|
31,065,548
|
|
—
|
|
7.8
|
|
1.7
|
Entities affiliated with Coatue Management, L.L.C.(7)
|
27,500,540
|
|
9.0
|
|
39,265,245
|
|
—
|
|
9.8
|
|
2.1
|
Easy Dynamic International Limited(8)
|
22,489,831
|
|
7.4
|
|
22,489,831
|
|
—
|
|
5.6
|
|
1.2
|
*
|
Represents beneficial ownership of voting power of less than 1%.
|
**
|
For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our outstanding Class A ordinary shares and Class B ordinary shares as a single class. Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of Class B ordinary shares is entitled to 20 votes per share, and while on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders. Our Class B ordinary shares are convertible at any time by the holders thereof into Class A ordinary shares on a one-for-one basis.
|
†
|
Each of Mr. He and Ms. Lee has accepted an appointment to serve on our board of directors effective immediately upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus forms a part.
|
(1)
|
Represents (a) 76,179,938 ordinary shares held by Soundscape Limited, a British Virgin Islands company; and (b) 7,222,222 Series A preferred shares held by YY TZ Limited, a British Virgin Islands company. Soundscape Limited is wholly owned by Mr. Zhao, and Mr. Zhao is the sole director of YY TZ Limited and, as such, has discretionary authority to vote and dispose of the shares held by YY TZ Limited in our company. The registered address of Soundscape Limited is Trinity Chambers, PO Box 4301, Road Town, Tortola, British Virgin Islands, and the registered address of YY TZ Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. All of the ordinary shares held by Soundscape Limited will be re-designated and re-classified as Class B ordinary shares immediately prior to the completion of this offering and all of the Series A preferred shares held by YY TZ Limited will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
|
(2)
|
Represents 14,900,000 ordinary shares held by Golden Dynamic International Limited, a British Virgin Islands company. Golden Dynamic International Limited is owned by a trust established under the laws of the British Virgin Islands for the benefit of Mr. Tao and his family members. Mr. Tao is the sole director of Golden Dynamic International Limited and, as such, has discretionary authority to vote and dispose of the shares held by Golden Dynamic International Limited in our company. The registered address of Golden Dynamic International Limited is Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin Islands. All of the ordinary shares held by Golden Dynamic International Limited will be re-designated and re-classified as Class A ordinary shares immediately prior to the completion of this offering.
|
(3)
|
Represents 20,000,000 Series A preferred shares, 5,078,370 Series B preferred shares, 2,507,837 Series B+ preferred shares and 3,479,341 Series C preferred shares held by Shunwei Technology II Limited. Shunwei China Internet Fund, L.P. is the sole shareholder of Shunwei Technology II Limited. Shunwei Capital Partners GP, L.P. is the general partner of Shunwei China Internet Fund, L.P. Shunwei Capital Partners GP Limited is the general partner of Shunwei Capital Partners GP, L.P. The shareholders of Shunwei Capital Partners GP Limited are Silver Unicorn Ventures Limited, a British Virgin Islands company wholly owned by Mr. Koh, and Grand Energy Ventures Limited, a British Virgin Islands company wholly owned by Mr. Lei Jun. The business address of Shunwei Technology II Limited is Vistra Corporate Services Center, Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. All of the preferred shares held by Shunwei Technology II Limited will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
|
(4)
|
Represents 1,474,976 ordinary shares, 1,958,473 Series A preferred shares, 2,946,919 Series B preferred shares and 490,539 Series B+ preferred shares held by GGV Capital IV L.P., and 31, 275 ordinary shares, 41,527 Series A preferred shares, 62,485 Series B preferred shares and 10,401 Series B+ preferred shares held by GGV Capital IV Entrepreneurs Fund L.P. GGV Capital IV LLC is the general partner of GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. Ms. Lee and Messrs. Jixun Foo, Glenn Solomon, Jeffrey Gordon Richards and Hans Tung are managing directors of GGV Capital IV LLC with shared voting and dispositive power over the shares held by GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. The business address of GGV IV L.P. and GGV IV Entrepreneurs Fund L.P. is 3000 Sand Hill Road, Building 4, Suite 230, Menlo Park, California 94025. All of the preferred shares held by GGV Capital IV L.P. and GGV Capital IV Entrepreneurs Fund L.P. will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
|
(5)
|
Represents (a) 2,000,000 Series A preferred shares held by Morningside China TMT Fund II, L.P.; (b) 23,260,188 Series B preferred shares held by Morningside China TMT Top Up Fund, L.P.; (c) 7,814,192 Series B+ preferred shares and 4,744,556 Series C preferred shares held by Morningside China TMT Special Opportunity Fund II, L.P.; (d) 781,419 Series B+ preferred shares and 474,456 Series C preferred shares held by Morningside China TMT Fund IV Co-Investment, L.P.; (e) 6,163,632 Series A preferred shares and 1,576,979 Series C+ preferred shares held by Evolution Special Opportunity Fund I, L.P.; and (f) 924,545 Series A preferred shares and 236,547 Series C+ preferred shares held by Evolution Fund I Co-investment, L.P. The foregoing entities are collectively referred to in this prospectus as the Morningside entities. Morningside China TMT Fund II, L.P. and Morningside China TMT Top Up Fund, L.P. are controlled by Morningside China TMT GP II, L.P., their general partner. Morningside China TMT Special Opportunity Fund II, L.P. and Morningside China TMT Fund IV Co-Investment, L.P. are controlled by Morningside China TMT GP IV, L.P., their general partner. Morningside China TMT GP II, L.P. and Morningside China TMT GP IV, L.P. are controlled by TMT General Partner Ltd., their general partner. Each of Mr. Liu, Mr. Jianming Shi and Morningside Venture (VII) Investments Limited is entitled to exercise or control the exercise of one-third of the voting power at general meetings of TMT General Partner Ltd. Morningside Venture (VII) Investments Limited is wholly and indirectly owned by Landmark Trust Switzerland SA as trustee of a family trust for the benefit of certain members of Mdm. Chan Tan Ching Fen’s family and other charitable objects. Evolution Special Opportunity Fund I, L.P. and Evolution Fund I Co-investment, L.P. are controlled by MSVC GP Limited, their general partner. Each of Mr. Liu and Mr. Shi is entitled to exercise or control the exercise of one-half of the voting power at general meetings of MSVC GP Limited. The registered address of the Morningside entities is 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands. All of the preferred shares held by the Morningside entities will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
|
(6)
|
Represents (a) 18,808,777 Series B preferred shares and 15,047,022 Series B+ preferred shares held by SIG China Investments Master Fund III, LLLP; and (b) 5,219,012 Series C preferred shares held by SIG Global China Fund I, LLLP. The foregoing entities are collectively referred to in this prospectus as the SIG entities. SIG Asia Investment, LLLP, a Delaware limited liability limited partnership, is the investment manager for each of the SIG entities pursuant to an investment management agreement and, as such, has discretionary authority to vote and dispose of the shares held by each of the SIG entities. In addition, Heights Capital Management, Inc., a Delaware corporation, is the investment manager for SIG Asia Investment, LLLP pursuant to an investment management agreement and, as such, also has discretionary authority to vote and dispose of the shares held by each of the SIG entities. Mr. Arthur Dantchik, in his capacity as president of SIG Asia Investment, LLLP, and vice president of Heights Capital Management, Inc. may also be deemed to have investment discretion over the shares held by each of the SIG entities. Mr. Dantchik disclaims any such investment discretion or beneficial ownership with respect to the shares held by the SIG entities. The business address of Mr. Dantchik and the SIG entities is 401 City Avenue, Suite 220, Bala Cynwyd, PA 19004. All of the preferred shares held by the SIG entities will be automatically converted into Class A ordinary shares immediately prior to the completion of this offering.
|
(7)
|
Represents 20,876,048 Series C preferred shares and 6,624,492 Series C+ preferred shares held by Coatue PE Asia XVI L.L.C. The number of Class A ordinary shares beneficially owned immediately after this offering also includes 11,764,705 shares that
|
(8)
|
Represents 22,489,831 ordinary shares held by Easy Dynamic International Limited, a British Virgin Islands company. Easy Dynamic International Limited is owned by a trust established under the laws of the British Virgin Islands for the benefit of Ms. Xiaojing Li and her family members. Ms. Li is the sole director of Easy Dynamic International Limited and, as such, has discretionary authority to vote and dispose of the shares held by Easy Dynamic International Limited in our company. The business address of Ms. Li and Easy Dynamic International Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. All of the ordinary shares held by Easy Dynamic International Limited will be re-designated and re-classified as Class A ordinary shares immediately prior to the completion of this offering.
|
•
|
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 ordinary 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; and
|
•
|
a fee of such maximum sum as the Nasdaq Stock Market may determine to be payable or such lesser sum as our 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 and voting rights; and
|
•
|
the redemption rights and terms and liquidation preferences.
|
•
|
authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders; and
|
•
|
limit the ability of shareholders to requisition and convene general meetings of shareholders.
|
•
|
does not have to file an annual return of its shareholders with the Registrar of Companies;
|
•
|
is not required to open its register of members for inspection;
|
•
|
does not have to hold an annual general meeting;
|
•
|
may issue negotiable or bearer shares or shares with no par value;
|
•
|
may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
|
•
|
may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
|
•
|
may register as a limited duration company; and
|
•
|
may register as a segregated portfolio company.
|
|
Cayman Islands
|
|
Delaware
|
Title of Organizational Documents
|
Memorandum and Articles of Association
|
|
Certificate of Incorporation and Bylaws
|
|
|
|
|
Duties of Directors
|
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company—a duty to act in good faith in the best interests of the company, a duty not to make a personal profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party and a duty to exercise powers for the purpose for which such powers were intended.
A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. |
|
Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of the company and its stockholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the stockholders.
|
|
|
|
|
Limitations on Personal Liability of Directors
|
The Companies Law has no equivalent provision to Delaware law regarding the limitation of director’s liability. However, as a matter of public policy, Cayman Islands law will not allow the limitation of a director’s liability to the extent that the liability is a consequence of the director committing a crime or of the director’s own fraud, dishonesty or wilful default.
|
|
Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director for money damages to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, unlawful payment of dividends or unlawful stock repurchase or redemption. In addition, an exculpatory provision with terms described in the previous sentence cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Indemnification of Directors, Officers, Agents and Others
|
Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands Court to be contrary to public policy, such as to provide indemnification against the consequences of committing a crime, or against the indemnified person’s own fraud, dishonesty or wilful default.
Our Articles provide that we will indemnify each director and officer against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such person, other than by reason of such person’s own dishonesty, wilful default or fraud. In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our post-offering amended and restated memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
|
|
A corporation has the power to indemnify any director, officer, employee, or agent of the corporation who was, is or is threatened to be made a party to an action, suit or proceeding who acted in good faith and in a manner they believed to be in the best interests of the corporation, and if with respect to a criminal proceeding, had no reasonable cause to believe his or her conduct would be unlawful, against amounts actually and reasonably incurred. Additionally, under the Delaware General Corporation Law, a Delaware corporation must indemnify its present or former directors and officers against expenses (including attorneys’ fees) actually and reasonably incurred to the extent that the officer or director has been successful on the merits or otherwise in defense of any action, suit or proceeding brought against him or her by reason of the fact that he or she is or was a director or officer of the corporation.
|
|
|
|
|
Interested Directors
|
Under the Articles, directors who are in any way, whether directly or indirectly, interested in a contract or proposed contract with our company must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any contract or proposed contract notwithstanding his or her interest, provided that in exercising any such vote, such director’s duties remain as described above.
|
|
Under Delaware law, a transaction in which a director has an interest is not void or voidable solely because such interested director is present at or participates in the meeting that authorizes the transaction if: (1) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; (2) such material facts are disclosed or are known to the stockholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the stockholders; or (3) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee of the board, or the stockholders. Under Delaware law, a director could be held liable for any transaction in which such director derived an improper personal benefit.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Voting Requirements
|
As a matter of Cayman Islands law, certain matters must be approved by special resolution of the shareholders, including amending or adopting memorandum or articles of association of a Cayman Islands company, reduction of share capital, change of name, authorization of a plan of merger, voluntary winding up of the company or the recalling of the voluntary liquidation of the company.
The Companies Law requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting. The Articles do not provide for a higher threshold.
The Companies Law defines “special resolutions” only. A company’s articles of association can therefore tailor the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. The Articles provide that an ordinary resolution is a resolution (1) passed by a simple majority of such shareholders as, being entitled to do so, vote in person (or, where proxies are allowed, by proxy) at a general meeting and regard shall be had in computing a majority to the number of votes to which each shareholder is entitled or (2) approved in writing by all of the shareholders entitled to vote at a general meeting in one or more instruments each signed by one or more of the shareholders and the effective date of the resolution so adopted shall be the date on which the instrument (or the last of such instruments, if more than one) is executed.
|
|
Under Delaware law, each stockholder is entitled to one vote for each share of capital stock held by such stockholder as of the applicable record date, unless otherwise provided in a corporation’s certificate of incorporation. Except as otherwise provided under the Delaware General Corporation Law or by the corporation’s certificate of incorporation or bylaws, under Delaware law, all matters brought before a meeting of stockholders at which a quorum is present (other than the election of directors) require the affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote at that meeting. Certain matters for stockholder approval, including the approval of certain merger agreements, certain amendments to the certificate of incorporation, and the sale, lease, or exchange of all or substantially all of the corporation’s assets will require approval of the holders of a majority of the outstanding capital stock. The certificate of incorporation may also include a provision requiring supermajority approval by the directors or stockholders for any corporate action.
In addition, under Delaware law, certain business combinations involving interested stockholders of publicly traded corporations may require approval by a supermajority of the non-interested stockholders.
|
|
|
|
|
Voting for Directors
|
The Articles provide that, for as long as Soundscape Limited, the holding company of our chief executive officer, and its affiliates collectively hold such number of Class B ordinary shares that constitute not less than 5% of the issued and outstanding shares of our Company, our chief executive officer shall be entitled, through its holding company, appoint a majority of our directors and to remove or replace any such directors. Subject to the foregoing, our directors may be appointed by a resolution of our board of directors to fill a casual vacancy on the board of directors or as an addition to the board of directors or by an ordinary resolution of our shareholders.
|
|
Under Delaware law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Cumulative Voting
|
There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands.
The Articles do not provide for cumulative voting on the election of the directors as described above.
|
|
No cumulative voting for the election of directors unless provided for in the certificate of incorporation.
|
|
|
|
|
Directors’ Powers Regarding Bylaws
|
The Articles may only be amended by a special resolution of the shareholders of the company.
|
|
The certificate of incorporation may grant the directors the power to adopt, amend or repeal bylaws.
|
|
|
|
|
Nomination and Removal of Directors and Filling Vacancies on Board
|
Nomination and removal of directors and filling of board vacancies are governed by the terms of the articles of association. The Articles provide that subject to certain restrictions as contained therein (including that our chief executive officer, through his holding company, shall be entitled to remove or replace any directors appointed by his holding company), directors may be removed with or without cause, by an ordinary resolution of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision.
In addition, a director’s office shall be vacated if the director (1) becomes bankrupt or makes any arrangement or composition with his creditors; (2) is found to be or becomes of unsound mind or dies; (3) resigns his office by notice in writing to the company; or (4) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association.
|
|
Stockholders may generally nominate directors if they comply with any applicable advance notice provisions and other procedural requirements in company bylaws.
Holders of a majority of the shares then entitled to vote at an election of directors may remove a director with or without cause, except in certain cases involving a classified board or if the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation or bylaws, directorship vacancies may be filled by a majority of the directors elected or then in office, or by the stockholders.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Mergers and Similar Arrangements
|
The Companies Law permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (1) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (2) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (1) a special resolution of the shareholders of each constituent company, and (2) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
|
|
Under Delaware law, with certain exceptions, a merger, a consolidation, or a sale, lease or exchange of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. However, unless required by its certificate of incorporation, approval is not required by the holders of the outstanding stock of a constituent corporation surviving a merger if:
• the merger agreement does not amend in any respect its certificate of incorporation;
• each share of its stock outstanding prior to the merger will be an identical share of stock following the merger; and
• either no shares of the surviving corporation’s common stock and no shares, securities or obligations convertible into such stock will be issued or delivered pursuant to the merger, or the authorized unissued shares or treasury shares of the surviving corporation’s common stock to be issued or delivered pursuant to the merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered pursuant to the merger do not exceed 20% of the shares of the surviving corporation’s common stock outstanding immediately prior to the effective date of the merger.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
|
Separate from the statutory provisions relating to mergers and consolidations, the Companies Law also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
• 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.
|
|
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
|
The Companies Law also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
|
|
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Shareholder Suits
|
The rights of shareholders under Cayman Islands law are not as extensive as those under Delaware law. Class actions are generally not available to shareholders under Cayman Islands laws; historically, there have not been any reported instances of such class actions having been successfully brought before the Cayman Islands Court. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected (and have had occasion) to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which permit a minority shareholder to commence a class action against, or derivative actions in the name of, our company to challenge:
• an act which is ultra vires or illegal and is therefore incapable of ratification by the shareholders;
• an act which constitutes a fraud against the minority where the wrongdoer are themselves in control of the company; and
• an act which requires a resolution with a qualified (or special) majority (i.e. more than a simple majority) which has not been obtained.
|
|
Class actions and derivative actions generally are available to stockholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit a winning plaintiff to recover attorneys’ fees incurred in connection with such action.
|
|
|
|
|
Inspection of Corporate Records
|
Shareholders of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of the register of members or other corporate records (other than the memorandum and articles of association and the register of mortgages and charges) of the company. However, these rights may be provided in the company’s articles of association.
|
|
Under Delaware law, stockholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to obtain copies of lists of stockholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation. A complete list of the stockholders entitled to vote at a stockholders’ meeting generally must be available for stockholder inspection at least ten days before the meeting.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Shareholder Proposals and Calling of Special Shareholder Meetings
|
The Companies Law provide shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Articles allow our shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to the outstanding shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders’ meeting, our Articles do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings.
|
|
Unless provided in the corporation’s certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which stockholders may bring business before a meeting.
Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws to call a special meeting of stockholders.
|
|
|
|
|
Approval of Corporate Matters by Written Consent
|
The Companies Law provide that shareholders may approve corporate matters by way of unanimous written resolutions signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held (if authorized by the articles of association).
|
|
Delaware law provides that, unless otherwise provided in the certificate of incorporation, stockholders may take action by written consent signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of stockholders.
|
|
|
|
|
Dissolution; Winding Up
|
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
|
|
Under Delaware law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by stockholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. A Delaware corporation may also be dissolved by decree or judgment of a Delaware court in certain circumstances.
|
|
|
|
|
Variation of Rights of Shares
|
Under Cayman Islands law and our Articles, if our share capital is divided into more than one class of shares, we may materially adversely vary the rights attached to any class with the written consent of the holders of 50% of the issued shares of that class or with the sanction of an ordinary resolution passed at a separate general meeting of the holders of the shares of that class.
|
|
Under Delaware law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.
|
|
|
|
|
|
Cayman Islands
|
|
Delaware
|
Dividends and Stock Repurchases
|
|
|
The Delaware General Corporation Law provides that, subject to any restrictions in a corporation’s certificate of incorporation, dividends may be declared from the corporation’s surplus, or, if there is no surplus, from its net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year, and Delaware common law also imposes a solvency requirement with respect to the payment of dividends. Dividends may not be declared out of net profits, however, if the corporation’s capital has been diminished to an amount less than the aggregate amount of all capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets is repaired. Furthermore, applicable Delaware statutory and common law generally provides that a corporation may redeem or repurchase its shares only if the redemption or repurchase would not impair the capital of the corporation and only if the corporation is solvent at the time of the redemption or repurchase, and the redemption or repurchase would not render the corporation insolvent.
|
•
|
we wish to receive a proxy to vote uninstructed shares;
|
•
|
we reasonably do not know of any substantial shareholder opposition to the proxy item(s); and
|
•
|
the proxy item(s) is not materially adverse to the interests of shareholders,
|
Persons Depositing or Withdrawing Shares or ADS Holders Must Pay:
|
|
For:
|
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
|
|
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
|
|
|
US$0.05 (or less) per ADS
|
|
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$0.05 (or less) per ADS per calendar year
|
|
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 (including SWIFT) 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 in the United States on which they were listed and, 30 days after that delisting, do not list the ADSs on another exchange in the United States or make arrangements for trading of ADSs on the U.S. over-the-counter market;
|
•
|
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, and the depositary will not be a fiduciary or have any fiduciary duty to holders of ADSs;
|
•
|
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 your behalf or on behalf of any other person;
|
•
|
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;
|
•
|
are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and
|
•
|
are not liable for any tax consequences that may be incurred by ADS holders as a result of owning or holding ADSs or for the inability or failure of an ADS holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit and the depositary has no duty to make any determination or provide any information as to our tax status.
|
•
|
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 (1) the depositary has closed its transfer books or we have closed our transfer books, (2) the transfer of shares is blocked to permit voting at a shareholders’ meeting or (3) we are paying a dividend on our shares;
|
•
|
when you 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.
|
•
|
1% of the then outstanding Class A ordinary shares of the same class, in the form of ADSs or otherwise, which immediately after this offering and the concurrent private placement will equal 3,246,003 Class A ordinary shares, assuming the underwriters do not exercise their over-allotment option; or
|
•
|
the average weekly trading volume of our ordinary shares of the same class, in the form of ADSs or otherwise, during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.
|
•
|
banks and other financial institutions;
|
•
|
insurance companies;
|
•
|
pension plans;
|
•
|
cooperatives;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
broker-dealers;
|
•
|
traders that elect to use a mark-to-market method of accounting;
|
•
|
certain former U.S. citizens or long-term residents;
|
•
|
tax-exempt entities (including private foundations);
|
•
|
persons liable for alternative minimum tax;
|
•
|
holders who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation;
|
•
|
investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;
|
•
|
investors that have a functional currency other than the U.S. dollar;
|
•
|
persons that actually or constructively own 10% or more of our stock (by vote or value);
|
•
|
persons required to accelerate the recognition of any item of gross income with respect to their ADSs or ordinary shares as a result of such income being recognized on an applicable financial statement; or
|
•
|
partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or ordinary shares through such entities;
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of, the United States or any state thereof or the District of Columbia;
|
•
|
an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
|
•
|
a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code.
|
•
|
the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;
|
•
|
the amount allocated to the current fiscal year and any fiscal years in the U.S. Holder’s holding period prior to the first fiscal year in which we are a PFIC, each a pre-PFIC year, will be taxable as ordinary income; and
|
•
|
the amount allocated to each prior fiscal year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such fiscal year.
|
Name
|
Number of ADSs
|
Morgan Stanley & Co. LLC
|
|
BofA Securities, Inc.
|
|
Needham & Company, LLC
|
|
Total
|
17,500,000
|
|
|
|
Total
|
||
|
Per ADS
|
|
No Exercise
|
|
Full Exercise
|
Public offering price
|
US$
|
|
US$
|
|
US$
|
Underwriting discounts and commissions to be paid by us
|
US$
|
|
US$
|
|
US$
|
Proceeds, before expenses, to us
|
US$
|
|
US$
|
|
US$
|
•
|
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any ordinary shares or ADSs or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs;
|
•
|
file any registration statement with the SEC relating to the offering of any ordinary shares, ADSs or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs; or
|
•
|
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the ordinary shares or ADSs,
|
•
|
the sale of the ADSs and the underlying shares to the underwriters pursuant to the underwriting agreement;
|
•
|
the issuance and sale of the Class A ordinary shares to the concurrent private placement purchasers as described in this prospectus;
|
•
|
the issuance by us of ordinary shares or ADSs pursuant to equity incentive plans existing on, or upon the exercise, conversion or exchange of exercisable, convertible or exchangeable securities outstanding as of, the date of the underwriting agreement and in each case described in this prospectus;
|
•
|
the conversion or reclassification of the outstanding preferred shares or other classes of our ordinary shares into Class A ordinary shares or Class B ordinary shares in connection with the consummation of this offering and in accordance with our amended and restated memorandum and articles of association that will become effective upon the completion of this offering, provided that any such Class A ordinary shares or Class B ordinary shares received upon such conversion or reclassification shall remain subject to the restrictions described above;
|
•
|
the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of ordinary shares or ADSs, provided that (1) such plan does not provide for the transfer of ordinary shares or ADSs during the restricted period and (2) to the extent a public announcement or filing under the Exchange Act, if any, is required or voluntarily made regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of ordinary shares or ADSs may be made under such plan during the restricted period;
|
•
|
the filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to our equity incentive plans that are described in this prospectus;
|
•
|
the issuance by us of any class of ordinary shares or any securities convertible into or exercisable or exchangeable for any class of ordinary shares issued under a registration statement or pursuant to an exemption from registration in connection with one or more acquisitions by us or any of our subsidiaries of a company or a business, securities, property or assets of another person or entity or pursuant to an employee benefit plan assumed by us in connection with such acquisition, or a joint venture, commercial relationship or strategic alliance (or the entering into of an agreement or agreements with respect thereto), provided that the aggregate number of ordinary shares that we may sell or issue or agree to sell or issue pursuant to this exception shall not exceed 5% of the total number of ordinary shares outstanding immediately following the completion of this offering and each recipient of such securities shall have, on or prior to the issuance of such securities, executed and delivered a lock-up agreement;
|
•
|
securities acquired in open market transactions after the completion of this offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with subsequent sales of ordinary shares or other securities acquired in such open market transactions;
|
•
|
transfers of ordinary shares or any security convertible into or exercisable or exchangeable for ordinary shares (1) as a bona fide gift or charitable contribution; (2) to an immediate family member or a trust for the direct or indirect benefit of the security holder or one or more immediate family members of the security holder; (3) by will or intestacy; (4) pursuant to a domestic relations order, divorce decree or court order; (5) to limited partners, general partners, members, stockholders or holders of similar equity interests, or other business entity that controls, is controlled by or managed by or is under common control with the undersigned; or (6) if the security holder is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;
|
•
|
transfers of ordinary shares or any security convertible into or exercisable or exchangeable for ordinary shares to us pursuant to agreements under which we have the option to repurchase the security holder’s securities or a right of first refusal with respect to transfers of the security holder’s securities;
|
•
|
the exercise of a stock option granted under a stock incentive plan or stock purchase plan described in this prospectus, and the receipt by the security holder of ordinary shares upon such exercise, insofar as such option is outstanding as of the date of this prospectus and the exercise period for such option expires during the restricted period, provided that the underlying ordinary shares shall continue to be subject to the restrictions on transfer set forth in the lock-up agreement; or
|
•
|
through the disposition or forfeiture of the security holder’s securities to us to satisfy any income, employment or tax withholding and remittance obligations of the security holder or us in connection with the vesting of restricted stock, restricted stock units or other incentive awards settled in ordinary shares held by the security holder, provided that such restricted stock, restricted stock units or other incentive awards were granted under a stock incentive plan, stock purchase plan or pursuant to a contractual employment arrangement described in this prospectus and were outstanding as of the date of this prospectus,
|
•
|
does not constitute a product disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth), or the Corporations Act;
|
•
|
has not been, and will not be, lodged with the Australian Securities and Investments Commission (“ASIC”), as a disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document under Chapter 6D.2 of the Corporations Act;
|
•
|
does not constitute or involve a recommendation to acquire, an offer or invitation for issue or sale, an offer or invitation to arrange the issue or sale, or an issue or sale, of interests to a “retail client” (as defined in section 761G of the Corporations Act and applicable regulations) in Australia; and
|
•
|
may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the categories of investors, or Exempt Investors, available under section 708 of the Corporations Act.
|
•
|
to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
|
•
|
to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the underwriters or the underwriters nominated by us for any such offer; or
|
•
|
in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
|
SEC registration fee
|
US$
|
47,021
|
Nasdaq Global Select Market listing fee
|
|
150,000
|
Financial Industry Regulatory Authority filing fee
|
|
54,838
|
Printing and engraving expenses
|
|
160,000
|
Legal fees and expenses
|
|
1,320,913
|
Accounting fees and expenses
|
|
451,652
|
Miscellaneous
|
|
102,261
|
Total
|
US$
|
2,286,685
|
|
Page
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
108,518,039
|
|
|
$
|
105,603,153
|
|
Short-term investments
|
1,457,046
|
|
|
—
|
|
||
Accounts receivable, net
|
11,659,275
|
|
|
16,247,565
|
|
||
Prepayments and other current assets
|
1,608,018
|
|
|
1,381,037
|
|
||
Total current assets
|
123,242,378
|
|
|
123,231,755
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment, net
|
3,124,571
|
|
|
6,281,990
|
|
||
Deferred tax assets
|
512,093
|
|
|
836,514
|
|
||
Other non-current assets
|
429,089
|
|
|
808,862
|
|
||
Total non-current assets
|
4,065,753
|
|
|
7,927,366
|
|
||
Total assets
|
$
|
127,308,131
|
|
|
$
|
131,159,121
|
|
Liabilities, mezzanine equity and shareholders’ equity (deficit)
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable (including accounts payable of the variable interest entity (“VIE”) without recourse to the Company of US$1,964,857 and US$2,992,628 as of December 31, 2018 and 2019, respectively)
|
2,765,825
|
|
|
4,088,283
|
|
||
Advances from customers (including advances from customers of the VIE without recourse to the Company of US$473,327 and US$733,518 as of December 31, 2018 and 2019, respectively)
|
628,954
|
|
|
920,925
|
|
||
Taxes payable (including taxes payable of the VIE without recourse to the Company of US$371,749 and US$756,020 as of December 31, 2018 and 2019, respectively)
|
1,313,002
|
|
|
2,493,137
|
|
||
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the VIE without recourse to the Company of US$2,195,527 and US$3,440,748 as of December 31, 2018 and 2019, respectively)
|
6,586,884
|
|
|
10,978,932
|
|
||
Total current liabilities
|
11,294,665
|
|
|
18,481,277
|
|
||
Total liabilities
|
$
|
11,294,665
|
|
|
$
|
18,481,277
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
Mezzanine equity
|
|
|
|
||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,578,868
|
|
|
90,049,774
|
|
||
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
29,955,293
|
|
|
30,045,929
|
|
||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,876,440
|
|
|
46,274,560
|
|
||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding as of December 31, 2018 and 2019)
|
67,844,843
|
|
|
73,600,134
|
|
||
Total Mezzanine equity
|
$
|
189,255,444
|
|
|
$
|
239,970,397
|
|
Shareholders’ equity (deficit)
|
|
|
|
||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized as of December 31, 2018 and 2019; 112,441,049 and 119,074,382 shares issued and outstanding as of December 31, 2018 and 2019, respectively)
|
11,244
|
|
|
11,907
|
|
||
Additional paid-in-capital
|
—
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(630,334
|
)
|
|
(988,417
|
)
|
||
Accumulated deficit
|
(72,622,888
|
)
|
|
(126,316,043
|
)
|
||
Total shareholders’ equity (deficit)
|
$
|
(73,241,978
|
)
|
|
$
|
(127,292,553
|
)
|
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
$
|
127,308,131
|
|
|
$
|
131,159,121
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
|
|
|
|
||||
Real-time engagement service revenues
|
$
|
43,199,085
|
|
|
$
|
63,925,303
|
|
Other revenues
|
457,869
|
|
|
503,387
|
|
||
Total revenues
|
43,656,954
|
|
|
64,428,690
|
|
||
Cost of revenues
|
(12,634,565
|
)
|
|
(20,417,464
|
)
|
||
Gross profit
|
31,022,389
|
|
|
44,011,226
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development expenses
|
(14,425,536
|
)
|
|
(23,622,830
|
)
|
||
Sales and marketing expenses
|
(11,986,444
|
)
|
|
(19,408,377
|
)
|
||
General and administrative expenses
|
(5,372,990
|
)
|
|
(7,176,816
|
)
|
||
Total operating expenses
|
(31,784,970
|
)
|
|
(50,208,023
|
)
|
||
Other operating income
|
1,025,148
|
|
|
107,852
|
|
||
Income (loss) from operations
|
262,567
|
|
|
(6,088,945
|
)
|
||
Exchange gain (loss)
|
(20,549
|
)
|
|
86,874
|
|
||
Interest income
|
239,176
|
|
|
625,970
|
|
||
Income (loss) before income taxes
|
481,194
|
|
|
(5,376,101
|
)
|
||
Income taxes
|
(105,078
|
)
|
|
(801,337
|
)
|
||
Net income (loss)
|
376,116
|
|
|
(6,177,438
|
)
|
||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961,473
|
)
|
|
(9,961,473
|
)
|
||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,234,811
|
)
|
|
(50,714,953
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(42,820,168
|
)
|
|
$
|
(66,853,864
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustments
|
(749,030
|
)
|
|
(358,083
|
)
|
||
Total comprehensive loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(43,569,198
|
)
|
|
$
|
(67,211,947
|
)
|
|
|
|
|
||||
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted
|
(0.39
|
)
|
|
(0.58
|
)
|
||
Weighted average number of ordinary shares—basic and diluted
|
109,141,311
|
|
|
115,716,392
|
|
||
|
|
|
|
||||
Share-based compensation expenses included in:
|
|
|
|
||||
Cost of revenues
|
49,893
|
|
|
79,552
|
|
||
Research and development expenses
|
919,773
|
|
|
1,472,528
|
|
||
Sales and marketing expenses
|
975,297
|
|
|
1,653,717
|
|
||
General and administrative expenses
|
905,389
|
|
|
1,046,372
|
|
|
Ordinary shares
|
|
Additional
paid-in capital
|
|
Accumulated
other
comprehensive income (loss)
|
|
Accumulated
deficit
|
|
Total
shareholders’ deficit
|
|||||||||||||
|
Number of
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance as of January 1, 2018
|
106,527,778
|
|
|
$
|
10,653
|
|
|
$
|
—
|
|
|
$
|
118,696
|
|
|
$
|
(41,397,864
|
)
|
|
$
|
(41,268,515
|
)
|
Repurchase of ordinary shares (Note 10)
|
(820,062
|
)
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
(784,717
|
)
|
|
(784,799
|
)
|
|||||
Vesting of restricted shares (Note 11)
|
6,733,333
|
|
|
673
|
|
|
165,038
|
|
|
—
|
|
|
—
|
|
|
165,711
|
|
|||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
2,253,350
|
|
|
—
|
|
|
—
|
|
|
2,253,350
|
|
|||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(2,418,388
|
)
|
|
—
|
|
|
(30,816,423
|
)
|
|
(33,234,811
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
376,116
|
|
|
376,116
|
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(749,030
|
)
|
|
—
|
|
|
(749,030
|
)
|
|||||
Balance as of December 31, 2018
|
112,441,049
|
|
|
11,244
|
|
|
—
|
|
|
(630,334
|
)
|
|
(72,622,888
|
)
|
|
(73,241,978
|
)
|
|||||
Vesting of restricted shares (Note 11)
|
6,733,333
|
|
|
673
|
|
|
76,768
|
|
|
—
|
|
|
—
|
|
|
77,441
|
|
|||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
3,158,886
|
|
|
—
|
|
|
—
|
|
|
3,158,886
|
|
|||||
Repurchase of restricted shares (Note 11)
|
(100,000
|
)
|
|
(10
|
)
|
|
(84,430
|
)
|
|
—
|
|
|
—
|
|
|
(84,440
|
)
|
|||||
Reclassification of liability-classified awards to equity-classified awards (Note 11)
|
—
|
|
|
—
|
|
|
48,012
|
|
|
—
|
|
|
—
|
|
|
48,012
|
|
|||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(3,199,236
|
)
|
|
—
|
|
|
(47,515,717
|
)
|
|
(50,714,953
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,177,438
|
)
|
|
(6,177,438
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(358,083
|
)
|
|
—
|
|
|
(358,083
|
)
|
|||||
Balance as of December 31, 2019
|
119,074,382
|
|
|
$
|
11,907
|
|
|
$
|
—
|
|
|
$
|
(988,417
|
)
|
|
$
|
(126,316,043
|
)
|
|
$
|
(127,292,553
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
376,116
|
|
|
$
|
(6,177,438
|
)
|
Share-based compensation expense
|
2,850,352
|
|
|
3,405,084
|
|
||
Depreciation of property and equipment
|
922,351
|
|
|
1,867,734
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(5,614,028
|
)
|
|
(4,807,207
|
)
|
||
Prepayments and other current assets
|
47,809
|
|
|
206,559
|
|
||
Deferred tax assets
|
(358,071
|
)
|
|
(336,463
|
)
|
||
Other non-current assets
|
(338,478
|
)
|
|
(135,120
|
)
|
||
Accounts payable
|
806,508
|
|
|
1,121,563
|
|
||
Advances from customers
|
292,655
|
|
|
302,655
|
|
||
Taxes payable
|
(1,134,236
|
)
|
|
1,214,926
|
|
||
Accrued expenses and other current liabilities
|
2,685,123
|
|
|
4,044,130
|
|
||
Net cash generated from operating activities
|
536,101
|
|
|
706,423
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of short-term investments
|
(1,511,800
|
)
|
|
(97,558,282
|
)
|
||
Proceeds from sale and maturity of short-term investments
|
—
|
|
|
99,007,872
|
|
||
Purchase of property and equipment
|
(2,260,791
|
)
|
|
(4,802,253
|
)
|
||
Net cash used in investing activities
|
(3,772,591
|
)
|
|
(3,352,663
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repurchase of ordinary shares
|
(784,799
|
)
|
|
—
|
|
||
Proceeds from issuance of Series C convertible redeemable preferred shares, net of the issuance costs of $110,059
|
66,556,608
|
|
|
—
|
|
||
Net cash provided by financing activities
|
65,771,809
|
|
|
—
|
|
||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
(555,985
|
)
|
|
(268,646
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
61,979,334
|
|
|
(2,914,886
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
46,618,705
|
|
|
108,598,039
|
|
||
Cash, cash equivalents and restricted cash at end of year
|
$
|
108,598,039
|
|
|
$
|
105,683,153
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Income taxes paid
|
421,560
|
|
|
411,068
|
|
||
Non-cash financing and investing activities:
|
|
|
|
||||
Accretion to redemption value of convertible redeemable preferred shares
|
33,234,811
|
|
|
50,714,953
|
|
||
Payables for property and equipment
|
366,503
|
|
|
613,463
|
|
|
Date of Incorporation
|
|
Place of Incorporation
|
|
Percentage of
Direct or Indirect Ownership
|
|
Principal Activities
|
Subsidiaries:
|
|
|
|
|
|
|
|
Agora Lab, Inc.
|
January 13, 2014
|
|
California, United States
|
|
100%
|
|
Provision of services
|
Agora IO, Inc
|
December 2, 2014
|
|
Cayman Islands
|
|
100%
|
|
Investment holding
|
Agora IO Hongkong Limited
|
December 12, 2014
|
|
Hong Kong
|
|
100%
|
|
Investment holding
|
Dayin Network Technology Co., Ltd. (“WFOE”)
|
April 30, 2015
|
|
PRC
|
|
100%
|
|
Provision of services
|
Agora.IO Ltd
|
July 25, 2019
|
|
United Kingdom
|
|
100%
|
|
Startup
|
|
|
|
|
|
|
|
|
VIE:
|
|
|
|
|
|
|
|
Shanghai Zhaoyan Network Technology Co., Ltd. (“VIE”)
|
March 28, 2014
|
|
PRC
|
|
100%
|
|
Provision of services
|
(c)
|
Consolidated Variable Interest Entities
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,917,074
|
|
|
$
|
17,308,887
|
|
Short-term investments
|
1,457,046
|
|
|
—
|
|
||
Accounts receivable, net
|
10,143,800
|
|
|
14,827,841
|
|
||
Amounts due from related parties
|
1,891,165
|
|
|
2,445,447
|
|
||
Prepayments and other current assets
|
1,189,673
|
|
|
886,022
|
|
||
Total current assets
|
23,598,758
|
|
|
35,468,197
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment, net
|
1,506,939
|
|
|
3,292,978
|
|
||
Deferred tax assets
|
277,533
|
|
|
387,950
|
|
||
Other non-current assets
|
50,882
|
|
|
69,968
|
|
||
Total non-current assets
|
1,835,354
|
|
|
3,750,896
|
|
||
Total assets
|
$
|
25,434,112
|
|
|
$
|
39,219,093
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
1,964,857
|
|
|
2,992,628
|
|
||
Amounts due to related parties
|
18,188,331
|
|
|
27,780,440
|
|
||
Advances from customers
|
473,327
|
|
|
733,518
|
|
||
Taxes payable
|
371,749
|
|
|
756,020
|
|
||
Accrued expenses and other current liabilities
|
2,195,527
|
|
|
3,440,748
|
|
||
Total current liabilities
|
23,193,791
|
|
|
35,703,354
|
|
||
Total liabilities
|
$
|
23,193,791
|
|
|
$
|
35,703,354
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Net cash and cash equivalents generated from operating activities
|
2,774,063
|
|
|
9,389,954
|
|
Net cash and cash equivalents used in investing activities
|
(2,251,153
|
)
|
|
(998,141
|
)
|
Net cash and cash equivalents used in financing activities
|
—
|
|
|
—
|
|
(a)
|
Basis of Presentation
|
(b)
|
Basis of Consolidation
|
(c)
|
Use of Estimates
|
(d)
|
Functional Currencies and Foreign Currency Translation
|
(e)
|
Concentration of Credit Risk
|
|
2018
|
|
2019
|
||
Customer A — Social media platform
|
30
|
%
|
|
*
|
|
Customer B — Social media platform
|
*
|
|
|
24
|
%
|
*
|
Less than 10%.
|
|
2018
|
|
2019
|
|
Customer A — Social media platform
|
16
|
%
|
|
*
|
*
|
Less than 10%.
|
(f)
|
Fair Value Measurements
|
•
|
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2: Observable, market-based inputs, other than quoted prices, in active markets for identical assets or liabilities.
|
•
|
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
|
As of December 31, 2018
|
||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Balance at
Fair value
|
||
Short-term investments — Structured deposits
|
—
|
|
|
1,457,046
|
|
—
|
|
|
1,457,046
|
(g)
|
Cash and Cash Equivalents
|
(h)
|
Restricted Cash
|
(i)
|
Short-term Investment
|
(j)
|
Accounts Receivable
|
(k)
|
Property and Equipment, Net
|
|
Estimated Useful Lives
|
Electronic equipment
|
3 years
|
Furniture, computers and office equipment
|
3 years
|
Network equipment
|
3 years
|
Leasehold improvements
|
Shorter of the lease term or the estimated useful life
|
(l)
|
Impairment of Long-lived Assets
|
(m)
|
Advances from Customers
|
(n)
|
Mezzanine Equity
|
(o)
|
Deferred Equity Offering Costs
|
(p)
|
Value Added Taxes
|
(q)
|
Revenue Recognition
|
(r)
|
Cost of Revenues
|
(s)
|
Research and Development Expenses
|
(t)
|
Software Development Costs
|
(u)
|
Sales and Marketing Expenses
|
(v)
|
General and Administrative Expenses
|
(w)
|
Operating Leases
|
(x)
|
Income Tax
|
(y)
|
Share-based Compensation
|
(z)
|
Related Parties
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Primary geographical markets based on customers’ location
|
|
|
|
||||
PRC
|
$
|
33,311,919
|
|
|
$
|
50,583,684
|
|
United States
|
4,582,105
|
|
|
5,296,269
|
|
||
Others
|
5,762,930
|
|
|
8,548,737
|
|
||
Total revenues
|
$
|
43,656,954
|
|
|
$
|
64,428,690
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Accounts receivable
|
$
|
12,026,319
|
|
|
$
|
17,283,107
|
|
Less: allowance for doubtful accounts
|
(367,044
|
)
|
|
(1,035,542
|
)
|
||
Accounts receivable, net
|
$
|
11,659,275
|
|
|
$
|
16,247,565
|
|
|
Year-Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
At beginning of the period
|
$
|
(119,336
|
)
|
|
$
|
(367,044
|
)
|
Addition
|
(314,019
|
)
|
|
(779,671
|
)
|
||
Write-off
|
52,259
|
|
|
100,276
|
|
||
Foreign currency translation impact
|
14,052
|
|
|
10,897
|
|
||
At end of the period
|
$
|
(367,044
|
)
|
|
$
|
(1,035,542
|
)
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
VAT recoverable(1)
|
$
|
1,109,048
|
|
|
$
|
776,141
|
|
Prepayments(2)
|
267,715
|
|
|
419,376
|
|
||
Restricted cash
|
80,000
|
|
|
80,000
|
|
||
Others
|
151,255
|
|
|
105,520
|
|
||
|
$
|
1,608,018
|
|
|
$
|
1,381,037
|
|
(1)
|
VAT recoverable represented the balances that the Group can utilize to deduct its VAT liabilities within the next 12 months.
|
(2)
|
Prepayments are primarily related to a prepayment for company events, prepaid rental expenses and other deposits.
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Cost:
|
|
||||||
Network equipment
|
$
|
2,574,060
|
|
|
$
|
6,976,107
|
|
Leasehold improvements
|
1,077,271
|
|
|
1,089,970
|
|
||
Electronic equipment
|
709,854
|
|
|
1,170,866
|
|
||
Furniture, computers and office equipment
|
329,198
|
|
|
443,453
|
|
||
Total cost
|
4,690,383
|
|
|
9,680,396
|
|
||
Less: accumulated depreciation
|
(1,565,812
|
)
|
|
(3,398,406
|
)
|
||
Property and equipment, net
|
$
|
3,124,571
|
|
|
$
|
6,281,990
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Long-term deposits
|
$
|
359,492
|
|
|
$
|
470,086
|
|
Deferral of initial public offering costs
|
—
|
|
|
287,331
|
|
||
Others
|
69,597
|
|
|
51,445
|
|
||
|
$
|
429,089
|
|
|
$
|
808,862
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
VAT payable
|
$
|
647,072
|
|
|
$
|
868,270
|
|
Corporate income taxes payable
|
454,373
|
|
|
1,165,660
|
|
||
Other taxes payable
|
211,557
|
|
|
459,207
|
|
||
|
$
|
1,313,002
|
|
|
$
|
2,493,137
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Accrued salary and social welfare costs
|
$
|
4,802,987
|
|
|
$
|
8,388,819
|
|
Liability classified awards for share-based compensation (Note 11)
|
667,188
|
|
|
—
|
|
||
Accrued professional service fees
|
158,432
|
|
|
788,313
|
|
||
Accrued staff reimbursements
|
187,208
|
|
|
332,578
|
|
||
Stock option deposit held on behalf of employees
|
177,015
|
|
|
400,680
|
|
||
Accrued rental fee
|
113,122
|
|
|
204,669
|
|
||
Others
|
480,932
|
|
|
863,873
|
|
||
|
$
|
6,586,884
|
|
|
$
|
10,978,932
|
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 2 votes in connection with the Series B Preferred Shares financing; and
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 3 votes in connection with the Series B+ Preferred Shares financing.
|
(a)
|
an amount equal to the Series A issue price, plus all accrued or declared but unpaid dividends on such Series A Preferred Share (for a partial year, the dividends shall be calculated proportionally), plus an amount that would accrue on the Series A issue price at a rate of 15% per annum, compounding annually, during the period commencing from December 16, 2013 and ending on the date of the Series A redemption notice, and
|
(b)
|
the fair market value of the Series A Preferred Share determined by an independent third party appraising firm selected jointly by the board of directors and the requesting holder, provided however, that any redemption of all or any part of Series A Preferred Shares held by a holder of Series A Preferred Shares at a price determined by an independent third party appraising firm shall not cause any material adverse effect to the Group companies taken as a whole.
|
|
Series A Preferred Shares
|
|
Series B Preferred Shares
|
|
Series B+ Preferred Shares
|
|
Series C Preferred Shares
|
|
Total
|
||||||||||||||||||||||
|
Number of shares
|
|
Amount
(US$)
|
|
Number of shares
|
|
Amount
(US$)
|
|
Number of shares
|
|
Amount
(US$)
|
|
Number of shares
|
|
Amount
(US$)
|
|
Amount
(US$)
|
||||||||||||||
Balances as of January 1, 2018
|
55,626,960
|
|
|
$
|
25,409,604
|
|
|
50,783,698
|
|
|
$
|
27,493,192
|
|
|
26,651,410
|
|
|
$
|
36,561,229
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
89,464,025
|
|
Issuance of convertible redeemable preferred shares, net of issuance costs of US$110,059
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,793,413
|
|
|
66,556,608
|
|
|
66,556,608
|
|
|||||
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
20,169,264
|
|
|
—
|
|
|
2,462,101
|
|
|
—
|
|
|
9,315,211
|
|
|
—
|
|
|
1,288,235
|
|
|
33,234,811
|
|
|||||
Balances as of December 31, 2018
|
55,626,960
|
|
|
$
|
45,578,868
|
|
|
50,783,698
|
|
|
$
|
29,955,293
|
|
|
26,651,410
|
|
|
$
|
45,876,440
|
|
|
34,793,413
|
|
|
$
|
67,844,843
|
|
|
$
|
189,255,444
|
|
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
44,470,906
|
|
|
—
|
|
|
90,636
|
|
|
—
|
|
|
398,120
|
|
|
—
|
|
|
5,755,291
|
|
|
50,714,953
|
|
|||||
Balances as of December 31, 2019
|
55,626,960
|
|
|
$
|
90,049,774
|
|
|
50,783,698
|
|
|
$
|
30,045,929
|
|
|
26,651,410
|
|
|
$
|
46,274,560
|
|
|
34,793,413
|
|
|
$
|
73,600,134
|
|
|
$
|
239,970,397
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Cost of revenues
|
$
|
49,893
|
|
|
$
|
79,552
|
|
Research and development expenses
|
919,773
|
|
|
1,472,528
|
|
||
Sales and marketing expenses
|
975,297
|
|
|
1,653,717
|
|
||
General and administrative expenses
|
905,389
|
|
|
1,046,372
|
|
||
|
$
|
2,850,352
|
|
|
$
|
4,252,169
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Equity award – share options
|
$
|
1,250,676
|
|
|
$
|
2,177,975
|
|
Equity award – restricted shares(1)
|
1,002,674
|
|
|
980,911
|
|
||
Liability award – share options
|
428,855
|
|
|
960,177
|
|
||
Liability award – restricted shares
|
168,147
|
|
|
133,106
|
|
||
|
$
|
2,850,352
|
|
|
$
|
4,252,169
|
|
(1)
|
Including restricted shares granted by the Founder for equity classified award of US$843,139 and US$790,643 for the years ended December 31, 2018 and 2019, respectively.
|
|
Number of
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|
Weighted
Average
Grant Date
Fair Value
|
|||||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
|||||||
Outstanding at January 1, 2018
|
20,412,350
|
|
|
$
|
0.10
|
|
|
7.84
|
|
$
|
5,087,933
|
|
|
$
|
0.12
|
|
Granted
|
14,689,473
|
|
|
0.12
|
|
|
|
|
|
|
0.37
|
|
||||
Forfeited
|
(1,440,866
|
)
|
|
0.10
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2018
|
33,660,957
|
|
|
0.11
|
|
|
7.91
|
|
19,994,575
|
|
|
0.23
|
|
|||
Granted
|
5,087,648
|
|
|
0.24
|
|
|
|
|
|
|
0.86
|
|
||||
Forfeited
|
(787,425
|
)
|
|
0.13
|
|
|
|
|
|
|
|
|||||
Reclassified from liability award
|
50,784
|
|
|
0.10
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2019
|
38,011,964
|
|
|
0.12
|
|
|
7.22
|
|
51,303,638
|
|
|
0.31
|
|
|||
Vested and expected to vest at December 31, 2019
|
20,719,325
|
|
|
0.11
|
|
|
6.29
|
|
28,263,729
|
|
|
0.18
|
|
|||
Exercisable at December 31, 2019
|
20,719,325
|
|
|
0.11
|
|
|
6.29
|
|
28,263,729
|
|
|
0.18
|
|
|
Number of Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
||||||||
Outstanding at January 1, 2018
|
1,150,784
|
|
|
$
|
0.10
|
|
|
6.97
|
|
|
$
|
286,842
|
|
|
$
|
0.07
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Outstanding at December 31, 2018
|
1,150,784
|
|
|
0.10
|
|
|
5.97
|
|
|
689,258
|
|
|
0.07
|
|
|||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||
Repurchased
|
(1,100,000
|
)
|
|
0.10
|
|
|
5.67
|
|
|
818,845
|
|
|
0.07
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||
Reclassified to equity classified award
|
(50,784
|
)
|
|
0.10
|
|
|
6.81
|
|
|
37,804
|
|
|
0.10
|
|
|||
Outstanding at December 31, 2019
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Exercise price
|
US$0.10- US$1.00
|
|
|
US$0.10-US$0.50
|
|
Fair value of the ordinary shares on the date of option grant
|
US$0.3493-US $0.6989
|
|
|
US$0.6989-US $1.4751
|
|
Risk-free interest rate(1)
|
2.54%-3.18%
|
|
|
1.80%-2.83%
|
|
Expected term (in years)
|
10
|
|
|
10
|
|
Expected dividend yield(2)
|
0%
|
|
|
0%
|
|
Expected volatility(3)
|
49.18%-50.36%
|
|
|
47.54%-50.01%
|
|
Expected forfeiture rate (post-vesting)
|
3
|
%
|
|
3
|
%
|
(1)
|
The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the U.S. treasury bonds with a maturity life equal to the expected life to expiration.
|
(2)
|
The Company has no history or expectation of paying dividends on its ordinary shares.
|
(3)
|
Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates.
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
|||
|
|
|
(US$)
|
|||
Outstanding at January 1, 2018
|
16,121,181
|
|
|
$
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(6,670,833
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2018
|
9,450,348
|
|
|
0.02
|
|
|
Granted
|
—
|
|
|
—
|
|
|
Reclassified from liability classified restricted shares
|
26,042
|
|
|
0.02
|
|
|
Vested
|
(6,670,833
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2019
|
2,805,557
|
|
|
0.02
|
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
|||
|
|
|
(US$)
|
|||
Outstanding at January 1, 2018
|
151,042
|
|
|
$
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(62,500
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2018
|
88,542
|
|
|
0.02
|
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(62,500
|
)
|
|
0.02
|
|
|
Reclassified to equity classified restricted shares
|
(26,042
|
)
|
|
0.02
|
|
|
Outstanding at December 31, 2019
|
—
|
|
|
0.02
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Pre-tax income from PRC entities
|
$
|
4,813,122
|
|
|
$
|
6,790,182
|
|
Pre-tax loss from non-PRC entities
|
(4,331,928
|
)
|
|
(12,166,283
|
)
|
||
Total pre-tax loss
|
$
|
481,194
|
|
|
$
|
(5,376,101
|
)
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Statutory income tax rate
|
25.00
|
%
|
|
25.00
|
%
|
Permanent differences(1)
|
(105.06
|
)%
|
|
9.07
|
%
|
Tax rate difference from statutory rate in other jurisdictions(2)
|
(51.95
|
)%
|
|
12.70
|
%
|
Change in valuation allowance(3)
|
236.64
|
%
|
|
(64.00
|
)%
|
Effect of tax holiday(4)
|
(82.96
|
)%
|
|
2.34
|
%
|
Others
|
0.17
|
%
|
|
(0.01
|
)%
|
Effective tax rate
|
21.84
|
%
|
|
(14.90
|
)%
|
(1)
|
The permanent differences are primarily related to additional tax deductions for qualified research and development expenses offset by non-deductible share-based compensation expenses.
|
(2)
|
The tax rate difference is attributed to varying rates in other jurisdictions where the Group is established or operates, such as the Cayman Islands or the United States.
|
(3)
|
The change in valuation allowance is primarily attributed to fully provisioning for net operating loss carry-forwards of Agora Lab, Inc.
|
(4)
|
The WFOE obtained its software enterprise certificate in 2018 and is entitled to a tax exemption from EIT for the year of 2018 and a 50% EIT rate reduction for the year of 2019.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Current income tax expense
|
463,149
|
|
|
1,137,800
|
|
||
Deferred income tax benefit
|
(358,071
|
)
|
|
(336,463
|
)
|
||
Income tax expense (benefit)
|
$
|
105,078
|
|
|
$
|
801,337
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
The aggregate amount of effect
|
399,208
|
|
|
125,630
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Tax loss carry-forwards
|
$
|
4,238,069
|
|
|
$
|
7,614,276
|
|
Payroll liabilities
|
402,783
|
|
|
627,010
|
|
||
Allowance for doubtful accounts
|
93,281
|
|
|
269,560
|
|
||
Other deductible temporary difference
|
64,455
|
|
|
52,955
|
|
||
Deferred tax assets
|
4,798,588
|
|
|
8,563,801
|
|
||
Deferred tax liabilities
|
—
|
|
|
—
|
|
||
Less valuation allowance
|
(4,286,495
|
)
|
|
(7,727,287
|
)
|
||
Deferred tax assets, net
|
$
|
512,093
|
|
|
$
|
836,514
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Balance at beginning of the year
|
$
|
(3,147,795
|
)
|
|
$
|
(4,286,495
|
)
|
Addition in current year
|
(1,138,700
|
)
|
|
(3,440,792
|
)
|
||
Reversals in current year
|
—
|
|
|
—
|
|
||
Balance at the end of the year
|
$
|
(4,286,495
|
)
|
|
$
|
(7,727,287
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
376,116
|
|
|
$
|
(6,177,438
|
)
|
Cumulative undeclared dividends on convertible redeemable preferred shares
|
(9,961,473
|
)
|
|
(9,961,473
|
)
|
||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
(33,234,811
|
)
|
|
(50,714,953
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders - basic and diluted
|
$
|
(42,820,168
|
)
|
|
$
|
(66,853,864
|
)
|
Denominator:
|
|
|
|
||||
Denominator for basic and diluted loss per share weighted-average ordinary shares outstanding
|
109,141,311
|
|
|
115,716,392
|
|
||
Basic and diluted loss per share
|
$
|
(0.39
|
)
|
|
$
|
(0.58
|
)
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Preferred shares - weighted average
|
141,543,341
|
|
|
167,855,481
|
|
Share options - weighted average
|
17,280,175
|
|
|
26,923,735
|
|
Restricted share - weighted average
|
11,358,874
|
|
|
5,154,272
|
|
|
Contractual Purchase Obligations
|
||
2020
|
$
|
2,600,251
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
|
(US$)
|
||||
Rental fee charged by a related party
|
153,920
|
|
|
168,349
|
|
|
Year Ended December 31, 2019
|
||
|
(Unaudited)
|
||
|
(US$)
|
||
Numerator:
|
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(66,853,864
|
)
|
Pro forma adjustment of conversion of Preferred Shares
|
60,676,426
|
|
|
Numerator for pro forma basic and diluted earnings per share
|
$
|
(6,177,438
|
)
|
Denominator:
|
|
||
Weighted-average number of ordinary shares outstanding
|
115,716,392
|
|
|
Pro forma effect of conversion of Preferred Shares
|
167,855,481
|
|
|
Denominator for pro forma basic earnings per ordinary share
|
283,571,873
|
|
|
Pro forma basic and diluted earnings per ordinary share:
|
$
|
(0.02
|
)
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
30,503,879
|
|
|
$
|
85,858,429
|
|
Total current assets
|
30,503,879
|
|
|
85,858,429
|
|
||
Investments in subsidiaries and the VIE
|
95,926,958
|
|
|
92,591,336
|
|
||
Amounts due from related parties
|
9,782,695
|
|
|
28,282,695
|
|
||
Total assets
|
136,213,532
|
|
|
206,732,460
|
|
||
Liabilities, Mezzanine equity and Shareholders’ deficit
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Amounts due to related parties
|
20,200,066
|
|
|
94,054,616
|
|
||
Total liabilities
|
20,200,066
|
|
|
94,054,616
|
|
||
Mezzanine equity:
|
|
|
|
||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,578,868
|
|
|
90,049,774
|
|
||
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
29,955,293
|
|
|
30,045,929
|
|
||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding as of December 31, 2018 and 2019)
|
45,876,440
|
|
|
46,274,560
|
|
||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding as of December 31, 2018 and 2019)
|
67,844,843
|
|
|
73,600,134
|
|
||
Total of mezzanine equity
|
189,255,444
|
|
|
239,970,397
|
|
||
Shareholders’ deficit:
|
|
|
|
||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized as of December 31, 2018 and 2019; 112,441,049 and 119,074,382 shares issued and outstanding as of December 31, 2018 and 2019, respectively)
|
11,244
|
|
|
11,907
|
|
||
Additional paid-in-capital
|
—
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(630,334
|
)
|
|
(988,417
|
)
|
||
Accumulated deficit
|
(72,622,888
|
)
|
|
(126,316,043
|
)
|
||
Total shareholders’ deficit
|
(73,241,978
|
)
|
|
(127,292,553
|
)
|
||
Total liabilities, mezzanine equity and shareholders’ deficit
|
$
|
136,213,532
|
|
|
$
|
206,732,460
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Interest income
|
$
|
152,273
|
|
|
$
|
—
|
|
Income from operations
|
152,273
|
|
|
—
|
|
||
Equity in income of subsidiaries and the VIE
|
223,843
|
|
|
(6,177,438
|
)
|
||
Income (loss) before income taxes
|
376,116
|
|
|
(6,177,438
|
)
|
||
Income taxes
|
—
|
|
|
—
|
|
||
Net income (loss)
|
376,116
|
|
|
(6,177,438
|
)
|
||
Less: cumulative undeclared dividends on Preferred Shares
|
(9,961,473
|
)
|
|
(9,961,473
|
)
|
||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(33,234,811
|
)
|
|
(50,714,953
|
)
|
||
Net loss attributable to ordinary shareholders
|
$
|
(42,820,168
|
)
|
|
$
|
(66,853,864
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustment, net of nil tax
|
(749,030
|
)
|
|
(358,083
|
)
|
||
Total comprehensive loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(43,569,198
|
)
|
|
$
|
(67,211,947
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
|
(US$)
|
||||||
Net cash provided by operating activities
|
$
|
152,273
|
|
|
$
|
—
|
|
Net cash (used in) provided by investing activities
|
(5,899,959
|
)
|
|
55,354,550
|
|
||
Net cash provided by financing activities
|
—
|
|
|
—
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(5,747,686
|
)
|
|
55,354,550
|
|
||
Cash, cash equivalents and restricted cash, beginning of year
|
36,251,565
|
|
|
30,503,879
|
|
||
Cash, cash equivalents and restricted cash, end of year
|
$
|
30,503,879
|
|
|
$
|
85,858,429
|
|
|
Page
|
|
As of
December 31,
|
|
As of
March 31,
|
|
Pro forma
|
||||||
As of
March 31,
|
|||||||||||
|
2019
|
|
2020
|
|
2020
|
||||||
|
|
|
|
|
Note 17
|
||||||
|
(US$)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
105,603,153
|
|
|
$
|
151,652,655
|
|
|
$
|
151,652,655
|
|
Accounts receivable, net
|
16,247,565
|
|
|
31,239,641
|
|
|
31,239,641
|
|
|||
Prepayments and other current assets
|
1,381,037
|
|
|
3,501,117
|
|
|
3,501,117
|
|
|||
Total current assets
|
123,231,755
|
|
|
186,393,413
|
|
|
186,393,413
|
|
|||
Non-current assets:
|
|
|
|
|
|
||||||
Property and equipment, net
|
6,281,990
|
|
|
8,282,042
|
|
|
8,282,042
|
|
|||
Deferred tax assets
|
836,514
|
|
|
823,656
|
|
|
823,656
|
|
|||
Other non-current assets
|
808,862
|
|
|
1,654,975
|
|
|
1,654,975
|
|
|||
Total non-current assets
|
7,927,366
|
|
|
10,760,673
|
|
|
10,760,673
|
|
|||
Total assets
|
$
|
131,159,121
|
|
|
$
|
197,154,086
|
|
|
$
|
197,154,086
|
|
Liabilities, mezzanine equity and shareholders’ equity (deficit)
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable (including accounts payable of the variable interest entity (“VIE”) without recourse to the Company of US$2,992,628 and US$ 7,156,391 as of December 31, 2019 and March 31, 2020, respectively)
|
4,088,283
|
|
|
9,087,247
|
|
|
9,087,247
|
|
|||
Advances from customers (including advances from customers of the VIE without recourse to the Company of US$733,518 and US$699,464 as of December 31, 2019 and March 31, 2020, respectively)
|
920,925
|
|
|
771,941
|
|
|
771,941
|
|
|||
Taxes payable (including taxes payable of the VIE without recourse to the Company of US$756,020 and US$701,612 as of December 31, 2019 and March 31, 2020, respectively)
|
2,493,137
|
|
|
2,689,344
|
|
|
2,689,344
|
|
|||
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the VIE without recourse to the Company of US$3,440,748 and US$5,273,857 as of December 31, 2019 and March 31, 2020, respectively)
|
10,978,932
|
|
|
17,994,294
|
|
|
17,994,294
|
|
|||
Total current liabilities
|
18,481,277
|
|
|
30,542,826
|
|
|
30,542,826
|
|
|||
Total liabilities
|
$
|
18,481,277
|
|
|
$
|
30,542,826
|
|
|
$
|
30,542,826
|
|
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
As of
December 31,
|
|
As of
March 31,
|
|
Pro forma
|
||||||
As of
March 31,
|
|||||||||||
|
2019
|
|
2020
|
|
2020
|
||||||
|
|
|
|
|
Note 17
|
||||||
|
(US$)
|
||||||||||
Mezzanine equity
|
|
|
|
|
|
||||||
Series A convertible redeemable preferred shares ($0.0001 par value, 55,626,960 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
90,049,774
|
|
|
123,628,884
|
|
|
—
|
|
|||
Series B convertible redeemable preferred shares ($0.0001 par value, 50,783,698 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
30,045,929
|
|
|
30,068,632
|
|
|
—
|
|
|||
Series B+ convertible redeemable preferred shares ($0.0001 par value, 26,651,410 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
46,274,560
|
|
|
46,374,628
|
|
|
—
|
|
|||
Series C convertible redeemable preferred shares ($0.0001 par value, 36,533,085 shares authorized, 34,793,413 issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
73,600,134
|
|
|
75,113,680
|
|
|
—
|
|
|||
Series C+ convertible redeemable preferred shares ($0.0001 par value, nil and 15,062,510 shares authorized, issued and outstanding as of December 31, 2019 and March 31, 2020; and none outstanding on a pro-forma basis as of March 31, 2020)
|
—
|
|
|
50,748,154
|
|
|
—
|
|
|||
Total Mezzanine equity
|
$
|
239,970,397
|
|
|
$
|
325,933,978
|
|
|
$
|
—
|
|
Shareholders’ equity (deficit)
|
|
|
|
|
|
||||||
Ordinary shares ($0.0001 par value; 330,404,847 shares authorized as of December 31, 2019 and March 31, 2020; 119,074,382 and 120,757,715 shares issued and outstanding as of December 31, 2019 and March 31, 2020, respectively; 303,675,706 shares issued and outstanding on a pro-forma basis as of March 31, 2020)
|
11,907
|
|
|
12,075
|
|
|
30,367
|
|
|||
Additional paid-in-capital
|
—
|
|
|
—
|
|
|
325,915,686
|
|
|||
Accumulated other comprehensive loss
|
(988,417
|
)
|
|
(1,489,615
|
)
|
|
(1,489,615
|
)
|
|||
Accumulated deficit
|
(126,316,043
|
)
|
|
(157,845,178
|
)
|
|
(157,845,178
|
)
|
|||
Total shareholders’ equity (deficit)
|
$
|
(127,292,553
|
)
|
|
$
|
(159,322,718
|
)
|
|
$
|
166,611,260
|
|
Total liabilities, mezzanine equity and shareholders’ equity (deficit)
|
$
|
131,159,121
|
|
|
$
|
197,154,086
|
|
|
$
|
197,154,086
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Real-time engagement service revenues
|
$
|
13,287,047
|
|
|
$
|
35,446,490
|
|
Other revenues
|
75,446
|
|
|
113,945
|
|
||
Total revenues
|
13,362,493
|
|
|
35,560,435
|
|
||
Cost of revenues
|
(4,151,502
|
)
|
|
(11,082,363
|
)
|
||
Gross profit
|
9,210,991
|
|
|
24,478,072
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development expenses
|
(4,199,568
|
)
|
|
(11,688,168
|
)
|
||
Sales and marketing expenses
|
(4,006,086
|
)
|
|
(6,002,444
|
)
|
||
General and administrative expenses
|
(1,562,462
|
)
|
|
(3,544,940
|
)
|
||
Total operating expenses
|
(9,768,116
|
)
|
|
(21,235,552
|
)
|
||
Other operating income
|
4,930
|
|
|
23,259
|
|
||
Income (loss) from operations
|
(552,195
|
)
|
|
3,265,779
|
|
||
Exchange loss
|
(18,248
|
)
|
|
(7,033
|
)
|
||
Interest income
|
42,840
|
|
|
97,235
|
|
||
Income (loss) before income taxes
|
(527,603
|
)
|
|
3,355,981
|
|
||
Income taxes
|
(190,375
|
)
|
|
(368,791
|
)
|
||
Net income (loss)
|
(717,978
|
)
|
|
2,987,190
|
|
||
Less: cumulative undeclared dividends on convertible redeemable preferred shares
|
(2,490,368
|
)
|
|
(3,399,132
|
)
|
||
Less: accretion on convertible redeemable preferred shares to redemption value
|
(10,178,895
|
)
|
|
(35,963,579
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(13,387,241
|
)
|
|
$
|
(36,375,521
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustments
|
321,374
|
|
|
(501,198
|
)
|
||
Total comprehensive loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(13,065,867
|
)
|
|
$
|
(36,876,719
|
)
|
|
|
|
|
||||
Net loss per share attributable to Agora, Inc.’s ordinary shareholders—basic and diluted
|
(0.12
|
)
|
|
(0.30
|
)
|
||
Weighted average number of ordinary shares-basic and diluted
|
113,245,308
|
|
|
119,882,136
|
|
||
|
|
|
|
||||
Share-based compensation expenses included in:
|
|
|
|
||||
Cost of revenues
|
18,752
|
|
|
31,009
|
|
||
Research and development expenses
|
327,112
|
|
|
292,393
|
|
||
Sales and marketing expenses
|
362,732
|
|
|
485,229
|
|
||
General and administrative expenses
|
221,234
|
|
|
638,791
|
|
|
Ordinary shares
|
|
Additional
paid-in capital
|
|
Accumulated
other
comprehensive income (loss)
|
|
Accumulated
deficit
|
|
Total
shareholders’ deficit
|
||||||||||||||
|
Number of
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||
Balance as of January 1, 2019
|
112,441,049
|
|
|
$
|
11,244
|
|
|
$
|
—
|
|
|
$
|
(630,334
|
)
|
|
$
|
(72,622,888
|
)
|
|
$
|
(73,241,978
|
)
|
|
Vesting of restricted shares (Note 11)
|
1,683,333
|
|
|
168
|
|
|
72,876
|
|
|
—
|
|
|
—
|
|
|
73,044
|
|
||||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
686,113
|
|
|
—
|
|
|
—
|
|
|
686,113
|
|
||||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(758,989
|
)
|
|
—
|
|
|
(9,419,906
|
)
|
|
(10,178,895
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(717,978
|
)
|
|
(717,978
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
321,374
|
|
|
—
|
|
|
321,374
|
|
||||||
Balance as of March 31, 2019
|
114,124,382
|
|
|
11,412
|
|
|
—
|
|
|
(308,960
|
)
|
|
(82,760,772
|
)
|
|
(83,058,320
|
)
|
||||||
Balance as of January 1, 2020
|
119,074,382
|
|
|
11,907
|
|
|
—
|
|
|
(988,417
|
)
|
|
(126,316,043
|
)
|
|
(127,292,553
|
)
|
||||||
Vesting of restricted shares (Note 11)
|
1,683,333
|
|
|
168
|
|
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation expense (Note 11)
|
—
|
|
|
—
|
|
|
1,447,422
|
|
|
—
|
|
|
—
|
|
|
1,447,422
|
|
||||||
Accretion on convertible redeemable preferred shares to redemption value (Note 9)
|
—
|
|
|
—
|
|
|
(1,447,254
|
)
|
|
—
|
|
|
(34,516,325
|
)
|
|
(35,963,579
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,987,190
|
|
|
2,987,190
|
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(501,198
|
)
|
|
—
|
|
|
(501,198
|
)
|
||||||
Balance as of March 31, 2020
|
120,757,715
|
|
|
$
|
12,075
|
|
|
$
|
—
|
|
|
$
|
(1,489,615
|
)
|
|
$
|
(157,845,178
|
)
|
|
$
|
(159,322,718
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(717,978
|
)
|
|
$
|
2,987,190
|
|
Share-based compensation expense
|
929,830
|
|
|
1,447,422
|
|
||
Depreciation of property and equipment
|
342,304
|
|
|
744,654
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,135,417
|
|
|
(15,446,318
|
)
|
||
Prepayments and other current assets
|
374,698
|
|
|
(2,165,912
|
)
|
||
Other non-current assets
|
(15,312
|
)
|
|
18,747
|
|
||
Accounts payable
|
1,230,482
|
|
|
4,787,923
|
|
||
Advances from customers
|
(134,251
|
)
|
|
(138,056
|
)
|
||
Taxes payable
|
(17,193
|
)
|
|
232,461
|
|
||
Accrued expenses and other current liabilities
|
490,565
|
|
|
6,612,474
|
|
||
Net cash generated from (used in) operating activities
|
3,618,562
|
|
|
(919,415
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of short-term investments
|
(6,669,829
|
)
|
|
—
|
|
||
Proceeds from sale and maturity of short-term investments
|
1,482,184
|
|
|
—
|
|
||
Purchase of property and equipment
|
(763,642
|
)
|
|
(2,496,289
|
)
|
||
Net cash used in investing activities
|
(5,951,287
|
)
|
|
(2,496,289
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of Series C+ convertible redeemable preferred shares, net of the issuance costs of nil
|
—
|
|
|
50,000,002
|
|
||
Payment of deferred initial public offering cost
|
—
|
|
|
(231,312
|
)
|
||
Net cash provided by financing activities
|
—
|
|
|
49,768,690
|
|
||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
194,052
|
|
|
(303,484
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(2,138,673
|
)
|
|
46,049,502
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
108,598,039
|
|
|
105,683,153
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
106,459,366
|
|
|
$
|
151,732,655
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Income taxes paid
|
—
|
|
|
—
|
|
||
Non-cash financing and investing activities:
|
|
|
|
||||
Accretion to redemption value of convertible redeemable preferred shares
|
10,178,895
|
|
|
35,963,579
|
|
||
Payables for property and equipment
|
479,249
|
|
|
936,482
|
|
||
Payables for deferred initial public offering cost
|
—
|
|
|
948,523
|
|
|
Date of Incorporation
|
|
Place of Incorporation
|
|
Percentage of
Direct or Indirect Ownership
|
|
Principal Activities
|
Subsidiaries:
|
|
|
|
|
|
|
|
Agora Lab, Inc.
|
January 13, 2014
|
|
California, United States
|
|
100%
|
|
Provision of services
|
Agora IO, Inc
|
December 2, 2014
|
|
Cayman Islands
|
|
100%
|
|
Investment holding
|
Agora IO Hongkong Limited
|
December 12, 2014
|
|
Hong Kong
|
|
100%
|
|
Investment holding
|
Dayin Network Technology Co., Ltd. (“WFOE”)
|
April 30, 2015
|
|
PRC
|
|
100%
|
|
Provision of services
|
Agora IO, Ltd.
|
July 25, 2019
|
|
United Kingdom
|
|
100%
|
|
Startup
|
|
|
|
|
|
|
|
|
VIE:
|
|
|
|
|
|
|
|
Shanghai Zhaoyan Network Technology Co., Ltd. (“VIE”)
|
March 28, 2014
|
|
PRC
|
|
100%
|
|
Provision of services
|
(c)
|
Consolidated Variable Interest Entities
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,308,887
|
|
|
$
|
16,770,070
|
|
Accounts receivable, net
|
14,827,841
|
|
|
29,487,637
|
|
||
Amounts due from related parties
|
2,445,447
|
|
|
2,557,014
|
|
||
Prepayments and other current assets
|
886,022
|
|
|
1,742,389
|
|
||
Total current assets
|
35,468,197
|
|
|
50,557,110
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment, net
|
3,292,978
|
|
|
4,785,792
|
|
||
Deferred tax assets
|
387,950
|
|
|
381,987
|
|
||
Other non-current assets
|
69,968
|
|
|
69,316
|
|
||
Total non-current assets
|
3,750,896
|
|
|
5,237,095
|
|
||
Total assets
|
$
|
39,219,093
|
|
|
$
|
55,794,205
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
2,992,628
|
|
|
7,156,391
|
|
||
Amounts due to related parties
|
27,780,440
|
|
|
38,524,641
|
|
||
Advances from customers
|
733,518
|
|
|
699,464
|
|
||
Taxes payable
|
756,020
|
|
|
701,612
|
|
||
Accrued expenses and other current liabilities
|
3,440,748
|
|
|
5,273,857
|
|
||
Total current liabilities
|
35,703,354
|
|
|
52,355,965
|
|
||
Total liabilities
|
$
|
35,703,354
|
|
|
$
|
52,355,965
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
|
(US$)
|
||||
Net cash and cash equivalents generated from operating activities
|
6,416,507
|
|
|
1,383,106
|
|
Net cash and cash equivalents used in investing activities
|
(5,435,194
|
)
|
|
(1,921,923
|
)
|
Net cash and cash equivalents used in financing activities
|
—
|
|
|
—
|
|
(a)
|
Basis of Presentation
|
(b)
|
Basis of Consolidation
|
(c)
|
Use of Estimates
|
(d)
|
Functional Currencies and Foreign Currency Translation
|
(e)
|
Concentration of Credit Risk
|
|
As of
December 31, 2019
|
|
As of
March 31, 2020
|
||
Customer A - Social media platform
|
24
|
%
|
|
15
|
%
|
Customer B - Educational institution application
|
*
|
|
|
15
|
%
|
*
|
Less than 10%.
|
|
For the three months ended
|
|||
|
2019
|
|
2020
|
|
Customer A - Social media platform
|
*
|
|
10
|
%
|
Customer B - Educational institution application
|
*
|
|
14
|
%
|
*
|
Less than 10%.
|
(f)
|
Mezzanine Equity
|
(g)
|
Deferred Equity Offering Costs
|
(h)
|
Revenue Recognition
|
(i)
|
Cost of Revenues
|
(j)
|
Research and Development Expenses
|
(k)
|
Software Development Costs
|
(l)
|
Sales and Marketing Expenses
|
(m)
|
General and Administrative Expenses
|
(n)
|
Operating Leases
|
(o)
|
Income Tax
|
(p)
|
Segment Reporting
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Primary geographical markets based on customers’ location
|
|
|
|
||||
PRC
|
$
|
9,767,402
|
|
|
$
|
31,933,887
|
|
United States
|
1,669,754
|
|
|
1,332,261
|
|
||
Others
|
1,925,337
|
|
|
2,294,287
|
|
||
Total revenues
|
$
|
13,362,493
|
|
|
$
|
35,560,435
|
|
(q)
|
Recently Issued Accounting Pronouncements
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Accounts receivable
|
$
|
17,283,107
|
|
|
$
|
32,410,013
|
|
Less: allowance for doubtful accounts
|
(1,035,542
|
)
|
|
(1,170,372
|
)
|
||
Accounts receivable, net
|
$
|
16,247,565
|
|
|
$
|
31,239,641
|
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
At beginning of the period
|
$
|
(367,044
|
)
|
|
$
|
(1,035,542
|
)
|
Addition
|
(181,196
|
)
|
|
(147,878
|
)
|
||
Foreign currency translation impact
|
(6,716
|
)
|
|
13,048
|
|
||
At end of the period
|
$
|
(554,956
|
)
|
|
$
|
(1,170,372
|
)
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Loans and advance to employees(3)
|
$
|
—
|
|
|
$
|
2,059,749
|
|
VAT recoverable(1)
|
776,141
|
|
|
607,986
|
|
||
Prepayments(2)
|
419,376
|
|
|
556,727
|
|
||
Restricted cash
|
80,000
|
|
|
80,000
|
|
||
Others
|
105,520
|
|
|
196,655
|
|
||
|
$
|
1,381,037
|
|
|
$
|
3,501,117
|
|
(1)
|
VAT recoverable represented the balances that the Group can utilize to deduct its VAT liabilities within the next 12 months.
|
(2)
|
Prepayments are primarily related to a prepayment for company events, prepaid rental expenses and other deposits.
|
(3)
|
Loans and advance to employees as of March 31, 2020 primarily consist of loans to the employees for the payment of individual income taxes for granted options. The interest associated with these loans are based on the one year risk-free interest rate stipulated by the People’s Bank of China, and the loan plus interest will be repaid by the employee within one year. As of March 31, 2020, the loan balance due from a related party was US$146,000, which was repaid on May 14, 2020.
|
|
As of December 31, 2019
|
|
As of March 31, 2020
|
||||
|
(US$)
|
||||||
Cost:
|
|
||||||
Network equipment
|
$
|
6,976,107
|
|
|
$
|
9,468,745
|
|
Leasehold improvements
|
1,089,970
|
|
|
1,084,092
|
|
||
Electronic equipment
|
1,170,866
|
|
|
1,281,616
|
|
||
Furniture, computers and office equipment
|
443,453
|
|
|
438,361
|
|
||
Total cost
|
9,680,396
|
|
|
12,272,814
|
|
||
Less: accumulated depreciation
|
(3,398,406
|
)
|
|
(4,095,590
|
)
|
||
Construction-in-process
|
—
|
|
|
104,818
|
|
||
Property and equipment, net
|
$
|
6,281,990
|
|
|
$
|
8,282,042
|
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Long-term deposits
|
$
|
470,086
|
|
|
$
|
463,899
|
|
Deferral of initial public offering costs
|
287,331
|
|
|
1,179,835
|
|
||
Others
|
51,445
|
|
|
11,241
|
|
||
|
$
|
808,862
|
|
|
$
|
1,654,975
|
|
|
As of December 31, 2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
VAT payable
|
$
|
868,270
|
|
|
$
|
916,039
|
|
Corporate income taxes payable
|
1,165,660
|
|
|
1,517,348
|
|
||
Other taxes payable
|
459,207
|
|
|
255,957
|
|
||
|
$
|
2,493,137
|
|
|
$
|
2,689,344
|
|
|
As of December 31,2019
|
|
As of March 31,
2020
|
||||
|
(US$)
|
||||||
Accrued salary and social welfare costs
|
$
|
8,388,819
|
|
|
$
|
15,134,411
|
|
Accrued professional service fees
|
788,313
|
|
|
1,495,516
|
|
||
Accrued staff reimbursements
|
332,578
|
|
|
138,789
|
|
||
Stock option deposit held on behalf of employees
|
400,680
|
|
|
411,783
|
|
||
Accrued rental fee
|
204,669
|
|
|
157,511
|
|
||
Others
|
863,873
|
|
|
656,284
|
|
||
|
$
|
10,978,932
|
|
|
$
|
17,994,294
|
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 2 votes in connection with the Series B Preferred Shares financing; and
|
•
|
the voting rights of shares controlled by the Founder was modified to carry 3 votes in connection with the Series B+ Preferred Shares financing.
|
(a)
|
an amount equal to the Series A issue price, plus all accrued or declared but unpaid dividends on such Series A Preferred Share (for a partial year, the dividends shall be calculated proportionally), plus an amount that would accrue on the Series A issue price at a rate of 15% per annum, compounding annually, during the period commencing from December 16, 2013 and ending on the date of the Series A redemption notice, and
|
(b)
|
the fair market value of the Series A Preferred Share determined by an independent third party appraising firm selected jointly by the board of directors and the requesting holder, provided however, that any redemption of all or any part of Series A Preferred Shares held by a holder of Series A Preferred Shares at a price determined by an independent third party appraising firm shall not cause any material adverse effect to the Group companies taken as a whole.
|
|
Series A Preferred
Shares
|
|
Series B Preferred Shares
|
|
Series B+ Preferred Shares
|
|
Series C Preferred Shares
|
|
Series C+ Preferred Shares
|
|
Total
|
|||||||||||||||||||||||||||
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Number of
|
|
Amount
|
|
Amount
|
|||||||||||||||||
|
shares
|
|
(US$)
|
|
Shares
|
|
(US$)
|
|
shares
|
|
(US$)
|
|
shares
|
|
(US$)
|
|
Shares
|
|
(US$)
|
|
(US$)
|
|||||||||||||||||
Balances as of January 1, 2019
|
55,626,960
|
|
|
$
|
45,578,868
|
|
|
50,783,698
|
|
|
$
|
29,955,293
|
|
|
26,651,410
|
|
|
$
|
45,876,440
|
|
|
34,793,413
|
|
|
$
|
67,844,843
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
189,255,444
|
|
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
8,661,860
|
|
|
—
|
|
|
22,634
|
|
|
—
|
|
|
99,208
|
|
|
—
|
|
|
1,395,193
|
|
|
—
|
|
|
—
|
|
|
10,178,895
|
|
||||||
Balances as of March 31, 2019
|
55,626,960
|
|
|
54,240,728
|
|
|
50,783,698
|
|
|
29,977,927
|
|
|
26,651,410
|
|
|
45,975,648
|
|
|
34,793,413
|
|
|
69,240,036
|
|
|
—
|
|
|
—
|
|
|
199,434,339
|
|
||||||
Balances as of January 1, 2020
|
55,626,960
|
|
|
90,049,774
|
|
|
50,783,698
|
|
|
30,045,929
|
|
|
26,651,410
|
|
|
46,274,560
|
|
|
34,793,413
|
|
|
73,600,134
|
|
|
—
|
|
|
—
|
|
|
239,970,397
|
|
||||||
Issuance of convertible redeemable preferred shares, net of issuance costs of nil
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,062,510
|
|
|
50,000,002
|
|
|
50,000,002
|
|
||||||
Accretion on convertible redeemable preferred shares to redemption value
|
—
|
|
|
33,579,110
|
|
|
—
|
|
|
22,703
|
|
|
—
|
|
|
100,068
|
|
|
—
|
|
|
1,513,546
|
|
|
—
|
|
|
748,152
|
|
|
35,963,579
|
|
||||||
Balances as of March 31, 2020
|
55,626,960
|
|
|
$
|
123,628,884
|
|
|
50,783,698
|
|
|
$
|
30,068,632
|
|
|
26,651,410
|
|
|
$
|
46,374,628
|
|
|
34,793,413
|
|
|
$
|
75,113,680
|
|
|
15,062,510
|
|
|
$
|
50,748,154
|
|
|
$
|
325,933,978
|
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Cost of revenues
|
$
|
18,752
|
|
|
$
|
31,009
|
|
Research and development expenses
|
327,112
|
|
|
292,393
|
|
||
Sales and marketing expenses
|
362,732
|
|
|
485,229
|
|
||
General and administrative expenses
|
221,234
|
|
|
638,791
|
|
||
|
$
|
929,830
|
|
|
$
|
1,447,422
|
|
|
Three months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Equity award - share options
|
$
|
486,863
|
|
|
$
|
1,185,341
|
|
Equity award - restricted shares(1)
|
199,250
|
|
|
262,081
|
|
||
Liability award - share options
|
170,618
|
|
|
—
|
|
||
Liability award - restricted shares
|
73,099
|
|
|
—
|
|
||
|
$
|
929,830
|
|
|
$
|
1,447,422
|
|
(1)
|
Including restricted shares granted by the Founder for equity classified award of US$159,913 and US$211,753 for the three months ended March 31, 2019 and 2020, respectively.
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
||||||||
Outstanding at January 1, 2019
|
33,660,957
|
|
|
$
|
0.11
|
|
|
7.91
|
|
|
$
|
19,994,575
|
|
|
$
|
0.23
|
|
Granted
|
1,567,500
|
|
|
0.29
|
|
|
|
|
|
|
0.62
|
|
|||||
Forfeited
|
(49,846
|
)
|
|
0.10
|
|
|
|
|
|
|
|
||||||
Outstanding at March 31, 2019
|
35,178,611
|
|
|
0.12
|
|
|
7.76
|
|
|
25,641,578
|
|
|
0.24
|
|
|||
Outstanding at January 1, 2020
|
38,011,964
|
|
|
0.12
|
|
|
7.22
|
|
|
51,303,638
|
|
|
0.31
|
|
|||
Granted
|
5,835,100
|
|
|
0.22
|
|
|
|
|
|
|
1.58
|
|
|||||
Forfeited
|
(347,219
|
)
|
|
0.21
|
|
|
|
|
|
|
|
||||||
Outstanding at March 31, 2020
|
43,499,845
|
|
|
0.14
|
|
|
7.34
|
|
|
83,669,193
|
|
|
0.48
|
|
|||
Vested and expected to vest at March 31, 2020
|
21,573,459
|
|
|
|
|
|
|
|
|
|
|||||||
Exercisable at March 31, 2020
|
21,573,459
|
|
|
|
|
|
|
|
|
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Grant Date
Fair Value
|
||||
|
|
|
(US$)
|
|
In Years
|
|
(US$)
|
|
(US$)
|
||||
Outstanding at January 1, 2019
|
1,150,784
|
|
|
0.10
|
|
|
5.97
|
|
689,258
|
|
|
0.07
|
|
Granted
|
—
|
|
|
|
|
|
|
|
|
|
|||
Forfeited
|
—
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at March 31, 2019
|
1,150,784
|
|
|
0.10
|
|
|
5.72
|
|
856,649
|
|
|
0.07
|
|
|
Three Months Ended March 31,
|
||
|
2019
|
|
2020
|
Exercise price
|
US$0.1-US$0.37
|
|
US$0.1-US$1.74
|
Fair value of the ordinary shares on the date of option grant
|
US$0.6989-US$0.8444
|
|
US$1.7358
|
Risk-free interest rate(1)
|
2.62%-2.83%
|
|
1.76%
|
Expected term (in years)
|
10
|
|
10
|
Expected dividend yield(2)
|
0%
|
|
0%
|
Expected volatility(3)
|
49.31%-50.01%
|
|
47.29%
|
Expected forfeiture rate (post-vesting)
|
3%
|
|
0%-3%
|
(1)
|
The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the U.S. treasury bonds with a maturity life equal to the expected life to expiration.
|
(2)
|
The Company has no history or expectation of paying dividends on its ordinary shares.
|
(3)
|
Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates.
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
|||
|
|
|
(US$)
|
|||
Outstanding at January 1, 2019
|
9,450,348
|
|
|
$
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(1,667,708
|
)
|
|
0.02
|
|
|
Outstanding at March 31, 2019
|
7,782,640
|
|
|
0.02
|
|
|
Outstanding at January 1, 2020
|
2,805,557
|
|
|
0.02
|
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(1,683,333
|
)
|
|
0.02
|
|
|
Outstanding at March 31, 2020
|
1,122,224
|
|
|
0.02
|
|
|
Numbers of Shares
|
|
Weighted-average Grant Date Fair Value
|
||
|
|
|
(US$)
|
||
Outstanding at January 1, 2019
|
88,542
|
|
|
0.02
|
|
Granted
|
—
|
|
|
—
|
|
Vested
|
(15,625
|
)
|
|
0.02
|
|
Outstanding at March 31, 2019
|
72,917
|
|
|
0.02
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
|
(US$)
|
||||
Profit (loss) before income tax
|
(527,603
|
)
|
|
3,355,981
|
|
Income tax expense
|
190,375
|
|
|
368,791
|
|
Effective tax rate
|
(36.08
|
)%
|
|
10.99
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2020
|
||||
|
(US$)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
(717,978
|
)
|
|
$
|
2,987,190
|
|
Cumulative undeclared dividends on convertible redeemable preferred shares
|
(2,490,368
|
)
|
|
(3,399,132
|
)
|
||
Accretion on convertible redeemable preferred shares to redemption value
(Note 9)
|
(10,178,895
|
)
|
|
(35,963,579
|
)
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders - basic and diluted
|
$
|
(13,387,241
|
)
|
|
$
|
(36,375,521
|
)
|
Denominator:
|
|
|
|
||||
Denominator for basic and diluted loss per share weighted-average ordinary shares outstanding
|
113,245,308
|
|
|
119,882,136
|
|
||
Basic and diluted loss per share
|
$
|
(0.12
|
)
|
|
$
|
(0.30
|
)
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
Preferred shares - weighted average
|
167,855,481
|
|
|
175,966,063
|
|
Share options - weighted average
|
24,352,696
|
|
|
33,982,260
|
|
Restricted share - weighted average
|
8,094,228
|
|
|
1,654,095
|
|
|
Contractual Purchase Obligations
|
||
|
(US$)
|
||
Remainder of 2020
|
$
|
4,238,710
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2020
|
||
|
(US$)
|
||||
Rental fee charged by a related party
|
17,213
|
|
|
49,922
|
|
|
Three Months Ended March 31, 2020
|
||
|
(Unaudited)
|
||
|
(US$)
|
||
Numerator:
|
|
||
Net loss attributable to Agora, Inc.’s ordinary shareholders
|
$
|
(36,375,521
|
)
|
Pro forma adjustment of conversion of Preferred Shares
|
39,362,711
|
|
|
Numerator for pro forma basic and diluted earnings per share
|
$
|
2,987,190
|
|
Denominator:
|
|
||
Weighted-average number of ordinary shares outstanding
|
119,882,136
|
|
|
Pro forma effect of conversion of Preferred Shares
|
175,966,063
|
|
|
Denominator for pro forma basic earnings per ordinary share
|
295,848,199
|
|
|
Dilutive impact of share options
|
33,982,260
|
|
|
Dilutive impact of restricted shares
|
1,654,095
|
|
|
Denominator for pro forma diluted net earnings per ordinary share
|
331,484,554
|
|
|
Pro forma basic earnings per ordinary share:
|
$
|
0.01
|
|
Pro forma diluted earnings per ordinary share:
|
$
|
0.01
|
|
•
|
Each shareholder of Agora IO exchanged all of their ordinary and preferred shares of Agora IO for an equivalent number of ordinary and preferred shares of Agora issued via a share swap agreement, resulting in Agora becoming the sole shareholder of Agora IO, and Agora IO and its former shareholders becoming the shareholders of Agora;
|
•
|
Immediately after the share swap, (1) Agora IO reclassified and re-designated all of the preferred shares of Agora IO held by Agora into ordinary shares of Agora IO, (2) Agora repurchased all ordinary shares of Agora held by Agora IO and (3) Agora IO repurchased an equivalent number of ordinary shares of Agora IO held by Agora, collectively resulting in the former Agora IO shareholders remaining shareholders of Agora and Agora IO becoming a wholly owned subsidiary of Agora and no longer a shareholder of Agora; and
|
•
|
Agora assumed all options granted by Agora IO under the 2018 Equity Incentive Plan, or the 2018 Plan, resulting in the shares subject to the options becoming the same number of shares of Agora instead of shares of Agora IO, but without otherwise affecting the number of options granted, the shares subject to the options, the exercise price of each award, the vesting commencement date or schedule, or the other terms and conditions in the respective award agreements. Agora IO then terminated the 2018 Plan without affecting the then-outstanding awards under the 2018 Plan.
|
Securities/Purchaser
|
|
Issuer
|
|
Date of Issuance
|
|
Number of Securities
|
|
Consideration
|
||
Series C+ Preferred Shares
|
|
|
|
|
|
|
|
|
||
Coatue PE Asia XVI LLC
|
|
Agora
|
|
February 12, 2020
|
|
6,624,492
|
|
|
US$21,990,001.00
|
|
Internet Fund VI Pte. Ltd.
|
|
Agora
|
|
February 12, 2020
|
|
6,624,492
|
|
|
US$21,990,001.00
|
|
Evolution Special Opportunity Fund I, L.P.
|
|
Agora
|
|
February 12, 2020
|
|
1,576,979
|
|
|
US$5,234,783.00
|
|
Evolution Fund I Co-investment, L.P.
|
|
Agora
|
|
February12, 2020
|
|
236,547
|
|
|
US$785,217.00
|
|
|
|
|
|
|
|
|
|
|
||
Series C Preferred Shares
|
|
|
|
|
|
|
|
|
||
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
3,479,341
|
|
No additional consideration
|
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
4,744,556
|
|
No additional consideration
|
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
474,456
|
|
No additional consideration
|
|
|
Coatue PE Asia XVI LLC
|
|
Agora
|
|
January 19, 2020
|
|
20,876,048
|
|
No additional consideration
|
|
|
SIG Global China Fund I, LLLP
|
|
Agora
|
|
January 19, 2020
|
|
5,219,012
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora IO
|
|
October 23, 2018
|
|
3,479,341
|
|
|
US$6,666,667.00
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora IO
|
|
October 23, 2018
|
|
4,744,556
|
|
|
US$9,090,909.00
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora IO
|
|
October 23, 2018
|
|
474,456
|
|
|
US$909,091.00
|
|
Coatue PE Asia XVI LLC
|
|
Agora IO
|
|
October 1, 2018
|
|
20,876,048
|
|
|
US$40,000,000.00
|
|
SIG Global China Fund I, LLLP
|
|
Agora IO
|
|
October 1, 2018
|
|
5,219,012
|
|
|
US$10,000,000.00
|
|
|
|
|
|
|
|
|
|
|
||
Series B+ Preferred Shares
|
|
|
|
|
|
|
|
|
||
SIG China Investments Master Fund III, LLLP
|
|
Agora
|
|
January 19, 2020
|
|
15,047,022
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
2,507,837
|
|
No additional consideration
|
|
|
GGV Capital IV L.P.
|
|
Agora
|
|
January 19, 2020
|
|
490,539
|
|
No additional consideration
|
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora
|
|
January 19, 2020
|
|
10,401
|
|
No additional consideration
|
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
781,419
|
|
No additional consideration
|
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
7,814,192
|
|
No additional consideration
|
|
|
SIG China Investments Master Fund III, LLLP
|
|
Agora IO
|
|
May 18, 2017
|
|
15,047,022
|
|
|
US$18,000,000.00
|
|
Shunwei Technology II Limited
|
|
Agora IO
|
|
May 18, 2017
|
|
2,507,837
|
|
|
US$3,000,000.02
|
|
Morningside China TMT Fund IV Co-Investment, L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
781,419
|
|
|
US$934,772.69
|
|
Morningside China TMT Special Opportunity Fund II, L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
7,814,192
|
|
|
US$9,347,726.87
|
|
GGV Capital IV L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
490,539
|
|
|
US$586,807.28
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
10,401
|
|
|
US$12,442.20
|
|
|
|
|
|
|
|
|
|
|
Securities/Purchaser
|
|
Issuer
|
|
Date of Issuance
|
|
Number of Securities
|
|
Consideration
|
||
Series B Preferred Shares
|
|
|
|
|
|
|
|
|
||
SIG China Investments Master Fund III, LLLP
|
|
Agora
|
|
January 19, 2020
|
|
18,808,777
|
|
No additional consideration
|
|
|
Morningside China TMT Top Up Fund, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
23,260,188
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
5,078,370
|
|
No additional consideration
|
|
|
GGV Capital IV L.P.
|
|
Agora
|
|
January 19, 2020
|
|
2,946,919
|
|
No additional consideration
|
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora
|
|
January 19, 2020
|
|
62,485
|
|
No additional consideration
|
|
|
IDG Technology Venture Investment V, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
626,959
|
|
No additional consideration
|
|
|
|
|
|
|
|
|
|
|
|
||
Series A Preferred Shares
|
|
|
|
|
|
|
|
|
||
YY TZ Limited
|
|
Agora
|
|
January 19, 2020
|
|
7,222,222
|
|
No additional consideration
|
|
|
Shunwei Technology II Limited
|
|
Agora
|
|
January 19, 2020
|
|
20,000,000
|
|
No additional consideration
|
|
|
Duowan Entertainment Corp.
|
|
Agora
|
|
January 19, 2020
|
|
18,626,960
|
|
No additional consideration
|
|
|
Morningside China TMT Fund II, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
2,000,000
|
|
No additional consideration
|
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
Agora
|
|
January 19, 2020
|
|
41,527
|
|
No additional consideration
|
|
|
GGV Capital IV L.P.
|
|
Agora
|
|
January 19, 2020
|
|
1,958,473
|
|
No additional consideration
|
|
|
CRCM Opportunity Fund, L.P.
|
|
Agora
|
|
January 19, 2020
|
|
3,000,000
|
|
No additional consideration
|
|
|
Yan Capital L.P.
|
|
Agora
|
|
January 19, 2020
|
|
2,777,778
|
|
No additional consideration
|
|
|
Yan Capital L.P.
|
|
Agora IO
|
|
May 18, 2017
|
|
2,777,778
|
|
US$277.78 and finder services
|
|
|
|
|
|
|
|
|
|
|
|
||
Ordinary Shares
|
|
|
|
|
|
|
|
|
||
Soundscape Limited
|
|
Agora
|
|
January 19, 2020
|
|
76,179,938
|
|
No additional consideration
|
|
|
VoiceCrew Limited
|
|
Agora
|
|
January 19, 2020
|
|
45,800,000
|
|
No additional consideration
|
|
|
Agora IO, Inc
|
|
Agora
|
|
January 19, 2020
|
|
109,825,419
|
|
No additional consideration
|
|
|
|
|
|
|
|
|
|
|
|
||
Options
|
|
|
|
|
|
|
|
|
||
Certain directors, officers, employees and consultants of the Company as a group
|
|
Agora and Agora IO
|
|
From April 30, 2017 through May 31, 2020
|
|
31,371,758
|
|
Past and future services to us
|
|
(a)
|
Exhibits
|
(b)
|
Financial Statement Schedules
|
(1)
|
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
|
(2)
|
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
Exhibit
Number
|
|
Description of Exhibit
|
1.1
|
|
|
3.1†
|
|
|
3.2†
|
|
|
4.1
|
|
|
4.2†
|
|
|
4.3
|
|
|
4.4†
|
|
|
5.1
|
|
|
8.1
|
|
|
10.1†
|
|
|
10.2†
|
|
|
10.3†
|
|
|
10.4†
|
|
|
10.5†
|
|
|
10.6†
|
|
|
10.7†
|
|
|
10.8†
|
|
|
10.9†
|
|
|
10.10†
|
|
|
10.11†
|
|
|
10.12†
|
|
|
10.13
|
|
|
10.14
|
|
|
10.15
|
|
|
21.1†
|
|
|
23.1
|
|
|
23.2
|
|
|
23.3†
|
|
|
24.1†
|
|
|
99.1†
|
|
99.2†
|
|
|
99.3†
|
|
|
99.4†
|
|
†
|
Previously filed.
|
AGORA, INC.
|
||
|
|
|
By:
|
/s/ Bin (Tony) Zhao
|
|
|
Name:
|
Bin (Tony) Zhao
|
|
Title:
|
Chief Executive Officer and Chairman
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Bin (Tony) Zhao
|
|
Chief Executive Officer and Chairman
(Principal Executive Officer)
|
|
June 19, 2020
|
Bin (Tony) Zhao
|
|
|
||
|
|
|
|
|
*
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
June 19, 2020
|
Jingbo Wang
|
|
|
||
|
|
|
|
|
*
|
|
Director
|
|
June 19, 2020
|
Qin Liu
|
|
|
||
|
|
|
|
|
*
|
|
Director
|
|
June 19, 2020
|
Tuck Lye Koh
|
|
|
* By:
|
/s/ Bin (Tony) Zhao
|
|
Bin (Tony) Zhao
|
|
Attorney-in-fact
|
AGORA LAB, INC.
|
||
|
|
|
By:
|
/s/ Regev (Reggie) Yativ
|
|
|
Name:
|
Regev (Reggie) Yativ
|
|
Title:
|
Chief Revenue Officer and Chief Operating Officer
|
(a)
|
Effectiveness of Registration Statement. Each of the Registration Statement and the ADS Registration Statement, and any amendment thereto, has become effective under the Securities Act; each of the Exchange Act Registration Statement and any
|
(b)
|
Compliance with Securities Law. (i) Each of the Registration Statement and the ADS Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement, the ADS Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Exchange Act Registration Statement complies and, as amended or supplemented, if applicable, will comply in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder, (iv) the Time of Sale Prospectus does not, and at the time of each sale of the Offered Securities in connection with the offering when the Prospectus is not yet available to prospective purchasers, at the Closing Date (as defined in Section 4) and at each Option Closing Date (as defined in Section 2), the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (v) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (vi) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriter Information described as such in Section 9(b) hereof.
|
(c)
|
Ineligible Issuer Status and Issuer Free Writing Prospectus. The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each
|
(d)
|
Good Standing of the Company. The Company has been duly incorporated, is validly existing as an exempted company with limited liability in good standing under the laws of the Cayman Islands, has the corporate power and authority to own or lease its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) would not have a Material Adverse Effect (as defined below). The currently effective memorandum and articles of association of the Company comply with the requirements of applicable Cayman Islands law and are in full force and effect. The fifth amended and restated memorandum and articles of association of the Company adopted on June 19, 2020 and filed as Exhibit 3.2 to the Registration Statement comply with the requirements of applicable Cayman Islands laws and, immediately prior to the closing on the Closing Date, will be in full force and effect. Complete and correct copies of all constitutive documents of the Company and all amendments thereto have been delivered to the Representatives; except as set forth in the Registration Statements, no change will be made to any such constitutive documents on or after the date of this Agreement through and including the Closing Date. A “Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), earnings, results of operations, business or prospects of the
|
(e)
|
Subsidiaries and Consolidated Affiliated Entities. Each of the Company’s direct and indirect subsidiaries (each a “Subsidiary” and collectively, the “Subsidiaries”) has been identified on Schedule III-A hereto, and each of the entities which the Company directly or indirectly controls through contractual arrangements (each a “Consolidated Affiliated Entity” and collectively, the “Consolidated Affiliated Entities”) has been identified on Schedule III-B hereto. Each of the Subsidiaries and Consolidated Affiliated Entities has been duly incorporated, is validly existing, and in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under the laws of the jurisdiction of its incorporation, has full power and authority (corporate or otherwise) to own or lease its property and to conduct its business as described in the Time of Sale Prospectus and the Prospectus, and is duly qualified to transact business and is in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) would not have a Material Adverse Effect; all of the equity interests of each Subsidiary have been duly and validly authorized and issued, are owned directly or indirectly by the Company, are fully or have been timely paid in accordance with its articles of association or other constitutive or organizational documents and non-assessable and are free and clear of all liens, encumbrances, equities or claims; all of the equity or sponsorship interests in each Consolidated Affiliated Entity have been duly and validly authorized and issued, and timely paid in accordance with its articles of association and non-assessable and are owned as described in the Time of Sale Prospectus and the Prospectus, and, except as described in the Time of Sale Prospectus and the Prospectus, free and clear of all liens, encumbrances, equities or claims. None of the outstanding share capital or equity interest in any Subsidiary was issued in violation of preemptive or similar rights of any security holder of such Subsidiary. All of the constitutive or organizational documents of each of the Subsidiaries and Consolidated Affiliated Entities comply with the requirements of applicable laws of its jurisdiction of incorporation or organization and are in full force and effect. Apart from the Subsidiaries and Consolidated Affiliated Entities, the Company has no direct or indirect subsidiaries or any other company over which it has direct or indirect effective control.
|
(f)
|
VIE Agreements and Corporate Structure.
|
(i)
|
The description of the corporate structure of the Company and each of the contracts among the Subsidiaries, the shareholders or the sponsors of the Consolidated Affiliated Entities and the Consolidated Affiliated Entities, as
|
(ii)
|
Each VIE Agreement has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding obligation of the parties thereto, enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental agency or body or any court) is required for the performance of the obligations under any VIE Agreement by the parties thereto, other than those as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus; and no consent, approval, authorization, order, filing or registration that has been obtained is being withdrawn or revoked or is subject to any condition precedent which has not been fulfilled or performed. The corporate structure of the Company complies with all applicable laws and regulations of the People’s Republic of China (the “PRC”), and neither the corporate structure nor the VIE Agreements violate, breach, contravene or otherwise conflict with any applicable laws of the PRC, yet as disclosed in the Time of Sale Prospectus and the Prospectus, there are substantial uncertainties regarding the interpretation and application of current and future laws of the PRC governing the validity of the arrangement contemplated under the VIE Agreements. There is no legal or governmental proceeding, inquiry or investigation pending against the Company, the Subsidiaries and Consolidated Affiliated Entities or shareholders or sponsors of the Consolidated Affiliated Entities in any jurisdiction challenging the validity of any of the VIE Agreements, and to the knowledge of the Company, no such proceeding, inquiry or investigation is threatened in any jurisdiction.
|
(iii)
|
The execution, delivery and performance of each VIE Agreement by the parties thereto do not and will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, or result in the imposition of any lien, encumbrance, equity or claim upon any property or assets of the Company or any of the Subsidiaries and Consolidated Affiliated
|
(iv)
|
The Company possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the Consolidated Affiliated Entities, through its rights to authorize the shareholders or sponsors, as the case may be, of the Consolidated Affiliated Entities to exercise their voting rights.
|
(g)
|
Authorization of this Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
|
(h)
|
Authorization of the Deposit Agreement. The Deposit Agreement has been duly authorized, executed and delivered by the Company and assuming due authorization, execution and delivery by the Depositary, constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The description of the Deposit Agreement contained in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus is true and accurate in all material respects.
|
(i)
|
Due Authorization of Registration Statements. The Registration Statement, the Time of Sale Prospectus, the Prospectus, any issuer free writing prospectus and the ADS Registration Statement and the filing of the Registration Statement, the Prospectus, any issuer free writing prospectus and the ADS Registration Statement with the Commission have been duly authorized by and on behalf of the Company, and the Registration Statement and the ADS Registration Statement have been duly executed pursuant to such authorization by and on behalf of the Company.
|
(j)
|
Share Capital. The authorized share capital of the Company conforms as to legal matters to the description thereof contained in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus.
|
(k)
|
Ordinary Shares. (i) The Ordinary Shares issued and outstanding prior to the issuance of the Offered Shares have been duly authorized and are validly issued, fully paid and non-assessable. As of the date hereof, the Company has authorized, issued and outstanding capitalization as set forth in the sections of the Time of Sale Prospectus and the Prospectus under the headings “Capitalization” and “Description of Share Capital” and, as of the Closing Date, the Company shall have authorized, issued and outstanding capitalization as set forth in the sections of the Time of Sale Prospectus and the Prospectus under the headings “Capitalization” and “Description of Share Capital.” (ii) Except as described in the Time of Sale Prospectus and the Prospectus, there are (A) no outstanding securities issued by the Company convertible into or exchangeable for, rights, warrants or options to acquire from the Company, or obligations of the Company to issue, Ordinary Shares or any of the share capital of the Company, and (B) no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any share capital of, or any direct interest in, any of the Company’s Subsidiaries and Consolidated Affiliated Entities.
|
(l)
|
Offered ADSs. The Offered ADSs, when issued by the Depositary against the deposit of the Offered Shares in respect thereof in accordance with the provisions of the Deposit Agreement, will be duly authorized, validly issued and the persons in whose names such Offered ADSs are registered will be entitled to the rights of registered holders of American depositary receipt specified therein and in the Deposit Agreement.
|
(m)
|
Offered Shares. (i) The Offered Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement and when appropriate entries are made in the register of members of the Company, will be validly issued, fully paid and non-assessable, and the issuance of such Offered Shares will not be subject to any preemptive rights, resale rights, rights of first refusal or similar rights. The Offered Shares, when issued and delivered against payment therefor in accordance with the terms of this Agreement, will be free of any restriction upon the voting or transfer thereof pursuant to the Company’s constitutive documents or any agreement or other instrument to which the Company is a party. (ii) The Offered Shares, when issued, are freely transferable by the Company to or for the account
|
(n)
|
Accurate Disclosure. The statements in the Time of Sale Prospectus and the Prospectus under the headings “Prospectus Summary,” “Risk Factors,” “Dividend Policy,” “Enforceability of Civil Liabilities,” “Corporate History and Structure,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation,” “Management,” “Principal Shareholders,” “Related Party Transactions,” “Description of Share Capital,” “Description of American Depositary Shares,” “Taxation” and “Underwriters,” insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate, complete and fair summaries of such matters described therein in all material respects; provided, however, that this representation and warranty shall not apply to statements furnished to the Company in writing by the Underwriters through you expressly for use in the Time of Sale Prospectus and the Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriter Information described as such in Section 9(b) hereof.
|
(o)
|
Listing. The ADSs have been approved for listing on the Nasdaq Global Select Market (“Nasdaq”), subject to official notice of issuance.
|
(p)
|
Compliance with Law, Constitutive Documents and Contracts. Neither the Company nor any of the Subsidiaries and Consolidated Affiliated Entities is (i) in breach or violation of any provision of applicable law, statute, rule or regulation (including, but not limited to, any applicable law concerning communication services, privacy, data protection and intellectual property rights in jurisdictions where the Company and its Subsidiaries and Consolidated Affiliated Entities operate, and foreign investment in the value-added telecommunications services sector in China) or (ii) in breach or violation of its respective constitutive or organizational documents, or (iii) in default under (nor has any event occurred which, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease, agreement or other instrument that is (x) binding upon the Company or any of the Subsidiaries and Consolidated Affiliated Entities and (y) material to the Company and the Subsidiaries and Consolidated Affiliated Entities taken as a whole, or any judgment, order or decree of any governmental body, regulatory body, agency, court, arbitrator or other authority, body or agency having jurisdiction over the Company or any of the Subsidiaries and Consolidated Affiliated Entities or any of their respective properties, assets or operations (each, a
|
(q)
|
Absence of Defaults and Conflicts Resulting from Transaction. The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement and the Deposit Agreement will not contravene (i) any provision of applicable law, (ii) the memorandum and articles of association of the Company, (iii) any agreement or other instrument binding upon the Company or any of the Subsidiaries and Consolidated Affiliated Entities, or (iv) any judgment, order or decree of any Governmental Entity, except in the case of (i), (iii) and (iv), as would not reasonably be expected to have a Material Adverse Effect or adversely affect the ability of the Company to perform its obligations under this Agreement; and no consent, approval, authorization or order of, or qualification with, any Governmental Entity is required for the performance by the Company of its obligations under this Agreement or the Deposit Agreement, except such as may be required by the securities or Blue Sky laws of the various states of the United States of America in connection with the offer and sale of the Offered Securities.
|
(r)
|
No Material Adverse Change in Business. Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, since the end of the period covered by the latest audited financial statements included in the Registration Statement, the Time of Sale Prospectus and the Prospectus (i) there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or otherwise), results of operations, business or properties of the Company and its Subsidiaries and Consolidated Affiliated Entities, taken as a whole; (ii) there has been no purchase of its own outstanding share capital by the Company, no dividend or distribution of any kind declared, paid or made by the Company on any class of its share capital; (iii) there has been no material adverse change in the share capital, short-term indebtedness, long-term indebtedness, net current assets or net assets of the Company and its Subsidiaries and Consolidated Affiliated Entities; (iv) neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities has (A) entered into or assumed any material transaction or agreement, (B) incurred, assumed or acquired any material liability or obligation, direct or contingent, (C) acquired or disposed of or agreed to acquire or dispose of any business or any other material asset, or (D) agreed to take any of the foregoing actions that would, in the case of (A) through (D), have a Material Adverse Effect; and (v) neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities has sustained any material loss or interference with its business from fire, explosion, flood, typhoon, or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree.
|
(s)
|
No Pending Proceedings. There are no legal or governmental actions, suits or proceedings before or brought by any Governmental Entity pending or, to the
|
(t)
|
Preliminary Prospectuses. Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.
|
(u)
|
Investment Company Act. The Company is not, and immediately after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Time of Sale Prospectus and the Prospectus will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”).
|
(v)
|
Environmental Laws. (i) The Company and its Subsidiaries and Consolidated Affiliated Entities, (A) are in compliance with any and all applicable foreign, national, federal, state and local laws and regulations (including, for the avoidance of doubt, all applicable laws and regulations of the PRC and the United States) relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Effect. (ii) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties), except for those that would, singly or in the aggregate, not have a Material Adverse Effect.
|
(w)
|
Registration Rights. Except as disclosed in the Time of Sale Prospectus and the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act (collectively, “registration rights”), and any person to whom the Company has granted registration rights has agreed not to exercise such rights until after the expiration of the Restricted Period referred to in Section 6.1(w) hereof.
|
(x)
|
Compliance with Anti-Corruption Laws. Neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities or their respective affiliates, nor any director, officer or employee thereof nor, to the Company’s knowledge, any agent or representative of the Company or of any of its Subsidiaries and Consolidated Affiliated Entities or their respective affiliates, (i) has used or will use any corporate funds for any unlawful contribution, gift, entertainment, or other unlawful expense relating to political activity; (ii) has taken or will take any action in furtherance of any offer, payment, promise to pay, or authorization or approval of the payment, giving of money, property, gifts, or anything else of value, directly or indirectly, to a “government official” (including any officer, director or employee of any government branch or agency, government-owned or controlled entity or instrumentality, public international organization or political party; any political party official or candidate for political office; or any close family member of, or person acting in an official capacity for or on behalf of, any of the foregoing) or to any other Person to influence official action or secure an improper advantage or to take any other action in violation of the U.S. Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, the Anti-Unfair Competition Law of the PRC, the Criminal Law of the PRC, any regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or any other applicable anti-bribery or anti-corruption law in each case as amended from time to time (collectively the “Anti-Corruption Laws”); (iii) has taken or will take any act in furtherance of an offer, payment, promise to pay, agreement, request, authorization or approval, or any other act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback, or other unlawful or improper payment or benefit; or (iv) will use, directly or indirectly, the proceeds of the offering in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any applicable Anti-Corruption Laws; and the Company and its Subsidiaries and Consolidated Affiliated Entities and their respective affiliates have each conducted their respective businesses in compliance with applicable Anti-Corruption laws and have instituted, maintained and enforced, and will continue to maintain and enforce, policies and procedures
|
(y)
|
Compliance with Anti-Money Laundering Laws. The Company and its Subsidiaries and Consolidated Affiliated Entities are and have at all times been in material compliance with all applicable financial recordkeeping and reporting requirements, including, to the extent applicable, those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and with all other applicable anti-money laundering statutes and the rules and regulations thereunder that are issued, administered or enforced by any governmental agency with jurisdiction over the Company or any of its Subsidiaries and Consolidated Affiliated Entities (collectively, the “Anti-Money Laundering Laws”), and no investigation, action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries and Consolidated Affiliated Entities with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
|
(z)
|
Compliance with OFAC. (i) Neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities, nor any director, officer or employee thereof, nor, to the knowledge of the Company, any agent, affiliate or representative of the Company or any of its Subsidiaries and Consolidated Affiliated Entities, is or undertakes any business with an individual or entity (“Person”) to the extent prohibited for any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise), that is, or is owned 50 percent or more or controlled by one or more Persons that are:
|
(A)
|
subject to or the target of any sanctions administered or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S. Department of State and the U.S. Department of Commerce), , the United Nations Security Council (“UNSC”), the European Union (“EU”) or any EU member state, Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, Sanctions”), including without limitation individuals or entities named on OFAC’s Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List, and Sectoral Sanctions Identifications List, or
|
(B)
|
located, organized or resident in a country or territory that is, or whose government is, subject to or the target of Sanctions (including, without limitation, Crimea, Cuba, Iran, North Korea, and Syria) (each, a “Sanctioned Country”).
|
(ii)
|
The Company and its Subsidiaries and Consolidated Affiliated Entities will not, directly or indirectly, use the proceeds of the offering, or lend, contribute
|
(A)
|
to fund or facilitate any dealings, activities or business in, with or relating to any country, territory or Person that, at the time of such funding or facilitation, is (i) a Sanctioned Country or (ii) a Person subject to or the target of Sanctions, or which is owned 50 percent or more or controlled by any such Person; or
|
(B)
|
in any other manner that would result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).
|
(iii)
|
For the past five years, the Company and its Subsidiaries and Consolidated Affiliated Entities, including any respective director, officer or employee thereof, and, to the knowledge of the Company, any agent, affiliate or representative of the Company or any of its Subsidiaries and Consolidated Affiliated Entities, have not engaged in, are not now engaged in, and will not engage in, any dealings or transactions with or relating to any Person that at the time of the dealing or transaction, is or was subject to or the target of Sanctions or with, in, or relating to any Sanctioned Country.
|
(iv)
|
No investigation, inquiry, action or suit or proceeding by or before any Governmental Entity, involving any actual or alleged violations of any Sanctions by the Company and its Subsidiaries and Consolidated Affiliated Entities, is pending, or to the knowledge of the Company, threatened;
|
(aa)
|
Subsequent Changes. Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Company and its Subsidiaries and Consolidated Affiliated Entities have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Company has not purchased any of its issued and outstanding shares, nor declared, paid or otherwise made any dividend or distribution of any kind on issued shares in its capital; and (iii) there has not been any material change in the capital stock, short‑term debt or long‑term debt of the Company and its Subsidiaries and Consolidated Affiliated Entities.
|
(bb)
|
Title to Property. None of the Company and its Subsidiaries and Consolidated Affiliated Entities owns any real property. Each of the Company and its Subsidiaries and Consolidated Affiliated Entities has good and marketable title to all personal tangible property, in each case, owned by them which is material to the business of the Company and its Subsidiaries and Consolidated Affiliated Entities, taken as a whole, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries and Consolidated Affiliated Entities; and any real property and buildings
|
(cc)
|
Possession of Intellectual Property. Except as disclosed in the Registration Statement, the Time of Sale Prospectus, and the Prospectus, the Company and its Subsidiaries and Consolidated Affiliated Entities own, possess, have been authorized to use or can develop, obtain or acquire on reasonable terms sufficient trademarks, trade names, service marks, patents, patent rights, copyrights, domain names, licenses, approvals, trade secrets, inventions, technology, know-how and other intellectual property and similar rights, including registrations and applications for registration thereof (collectively, “Intellectual Property Rights”) necessary or material to the conduct of the business now conducted or proposed to be conducted as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus and the loss or expected expiration of any such Intellectual Property Rights would not, individually or in the aggregate, have a Material Adverse Effect. Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) there are no rights of third parties to any of the Intellectual Property Rights owned by the Company or its Subsidiaries and Consolidated Affiliated Entities; (ii) there is no infringement, misappropriation breach, default or other violation, or the occurrence of any event that with notice or the passage of time would constitute any of the foregoing, by the Company or its Subsidiaries and Consolidated Affiliated Entities or third parties of any of the Intellectual Property Rights of the Company or its Subsidiaries and Consolidated Affiliated Entities; (iii) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s or the Subsidiaries’ and Consolidated Affiliated Entities’ rights in or to, or claiming the violation of any of the terms of, any of the Company’s Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company, any Subsidiary or any Consolidated Affiliated Entity infringes, misappropriates or otherwise violates or conflicts with any Intellectual Property Rights of others and the Company is unaware of any other fact which would form a reasonable basis for any such claim; and (vi) none of the Intellectual Property Rights used by the Company or its Subsidiaries and Consolidated Affiliated Entities in their businesses has been obtained or is being used by the Company or its Subsidiaries and Consolidated Affiliated Entities in violation of any contractual obligation binding on the Company or its Subsidiaries and Consolidated Affiliated Entities, except in each case covered by clauses (i) through (vi) such as would not,
|
(dd)
|
Merger or Consolidation. Neither the Company nor any of its Subsidiaries or Consolidated Affiliated Entities is a party to any effective memorandum of understanding, letter of intent, definitive agreement or any similar agreements with respect to a merger or consolidation or an acquisition or disposition of assets, technologies, business units or businesses which is required to be described in the Registration Statement, the Time of Sale Prospectus and the Prospectus and which is not so described.
|
(ee)
|
Termination of Contracts. Neither the Company nor any of its Subsidiaries or Consolidated Affiliated Entities has sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements specifically referred to or described in the Time of Sale Prospectus and the Prospectus or filed as an exhibit to the Registration Statement, and no such termination or non-renewal has been threatened by the Company or any of its Subsidiaries or Consolidated Affiliated Entities, or to the knowledge of the Company, by any other party to any such contract or agreement.
|
(ff)
|
Absence of Labor Dispute; Compliance with Labor Law. No material labor dispute with the employees or third-party contractors of the Company or any of its Subsidiaries and Consolidated Affiliated Entities exists, or to the knowledge of the Company, is imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of the principal suppliers, service providers or business partners of the Company and its Subsidiaries and Consolidated Affiliated Entities that could reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries and Consolidated Affiliated Entities are and have been in all times in compliance with all applicable labor laws and regulations in all material respects, and no governmental investigation or proceedings with respect to labor law compliance exists, or to the knowledge of the Company, is imminent.
|
(gg)
|
Cybersecurity. (A) Except as would not have a Material Adverse Effect, there has been no security breach of, or unauthorized access to or disclosure of , or other compromise of the Company’s or its Subsidiaries’ and Consolidated Affiliated Entities’ information technology and computer systems, networks, hardware, software, or proprietary, confidential, personal or personally identifiable data and databases (including the proprietary, confidential, personal or personally identifiable data and information of their respective customers, employees, suppliers, vendors or any other third parties maintained, processed or stored by the Company and its Subsidiaries and Consolidated Affiliated Entities, and any such proprietary, confidential, personal or personally identifiable data processed or stored by third parties on behalf of the Company and its Subsidiaries and Consolidated Affiliated Entities) (collectively, “IT Systems and Data”); (B) to the knowledge of the
|
(hh)
|
Insurance. Each of the Company and its Subsidiaries and Consolidated Affiliated Entities are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as, in the Company’s reasonable judgment, are prudent and customary in the businesses in which they are engaged; neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities has been refused any insurance coverage sought or applied for; and neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
|
(ii)
|
Possession of Licenses and Permits. (i) Each of the Company and its Subsidiaries and Consolidated Affiliated Entities possesses all licenses, certificates, approvals, authorizations, declarations and permits issued by, and has made all necessary reports to and filings with, the appropriate national, federal, state, local or foreign Governmental Entities, for the Company and each of its Subsidiaries and Consolidated Affiliated Entities that are necessary to conduct their respective businesses (collectively, “Governmental Licenses”); (ii) each of the Company and its Subsidiaries and Consolidated Affiliated Entities is in material compliance with the terms and conditions of all such Governmental Licenses; (iii) all such Governmental Licenses are valid and in full force and effect and contain no materially burdensome restrictions or conditions not described in the Time of Sale Prospectus or the Prospectus; (iv) neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities has received any notice of proceedings relating to the revocation or modification of any such Governmental License; (v) neither the Company nor any of its Subsidiaries and Consolidated Affiliated Entities has any reason to believe that any such Governmental License will not be renewed in the
|
(jj)
|
Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance or sale of the Offered Securities hereunder or the consummation of the transactions contemplated by this Agreement, except such as have been already obtained or as may be required under the Securities Act and the applicable rules and regulations of the Commission thereunder, the rules of Nasdaq, state securities laws or the rules of Financial Industry Regulatory Authority
|
(kk)
|
Related Party Transactions. No material relationships or material transactions, direct or indirect, exist between any of the Company or its Subsidiaries and Consolidated Affiliated Entities on the one hand and their respective shareholders, sponsors, affiliates, officers and directors or any affiliates or family members of such persons on the other hand, except as described in the Time of Sale Prospectus and the Prospectus.
|
(ll)
|
PFIC Status. Subject to the assumptions, qualifications, determinations and projections set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus, the Company does not expect to be a passive foreign investment company (“PFIC”) within the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (the “Code”), for its current fiscal year or in the foreseeable future; provided, however, that if the Company were considered by a tax authority to be a “controlled foreign corporation” within the meaning of Section 957(a) of the Code following the completion of the transaction contemplated by this Agreement, the Company expects that it would be a PFIC for the fiscal year ending December 31, 2020.
|
(mm)
|
No Transaction or Other Taxes. Except for any net income, capital gain, profits or franchise taxes imposed on any Underwriter by the PRC, the United States, Hong Kong, or the Cayman Islands as a result of any present or former connection (other than any connection resulting solely from the transactions contemplated by this Agreement) between such Underwriter and the jurisdiction imposing such taxes, no transaction, stamp, capital or other documentary, issuance, registration, transaction, transfer, withholding or other taxes or duties are payable by or on behalf of the Underwriters to the government of the PRC, the United States, Hong Kong or the Cayman Islands or any political subdivision or taxing authority thereof in connection with (i) the creation, allotment, issuance, sale and delivery of the Offered Securities by the Company or the deposit of the Offered Shares with the Depositary and the Custodian, as defined in the Deposit Agreement (the “Custodian”), the issuance of the Offered ADSs by the Depositary, and the delivery of the Offered ADSs to or for the account of the Underwriters, (ii) the purchase from the Company of the Offered
|
(nn)
|
Independent Accountants. PricewaterhouseCoopers Zhong Tian LLP, whose reports on the consolidated financial statements of the Company are included in the Registration Statement, the Time of Sale Prospectus and the Prospectus, are independent registered public accountants with respect to the Company as required by the Securities Act and by the rules of the Public Company Accounting Oversight Board.
|
(oo)
|
Financial Statements. The financial statements included in the Registration Statement, the Time of Sale Prospectus and the Prospectus, together with the related notes and schedules thereto, present fairly in all material respects the financial position of the Company and the Subsidiaries and Consolidated Affiliated Entities as of the dates indicated and consolidated results of operations, cash flows and changes in shareholders’ equity of the Company for the periods specified and have been prepared in compliance as to form in all material respects with the applicable accounting requirements of the Securities Act and the related rules and regulations adopted by the Commission and in all material respects in conformity with United States generally accepted accounting principles applied on a consistent basis during the periods involved; the other financial data contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus are accurately and fairly presented in all material respects and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included in the Registration Statement, the Time of Sale Prospectus or the Prospectus that are not included as required; and the Company and the Subsidiaries and Consolidated Affiliated Entities do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations) not described in the Registration Statement, the Time of Sale Prospectus and the Prospectus.
|
(pp)
|
Critical Accounting Policies. The section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Time of Sale Prospectus and the Prospectus accurately and fairly describes in all material respects (i) the accounting policies that the Company believes are the most important in the portrayal of the Company’s financial condition and results of operations and that require management’s most difficult subjective or complex judgment; (ii) the material judgments and uncertainties affecting the application of critical accounting policies and estimates; (iii) the likelihood that materially different amounts would be reported under different conditions or using different assumptions and an explanation thereof; (iv) all material trends, demands, commitments and events
|
(qq)
|
Internal Controls. The Company and its Subsidiaries and Consolidated Affiliated Entities maintain a system of internal controls over financial reporting and accounting matters sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Time of Sale Prospectus and the Prospectus, since the end of the Company’s most recent audited fiscal year, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
(rr)
|
Compliance with the Sarbanes-Oxley Act. The Company has taken all necessary actions to ensure that, upon the effectiveness of the Registration Statement, it will be in compliance in all material respects with all provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder or implementing the provisions thereof (the “Sarbanes-Oxley Act”) that are then in effect and with which the Company is required to comply as of the effectiveness of the Registration Statement, and is actively taking steps to ensure that it will be in compliance with other provisions of the Sarbanes-Oxley Act not currently in effect, upon the effectiveness of such provisions, or which will become applicable to the Company at all times after the effectiveness of the Registration Statement.
|
(ss)
|
Absence of Accounting Issues. The Company has not received any notice, oral or written, from the board of directors stating that it is reviewing or investigating, and the Company’s independent registered public accounting firm has not recommended that the board of directors review or investigate, (i) adding to, deleting, changing the application of, or changing the Company’s disclosure with respect to, any of the Company’s material accounting policies or (ii) any matter which could result in a restatement of the Company’s financial statements for any annual or interim period during the current or prior three fiscal years.
|
(tt)
|
Operating and Other Company Data. All operating and other Company data disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus are true and accurate in all material respects.
|
(uu)
|
Third-party Data. Any statistical, industry-related and market-related data included in the Registration Statement, the Time of Sale Prospectus or Prospectus are based on or derived from sources that the Company reasonably and in good faith believes to be reliable and accurate, and such data agree with the sources from which they are derived, and the Company has obtained the written consent for the use of such data from such sources to the extent required.
|
(vv)
|
Registration Statement Exhibits. There are no legal or governmental proceedings or contracts or other documents of a character required to be described in the Registration Statement, the ADS Registration Statement or the Exchange Act Registration Statement or, in the case of documents, to be filed as exhibits to the Registration Statement, that are not described and filed as required.
|
(ww)
|
No Unapproved Marketing Documents. The Company has not distributed and, prior to the later to occur of any delivery date and completion of the distribution of the Offered Securities, will not distribute any offering material in connection with the offering and sale of the Offered Securities other than the preliminary prospectus filed as part of the Registration Statement as originally confidentially submitted or as part of any amendment thereto, the Prospectus and any issuer free writing prospectus to which the Representatives have consented, as set forth on Schedule II hereto.
|
(xx)
|
Payments of Dividends; Payments in Foreign Currency. Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) none of the Company nor any of its Subsidiaries and Consolidated Affiliated Entities is prohibited, directly or indirectly, from (A) paying any dividends or making any other distributions on its share capital, (B) making or repaying any loan or advance to the Company or any other Subsidiary or Consolidated Affiliated Entity or (C) transferring any of its properties or assets to the Company or any other Subsidiary or Consolidated Affiliated Entity; and (ii) all dividends and other distributions declared and payable upon the share capital of the Company or any of its Subsidiaries and Consolidated Affiliated Entities (A) may be converted into United States dollars, that may be freely transferred out of such Person’s jurisdiction of incorporation, without the consent, approval, authorization or order of, or qualification with, any Governmental Entity in such Person’s jurisdiction of incorporation or tax residence; and (B) are not and will not be subject to withholding, value added or other taxes under the currently effective laws and regulations of such Person’s jurisdiction of incorporation, without the necessity of obtaining any consents, approvals, authorizations, orders, registrations, clearances or qualifications of or with any Governmental Entity having jurisdiction over such Person.
|
(yy)
|
Compliance with PRC Overseas Investment and Listing Regulations. Each of the Company and its Subsidiaries and Consolidated Affiliated Entities has complied,
|
(zz)
|
M&A Rules. The Company is aware of and has been advised as to the content of the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors and any official clarifications, guidance, interpretations or implementation rules in connection with or related thereto (the “PRC Mergers and Acquisitions Rules”) jointly promulgated by the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Tax Administration, the State Administration of Industry and Commerce, the CSRC and SAFE on August 8, 2006 and amended by the Ministry of Commerce on June 22, 2009, including the provisions thereof which purport to require offshore special purpose entities formed for listing purposes and controlled directly or indirectly by PRC companies or individuals to obtain the approval of the CSRC prior to the listing and trading of their securities on an overseas stock exchange. The Company has received legal advice specifically with respect to the PRC Mergers and Acquisitions Rules from its PRC counsel, and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice. The issuance and sale of the Offered Securities, the listing and trading of the Offered ADSs on Nasdaq and the consummation of the transactions contemplated by this Agreement and the Deposit Agreement (i) are not and will not be, as of the date hereof or at the Closing Date or the applicable Option Closing Date, as the case may be, adversely affected by the PRC Mergers and Acquisitions Rules and (ii) do not require the prior approval of the CSRC.
|
(aaa)
|
Foreign Private Issuer. The Company is a “foreign private issuer” within the meaning of Rule 405 under the Securities Act.
|
(bbb)
|
Absence of Manipulation. None of the Company, the Subsidiaries and Consolidated Affiliated Entities or, to the knowledge of the Company, any of their respective directors, officers, affiliates or controlling persons has taken, directly or indirectly, any action which was designed to cause or result in, or that has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation
|
(ccc)
|
No Sale, Issuance and Distribution of Shares. Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, the Company has not sold, issued or distributed any Ordinary Shares during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants.
|
(ddd)
|
No Immunity. None of the Company, the Subsidiaries and Consolidated Affiliated Entities or any of their respective properties, assets or revenues has any right of immunity, under the laws of the Cayman Islands, Hong Kong, the PRC, the States of New York or California or the United States, from any legal action, suit or proceeding, the giving of any relief in any such legal action, suit or proceeding, set-off or counterclaim, the jurisdiction of any Cayman Islands, Hong Kong, PRC, New York, California or United States federal court, service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement or the Deposit Agreement; and, to the extent that the Company, any of the Subsidiaries and Consolidated Affiliated Entities or any of their respective properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, each of the Company and the Subsidiaries and Consolidated Affiliated Entities waives or will waive such right to the extent permitted by law and has consented to such relief and enforcement as provided in Section 13 of this Agreement and Section 7.7 of the Deposit Agreement.
|
(eee)
|
Validity of Choice of Law. The choice of the laws of the State of New York as the governing law of this Agreement and the Deposit Agreement does not contravene the laws of the Cayman Islands, Hong Kong and the PRC and will be observed and given effect to by the courts of the Cayman Islands and honored by courts in Hong Kong and the PRC. The Company has the power to submit, and pursuant to Section 13 of this Agreement and Section 7.7 of the Deposit Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each New York State and United States Federal court sitting in The City of New York (each, a “New York Court”) and has validly and irrevocably waived any objection to the laying of venue of any suit, action or proceeding brought in any such court; and the Company has the power to designate, appoint and empower, and pursuant to Section 13 of this Agreement and Section 7.7 of the Deposit Agreement, has legally, validly, effectively and irrevocably designated, appointed and empowered, an authorized agent for service of process in any action arising out of or relating to this Agreement, the
|
(fff)
|
Enforceability of Judgment. Any final judgment for a fixed or readily calculable sum of money rendered by a New York Court having jurisdiction under its own domestic laws in respect of any suit, action or proceeding against the Company based upon this Agreement or the Deposit Agreement and any instruments or agreements entered into for the consummation of the transactions contemplated herein and therein would be recognized and enforced against the Company, without re-examination or review of the merits of the cause of action in respect of which the original judgment was given or re-litigation of the matters adjudicated upon, by an action commenced on the foreign judgment debt of the Grand Court of the Cayman Islands and the courts of the PRC, provided that (i) with respect to courts of the Cayman Islands, such judgment (A) is given by a foreign court of competent jurisdiction, (B) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (C) is not in respect of taxes, a fine or a penalty, (D) the enforcement of the judgment would not be contrary to natural justice or the public policy of the Cayman Islands, (E) is a final judgment, and (ii) with respect to courts of the PRC, any application or request for recognition and execution of such judgment is subject to compliance with relevant civil procedural requirements in the PRC. The Company is not aware of any reason why the enforcement in the Cayman Islands or the PRC of such a New York Court judgment would be, as of the date hereof, contrary to public policy of the Cayman Islands or PRC.
|
(ggg)
|
Lending Relationship. Except as disclosed in the Time of Sale Prospectus and the Prospectus, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of any Underwriter and (ii) does not intend to use any of the proceeds from the sale of the Securities to repay any outstanding debt owed to any affiliate of any Underwriter.
|
(hhh)
|
Compliance with Foreign Laws. The Registration Statement, the Prospectus, the Time of Sale Prospectus and any preliminary prospectus comply in all material respects, and any amendments or supplements thereto will comply in all material respects, with any applicable laws or regulations of foreign jurisdictions in which the Prospectus, the Time of Sale Prospectus or any preliminary prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed ADS Program. No consent, approval, authorization or order of, or qualification with, any Governmental Entity, other than those obtained, is required in connection with the offering of the Directed ADSs in any jurisdiction where the Directed ADSs are being offered.
|
(iii)
|
Absence of Unlawful Influence. The Company has not offered, or caused the Designated Underwriter or its affiliates to offer, Directed ADSs to any person pursuant to the Directed ADS Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer’s or supplier’s level or type of business with the Company, or (ii) a trade journalist or publication to write or publish favorable information about the Company or its products.
|
(jjj)
|
Representation of Officers. Any certificate signed by any officer of the Company and delivered to the Representatives or counsel to the Underwriters in connection with the offering shall be deemed a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
|
(kkk)
|
Tax Filings. (i) The Company and each of its Subsidiaries and the Consolidated Affiliated Entities have filed all tax returns required to be filed through the date of this Agreement or have requested extensions thereof and have paid all taxes required to be paid thereon (except for cases where failure to file or pay would not have a Material Adverse Effect, or except for taxes currently being contested in good faith and for which adequate reserves have been made in the financial statements of the Company), and no tax deficiency has been determined adversely to the Company or any of its Subsidiaries and the Consolidated Affiliated Entities which has had (nor does the Company nor any of its Subsidiaries and the Consolidated Affiliated Entities have any notice or knowledge of any tax deficiency which could reasonably be expected to be determined adversely to the Company or its Subsidiaries and the Consolidated Affiliated Entities and which could reasonably be expected to have) a Material Adverse Effect. (ii) Any unpaid material income and corporation tax liability of the Company for any years not finally determined have been accrued on the Company’s financial statements in accordance with the United States generally accepted accounting principles. (iii) All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by the Company or any of the Subsidiaries and Consolidated Affiliated Entities as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRC.
|
(lll)
|
EGC Status. From the time of initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”). “Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
|
(mmm)
|
Testing-the-Waters Communication. The Company (A) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters Communications with the consent of the Representatives with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act, and (B) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications. The Company reconfirms that the Representatives have been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any other Written Testing-the-Waters Communications. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act.
|
(nnn)
|
As of the time of each sale of the Offered Securities in connection with the offering when the Prospectus is not yet available to prospective purchasers, no individual Written Testing-the-Waters Communication, when considered together with the Time of Sale Prospectus, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
|
3.
|
TERMS OF PUBLIC OFFERING. The Company is advised by you that the Underwriters propose to make a public offering of their respective portions of the Offered ADSs as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable. The Company is further advised by you that the Offered ADSs are to be offered to the public initially at US$[●] per ADS (the “Public Offering Price”) and to certain dealers selected by the Representatives at a price that represents a concession not in excess of US$[●] per ADS under the Public Offering Price.
|
4.
|
PAYMENT AND DELIVERY.
|
(a)
|
Payment for the Firm ADSs to be sold by the Company shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Firm ADSs for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on [●], 2020, or at such other time on the same or such other date, not later than [●], 2020, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the “Closing Date.”
|
(b)
|
Payment for any Additional ADSs shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Additional ADSs for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 2 or at such other time on the same or on such other date, in any event not later than [●], 2020 as shall be designated in writing by you.
|
(c)
|
The Offered ADSs to be delivered to each Underwriter shall be delivered in book entry form, and registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date or the applicable Option Closing Date, as the case may be. Such Offered ADSs shall be delivered by or on behalf of the Company to the Representatives through the facilities of the Depository Trust Company (“DTC”), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal or other immediately available funds to the account(s) specified by the Company to the Representatives on the Closing Date or Option Closing Date, as the case may be, or at such other time and date as shall be designated in writing by the Representatives. The Purchase Price payable by the Underwriters shall be reduced by (i) any transfer taxes paid by, or on behalf of, the Underwriters in connection with the transfer of the Offered Securities to the Underwriters and (ii) any withholding required by law.
|
5.
|
CONDITIONS TO THE UNDERWRITERS’ OBLIGATIONS. The obligations of the Company to sell the Offered Securities to the Underwriters and the several obligations of the Underwriters to purchase and pay for the Offered Securities on the Closing Date and each Option Closing Date are subject to the condition that the Registration Statement shall have become effective not later than [●] p.m. (New York City time) on the date hereof.
|
(a)
|
Subsequent to the execution and delivery of this Agreement and prior to the Closing Date or the applicable Option Closing Date, as the case may be,
|
(b)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, a certificate, dated such date, signed by a duly authorized executive officer of the Company, (i) to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date or the applicable Option Closing Date, as the case may be, and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before such date (and the officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened) and (ii) with respect to such other matters as the Representatives may reasonably require.
|
(c)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, a certificate, dated such date and signed by the chief financial officer of the Company with respect to certain operating data and financial figures contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus, in form and substance satisfactory to the Underwriters.
|
(d)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion and negative assurance letter of Wilson Sonsini Goodrich & Rosati, Professional Corporation, U.S. counsel for the Company,
|
(e)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion or opinions of Maples and Calder (Hong Kong) LLP, Cayman Islands counsel for the Company, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.
|
(f)
|
The Company shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion of King & Wood Mallesons, PRC counsel for the Company, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters (together with a consent letter, in form and substance reasonably satisfactory to the Underwriters, permitting the Company to provide a copy of such opinion to the Underwriters) and a copy of such opinion shall have been provided to the Underwriters.
|
(g)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion of Wilson Sonsini Goodrich & Rosati, Hong Kong counsel for the Company, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.
|
(h)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion and negative assurance letter of Simpson Thacher & Bartlett LLP, U.S. counsel for the Underwriters, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.
|
(i)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion of Fangda Partners, PRC counsel for the Underwriters, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.
|
(j)
|
The Underwriters shall have received on the Closing Date or the applicable Option Closing Date, as the case may be, an opinion of Emmet, Marvin & Matvin, LLP, counsel for the Depositary, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.
|
(k)
|
The Underwriters shall have received, on each of the date hereof and the Closing Date or the applicable Option Closing Date, as the case may be, a letter dated such date, in form and substance satisfactory to the Underwriters, from PricewaterhouseCoopers Zhong Tian LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to the Underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.
|
(l)
|
The “lock-up” letters, each substantially in the form of Exhibit A hereto, executed by the individuals and entities listed on Schedule IV relating to sales and certain other dispositions of Ordinary Shares or certain other securities, delivered to the Representatives on or before the date hereof (the “Lock-Up Letter”), shall be in full force and effect on the Closing Date.
|
(m)
|
There shall not have been any adverse legislative or regulatory developments in the PRC and the United States following the signing of this Agreement, which in the Representatives’ sole judgment in good faith after consultation with the Company, would make it inadvisable or impractical to proceed with the public offering or the delivery of the Offered Securities at the Closing Date or the applicable Optional Closing Date, as the case may be, on the terms and in the manner contemplated in this Agreement.
|
(n)
|
The Company and the Depositary shall have executed and delivered the Deposit Agreement and, in the case of the Company, a side letter (the “Depositary Side Letter”) addressed to the Depositary, instructing the Depositary not to accept any shareholder’s deposit of Ordinary Shares in the Company’s American Depositary Receipt facility or issue any new ADSs to any shareholder or any third party unless consented to by the Company, and the Deposit Agreement shall be in full force and effect on the Closing Date and the applicable Option Closing Date. The Company and the Depositary shall have taken all actions necessary to permit the deposit of the Offered Shares and the issuance of the Offered ADSs in accordance with the Deposit Agreement.
|
(o)
|
The Depositary shall have furnished or caused to be furnished to the Underwriters a certificate satisfactory to the Representatives of one of its authorized officers with respect to the deposit with it of the Offered Shares against issuance of the Offered ADSs, the execution, issuance, countersignature and delivery of the ADSs pursuant to the Deposit Agreement and such other matters related thereto as the Representatives may reasonably request.
|
(p)
|
The Offered ADSs shall have been approved for listing on Nasdaq, subject to only official notice of issuance.
|
(q)
|
If the Company elects to rely upon Rule 462(b) under the Securities Act, the Company shall have filed a Rule 462 Registration Statement with the Commission in compliance with Rule 462(b) promptly after 4:00 p.m., New York City time, on the date of this Agreement, and the Company shall have at the time of filing either paid to the Commission the filing fee for the Rule 462 Registration Statement or given irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Securities Act.
|
(r)
|
The Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective.
|
(s)
|
No stop order suspending the effectiveness of the Registration Statement, the ADS Registration Statement, any Rule 462 Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect and no proceedings for such purpose shall have been instituted or, to the Company’s knowledge, threatened by the Commission.
|
(t)
|
Financial Industry Regulatory Authority (“FINRA”) shall not have raised any objection with respect to the fairness or reasonableness of the underwriting, or other arrangements of the transactions contemplated hereby.
|
(u)
|
At or prior to the Closing Date or the applicable Option Closing Date, the ADSs shall be eligible for clearance and settlement through the facilities of the DTC.
|
(v)
|
On the Closing Date or the applicable Option Closing Date, as the case may be, the Representatives and counsel for the Underwriters shall have received such information, documents, certificates and opinions as they may reasonably require for the purposes of enabling them to pass upon the accuracy and completeness of any statement in the Registration Statement, the Time of Sale Prospectus and the Prospectus, issuance and sale of the Offered Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.
|
6.1
|
The Company, in addition to its other agreements and obligations hereunder, covenants with each Underwriter as follows:
|
(a)
|
To file the Prospectus with the Commission within the time periods specified by Rule 424(b) and Rule 430A under the Securities Act.
|
(b)
|
To furnish to you, without charge, copies of the Registration Statement and the ADS Registration Statement (including, in each case, exhibits thereto) and for delivery to each other Underwriter a copy of the Registration Statement and the ADS Registration Statement (in each case, without exhibits thereto) and to furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Sections 6.1(f) or 6.1(g)below, as many copies of the Time of Sale Prospectus, the Prospectus and any supplements and amendments thereto or to the Registration Statement as you may reasonably request.
|
(c)
|
Before amending or supplementing the Registration Statement, the ADS Registration Statement, the Time of Sale Prospectus or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.
|
(d)
|
To furnish to you a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which you reasonably object.
|
(e)
|
Not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder.
|
(f)
|
If the Time of Sale Prospectus is being used to solicit offers to buy the Offered Securities at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the
|
(g)
|
If, during such period after the first date of the public offering of the Offered Securities as in the opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which the Offered Securities may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law.
|
(h)
|
To endeavor to qualify the Offered Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request.
|
(i)
|
To advise you promptly and confirming such advice in writing, of any request by the Commission for amendments or supplements to the Registration Statement, the ADS Registration Statement, the Exchange Act Registration Statement, any Time of Sale Prospectus, Prospectus or free writing prospectus or for additional information with respect thereto, or of notice of institution of proceedings for, or the entry of a stop order, suspending the effectiveness of the Registration Statement or the ADS Registration Statement and, if the Commission should enter a stop order suspending the effectiveness of the Registration Statement or the ADS Registration Statement, to use its best efforts to obtain the lifting or removal of such order as soon as possible.
|
(j)
|
To make generally available to the Company’s security holders and to you as soon as practicable an earnings statement covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the date of this
|
(k)
|
During the period when the Prospectus is required to be delivered under the Securities Act, to file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and the rules and regulations of the Commission thereunder.
|
(l)
|
To apply the net proceeds to the Company from the sale of the Offered Securities in the manner set forth under the heading “Use of Proceeds” in the Time of Sale Prospectus and to file such reports with the Commission with respect to the sale of the Offered Securities and the application of the proceeds therefrom as may be required by Rule 463 under the Securities Act; not to invest, or otherwise use the proceeds received by the Company from its sale of the Offered Securities in such a manner (i) as would require the Company or any of the Subsidiaries and Consolidated Affiliated Entities to register as an investment company under the 1940 Act, and (ii) that would result in the Company being not in compliance with any applicable laws, rules and regulations of the State Administration of Foreign Exchange of the PRC.
|
(m)
|
Not to, and to cause each of its Subsidiaries and Consolidated Affiliated Entities not to, take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Offered Securities.
|
(n)
|
To comply with all applicable securities and other laws, rules and regulations in each jurisdiction in which the Directed ADSs are offered in connection with the Directed ADS Program.
|
(o)
|
In connection with the Directed ADS Program, to ensure that the Directed ADSs will be restricted to the extent required by FINRA or the FINRA rules from sale, transfer, assignment, pledge or hypothecation for a period of six months following the date of the effectiveness of the Registration Statement (it being understood that the Designated Underwriter will notify the Company as to which Participants will need to be so restricted); and to direct the transfer agent to place stop transfer restrictions upon such securities for such period of time.
|
(p)
|
The Company will comply with all applicable securities and other applicable laws, rules and regulations in each foreign jurisdiction in which the Directed ADSs are offered in connection with the Directed ADS Program.
|
(q)
|
To comply with the terms of the Deposit Agreement so that the Offered ADSs will be issued by the Depositary and delivered to each Underwriter’s participant account in DTC, pursuant to this Agreement on the Closing Date and each applicable Option Closing Date.
|
(r)
|
(i) Not to attempt to avoid any judgment in connection with this Agreement obtained by it, applied to it, or denied to it in a court of competent jurisdiction outside the Cayman Islands; (ii) following the consummation of the offering, to use its reasonable efforts to obtain and maintain all approvals required in the Cayman Islands to pay and remit outside the Cayman Islands all dividends declared by the Company and payable on the Ordinary Shares, if any; and (iii) to use its reasonable efforts to obtain and maintain all approvals, if any, required in the Cayman Islands for the Company to acquire sufficient foreign exchange for the payment of dividends and all other relevant purposes.
|
(s)
|
To comply with the PRC Overseas Investment and Listing Regulations, and to use its reasonable efforts to cause holders of its Ordinary Shares that are, or that are directly or indirectly owned or controlled by, Chinese residents or Chinese citizens, as known to the Company, to comply with the PRC Overseas Investment and Listing Regulations applicable to them, including, without limitation, requesting each such shareholder to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations (including any applicable rules and regulations of SAFE).
|
(t)
|
To promptly notify you if the Company ceases to be an Emerging Growth Company at any time prior to the later of (a) completion of the distribution of the Offered Securities within the meaning of the Securities Act and (b) completion of the Restricted Period (as defined in this Section 6).
|
(u)
|
If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication, when considered together with the Time of Sale Prospectus, included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify you and will promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
|
(v)
|
The Company will indemnify and hold harmless the Underwriters against any transaction, stamp, capital or other issuance, registration, documentary, transaction, transfer, withholding or other similar taxes or duties (other than taxes imposed on the net income of an Underwriter), including any interest and penalties, on the creation, allotment, issue and sale of the Offered Securities to the Underwriters and on the execution and delivery of, and the performance of the obligations (including the initial resale and delivery of the Offered Securities by the Underwriters) under, this Agreement or the Deposit Agreement and on bringing any such document within any jurisdiction. All payments to be made by the Company hereunder shall be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties or governmental charges whatsoever unless the
|
(w)
|
The Company, without the prior written consent of the Representatives on behalf of the Underwriters, will not, during the period ending 180 days after the date of the Prospectus (the “Restricted Period”), (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or American Depositary Shares beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) or any other securities so owned convertible into or exercisable or exchangeable for Ordinary Shares or American Depositary Shares or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares or American Depositary Shares, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Ordinary Shares, American Depositary Shares or such other securities, in cash or otherwise or (iii) file any registration statement with the Commission relating to the offering of any Ordinary Shares, American Depositary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares or American Depositary Shares.
|
(a)
|
The Company agrees (1) that it will not release any security holder from, or waive any provision of, any lockup or similar agreement between the Company and any security holder, (2) not to instruct its share registrar to give effect to any share transfers directly or indirectly by any shareholder during the Restricted Period, and (3) to enter into the Depositary Side Letter with the Depositary, and not to release the Depositary from any of its obligations set forth in, or otherwise amend, terminate or fail to enforce, the Depositary Side Letter or consent to any deposit during the Restricted Period unless with the prior written consent of the Representatives on behalf of the Underwriters.
|
(b)
|
If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in a Lock-up Letter for an officer or director of the Company and provides the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit B hereto through a major news service or in a registration statement publicly filed with the Commission in connection with a secondary offering, in each case at least two business days before the effective date of the release or waiver.
|
8.
|
COVENANTS OF THE UNDERWRITERS. Each Underwriter severally covenants with the Company not to take any action that would result in the Company being required to file with the Commission under Rule 433(d) a free writing prospectus prepared by or on behalf of such Underwriter that otherwise would not be required to be filed by the Company thereunder, but for the action of such Underwriter.
|
9.
|
INDEMNITY AND CONTRIBUTION.
|
(a)
|
The Company agrees to indemnify and hold harmless each Underwriter, each director, officer, employee, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, the ADS Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act, any road show as defined in Rule 433(h) under the Securities Act (a “road show”), or the Prospectus or any amendment or supplement thereto, or any Written Testing-the-Waters Communication caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each Underwriter and each such director, officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, director, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information is that described in Section 9(b).
|
(b)
|
Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration
|
(c)
|
In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 9(a) or 9(b), such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed in writing to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (i) the out-of-pocket fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act, (ii) the out-of-pocket fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either such Section, and that all such out-of-pocket fees and expenses shall be
|
(d)
|
To the extent the indemnification provided for in Section 9(a) or 9(b), is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand from the offering of the Offered Securities or (i) if the allocation provided by clause 9(e)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 9(e)(i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Offered Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Offered Securities (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the
|
(e)
|
The Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 9(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 9(d) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Offered Securities exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
|
(f)
|
The indemnity and contribution provisions contained in this Section 9 and the representations, warranties and other statements of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter, or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Offered Securities.
|
10.
|
DIRECTED ADS PROGRAM INDEMNIFICATION.
|
(a)
|
The Company agrees to indemnify and hold harmless the Designated Underwriter, each person, if any, who controls the Designated Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each
|
(b)
|
In case any proceeding (including any governmental investigation) shall be instituted involving any Designated Underwriter Entity in respect of which indemnity may be sought pursuant to Section 10(a), the Designated Underwriter Entity seeking indemnity shall promptly notify the Company in writing and the Company, upon request of the Designated Underwriter Entity, shall retain counsel reasonably satisfactory to the Designated Underwriter Entity to represent the Designated Underwriter Entity and any others the Company may designate in such proceeding and shall pay the out-of-pocket fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Designated Underwriter Entity shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Designated Underwriter Entity unless (i) the Company shall have agreed in writing to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Company and the Designated Underwriter Entity and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not, in respect of the legal expenses of the Designated Underwriter Entities in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the out-of-pocket fees and expenses of more than one separate firm (in addition to any local counsel) for all Designated Underwriter Entities. Any such separate firm for the Designated Underwriter Entities shall be designated in writing by the Designated Underwriter. The Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Company agrees to indemnify the Designated Underwriter Entities from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time a Designated Underwriter Entity shall have requested the Company to reimburse it for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Company agrees that it shall be liable for any settlement of any proceeding effected without
|
(c)
|
To the extent the indemnification provided for in Section 10(a) is unavailable to a Designated Underwriter Entity or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then the Company in lieu of indemnifying the Designated Underwriter Entity thereunder shall contribute to the amount paid or payable by the Designated Underwriter Entity as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Designated Underwriter Entities on the other hand from the offering of the Directed ADSs or (i) if the allocation provided by clause 10(c)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 10(c)(i) above but also the relative fault of the Company on the one hand and of the Designated Underwriter Entities on the other hand in connection with any statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Designated Underwriter Entities on the other hand in connection with the offering of the Directed ADSs shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Directed ADSs (before deducting expenses) and the total underwriting discounts and commissions received by the Designated Underwriter Entities for the Directed ADSs bear to the aggregate Public Offering Price of the Directed ADSs. If the loss, claim, damage or liability is caused by an untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact, the relative fault of the Company on the one hand and the Designated Underwriter Entities on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the Company or by the Designated Underwriter Entities and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
|
(d)
|
The Company and the Designated Underwriter Entities agree that it would not be just or equitable if contribution pursuant to this Section 10 were determined by pro rata allocation (even if the Designated Underwriter Entities were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 10(c). The amount paid
|
(e)
|
The indemnity and contribution provisions contained in this Section 10 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Designated Underwriter Entity or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Directed ADSs.
|
11.
|
TERMINATION. The Underwriters may terminate this Agreement by notice given by the Representatives to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade or other relevant exchanges, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States, the PRC or the Cayman Islands shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by United States Federal, New York State, Hong Kong, California State, PRC or Cayman Islands authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets, currency exchange rates or controls or any calamity or crisis that, in the judgment of the Representatives, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in the judgment of the Representatives, impracticable or inadvisable to proceed with the offer, sale or delivery of the Offered Securities on the terms and in the manner contemplated in the Time of Sale Prospectus or the Prospectus.
|
12.
|
EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
|
13.
|
SUBMISSION TO JURISDICTION; APPOINTMENT OF AGENT FOR SERVICE. The Company hereby irrevocably submits to the exclusive jurisdiction of the New York Courts in any suit or proceeding arising out of or relating to this Agreement, the Deposit Agreement, the Time of Sale Prospectus, the Prospectus, the Registration Statement, the ADS Registration Statement, the offering of the Offered Securities, or any transactions
|
14.
|
JUDGMENT CURRENCY. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder into any currency other than United States dollars, the parties hereto agree, to the fullest extent permitted by law, that the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Underwriters could purchase United States dollars with such other currency in The City of New York on the business day preceding that on which final judgment is given. The obligation of the Company pursuant to this Agreement with respect to any sum due from it to any Underwriter or any person controlling any Underwriter shall, notwithstanding any judgment in a currency other than United States dollars, not be discharged until the first business day following receipt by such Underwriter or controlling person of any sum in such other currency, and only to the extent that such Underwriter or controlling person may in accordance with normal banking procedures purchase United States dollars with such other currency. If the United States dollars so purchased are less than the sum originally due to such Underwriter or controlling person hereunder, the Company agrees as a separate obligation and notwithstanding any such judgment, to indemnify such Underwriter or controlling person against such loss. If the United States dollars so purchased are greater than the sum originally due to such Underwriter or controlling person hereunder, such Underwriter or controlling person agrees to pay to the Company, an amount equal to the excess of the dollars so purchased over the sum originally due to such Underwriter or controlling person hereunder.
|
15.
|
ENTIRE AGREEMENT. This Agreement, together with any contemporaneous written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the sale and purchase of the Offered Securities and the offering
|
16.
|
COUNTERPARTS. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
|
17.
|
APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.
|
18.
|
HEADINGS. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.
|
19.
|
NOTICES. All communications hereunder shall be in writing and effective only upon receipt and if to the Underwriters shall be delivered, mailed or sent to the Representatives at:
|
20.
|
PARTIES AT INTEREST. The Agreement set forth has been and is made solely for the benefit of the Underwriters, the Company and to the extent provided in Section 9 hereof the controlling persons, partners, directors and officers referred to in such sections and their respective successors, assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, from any of the Underwriters) shall acquire or have any rights under or by virtue of this Agreement.
|
21.
|
ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees to each of the following:
|
(a)
|
No Other Relationship. Each of the Representatives has been retained solely to act as an underwriter in connection with the sale of the Offered Securities and that no fiduciary, advisory or agency relationship between the Company and any of the Representatives has been created in respect of any of the transactions contemplated by this Agreement or the Prospectus, irrespective of whether any of the Representatives have advised or are advising the Company on other matters.
|
(b)
|
Arms’ Length Negotiations. The price of the Offered Securities set forth in this Agreement was established by the Company following discussions and arms-length negotiations with the Representatives and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement.
|
(c)
|
Absence of Obligation to Disclose. The Company has been advised that the each of the Representatives and their respective affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that each of the Representatives has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship.
|
(d)
|
Waiver. The Company waives, to the fullest extent permitted by law, any claims it may have against the each of the Representatives for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that none of the Representatives shall have any liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including shareholders, employees or creditors of the Company.
|
22.
|
RECOGNITION OF THE U.S. SPECIAL RESOLUTION REGIMES.
|
(a)
|
In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
|
(b)
|
In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this
|
23.
|
TRIAL BY JURY. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
|
24.
|
TAXES. If any sum payable by the Company under this Agreement is subject to tax in the hands of an Underwriter or taken into account as a receipt in computing the taxable income of that Underwriter (excluding net income taxes on underwriting commissions payable hereunder), the sum payable to the Underwriter under this Agreement shall be increased to such sum as will ensure that the Underwriter shall be left with the sum it would have had in the absence of such tax.
|
25.
|
SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Underwriters, the Company and their successors and assigns and any successor or assign of any substantial portion of the Company’s, and any of the Underwriters’ respective businesses and/or assets. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (a) the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of the directors, officers and employees of the Underwriters and each person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Securities Act and (b) the indemnity agreement of the Underwriters contained in Section 9(b) of this Agreement
|
26.
|
PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any section, subsection, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, subsection, paragraph or provision hereof. If any section, subsection, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
|
27.
|
AMENDMENTS. This Agreement may only be amended or modified in writing, signed by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.
|
Very truly yours,
|
|
|
|
Agora, Inc.
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
Underwriter
|
|
Number of Firm ADSs to be Purchased
|
|
Maximum Number of Additional ADSs to be Purchased
|
Morgan Stanley & Co. LLC
|
|
|
|
|
|
|
|
|
|
BofA Securities, Inc.
|
|
|
|
|
|
|
|
|
|
[●]
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
1.
|
Preliminary Prospectus issued [●], 2020
|
2.
|
[identify all free writing prospectuses filed by the Company under Rule 433(d) of the Securities Act]
|
3.
|
Public Offering Price: US$[●] per ADS
|
Name
|
|
Place of Incorporation
|
1. Agora Lab, Inc.
|
|
California, United States
|
|
|
|
2. Agora IO, Inc
|
|
Cayman Islands
|
|
|
|
3. Agora IO Hongkong Limited
|
|
Hong Kong
|
|
|
|
4. Dayin Network Technology Co., Ltd.
|
|
PRC
|
|
|
|
5. Agora.IO Ltd
|
|
United Kingdom
|
Name
|
|
Place of Incorporation
|
|
1. Shanghai Zhaoyan Network Technology Co., Ltd.
|
PRC
|
(a)
|
to the Underwriters pursuant to the Underwriting Agreement;
|
(b)
|
acquired in open market transactions after the completion of the Public Offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with subsequent sales of Ordinary Shares or other securities acquired in such open market transactions;
|
(c)
|
as a bona fide gift or charitable contribution;
|
(d)
|
to an immediate family member or a trust for the direct or indirect benefit of the undersigned or such immediate family member of the undersigned;
|
(e)
|
by will or intestacy;
|
(f)
|
pursuant to a domestic relations order, divorce decree or court order;
|
(g)
|
to limited partners, general partners, members, stockholders or holders of similar equity interests, or other business entity that controls, is controlled by or managed by or is under common control with the undersigned;
|
(h)
|
if the undersigned is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;
|
(i)
|
to the Company pursuant to agreements under which the Company has the option to repurchase the Undersigned’s Shares or a right of first refusal with respect to transfers of the Undersigned’s Shares;
|
(j)
|
to the Company through the exercise of a stock option granted under a stock incentive plan or stock purchase plan described in the Prospectus by the undersigned, and the receipt by the undersigned from the Company of Ordinary Shares upon such exercise, insofar as such option is outstanding as of the date of the Prospectus and the exercise period for such option expires during the Restricted Period; provided that the underlying Ordinary Shares shall continue to be subject to the restrictions on transfer set forth in this Lock-Up Letter;
|
(k)
|
through the disposition or forfeiture of the Undersigned’s Shares to the Company to satisfy any income, employment or tax withholding and remittance obligations of the undersigned or the employer of the undersigned in connection with the vesting of restricted stock, restricted stock units or other incentive awards settled in Ordinary Shares held by the undersigned; provided that such restricted stock, restricted stock units or other incentive awards were granted under a stock incentive plan, stock purchase plan or pursuant to a contractual employment arrangement described in the Prospectus and were outstanding as of the date of the Prospectus;
|
(l)
|
through the conversion or reclassification of the Company’s outstanding preferred shares or ordinary shares into Ordinary Shares in connection with the consummation of the Public Offering and in accordance with the Company’s amended and restated memorandum and articles of association that will become effective upon the completion of the Public Offering; provided that any such Ordinary Shares received upon such conversion or reclassification shall remain subject to the restrictions contained in this Lock-Up Letter;
|
(m)
|
with the prior written consent of each of Morgan Stanley & Co. LLC and BofA Securities, Inc. on behalf of the Underwriters; and
|
Very truly yours,
|
|
|
|
Name of Security Holder (Print exact name)
|
|
|
|
By:
|
|
|
Signature
|
|
|
If not signing in an individual capacity:
|
|
|
|
Name of Authorized Signatory (Print)
|
|
|
|
Title of Authorized Signatory (Print)
|
|
|
|
(indicate capacity of person signing if signing as custodian, trustee, or on behalf of an entity)
|
Very truly yours,
|
|
|
|
Acting severally on behalf of themselves and the several Underwriters named in Schedule I to the Underwriting Agreement
|
|
|
|
Morgan Stanley & Co. LLC
|
|
|
|
By:
|
|
|
Name
|
|
Title:
|
|
|
BofA Securities, Inc.
|
|
|
|
By:
|
|
|
Name
|
|
Title:
|
ARTICLE 1.
|
DEFINITIONS
|
1
|
|
SECTION 1.1.
|
American Depositary Shares.
|
1
|
|
SECTION 1.2.
|
Commission.
|
2
|
|
SECTION 1.3.
|
Company.
|
2
|
|
SECTION 1.4.
|
Custodian.
|
2
|
|
SECTION 1.5.
|
Deliver; Surrender.
|
2
|
|
SECTION 1.6.
|
Deposit Agreement.
|
2
|
|
SECTION 1.7.
|
Depositary; Depositary’s Office.
|
3
|
|
SECTION 1.8.
|
Deposited Securities.
|
3
|
|
SECTION 1.9.
|
Disseminate.
|
3
|
|
SECTION 1.10.
|
Dollars.
|
3
|
|
SECTION 1.11.
|
DTC.
|
3
|
|
SECTION 1.12.
|
Foreign Registrar.
|
3
|
|
SECTION 1.13.
|
Holder.
|
3
|
|
SECTION 1.14.
|
Owner.
|
4
|
|
SECTION 1.15.
|
Receipts.
|
4
|
|
SECTION 1.16.
|
Registrar.
|
4
|
|
SECTION 1.17.
|
Replacement.
|
4
|
|
SECTION 1.18.
|
Restricted Securities.
|
4
|
|
SECTION 1.19.
|
Securities Act of 1933.
|
4
|
|
SECTION 1.20.
|
Shares.
|
4
|
|
SECTION 1.21.
|
SWIFT.
|
5
|
|
SECTION 1.22.
|
Termination Option Event.
|
5
|
|
ARTICLE 2.
|
FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES
|
5
|
|
SECTION 2.1.
|
Form of Receipts; Registration and Transferability of American Depositary Shares.
|
5
|
|
SECTION 2.2.
|
Deposit of Shares.
|
6
|
|
SECTION 2.3.
|
Delivery of American Depositary Shares.
|
7
|
|
SECTION 2.4.
|
Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated American Depositary Shares.
|
7
|
|
SECTION 2.5.
|
Surrender of American Depositary Shares and Withdrawal of Deposited Securities.
|
8
|
|
SECTION 2.6.
|
Limitations on Delivery, Registration of Transfer and Surrender of American Depositary Shares.
|
9
|
|
SECTION 2.7.
|
Lost Receipts, etc.
|
10
|
|
SECTION 2.8.
|
Cancellation and Destruction of Surrendered Receipts.
|
10
|
|
SECTION 2.9.
|
DTC Direct Registration System and Profile Modification System.
|
10
|
|
ARTICLE 3.
|
CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES
|
11
|
|
SECTION 3.1.
|
Filing Proofs, Certificates and Other Information.
|
11
|
|
SECTION 3.2.
|
Liability of Owner for Taxes.
|
11
|
|
SECTION 3.3.
|
Warranties on Deposit of Shares.
|
12
|
|
SECTION 3.4.
|
Disclosure of Interests.
|
12
|
|
ARTICLE 4.
|
THE DEPOSITED SECURITIES
|
12
|
|
SECTION 4.1.
|
Cash Distributions.
|
12
|
|
SECTION 4.2.
|
Distributions Other Than Cash, Shares or Rights.
|
13
|
|
SECTION 4.3.
|
Distributions in Shares.
|
14
|
|
SECTION 4.4.
|
Rights.
|
14
|
|
SECTION 4.5.
|
Conversion of Foreign Currency.
|
15
|
|
SECTION 4.6.
|
Fixing of Record Date.
|
17
|
|
SECTION 4.7.
|
Voting of Deposited Shares.
|
17
|
|
SECTION 4.8.
|
Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities.
|
19
|
|
SECTION 4.9.
|
Reports.
|
20
|
|
SECTION 4.10.
|
Lists of Owners.
|
20
|
|
SECTION 4.11.
|
Withholding.
|
20
|
|
ARTICLE 5.
|
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY
|
21
|
|
SECTION 5.1.
|
Maintenance of Office and Register by the Depositary.
|
21
|
|
SECTION 5.2.
|
Prevention or Delay of Performance by the Company or the Depositary.
|
21
|
|
SECTION 5.3.
|
Obligations of the Depositary and the Company.
|
22
|
|
SECTION 5.4.
|
Resignation and Removal of the Depositary.
|
23
|
|
SECTION 5.5.
|
The Custodians.
|
24
|
|
SECTION 5.6.
|
Notices and Reports.
|
24
|
|
SECTION 5.7.
|
Distribution of Additional Shares, Rights, etc.
|
25
|
|
SECTION 5.8.
|
Indemnification.
|
25
|
|
SECTION 5.9.
|
Charges of Depositary.
|
26
|
|
SECTION 5.10.
|
Retention of Depositary Documents.
|
27
|
|
SECTION 5.11.
|
Exclusivity.
|
27
|
|
SECTION 5.12.
|
Information for Regulatory Compliance.
|
27
|
|
ARTICLE 6.
|
AMENDMENT AND TERMINATION
|
28
|
|
SECTION 6.1.
|
Amendment.
|
28
|
|
SECTION 6.2.
|
Termination.
|
28
|
|
ARTICLE 7.
|
MISCELLANEOUS
|
29
|
|
SECTION 7.1.
|
Counterparts; Signatures; Delivery.
|
29
|
|
SECTION 7.2.
|
No Third Party Beneficiaries.
|
30
|
|
SECTION 7.3.
|
Severability.
|
30
|
|
SECTION 7.4.
|
Owners and Holders as Parties; Binding Effect.
|
30
|
|
SECTION 7.5.
|
Notices.
|
30
|
|
SECTION 7.6.
|
Appointment of Agent for Service of Process; Submission to Jurisdiction; Jury Trial Waiver.
|
31
|
|
SECTION 7.7.
|
Waiver of Immunities.
|
31
|
|
SECTION 7.8.
|
Governing Law.
|
32
|
|
ARTICLE 2.
|
FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES
|
ARTICLE 3.
|
CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES
|
AGORA, INC.
|
||
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON,
|
||
as Depositary
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
AMERICAN DEPOSITARY SHARES
|
(Each American Depositary Share represents
|
Four deposited Shares)
|
1.
|
THE DEPOSIT AGREEMENT.
|
2.
|
SURRENDER OF AMERICAN DEPOSITARY SHARES AND WITHDRAWAL OF SHARES.
|
3.
|
REGISTRATION OF TRANSFER OF AMERICAN DEPOSITARY SHARES; COMBINATION AND SPLIT-UP OF RECEIPTS; INTERCHANGE OF CERTIFICATED AND UNCERTIFICATED AMERICAN DEPOSITARY SHARES.
|
4.
|
LIABILITY OF OWNER FOR TAXES.
|
5.
|
WARRANTIES ON DEPOSIT OF SHARES.
|
6.
|
FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.
|
7.
|
CHARGES OF DEPOSITARY.
|
8.
|
DISCLOSURE OF INTERESTS.
|
9.
|
TITLE TO AMERICAN DEPOSITARY SHARES.
|
10.
|
VALIDITY OF RECEIPT.
|
11.
|
REPORTS; INSPECTION OF TRANSFER BOOKS.
|
12.
|
DIVIDENDS AND DISTRIBUTIONS.
|
13.
|
RIGHTS.
|
14.
|
CONVERSION OF FOREIGN CURRENCY.
|
15.
|
RECORD DATES.
|
16.
|
VOTING OF DEPOSITED SHARES.
|
17.
|
TENDER AND EXCHANGE OFFERS; REDEMPTION, REPLACEMENT OR CANCELLATION OF DEPOSITED SECURITIES.
|
18.
|
LIABILITY OF THE COMPANY AND DEPOSITARY.
|
19.
|
RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF SUCCESSOR CUSTODIAN.
|
20.
|
AMENDMENT.
|
21.
|
TERMINATION OF DEPOSIT AGREEMENT.
|
22.
|
DTC DIRECT REGISTRATION SYSTEM AND PROFILE MODIFICATION SYSTEM.
|
23.
|
ARBITRATION; SETTLEMENT OF DISPUTES.
|
24.
|
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS; SUBMISSION TO JURISDICTION; JURY TRIAL WAIVER; WAIVER OF IMMUNITIES.
|
1
|
Documents Reviewed
|
1.1
|
The certificate of incorporation of the Company dated 28 November 2013 issued by the Registrar of Companies in the Cayman Islands.
|
1.2
|
The fourth amended and restated memorandum and articles of association of the Company as adopted by special resolution passed on 12 February 2020 (the "Pre‑IPO Memorandum and Articles").
|
1.3
|
The fifth amended and restated memorandum and articles of association of the Company as conditionally adopted by a special resolution passed on 19 June 2020 and effective immediately prior to the completion of the Company’s initial public offering of the ADSs representing the Shares (the "IPO Memorandum and Articles").
|
1.4
|
The written resolutions of the directors of the Company dated 15 June 2020 (the "Directors' Resolutions").
|
1.5
|
The written resolutions of the shareholders of the Company dated 19 June 2020 (the "Shareholders' Resolutions").
|
1.6
|
A certificate from a director of the Company, a copy of which is attached hereto (the "Director's Certificate").
|
1.7
|
A certificate of good standing dated 8 June 2020, issued by the Registrar of Companies in the Cayman Islands (the "Certificate of Good Standing").
|
1.8
|
The Registration Statement.
|
2
|
Assumptions
|
2.1
|
Copies of documents, conformed copies or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals.
|
2.2
|
All signatures, initials and seals are genuine.
|
2.3
|
There is nothing contained in the minute book or corporate records of the Company (which we have not inspected) which would or might affect the opinions set out below.
|
2.4
|
There is nothing under any law (other than the law of the Cayman Islands), which would or might affect the opinions set out below.
|
3
|
Opinion
|
3.1
|
The Company has been duly incorporated as an exempted company with limited liability and is validly existing and in good standing with the Registrar of Companies under the laws of the Cayman Islands.
|
3.2
|
The authorised share capital of the Company, with effect immediately prior to the completion of the Company’s initial public offering of the ADSs representing the Shares, will be US$100,000 divided into 1,000,000,000 shares comprising of (i) 800,000,000 Class A Ordinary Shares of a par value of US$0.0001 each, (ii) 76,179,938 Class B Ordinary Shares of a par value of US$0.0001 each, and (iii) 123,820,062 shares of a par value of US$0.0001 each of such class or classes (however designated) as the board of directors may determine in accordance with the IPO Memorandum and Articles.
|
3.3
|
The issue and allotment of the Shares have been duly authorised and when allotted, issued and paid for as contemplated in the Registration Statement, the Shares will be legally issued and allotted, fully paid and non-assessable. As a matter of Cayman law, a share is only issued when it has been entered in the register of members (shareholders).
|
3.4
|
The statements under the caption "Taxation" in the prospectus forming part of the Registration Statement, to the extent that they constitute statements of Cayman Islands law, are accurate in all material respects and that such statements constitute our opinion.
|
4
|
Qualifications
|
To:
|
Maples and Calder (Hong Kong) LLP
|
1
|
The Pre-IPO Memorandum and Articles remain in full and effect and, except as amended by the Shareholders' Resolutions adopting the IPO Memorandum and Articles, are otherwise unamended.
|
2
|
The Directors' Resolutions were duly passed in the manner prescribed in Pre-IPO Memorandum and Articles (including, without limitation, with respect to the disclosure of interests (if any) by directors of the Company) and have not been amended, varied or revoked in any respect.
|
3
|
The Shareholders' Resolutions were duly passed in the manner prescribed in the Fourth M&A and have not been amended, varied or revoked in any respect.
|
4
|
The authorised share capital of the Company is US$100,000 divided into (i) 817,082,009 ordinary shares of a par value of US$0.0001 each; (ii) 55,626,960 series A preferred shares of a par value of US$0.0001 each, (iii) 50,783,698 series B preferred shares of a par value of US$0.0001 each; (iv) 26,651,410 series B+ preferred shares of a par value of US$0.0001 each; (v) 34,793,413 series C preferred shares of a par value of US$0.0001 each; and (vi) 15,062,510 are designated as series C+ preferred shares of a par value of US$0.0001 each.
|
5
|
The authorised share capital of the Company, with effect immediately prior to the completion of the Company’s initial public offering of the ADSs representing the Shares, will be US$100,000 divided into 1,000,000,000 shares comprising of (i) 800,000,000 Class A Ordinary Shares of a par value of US$0.0001 each, (ii) 76,179,938 Class B Ordinary Shares of a par value of US$0.0001 each, and (iii) 123,820,062 shares of a par value of US$0.0001 each of such class or classes (however designated) as the board of directors may determine in accordance with the IPO Memorandum and Articles.
|
6
|
The shareholders of the Company have not restricted or limited the powers of the directors in any way and there is no contractual or other prohibition (other than as arising under
|
7
|
The directors of the Company at the date of the Directors' Resolutions and as at the date of this certificate were and are as follows:
|
8
|
Each director considers the transactions contemplated by the Registration Statement to be of commercial benefit to the Company and has acted bona fide in the best interests of the Company, and for a proper purpose of the Company in relation to the transactions which are the subject of the Opinion.
|
9
|
To the best of my knowledge and belief, having made due inquiry, the Company is not the subject of legal, arbitral, administrative or other proceedings in any jurisdiction that would have a material adverse effect on the business, properties, financial condition, results of operations or prospects of the Company. Nor have the directors or shareholders taken any steps to have the Company struck off or placed in liquidation, nor have any steps been taken to wind up the Company. Nor has any receiver been appointed over any of the Company's property or assets.
|
10
|
Upon the completion of the Company's initial public offering of the ADSs representing the Shares, the Company will not be subject to the requirements of Part XVIIA of the Companies Law (2020 Revision) of the Cayman Islands.
|
Signature:
|
/s/ Bin (Tony) Zhao
|
Name:
|
Bin (Tony) Zhao
|
Title:
|
Director
|
1.
|
Purchase of the Shares by the Purchaser.
|
(a)
|
The Company agrees to issue and sell the Shares to the Purchaser as provided in this agreement (the “Agreement”), and the Purchaser agrees to purchase from the Company the Shares at a price per Share (the “Purchase Price”) equal to the initial public offering price per ADS in the Qualified IPO (before any underwriting discounts and commissions) (the “ADS Price”) multiplied by the number of ADSs (or fraction thereof) representing one Class A Ordinary Share, pursuant to the exchange rate set forth in the Prospectus (as defined in the Underwriting Agreement) (the “IPO Price”). The number of Shares to be sold by the Company and purchased by the Purchaser shall equal the quotient of US$50,000,000.00 divided by the IPO Price (rounded down to the nearest whole Share).
|
(b)
|
Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Company to the Purchaser, at the location and at the time of the closing of the Qualified IPO, subject to the satisfaction of the conditions set forth herein. The time and date of such payment for the Shares is referred to herein as the “Closing Date.” Payment for the Shares to be purchased on the Closing Date shall be made against delivery to the Purchaser of the Shares registered in the name of the Purchaser, which Shares shall be uncertificated shares.
|
2.
|
Registration Rights. If the Purchaser is not already a party to the Company’s Amended and Restated Shareholders Agreement, dated February 12, 2020, by and among the Company, the shareholders of the Company named therein and the other parties thereto, as may be amended through the Closing Date (the “Rights Agreement”), the Rights Agreement shall be amended on the Closing Date to provide the
|
3.
|
Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date):
|
(a)
|
Organization and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Cayman Islands, with power and authority (corporate and other) to own its properties and conduct its business as now conducted, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under the laws of each jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to so qualify or be in good standing in any such jurisdiction would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. For purposes of this Section 3, “Material Adverse Effect” means (i) any material adverse effect, or any development involving a prospective material adverse effect, in or affecting the general affairs, management, assets (including intangible assets), liabilities, consolidated financial position, consolidated shareholders’ equity, prospects, or consolidated results of operations of the Company and its subsidiaries, taken as a whole, or (ii) any effect, or any development involving a prospective effect, that could adversely affect, prevent or delay, the ability of the Company to perform any of its covenants or obligations under this Agreement, the Rights Agreement, or the Rights Agreement Amendment, if applicable, to consummate the sale and issuance of the Shares or the other transactions contemplated hereby and thereby, or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(b)
|
Authorization; Enforceability. The Company has the requisite corporate power and authority to enter into this Agreement and the Rights Agreement Amendment, if applicable, and to perform its obligations hereunder and thereunder. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment, if applicable, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance and delivery of the Shares has been taken and no other corporate proceedings on the part of the Company, its officers, directors or shareholders are necessary to authorize and approve this Agreement, the Rights Agreement Amendment, if applicable, or the transactions contemplated hereby and thereby. This Agreement has, and as of the Closing Date the Rights Agreement Amendment, if applicable, will have, been duly executed and delivered by the Company and constitutes the valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent the indemnification provisions contained in the Rights Agreement may be limited by applicable federal or state securities laws.
|
(c)
|
Valid Issuance of Shares. The Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement and when appropriate entries are made in the register of members of the Company, will be validly issued, fully paid and non-assessable, and as of the
|
(d)
|
No Conflicts. The issue and sale of the Shares, the compliance by the Company with this Agreement and the Rights Agreement Amendment, if applicable, and the consummation of the transactions herein and therein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the memorandum and articles of association the Company, or (iii) result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the case of (i) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Shares by the Company or the consummation by the Company of the transactions contemplated by this Agreement or the Rights Agreement Amendment, if applicable, except (A) such consents, approvals, authorizations, orders, registrations or qualifications as may be required under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), or state securities or Blue Sky laws, or (B) where the failure to obtain any such consent, approval, authorization, order, registration or qualification would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
|
(e)
|
Description of Share Capital. As of the Closing Date, the statements set forth in the Time of Sale Prospectus (as defined in the Underwriting Agreement) and Prospectus (as defined in the Underwriting Agreement) under the caption “Description of Share Capital,” insofar as they purport to constitute a summary of the terms of the Company’s share capital, are accurate, complete and fair in all material respects.
|
(f)
|
Registration Statement. The Registration Statement, and any amendment thereto, including any information deemed to be included therein pursuant to the rules and regulations SEC promulgated under the Securities Act, complied (or, in the case of amendments filed after the date hereof, will comply) as of its filing date in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and did not (or, in the case of amendments filed after the date hereof, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date it is declared effective by the SEC, the Registration Statement, as so amended, and any related registration statements, will comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The preliminary prospectus included in the Registration Statement as of the date the Registration Statement is declared effective by the SEC, and any free writing prospectus related to the Registration Statement and any final prospectus related to the Registration Statement filed pursuant to Rule 424 promulgated under the Securities Act, in each case as of its date, will comply in all material respects with the requirements of the Securities Act and the rules and regulations promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
|
(g)
|
Brokers or Finders. The Company has not engaged any brokers, finders or agents such that the Purchaser will incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
|
(h)
|
Private Placement. Assuming the accuracy of the representations, warranties and covenants of the Purchaser set forth in Section 4 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchaser under this Agreement.
|
4.
|
Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as of the date hereof and as of the Closing Date that:
|
(a)
|
Organization and Qualification. The Purchaser is duly organized, validly existing and in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under, and by virtue of, the laws of the place of its incorporation or establishment.
|
(b)
|
Authorization; Enforceability. The Purchaser has the requisite corporate or other applicable organizational power and authority to enter into this Agreement and the Rights Agreement Amendment, if applicable, and to perform its obligations hereunder and thereunder. All corporate or other applicable organizational action on the part of the Purchaser, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment, if applicable, and the performance of all obligations of the Purchaser hereunder and thereunder has been taken and no other corporate or other applicable organizational proceedings on the part of the Purchaser, its officers, directors or shareholders are necessary to authorize and approve this Agreement, the Rights Agreement Amendment, if applicable, or the transactions contemplated hereby and thereby. This Agreement has, and as of the Closing Date the Rights Agreement Amendment, if applicable, will have, been duly executed and delivered by the Purchaser and constitutes the valid and legally binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent the indemnification provisions contained in the Rights Agreement may be limited by applicable federal or state securities laws.
|
(c)
|
[Intentionally Omitted].
|
(d)
|
Purchase Entirely for Own Account. The Purchaser hereby confirms that the Shares will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares. Except as otherwise disclosed to the Company on or prior to the Closing Date, the Purchaser has not been formed for the specific purpose of acquiring the Shares.
|
(e)
|
Disclosure of Information. The Purchaser believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. The Purchaser further
|
(f)
|
Restricted Securities. The Purchaser understands that the Shares are being issued in a transaction that was not, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Shares indefinitely and/or are subject to transfer restrictions for a specified “distribution compliance period” under Regulation S promulgated under the Securities Act, and, in each case, cannot be transferred unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Shares for resale. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.
|
(g)
|
Legends. The Purchaser understands that the Shares may bear one or all of the following legends:
|
i.
|
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.”
|
ii.
|
Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the Shares represented by the certificate so legended.
|
(h)
|
Eligible Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D and/or is not a “U.S. person” as defined in Rule 902(k) of Regulation S, in each case as promulgated under the Securities Act.
|
(i)
|
Non-U.S. Investors. If the Purchaser is a Non-U.S. person (as defined below), the Purchaser hereby represents and warrants to the Company as follows:
|
i.
|
This Agreement is made by the Company with the Purchaser, who is a Non-U.S. person, in reliance upon such Non-U.S. person’s representations, warranties and covenants made in this Section 4(i).
|
ii.
|
Such Non-U.S. person has been advised and acknowledges that:
|
A.
|
the Shares have not been, and when issued, will not be registered under the Securities Act, the securities laws of any state of the United States or the securities laws of any other country;
|
B.
|
in issuing and selling the Shares to such Non-U.S. person pursuant hereto, the Company is relying upon the “safe harbor” provided by Regulation S and/or on Section 4(a)(2) under the Securities Act;
|
C.
|
it is a condition to the availability of the Regulation S “safe harbor” that the Shares not be offered or sold in the United States or to a U.S. person until the expiration of a forty-day “distribution compliance period” following the Closing Date; and
|
D.
|
notwithstanding the foregoing, prior to the expiration of the forty-day “distribution compliance period” after the Closing Date (the “Restricted Period”), the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person.
|
iii.
|
As used herein, the term “United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia, and the term “U.S. person” (as defined in Regulation S) means:
|
A.
|
a natural person resident in the United States;
|
B.
|
any partnership or corporation organized or incorporated under the laws of the United States;
|
C.
|
any estate of which any executor or administrator is a U.S. person;
|
D.
|
any trust of which any trustee is a U.S. person;
|
E.
|
any agency or branch of a foreign entity located in the United States;
|
F.
|
any nondiscretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;
|
G.
|
any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated and (if an individual) resident in the United States; and
|
H.
|
a corporation or partnership organized under the laws of any foreign jurisdiction and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and
|
iv.
|
Such Non-U.S. person agrees that with respect to the Shares, until the expiration of the Restricted Period:
|
A.
|
such Non-U.S. person, its agents or its representatives have not and will not solicit offers to buy, offer for sale or sell any of the Shares or any beneficial interest therein in the United States or to or for the account of a U.S. person; and
|
B.
|
notwithstanding the foregoing, the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person; and
|
C.
|
such Non-U.S. person shall not engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act.
|
v.
|
Such Non-U.S. person has not engaged, nor is it aware that any party has engaged, and such Non-U.S. person will not engage or cause any third party to engage, in any directed selling efforts (as such term is defined in Regulation S) in the United States with respect to the Shares.
|
vi.
|
Such Non-U.S. person: (A) is domiciled and has its principal place of business outside the United States; (B) certifies it is not a U.S. person and is not acquiring the Shares for the account or benefit of any U.S. person; and (C) at the time of the Closing Date, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection therewith will be located outside the United States.
|
vii.
|
At the time of offering to such Non-U.S. person and communication of such Non-U.S. person’s order to purchase the Shares and at the time of such Non-U.S. Person’s execution of this Agreement, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection therewith were located outside the United States.
|
viii.
|
Such Non-U.S. person is not a “distributor” (as defined in Regulation S) or a “dealer” (as defined in the Securities Act).
|
ix.
|
Such Non-U.S. person acknowledges that the Company shall make a notation in its share register regarding the restrictions on transfer set forth in this Section 4(i) and shall transfer such shares on the books of the Company only to the extent consistent therewith. In particular, such Non-U.S. person acknowledges that the Company shall refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration.
|
x.
|
Such Purchaser understands and agrees that each certificate held by such Non-U.S. person representing the Shares, or any other securities issued in respect of the Shares upon any share split, dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by this Agreement or under applicable state securities laws):
|
xi.
|
If the Purchaser is a Non-U.S. person, the Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (A) the legal requirements within its jurisdiction for the purchase of the Shares, (B) any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. The Purchaser’s subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of the Purchaser’s jurisdiction.
|
(j)
|
Investment Experience. The Purchaser acknowledges that it is investing in securities of companies in the development stage and that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.
|
(k)
|
No General Solicitation. Neither the Purchaser nor any of its officers, directors, employees, agents, stockholders, partners or affiliates has been directly or indirectly solicited through any public advertising or general solicitation (including by means of the Registration Statement or prospectus contained therein) and did not learn of and become interested in the transaction contemplated in this Agreement by means of the Registration Statement or prospectus contained therein. The Purchaser hereby further confirms that it or an affiliate of the Purchaser had a substantive
|
(l)
|
Brokers or Finders. The Purchaser has not engaged any brokers, finders or agents such that the Company will incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
|
5.
|
Conditions of Purchaser’s Obligations. The obligation of the Purchaser to purchase the Shares on the Closing Date as provided herein is subject to the following conditions:
|
(a)
|
Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct on the date hereof and on and as of the Closing Date (except to the extent any such representations and warranties expressly relate to an earlier date, in which case, as of such earlier date).
|
(b)
|
Public Offering ADSs. The Underwriters shall have purchased, immediately prior to the purchase of the Shares by the Purchaser hereunder, the Firm ADSs (as defined in the Underwriting Agreement) at the ADS Price (less any underwriting discounts or commissions).
|
(c)
|
No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(d)
|
Amendment to Rights Agreement. If applicable, the Company, the Purchaser and the parties to the Rights Agreement required to amend the Rights Agreement shall have executed and delivered to the Company and the Purchaser signature pages to the Rights Agreement Amendment, and the Rights Agreement, as amended, shall be in full force and effect.
|
6.
|
Conditions of Company’s Obligations. The obligation of the Company to issue and sell the Shares on the Closing Date as provided herein is subject to the following conditions:
|
(a)
|
Representations and Warranties. The representations and warranties of the Purchaser contained herein shall be true and correct on the date hereof and on and as of the Closing Date (except to the extent any such representations and warranties expressly relate to an earlier date, in which case, as of such earlier date).
|
(b)
|
Public Offering Shares. The Underwriters shall have purchased, immediately prior to the issuance and sale of the Shares by the Company hereunder, the Firm ADSs (as defined in the Underwriting Agreement) at the ADS Price (less any underwriting discounts or commissions).
|
(c)
|
No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or
|
(d)
|
Lock-Up Agreement. The Purchaser shall have executed and delivered to the Company a lock-up agreement in substantially the form provided to the Purchaser by the Company (the “Lock-Up Agreement”), and the Lock-Up Agreement shall be in full force and effect.
|
7.
|
Termination. This Agreement shall automatically terminate upon the earliest to occur of (i) the written consent of each of the Company and the Purchaser, (ii) the withdrawal by the Company of the Registration Statement, (iii) following the execution of the Underwriting Agreement, the termination of such Underwriting Agreement in accordance with its terms, and (iv) July 15, 2020, if the closing of the Qualified IPO has not occurred on or prior to such date.
|
8.
|
Covenants. The Company undertakes to use its reasonable efforts to (i) have the Company’s register of members updated as promptly as practicable after the Closing Date to reflect the issuance of the Shares, and (ii) cooperate with the Purchaser in good faith to facilitate the conversion of the Shares into the corresponding number of ADSs upon the request of the Purchaser in accordance with applicable securities laws and the terms of the deposit agreement with respect to the ADSs. The Company further agrees to pay the ADS issuance fee, if any, collected by the depositary, upon the initial issuance of the ADSs upon the Purchaser’s deposit of the Shares, whether such deposit and issuance occurs in connection with the sale of such ADSs or otherwise.
|
9.
|
Miscellaneous.
|
(a)
|
[Intentionally Omitted].
|
(b)
|
Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication.
|
i.
|
If to the Company:
|
ii.
|
If to the Purchaser:
|
(c)
|
Assignment. No party shall have the right to assign any of its rights or obligations under this Agreement without, in the case of the Purchaser, the prior written consent of the Company and in the case of the Company, the Purchaser.
|
(d)
|
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
|
(e)
|
Jurisdiction; Venue. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in New York County in the State of New York (or in the event of exclusive federal jurisdiction, the courts of the Southern District of New York).
|
(f)
|
Waiver of Jury Trial. The Company and the Purchaser hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
|
(g)
|
Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assignees. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person, other than the parties hereto and their respective successors and assignees, any right or remedy under or in respect of this Agreement to enforce, make or pursue any claim, or enjoy any benefit under any provision contained in this Agreement.
|
(h)
|
Survival. The respective representations, warranties and agreements of the Company and the Purchasers contained in this Agreement shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or the Purchaser.
|
(i)
|
Entire Agreement. This Agreement, the Rights Agreement Amendment, if applicable, and the Lock-Up Agreement constitute the full and entire understanding and agreement between the parties with
|
(j)
|
Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes
|
(k)
|
Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
|
(l)
|
Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
|
Very truly yours,
|
|
|
|
AGORA, INC.
|
|
|
|
|
|
By:
|
/s/ Bin (Tony) Zhao
|
|
Name: Bin (Tony) Zhao
|
|
Title: Chief Executive Officer and Chairman
|
Accepted as of the date hereof
|
|
|
|
COATUE CPP 10 LLC
|
|
By: Coatue Management, L.L.C., its investment manager
|
|
|
|
|
|
By: /s/ Zachary Feingold
|
|
Name: Zachary Feingold
|
|
Title: Authorized Signatory
|
|
COMPANY:
|
Agora, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name: ZHAO Bin
|
|
|
Title: Director
|
FOUNDER:
|
|
|
|
|
|
|
|
|
|
ZHAO Bin
|
|
PREFERRED HOLDER:
|
SIG China Investments Master Fund III, LLLP
|
|
|
|
|
|
SIG Asia Investment, LLLP,
Its Authorized Agent |
|
|
|
|
|
By: Heights Capital Management, Inc.,
Its Authorized Agent |
|
|
|
|
|
|
|
|
By:
|
|
|
Name: Michael Spolan
|
|
|
Title: General Counsel
|
|
|
|
|
|
|
|
|
|
|
PREFERRED HOLDER:
|
SIG Global China Fund I, LLLP
|
|
|
|
|
|
SIG Asia Investment, LLLP,
Its Authorized Agent |
|
|
|
|
|
By: Heights Capital Management, Inc.,
Its Authorized Agent |
|
|
|
|
|
|
|
|
By:
|
|
|
Name: Michael Spolan
|
|
|
Title: General Counsel
|
PREFERRED HOLDER:
|
IDG Technology Venture Investment V, L.P.
|
|
|
|
|
|
By: IDG Technology Venture Investment V, LLC, its General Partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Shunwei Technology II Limited
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Duowan Entertainment Corp.
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT FUND II, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By :
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
|
|
|
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By :
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
Director/Authorised Signatory
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT TOP UP FUND, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By :
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
|
|
|
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By :
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
Director/Authorised Signatory
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT
SPECIAL OPPORTUNITY FUND II, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By :
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
|
|
|
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By :
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
Title: Authorised Signatory
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT FUND IV
CO-INVESTMENT, L.P.,
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By :
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
|
|
|
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By :
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
Title: Authorised Signatory
|
PREFERRED HOLDER:
|
Evolution Special Opportunity Fund I, L.P.
|
|
|
a Cayman Islands exempted limited partnership
By: MSVC GP Limited,
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title: Director / Authorized Signatory
|
|
|
|
|
|
|
|
|
|
|
PREFERRED HOLDER:
|
Evolution Fund I Co-investment, L.P.
|
|
|
a Cayman Islands exempted limited partnership
By: MSVC GP Limited,
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title: Director / Authorized Signatory
|
PREFERRED HOLDER:
|
GGV CAPITAL IV L.P.
|
|
|
By: GGV Capital IV L.L.C., its General Partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
PREFERRED HOLDER:
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
|
By: GGV Capital IV L.L.C., its General Partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
CRCM Opportunity Fund, L.P.
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Yan Capital L.P.
|
|
|
|
|
|
|
|
|
By: Yan Capital Management Ltd.
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Coatue PE Asia XVI LLC
|
|
|
By: Coatue Management, L.L.C., its investment manager
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Internet Fund VI Pte. Ltd.
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
CPP PURCHASER:
|
[Purchaser name]
|
|
|
By:
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
CPP PURCHASER:
|
[Purchaser name]
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
1.
|
Purchase of the Shares by the Purchaser.
|
(a)
|
The Company agrees to issue and sell the Shares to the Purchaser as provided in this agreement (the “Agreement”), and the Purchaser agrees to purchase from the Company the Shares at a price per Share (the “Purchase Price”) equal to the initial public offering price per ADS in the Qualified IPO (before any underwriting discounts and commissions) (the “ADS Price”) multiplied by the number of ADSs (or fraction thereof) representing one Class A Ordinary Share, pursuant to the exchange rate set forth in the Prospectus (as defined in the Underwriting Agreement) (the “IPO Price”). The number of Shares to be sold by the Company and purchased by the Purchaser shall equal the quotient of US$30,000,000.00 divided by the IPO Price (rounded down to the nearest whole Share).
|
(b)
|
Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Company to the Purchaser, at the location and at the time of the closing of the Qualified IPO, subject to the satisfaction of the conditions set forth herein. The time and date of such payment for the Shares is referred to herein as the “Closing Date.” Payment for the Shares to be purchased on the Closing Date shall be made against delivery to the Purchaser of the Shares registered in the name of the Purchaser, which Shares shall be uncertificated shares.
|
2.
|
Registration Rights. If the Purchaser is not already a party to the Company’s Amended and Restated Shareholders Agreement, dated February 12, 2020, by and among the Company, the shareholders of the Company named therein and the other parties thereto, as may be amended through the Closing Date (the “Rights Agreement”), the Rights Agreement shall be amended on the Closing Date to provide the
|
3.
|
Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date):
|
(a)
|
Organization and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Cayman Islands, with power and authority (corporate and other) to own its properties and conduct its business as now conducted, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under the laws of each jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to so qualify or be in good standing in any such jurisdiction would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. For purposes of this Section 3, “Material Adverse Effect” means (i) any material adverse effect, or any development involving a prospective material adverse effect, in or affecting the general affairs, management, assets (including intangible assets), liabilities, consolidated financial position, consolidated shareholders’ equity, prospects, or consolidated results of operations of the Company and its subsidiaries, taken as a whole, or (ii) any effect, or any development involving a prospective effect, that could adversely affect, prevent or delay, the ability of the Company to perform any of its covenants or obligations under this Agreement, the Rights Agreement, or the Rights Agreement Amendment, if applicable, to consummate the sale and issuance of the Shares or the other transactions contemplated hereby and thereby, or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(b)
|
Authorization; Enforceability. The Company has the requisite corporate power and authority to enter into this Agreement and the Rights Agreement Amendment, if applicable, and to perform its obligations hereunder and thereunder. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment, if applicable, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance and delivery of the Shares has been taken and no other corporate proceedings on the part of the Company, its officers, directors or shareholders are necessary to authorize and approve this Agreement, the Rights Agreement Amendment, if applicable, or the transactions contemplated hereby and thereby. This Agreement has, and as of the Closing Date the Rights Agreement Amendment, if applicable, will have, been duly executed and delivered by the Company and constitutes the valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent the indemnification provisions contained in the Rights Agreement may be limited by applicable federal or state securities laws.
|
(c)
|
Valid Issuance of Shares. The Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement and when appropriate entries are made in the register of members of the Company, will be validly issued, fully paid and non-assessable, and as of the
|
(d)
|
No Conflicts. The issue and sale of the Shares, the compliance by the Company with this Agreement and the Rights Agreement Amendment, if applicable, and the consummation of the transactions herein and therein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the memorandum and articles of association the Company, or (iii) result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the case of (i) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Shares by the Company or the consummation by the Company of the transactions contemplated by this Agreement or the Rights Agreement Amendment, if applicable, except (A) such consents, approvals, authorizations, orders, registrations or qualifications as may be required under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), or state securities or Blue Sky laws, or (B) where the failure to obtain any such consent, approval, authorization, order, registration or qualification would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
|
(e)
|
Description of Share Capital. As of the Closing Date, the statements set forth in the Time of Sale Prospectus (as defined in the Underwriting Agreement) and Prospectus (as defined in the Underwriting Agreement) under the caption “Description of Share Capital,” insofar as they purport to constitute a summary of the terms of the Company’s share capital, are accurate, complete and fair in all material respects.
|
(f)
|
Registration Statement. The Registration Statement, and any amendment thereto, including any information deemed to be included therein pursuant to the rules and regulations SEC promulgated under the Securities Act, complied (or, in the case of amendments filed after the date hereof, will comply) as of its filing date in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and did not (or, in the case of amendments filed after the date hereof, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date it is declared effective by the SEC, the Registration Statement, as so amended, and any related registration statements, will comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The preliminary prospectus included in the Registration Statement as of the date the Registration Statement is declared effective by the SEC, and any free writing prospectus related to the Registration Statement and any final prospectus related to the Registration Statement filed pursuant to Rule 424 promulgated under the Securities Act, in each case as of its date, will comply in all material respects with the requirements of the Securities Act and the rules and regulations promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
|
(g)
|
Brokers or Finders. The Company has not engaged any brokers, finders or agents such that the Purchaser will incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
|
(h)
|
Private Placement. Assuming the accuracy of the representations, warranties and covenants of the Purchaser set forth in Section 4 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchaser under this Agreement.
|
4.
|
Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as of the date hereof and as of the Closing Date that:
|
(a)
|
Organization and Qualification. The Purchaser is duly organized, validly existing and in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under, and by virtue of, the laws of the place of its incorporation or establishment.
|
(b)
|
Authorization; Enforceability. The Purchaser has the requisite corporate or other applicable organizational power and authority to enter into this Agreement and the Rights Agreement Amendment, if applicable, and to perform its obligations hereunder and thereunder. All corporate or other applicable organizational action on the part of the Purchaser, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment, if applicable, and the performance of all obligations of the Purchaser hereunder and thereunder has been taken and no other corporate or other applicable organizational proceedings on the part of the Purchaser, its officers, directors or shareholders are necessary to authorize and approve this Agreement, the Rights Agreement Amendment, if applicable, or the transactions contemplated hereby and thereby. This Agreement has, and as of the Closing Date the Rights Agreement Amendment, if applicable, will have, been duly executed and delivered by the Purchaser and constitutes the valid and legally binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent the indemnification provisions contained in the Rights Agreement may be limited by applicable federal or state securities laws.
|
(c)
|
No Conflicts. The purchase of the Shares, the compliance by the Purchaser with this Agreement and the Rights Agreement Amendment and the consummation of the transactions herein and therein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Purchaser or any of its subsidiaries is a party or by which the Purchaser or any of its subsidiaries is bound or to which any of the property or assets of the Purchaser or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the corporate charter documents of the Purchaser, or (iii) result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Purchaser or any of its subsidiaries or any of their properties, except in the case of (i) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the purchase of the Shares by the Purchaser or the consummation by the Purchaser of the transactions contemplated by this Agreement or the
|
(d)
|
Purchase Entirely for Own Account. The Purchaser hereby confirms that the Shares will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares. Except as otherwise disclosed to the Company on or prior to the Closing Date, the Purchaser has not been formed for the specific purpose of acquiring the Shares.
|
(e)
|
Disclosure of Information. The Purchaser believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares.
|
(f)
|
Restricted Securities. The Purchaser understands that the Shares are being issued in a transaction that was not, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Shares indefinitely and/or are subject to transfer restrictions for a specified “distribution compliance period” under Regulation S promulgated under the Securities Act, and, in each case, cannot be transferred unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Shares for resale. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.
|
(g)
|
Legends. The Purchaser understands that the Shares may bear one or all of the following legends:
|
i.
|
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.”
|
ii.
|
Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the Shares represented by the certificate so legended.
|
(h)
|
Eligible Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D and/or is not a “U.S. person” as defined in Rule 902(k) of Regulation S, in each case as promulgated under the Securities Act.
|
(i)
|
Non-U.S. Investors. If the Purchaser is a Non-U.S. person (as defined below), the Purchaser hereby represents and warrants to the Company as follows:
|
i.
|
This Agreement is made by the Company with the Purchaser, who is a Non-U.S. person, in reliance upon such Non-U.S. person’s representations, warranties and covenants made in this Section 4(i).
|
ii.
|
Such Non-U.S. person has been advised and acknowledges that:
|
A.
|
the Shares have not been, and when issued, will not be registered under the Securities Act, the securities laws of any state of the United States or the securities laws of any other country;
|
B.
|
in issuing and selling the Shares to such Non-U.S. person pursuant hereto, the Company is relying upon the “safe harbor” provided by Regulation S and/or on Section 4(a)(2) under the Securities Act;
|
C.
|
it is a condition to the availability of the Regulation S “safe harbor” that the Shares not be offered or sold in the United States or to a U.S. person until the expiration of a forty-day “distribution compliance period” following the Closing Date; and
|
D.
|
notwithstanding the foregoing, prior to the expiration of the forty-day “distribution compliance period” after the Closing Date (the “Restricted Period”), the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person.
|
iii.
|
As used herein, the term “United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia, and the term “U.S. person” (as defined in Regulation S) means:
|
A.
|
a natural person resident in the United States;
|
B.
|
any partnership or corporation organized or incorporated under the laws of the United States;
|
C.
|
any estate of which any executor or administrator is a U.S. person;
|
D.
|
any trust of which any trustee is a U.S. person;
|
E.
|
any agency or branch of a foreign entity located in the United States;
|
F.
|
any nondiscretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;
|
G.
|
any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated and (if an individual) resident in the United States; and
|
H.
|
a corporation or partnership organized under the laws of any foreign jurisdiction and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.
|
iv.
|
Such Non-U.S. person agrees that with respect to the Shares, until the expiration of the Restricted Period:
|
A.
|
such Non-U.S. person, its agents or its representatives have not and will not solicit offers to buy, offer for sale or sell any of the Shares or any beneficial interest therein in the United States or to or for the account of a U.S. person; and
|
B.
|
notwithstanding the foregoing, the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person; and
|
C.
|
such Non-U.S. person shall not engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act.
|
v.
|
Such Non-U.S. person has not engaged, nor is it aware that any party has engaged, and such Non-U.S. person will not engage or cause any third party to engage, in any directed selling efforts (as such term is defined in Regulation S) in the United States with respect to the Shares.
|
vi.
|
Such Non-U.S. person: (A) is domiciled and has its principal place of business outside the United States; (B) certifies it is not a U.S. person and is not acquiring the Shares for the account or benefit of any U.S. person; and (C) at the time of the Closing Date, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection therewith will be located outside the United States.
|
vii.
|
At the time of offering to such Non-U.S. person and communication of such Non-U.S. person’s order to purchase the Shares and at the time of such Non-U.S. Person’s execution of this Agreement, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection therewith were located outside the United States.
|
viii.
|
Such Non-U.S. person is not a “distributor” (as defined in Regulation S) or a “dealer” (as defined in the Securities Act).
|
ix.
|
Such Non-U.S. person acknowledges that the Company shall make a notation in its share register regarding the restrictions on transfer set forth in this Section 4(i) and shall transfer such shares on the books of the Company only to the extent consistent therewith. In particular, such Non-U.S. person acknowledges that the Company shall refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration.
|
x.
|
Such Purchaser understands and agrees that each certificate held by such Non-U.S. person representing the Shares, or any other securities issued in respect of the Shares upon any share split, dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by this Agreement or under applicable state securities laws):
|
xi.
|
If the Purchaser is a Non-U.S. person, the Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (A) the legal requirements within its jurisdiction for the purchase of the Shares, (B) any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. The Purchaser’s
|
(j)
|
Investment Experience. The Purchaser acknowledges that it is investing in securities of companies in the development stage and that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.
|
(k)
|
No General Solicitation. Neither the Purchaser nor any of its officers, directors, employees, agents, stockholders, partners or affiliates has been directly or indirectly solicited through any public advertising or general solicitation (including by means of the Registration Statement or prospectus contained therein) and did not learn of and become interested in the transaction contemplated in this Agreement by means of the Registration Statement or prospectus contained therein. The Purchaser hereby further confirms that it or an affiliate of the Purchaser had a substantive pre-existing relationship with the Company prior to the commencement of any discussion in connection with the transaction contemplated in this Agreement. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including, through a broker or finder (i) engaged in any general solicitation, or (ii) published any advertisement in connection with the offer and sale of the Shares.
|
(l)
|
Brokers or Finders. The Purchaser has not engaged any brokers, finders or agents such that the Company will incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
|
5.
|
Conditions of Purchaser’s Obligations. The obligation of the Purchaser to purchase the Shares on the Closing Date as provided herein is subject to the following conditions:
|
(a)
|
Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct on the date hereof and on and as of the Closing Date (except to the extent any such representations and warranties expressly relate to an earlier date, in which case, as of such earlier date).
|
(b)
|
Public Offering ADSs. The Underwriters shall have purchased, immediately prior to the purchase of the Shares by the Purchaser hereunder, the Firm ADSs (as defined in the Underwriting Agreement) at the ADS Price (less any underwriting discounts or commissions).
|
(c)
|
No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(d)
|
Amendment to Rights Agreement. If applicable, the Company, the Purchaser and the parties to the Rights Agreement required to amend the Rights Agreement shall have executed and delivered to the Company and the Purchaser signature pages to the Rights Agreement Amendment, and the Rights Agreement, as amended, shall be in full force and effect.
|
6.
|
Conditions of Company’s Obligations. The obligation of the Company to issue and sell the Shares on the Closing Date as provided herein is subject to the following conditions:
|
(a)
|
Representations and Warranties. The representations and warranties of the Purchaser contained herein shall be true and correct on the date hereof and on and as of the Closing Date (except to the extent any such representations and warranties expressly relate to an earlier date, in which case, as of such earlier date).
|
(b)
|
Public Offering Shares. The Underwriters shall have purchased, immediately prior to the issuance and sale of the Shares by the Company hereunder, the Firm ADSs (as defined in the Underwriting Agreement) at the ADS Price (less any underwriting discounts or commissions).
|
(c)
|
No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(d)
|
Lock-Up Agreement. The Purchaser shall have executed and delivered to the Company a lock-up agreement in substantially the form provided to the Purchaser by the Company (the “Lock-Up Agreement”), and the Lock-Up Agreement shall be in full force and effect.
|
7.
|
Termination. This Agreement shall automatically terminate upon the earliest to occur of (i) the written consent of each of the Company and the Purchaser, (ii) the withdrawal by the Company of the Registration Statement, (iii) following the execution of the Underwriting Agreement, the termination of such Underwriting Agreement in accordance with its terms, and (iv) July 15, 2020, if the closing of the Qualified IPO has not occurred on or prior to such date.
|
8.
|
Covenants. The Company undertakes to use its reasonable efforts to (i) have the Company’s register of members updated as promptly as practicable after the Closing Date to reflect the issuance of the Shares, and (ii) cooperate with the Purchaser in good faith to facilitate the conversion of the Shares into the corresponding number of ADSs upon the request of the Purchaser in accordance with applicable securities laws and the terms of the deposit agreement with respect to the ADSs. The Company further agrees to pay the ADS issuance fee, if any, collected by the depositary, upon the initial issuance of the ADSs upon the Purchaser’s deposit of the Shares, whether such deposit and issuance occurs in connection with the sale of such ADSs or otherwise.
|
9.
|
Miscellaneous.
|
(a)
|
Confidentiality. The Company and the Purchaser acknowledge that they have previously executed a mutual non-disclosure agreement dated June 7, 2020, as amended (the “Confidentiality Agreement”), which shall continue in full force and effect in accordance with its terms.
|
(b)
|
Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication.
|
i.
|
If to the Company:
|
ii.
|
If to the Purchaser:
|
(c)
|
Assignment. No party shall have the right to assign any of its rights or obligations under this Agreement without, in the case of the Purchaser, the prior written consent of the Company and in the case of the Company, the Purchaser.
|
(d)
|
Governing Law. This Agreement shall be governed by and construed under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”), without regard to principles of conflict of laws thereunder.
|
(e)
|
Dispute Resolution.
|
i.
|
Any dispute, controversy or claim (each, a “Dispute”) arising out of or relating to this Agreement, or the interpretation, breach, termination, validity or invalidity thereof, shall be referred to arbitration upon the demand of either party to the dispute with notice (the “Arbitration Notice”) to the other.
|
ii.
|
The Dispute shall be settled by arbitration in Hong Kong by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”) in force when the Arbitration Notice is submitted in accordance with the HKIAC Rules. There shall be one arbitrator. The HKIAC Council shall select the arbitrator.
|
iii.
|
To the extent that the HKIAC Rules are in conflict with the provisions of this Section 8(f), including the provisions concerning the appointment of the arbitrators, the provisions of this Section 8(f) shall prevail.
|
iv.
|
The arbitration shall be conducted in both Chinese and English. Each party to the arbitration shall cooperate with each other party to the arbitration in making full disclosure of and providing complete access to all information and documents requested by such other party in connection with such arbitral proceedings, subject only to any confidentiality obligations binding on such party.
|
v.
|
The award of the arbitral tribunal shall be final and binding upon the parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.
|
vi.
|
The arbitral tribunal shall decide any Dispute submitted by the parties to the arbitration strictly in accordance with the substantive laws of Hong Kong (without regard to principles of conflict of laws thereunder) and shall not apply any other substantive law.
|
vii.
|
Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.
|
viii.
|
During the course of the arbitral tribunal’s adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.
|
(f)
|
Waiver of Jury Trial. The Company and the Purchaser hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
|
(g)
|
Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assignees. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person, other than the parties hereto and their respective successors and assignees, any right or remedy under or in respect of this Agreement or any right under the Contracts (Rights of Third Parties) Ordinance (Chapter 623 of the Laws of Hong Kong) to enforce, make or pursue any claim, or enjoy any benefit under any provision contained in this Agreement.
|
(h)
|
Survival. The respective representations, warranties and agreements of the Company and the Purchasers contained in this Agreement shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or the Purchaser.
|
(i)
|
Entire Agreement. This Agreement, the Rights Agreement Amendment, if applicable, the Lock-Up Agreement and the Confidentiality Agreement constitute the full and entire understanding and agreement between the parties with regard to the specific subject matter hereof, and any and all other written or oral agreements relating to the specific subject matter hereof existing between the parties hereto are expressly cancelled.
|
(j)
|
Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes
|
(k)
|
Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
|
(l)
|
Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
|
Very truly yours,
|
|
|
|
AGORA, INC.
|
|
|
|
|
|
By: /s/ Bin (Tony) Zhao
|
|
Name: Bin (Tony) Zhao
|
|
Title: Chief Executive Officer and Chairman
|
Accepted as of the date hereof
|
|
NEUMANN CAPITAL
|
|
|
By: /s/ ZHANG Fei
|
Name: ZHANG Fei
|
Title: Director
|
COMPANY:
|
Agora, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name: ZHAO Bin
|
|
|
Title: Director
|
FOUNDER:
|
|
|
|
|
|
|
ZHAO Bin
|
|
PREFERRED HOLDER:
|
SIG China Investments Master Fund III, LLLP
|
|
|
|
|
|
SIG Asia Investment, LLLP,
Its Authorized Agent
|
|
|
|
|
|
By: Heights Capital Management, Inc.,
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name: Michael Spolan
|
|
|
Title: General Counsel
|
PREFERRED HOLDER:
|
SIG Global China Fund I, LLLP
|
|
|
|
|
|
SIG Asia Investment, LLLP,
Its Authorized Agent
|
|
|
|
|
|
By: Heights Capital Management, Inc.,
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name: Michael Spolan
|
|
|
Title: General Counsel
|
PREFERRED HOLDER:
|
IDG Technology Venture Investment V, L.P.
|
|
|
|
|
|
By: IDG Technology Venture Investment V, LLC, its General Partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Shunwei Technology II Limited
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Duowan Entertainment Corp.
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT FUND II, L.P.,
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director/Authorised Signatory
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT TOP UP FUND, L.P.,
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director/Authorised Signatory
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT
SPECIAL OPPORTUNITY FUND II, L.P.,
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title: Authorised Signatory
|
PREFERRED HOLDER:
|
MORNINGSIDE CHINA TMT FUND IV
CO-INVESTMENT, L.P.,
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
By:
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
a Cayman Islands exempted limited partnership,
its general partner
|
|
|
|
|
|
By:
|
|
|
TMT GENERAL PARTNER LTD.,
a Cayman Islands limited company,
its general partner
|
|
|
|
|
|
in on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title: Authorised Signatory
|
PREFERRED HOLDER:
|
Evolution Special Opportunity Fund I, L.P.
a Cayman Islands exempted limited partnership
By: MSVC GP Limited,
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title: Director/Authorized Signatory
|
PREFERRED HOLDER:
|
Evolution Fund I Co-investment, L.P.
a Cayman Islands exempted limited partnership
By: MSVC GP Limited,
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title: Director/Authorized Signatory
|
PREFERRED HOLDER:
|
GGV CAPITAL IV L.P.
By: GGV Capital IV L.L.C., its General Partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
GGV Capital IV Entrepreneurs Fund L.P.
By: GGV Capital IV L.L.C., its General Partner
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
CRCM Opportunity Fund, L.P.
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Yan Capital L.P.
|
|
|
|
|
|
|
|
|
By: Yan Capital Management Ltd.
Its Authorized Agent
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Coatue PE Asia XVI LLC
By: Coatue Management, L.L.C., its investment manager
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PREFERRED HOLDER:
|
Internet Fund VI Pte. Ltd.
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
CPP PURCHASER:
|
[Purchaser name]
By:
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
CPP PURCHASER:
|
[Purchaser name]
|
|
|
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
1.
|
Purchase of the Shares by the Purchaser.
|
(a)
|
The Company agrees to issue and sell the Shares to the Purchaser as provided in this agreement (the “Agreement”), and the Purchaser agrees to purchase from the Company the Shares at a price per Share (the “Purchase Price”) equal to the initial public offering price per ADS in the Qualified IPO (before any underwriting discounts and commissions) (the “ADS Price”) multiplied by the number of ADSs (or fraction thereof) representing one Class A Ordinary Share, pursuant to the exchange rate set forth in the Prospectus (as defined in the Underwriting Agreement) (the “IPO Price”). The number of Shares to be sold by the Company and purchased by the Purchaser shall equal the quotient of US$30,000,000 divided by the IPO Price (rounded down to the nearest whole Share).
|
(b)
|
Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Company to the Purchaser, at the location and at the time of the closing of the Qualified IPO, subject to the satisfaction of the conditions set forth herein. The time and date of such payment for the Shares is referred to herein as the “Closing Date.” Payment for the Shares to be purchased on the Closing Date shall be made against delivery to the Purchaser of the Shares registered in the name of the Purchaser, which Shares shall be uncertificated shares.
|
2.
|
Registration Rights. If the Purchaser is not already a party to the Company’s Amended and Restated Shareholders Agreement, dated February 12, 2020, by and among the Company, the shareholders of the Company named therein and the other parties thereto, as may be amended through the Closing Date (the “Rights Agreement”), the Rights Agreement shall be amended on the Closing Date to provide the
|
3.
|
Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date):
|
(a)
|
Organization and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Cayman Islands, with power and authority (corporate and other) to own its properties and conduct its business as now conducted, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under the laws of each jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to so qualify or be in good standing in any such jurisdiction would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. For purposes of this Section 3, “Material Adverse Effect” means (i) any material adverse effect, or any development involving a prospective material adverse effect, in or affecting the general affairs, management, assets (including intangible assets), liabilities, consolidated financial position, consolidated shareholders’ equity, prospects, or consolidated results of operations of the Company and its subsidiaries, taken as a whole, or (ii) any effect, or any development involving a prospective effect, that could adversely affect, prevent or delay, the ability of the Company to perform any of its covenants or obligations under this Agreement, the Rights Agreement, or the Rights Agreement Amendment, if applicable, to consummate the sale and issuance of the Shares or the other transactions contemplated hereby and thereby, or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(b)
|
Authorization; Enforceability. The Company has the requisite corporate power and authority to enter into this Agreement and the Rights Agreement Amendment, if applicable, and to perform its obligations hereunder and thereunder. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment, if applicable, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance and delivery of the Shares has been taken and no other corporate proceedings on the part of the Company, its officers, directors or shareholders are necessary to authorize and approve this Agreement, the Rights Agreement Amendment, if applicable, or the transactions contemplated hereby and thereby. This Agreement has, and as of the Closing Date the Rights Agreement Amendment, if applicable, will have, been duly executed and delivered by the Company and constitutes the valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent the indemnification provisions contained in the Rights Agreement may be limited by applicable federal or state securities laws.
|
(c)
|
Valid Issuance of Shares. The Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement and when appropriate entries are made in the register of members of the Company, will be validly issued, fully paid and non-assessable, and as of the
|
(d)
|
No Conflicts. The issue and sale of the Shares, the compliance by the Company with this Agreement and the Rights Agreement Amendment, if applicable, and the consummation of the transactions herein and therein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the memorandum and articles of association the Company, or (iii) result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the case of (i) and (iii), as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Shares by the Company or the consummation by the Company of the transactions contemplated by this Agreement or the Rights Agreement Amendment, if applicable, except (A) such consents, approvals, authorizations, orders, registrations or qualifications as may be required under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), or state securities or Blue Sky laws, or (B) where the failure to obtain any such consent, approval, authorization, order, registration or qualification would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
|
(e)
|
Description of Share Capital. As of the Closing Date, the statements set forth in the Time of Sale Prospectus (as defined in the Underwriting Agreement) and Prospectus (as defined in the Underwriting Agreement) under the caption “Description of Share Capital,” insofar as they purport to constitute a summary of the terms of the Company’s share capital, are accurate, complete and fair in all material respects.
|
(f)
|
Registration Statement. The Registration Statement, and any amendment thereto, including any information deemed to be included therein pursuant to the rules and regulations SEC promulgated under the Securities Act, complied (or, in the case of amendments filed after the date hereof, will comply) as of its filing date in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and did not (or, in the case of amendments filed after the date hereof, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date it is declared effective by the SEC, the Registration Statement, as so amended, and any related registration statements, will comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. The preliminary prospectus included in the Registration Statement as of the date the Registration Statement is declared effective by the SEC, and any free writing prospectus related to the Registration Statement and any final prospectus related to the Registration Statement filed pursuant to Rule 424 promulgated under the Securities Act, in each case as of its date, will comply in all material respects with the requirements of the Securities Act and the rules and regulations promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
|
(g)
|
Brokers or Finders. The Company has not engaged any brokers, finders or agents such that the Purchaser will incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
|
(h)
|
Private Placement. Assuming the accuracy of the representations, warranties and covenants of the Purchaser set forth in Section 4 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchaser under this Agreement.
|
4.
|
Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as of the date hereof and as of the Closing Date that:
|
(a)
|
Organization and Qualification. The Purchaser is duly organized, validly existing and in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) under, and by virtue of, the laws of the place of its incorporation or establishment.
|
(b)
|
Authorization; Enforceability. The Purchaser has the requisite corporate or other applicable organizational power and authority to enter into this Agreement and the Rights Agreement Amendment, if applicable, and to perform its obligations hereunder and thereunder. All corporate or other applicable organizational action on the part of the Purchaser, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment, if applicable, and the performance of all obligations of the Purchaser hereunder and thereunder has been taken and no other corporate or other applicable organizational proceedings on the part of the Purchaser, its officers, directors or shareholders are necessary to authorize and approve this Agreement, the Rights Agreement Amendment, if applicable, or the transactions contemplated hereby and thereby. This Agreement has, and as of the Closing Date the Rights Agreement Amendment, if applicable, will have, been duly executed and delivered by the Purchaser and constitutes the valid and legally binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (ii) to the extent the indemnification provisions contained in the Rights Agreement may be limited by applicable federal or state securities laws.
|
(c)
|
[Intentionally Omitted].
|
(d)
|
Purchase Entirely for Own Account. The Purchaser hereby confirms that the Shares will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares. Except as otherwise disclosed to the Company on or prior to the Closing Date, the Purchaser has not been formed for the specific purpose of acquiring the Shares.
|
(e)
|
Disclosure of Information. The Purchaser believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. The Purchaser further
|
(f)
|
Restricted Securities. The Purchaser understands that the Shares are being issued in a transaction that was not, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Shares indefinitely and/or are subject to transfer restrictions for a specified “distribution compliance period” under Regulation S promulgated under the Securities Act, and, in each case, cannot be transferred unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Shares for resale. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.
|
(g)
|
Legends. The Purchaser understands that the Shares may bear one or all of the following legends:
|
i.
|
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.”
|
ii.
|
Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the Shares represented by the certificate so legended.
|
(h)
|
Eligible Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D and/or is not a “U.S. person” as defined in Rule 902(k) of Regulation S, in each case as promulgated under the Securities Act.
|
(i)
|
Non-U.S. Investors. If the Purchaser is a Non-U.S. person (as defined below), the Purchaser hereby represents and warrants to the Company as follows:
|
i.
|
This Agreement is made by the Company with the Purchaser, who is a Non-U.S. person, in reliance upon such Non-U.S. person’s representations, warranties and covenants made in this Section 4(i).
|
ii.
|
Such Non-U.S. person has been advised and acknowledges that:
|
A.
|
the Shares have not been, and when issued, will not be registered under the Securities Act, the securities laws of any state of the United States or the securities laws of any other country;
|
B.
|
in issuing and selling the Shares to such Non-U.S. person pursuant hereto, the Company is relying upon the “safe harbor” provided by Regulation S and/or on Section 4(a)(2) under the Securities Act;
|
C.
|
it is a condition to the availability of the Regulation S “safe harbor” that the Shares not be offered or sold in the United States or to a U.S. person until the expiration of a forty-day “distribution compliance period” following the Closing Date; and
|
D.
|
notwithstanding the foregoing, prior to the expiration of the forty-day “distribution compliance period” after the Closing Date (the “Restricted Period”), the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person.
|
iii.
|
As used herein, the term “United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia, and the term “U.S. person” (as defined in Regulation S) means:
|
A.
|
a natural person resident in the United States;
|
B.
|
any partnership or corporation organized or incorporated under the laws of the United States;
|
C.
|
any estate of which any executor or administrator is a U.S. person;
|
D.
|
any trust of which any trustee is a U.S. person;
|
E.
|
any agency or branch of a foreign entity located in the United States;
|
F.
|
any nondiscretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;
|
G.
|
any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated and (if an individual) resident in the United States; and
|
H.
|
a corporation or partnership organized under the laws of any foreign jurisdiction and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and
|
iv.
|
Such Non-U.S. person agrees that with respect to the Shares, until the expiration of the Restricted Period:
|
A.
|
such Non-U.S. person, its agents or its representatives have not and will not solicit offers to buy, offer for sale or sell any of the Shares or any beneficial interest therein in the United States or to or for the account of a U.S. person; and
|
B.
|
notwithstanding the foregoing, the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person; and
|
C.
|
such Non-U.S. person shall not engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act.
|
v.
|
Such Non-U.S. person has not engaged, nor is it aware that any party has engaged, and such Non-U.S. person will not engage or cause any third party to engage, in any directed selling efforts (as such term is defined in Regulation S) in the United States with respect to the Shares.
|
vi.
|
Such Non-U.S. person: (A) is domiciled and has its principal place of business outside the United States; (B) certifies it is not a U.S. person and is not acquiring the Shares for the account or benefit of any U.S. person; and (C) at the time of the Closing Date, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection therewith will be located outside the United States.
|
vii.
|
At the time of offering to such Non-U.S. person and communication of such Non-U.S. person’s order to purchase the Shares and at the time of such Non-U.S. Person’s execution of this Agreement, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection therewith were located outside the United States.
|
viii.
|
Such Non-U.S. person is not a “distributor” (as defined in Regulation S) or a “dealer” (as defined in the Securities Act).
|
ix.
|
Such Non-U.S. person acknowledges that the Company shall make a notation in its share register regarding the restrictions on transfer set forth in this Section 4(i) and shall transfer such shares on the books of the Company only to the extent consistent therewith. In particular, such Non-U.S. person acknowledges that the Company shall refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration.
|
x.
|
Such Purchaser understands and agrees that each certificate held by such Non-U.S. person representing the Shares, or any other securities issued in respect of the Shares upon any share split, dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by this Agreement or under applicable state securities laws):
|
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE.
|
xi.
|
If the Purchaser is a Non-U.S. person, the Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (A) the legal requirements within its jurisdiction for the purchase of the Shares, (B) any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. The Purchaser’s subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of the Purchaser’s jurisdiction.
|
(j)
|
Investment Experience. The Purchaser acknowledges that it is investing in securities of companies in the development stage and that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.
|
(k)
|
No General Solicitation. Neither the Purchaser nor any of its officers, directors, employees, agents, stockholders, partners or affiliates has been directly or indirectly solicited through any public advertising or general solicitation (including by means of the Registration Statement or prospectus contained therein) and did not learn of and become interested in the transaction contemplated in this Agreement by means of the Registration Statement or prospectus contained therein. The Purchaser hereby further confirms that it or an affiliate of the Purchaser had a substantive pre-existing relationship with the Company prior to the commencement of any discussion in connection with the transaction contemplated in this Agreement. Neither the Purchaser, nor any of
|
(l)
|
Brokers or Finders. The Purchaser has not engaged any brokers, finders or agents such that the Company will incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
|
5.
|
Conditions of Purchaser’s Obligations. The obligation of the Purchaser to purchase the Shares on the Closing Date as provided herein is subject to the following conditions:
|
(a)
|
Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct on the date hereof and on and as of the Closing Date (except to the extent any such representations and warranties expressly relate to an earlier date, in which case, as of such earlier date).
|
(b)
|
Public Offering ADSs. The Underwriters shall have purchased, immediately prior to the purchase of the Shares by the Purchaser hereunder, the Firm ADSs (as defined in the Underwriting Agreement) at the ADS Price (less any underwriting discounts or commissions).
|
(c)
|
No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby.
|
(d)
|
Amendment to Rights Agreement. If applicable, the Company, the Purchaser and the parties to the Rights Agreement required to amend the Rights Agreement shall have executed and delivered to the Company and the Purchaser signature pages to the Rights Agreement Amendment, and the Rights Agreement, as amended, shall be in full force and effect.
|
6.
|
Conditions of Company’s Obligations. The obligation of the Company to issue and sell the Shares on the Closing Date as provided herein is subject to the following conditions:
|
(a)
|
Representations and Warranties. The representations and warranties of the Purchaser contained herein shall be true and correct on the date hereof and on and as of the Closing Date (except to the extent any such representations and warranties expressly relate to an earlier date, in which case, as of such earlier date).
|
(b)
|
Public Offering Shares. The Underwriters shall have purchased, immediately prior to the issuance and sale of the Shares by the Company hereunder, the Firm ADSs (as defined in the Underwriting Agreement) at the ADS Price (less any underwriting discounts or commissions).
|
(c)
|
No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Shares or otherwise prohibit or make illegal the consummation of the transactions contemplated hereby;
|
(d)
|
Lock-Up Agreement. The Purchaser shall have executed and delivered to the Company a lock-up agreement in substantially the form provided to the Purchaser by the Company (the “Lock-Up Agreement”), and the Lock-Up Agreement shall be in full force and effect.
|
7.
|
Termination. This Agreement shall automatically terminate upon the earliest to occur of (i) the written consent of each of the Company and the Purchaser, (ii) the withdrawal by the Company of the Registration Statement, (iii) following the execution of the Underwriting Agreement, the termination of such Underwriting Agreement in accordance with its terms, and (iv) July 15, 2020, if the closing of the Qualified IPO has not occurred on or prior to such date.
|
8.
|
Covenants. The Company undertakes to use its reasonable efforts to (i) have the Company’s register of members updated as promptly as practicable after the Closing Date to reflect the issuance of the Shares, and (ii) cooperate with the Purchaser in good faith to facilitate the conversion of the Shares into the corresponding number of ADSs upon the request of the Purchaser in accordance with applicable securities laws and the terms of the deposit agreement with respect to the ADSs. The Company further agrees to pay the ADS issuance fee, if any, collected by the depositary, upon the initial issuance of the ADSs upon the Purchaser’s deposit of the Shares, whether such deposit and issuance occurs in connection with the sale of such ADSs or otherwise.
|
9.
|
Miscellaneous.
|
(a)
|
[Intentionally Omitted].
|
(b)
|
Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication.
|
i.
|
If to the Company:
|
ii.
|
If to the Purchaser:
|
(c)
|
Assignment. No party shall have the right to assign any of its rights or obligations under this Agreement without, in the case of the Purchaser, the prior written consent of the Company and in the case of the Company, the Purchaser.
|
(d)
|
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
|
(e)
|
Jurisdiction; Venue. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in New York County in the State of New York (or in the event of exclusive federal jurisdiction, the courts of the Southern District of New York).
|
(f)
|
Waiver of Jury Trial. The Company and the Purchaser hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
|
(g)
|
Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assignees. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person, other than the parties hereto and their respective successors and assignees, any right or remedy under or in respect of this Agreement to enforce, make or pursue any claim, or enjoy any benefit under any provision contained in this Agreement.
|
(h)
|
Survival. The respective representations, warranties and agreements of the Company and the Purchasers contained in this Agreement shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or the Purchaser.
|
(i)
|
Entire Agreement. This Agreement, the Rights Agreement Amendment, if applicable, and the Lock-Up Agreement constitute the full and entire understanding and agreement between the parties with regard to the specific subject matter hereof, and any and all other written or oral agreements relating to the specific subject matter hereof existing between the parties hereto are expressly cancelled.
|
(j)
|
Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes
|
(k)
|
Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
|
(l)
|
Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
|
Very truly yours,
|
|
|
|
AGORA, INC.
|
|
|
|
By: /s/ Bin (Tony) Zhao
|
|
|
Name: Bin (Tony) Zhao
|
|
Title: Chief Executive Officer and Chairman
|
|
|
|
|
|
|
Accepted as of the date hereof
|
|
|
|
VIP III NOMINEES LIMITED
|
|
|
|
By: /s/ Thomas Studd
|
|
Name: Thomas Studd
|
|
Title: Member of Vitruvian Partners LLP in its capacity as director of VIP III Nominees Limited
|
“Registrable Securities” means (i) the Ordinary Shares issued or issuable upon conversion of the Preferred Shares; (ii) any Ordinary Shares of the Company issued as a dividend or other distribution with respect to, in exchange for, or in replacement of, the shares referenced in (i) herein; (iii) the Class A ordinary shares issued pursuant to that certain Class A Ordinary Shares Purchase Agreement by and between the Company and [Purchaser name], dated as of June __, 2020; (iv) the Class A ordinary shares issued pursuant to that certain Class A Ordinary Shares Purchase Agreement by and between the Company and [Purchaser name], dated as of June __, 2020; and (v) any Ordinary Shares owned or hereafter acquired by the Investors; excluding in all cases, however, any of the foregoing sold by a Person in a transaction other than an assignment pursuant to Section 13.3. For purposes of this Agreement, Registrable Securities shall cease to be Registrable Securities when such Registrable Securities have been disposed of pursuant to an effective Registration Statement.
|
COMPANY:
|
|
Agora, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name: ZHAO Bin
|
|
|
|
Title: Director
|
FOUNDER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZHAO Bin
|
PREFERRED HOLDER:
|
|
SIG China Investments Master Fund III, LLLP
|
|
|
|
|
|
|
|
SIG Asia Investment, LLLP,
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
By: Heights Capital Management, Inc.,
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name: Michael Spolan
|
|
|
|
Title: General Counsel
|
|
|
|
|
|
|
|
|
|
PREFERRED HOLDER:
|
|
SIG Global China Fund I, LLLP
|
|
|
|
|
|
|
|
SIG Asia Investment, LLLP,
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
By: Heights Capital Management, Inc.,
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name: Michael Spolan
|
|
|
|
Title: General Counsel
|
PREFERRED HOLDER:
|
|
IDG Technology Venture Investment V, L.P.
|
|
|
|
|
|
|
|
By: IDG Technology Venture Investment V, LLC, its General Partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
Shunwei Technology II Limited
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
Duowan Entertainment Corp.
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
MORNINGSIDE CHINA TMT FUND II, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
|
|
By:
|
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
|
a Cayman Islands limited company,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
Director/Authorised Signatory
|
PREFERRED HOLDER:
|
|
MORNINGSIDE CHINA TMT TOP UP FUND, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
|
|
By:
|
|
|
|
MORNINGSIDE CHINA TMT GP II, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
|
a Cayman Islands limited company,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
Director/Authorised Signatory
|
PREFERRED HOLDER:
|
|
MORNINGSIDE CHINA TMT
|
|
|
|
SPECIAL OPPORTUNITY FUND II, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
|
|
By:
|
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
|
a Cayman Islands limited company,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
Title: Authorised Signatory
|
PREFERRED HOLDER:
|
|
MORNINGSIDE CHINA TMT FUND IV
|
|
|
|
CO-INVESTMENT, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
|
|
|
|
By:
|
|
|
|
MORNINGSIDE CHINA TMT GP IV, L.P.,
|
|
|
|
a Cayman Islands exempted limited partnership,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
TMT GENERAL PARTNER LTD.,
|
|
|
|
a Cayman Islands limited company,
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
in
|
on
|
|
|
|
|
|
|
|
|
|
|
Title: Authorised Signatory
|
PREFERRED HOLDER:
|
|
Evolution Special Opportunity Fund I, L.P.
|
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
By: MSVC GP Limited,
|
|
|
|
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title: Director / Authorized Signatory
|
|
|
|
|
|
|
|
|
|
PREFERRED HOLDER:
|
|
Evolution Fund I Co-investment, L.P.
|
|
|
|
a Cayman Islands exempted limited partnership
|
|
|
|
By: MSVC GP Limited,
|
|
|
|
a Cayman Islands exempted company, as its general partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title: Director / Authorized Signatory
|
PREFERRED HOLDER:
|
|
GGV CAPITAL IV L.P.
|
|
|
|
By: GGV Capital IV L.L.C., its General Partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
PREFERRED HOLDER:
|
|
GGV Capital IV Entrepreneurs Fund L.P.
|
|
|
|
By: GGV Capital IV L.L.C., its General Partner
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
CRCM Opportunity Fund, L.P.
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
Yan Capital L.P.
|
|
|
|
|
|
|
|
By: Yan Capital Management Ltd.
|
|
|
|
Its Authorized Agent
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
Coatue PE Asia XVI LLC
|
|
|
|
By: Coatue Management, L.L.C., its investment manager
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
PREFERRED HOLDER:
|
|
Internet Fund VI Pte. Ltd.
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
CPP PURCHASER:
|
|
[Purchaser name]
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
CPP PURCHASER:
|
|
[Purchaser name]
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|