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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 001-39340

Agora, Inc.
(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrant’s name into English)

Cayman Islands
(Jurisdiction of incorporation or organization)

Floor 8, Building 12
Phase III of ChuangZhiTianDi
333 Songhu Road
Yangpu District
, Shanghai
People’s Republic of China
(Address of principal executive offices)

Jingbo Wang, Chief Financial Officer
Telephone: +
86-400-632-6626
Email: investor@agora.io
Floor 8, Building 12, Phase III of ChuangZhiTianDi, 333 Songhu Road
Yangpu District
, Shanghai
People’s Republic of China
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

American depositary shares (each American depositary shares representing four Class A ordinary share, par value US$0.0001 each)
Class A ordinary shares, with a par value of US$0.0001 each*

API

The Nasdaq Global Select Market
The
Nasdaq Global Select Market

 

* Not for trading, but only in connection with the listing on the Nasdaq Global Select Market of American depositary shares

Securities registered or to be registered pursuant to Section 12(g) of the Act:

[None]

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

[None]

 


Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Title of Class

Number of Shares Outstanding

Class A ordinary shares, par value US$0.0001 each

353,762,324 were outstanding as of December 31, 2022

Class B ordinary shares, par value US$0.0001 each

76,179,938 were outstanding as of December 31, 2022

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

☐ International Financial Reporting Standards as issued by the International Accounting Standards Board

☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No ☒

[APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS]

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ☐ No ☐

 

 


 

table of contents

 

 

Introduction

1

Forward-Looking Statements

2

Part I

3

 

Item 1.

 

Identity of Directors, Senior Management and Advisors

3

 

Item 2.

 

Offer Statistics and Expected Timetable

3

 

Item 3.

 

Key Information

3

 

Item 4.

 

Information on the Company

66

 

Item 4A.

 

Unresolved Staff Comments

88

 

Item 5.

 

Operating and Financial Review and Prospects

88

 

Item 6.

 

Directors, Senior Management and Employees

103

 

Item 7.

 

Major Shareholders and Related Party Transactions

119

 

Item 8.

 

Financial Information

120

 

Item 9.

 

The Offer and Listing

121

 

Item 10.

 

Additional Information

121

 

Item 11.

 

Quantitative and Qualitative Disclosures about Market Risk

128

 

Item 12.

 

Description of Securities Other Than Equity Securities

128

Part II

131

 

Item 13.

 

Defaults, Dividend Arrearages and Delinquencies

131

 

Item 14.

 

Material Modifications to the Rights of Security Holders and Use of Proceeds

131

 

Item 15.

 

Controls and Procedures

131

 

Item 16A.

 

Audit Committee Financial Expert

132

 

Item 16B.

 

Code of Ethics

132

 

Item 16C.

 

Principal Accountant Fees and Services

132

 

Item 16D.

 

Exemptions from the Listing Standards for Audit Committees

132

 

Item 16E.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

133

 

Item 16F.

 

Change in Registrant’s Certifying Accountant

133

 

Item 16G.

 

Corporate Governance

133

 

Item 16H.

 

Mine Safety Disclosure

133

 

Item 16I.

 

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

134

Part III

135

 

Item 17.

 

Financial Statements

135

 

Item 18.

 

Financial Statements

135

 

Item 19.

 

Exhibits

135

 

i


 

Introduction

Except where the context otherwise requires and for purposes of this annual report on Form 20-F only:

“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;
“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 Zhaoyan and, to the extent applicable, Zhonghuan Chuanyin;
“China” or “PRC” refer to the People’s Republic of China, only in the context of describing PRC laws, regulations and other legal or tax matters in this annual report, excludes 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$0.0001 per share;
“CAC” are to the Cyberspace Administration of China;
“CSRC” are to the China Securities Regulatory Commission;
“Easemob” and “Beijing Easemob” refers to Beijing Yizhang Yunfeng Technology Co., Ltd., a limited liability company established in the PRC on April 27, 2013, and previously a wholly-owned subsidiary of our company;
“RMB” and “Renminbi” refer to the legal currency of China;
“SAFE” are to the State Administration of Foreign Exchange of China;
“Shanghai Dayin” refers to Shanghai Dayin Network Technology Co., Ltd., a limited liability company established in the PRC on April 30, 2015, and a wholly-owned subsidiary of our company;
“US$,” “U.S. dollars,” or “dollars” refer to the legal currency of the United States;
“VIEs” refer to, collectively, Zhaoyan and, to the extent before its sale in February 2023, Zhonghuan Chuanyin, each, a “VIE”. For the avoidance of doubt, Zhaoyan is our sole VIE as of the date of this annual report;
“WFOEs” refer to, collectively, Shanghai Dayin and, to the extent before its sale in February 2023, Easemob, each, a “WFOE”. For the avoidance of doubt, Shanghai Dayin is our sole WFOE as of the date of this annual report;
“Zhaoyan” refers to Shanghai Zhaoyan Network Technology Co., Ltd., a limited liability company established in the PRC on March 28, 2014, and one of the VIEs; and
“Zhonghuan Chuanyin” refers to Beijing Zhonghuan Chuanyin Technology Co., Ltd., a limited liability company established in the PRC on April 22, 2020, and previously one of the VIEs.

Our reporting and functional currency is the U.S. dollar. Other than the functional currency of our subsidiaries and VIEs in China is the Renminbi, the functional currencies of our non-PRC subsidiaries are the U.S. dollar. This annual report contains translations between Renminbi and U.S. dollars solely for the convenience of the reader. The translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 30, 2022. We make no representation that the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

1


 

Forward-Looking Statements

This annual report contains forward-looking statements, including our future operating results and conditions, our prospects and our future financial performance and condition. These forward-looking statements are made under the “safe harbor” provision under Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and as defined in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. All statements other than statements of historical fact in this annual report constitute forward-looking statements. We have used words or phrases such as “may,” “would,” “will,” “expect,” “anticipate,” “intend,” “seek,” “estimate,” “plan,” “believe,” “is/are likely to” or other similar expressions in this annual report to identify some of these forward-looking statements. These forward-looking statements, including, among others, those relating to our future business prospects, product development, revenues, profits, costs, capital expenditures, cash flows and working capital, are necessarily estimates reflecting the best judgment of directors and management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this annual report.

These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this annual report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this annual report include, but are not limited to, statements about:

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 COVID-19 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; and
general economic conditions and changing regulations and their impact on customer and end-user demand, as well as PRC governmental policies relating to media, the internet, internet content providers and cybersecurity, and the implementation of a corporate structure involving VIEs in China.

You should read this annual report, including the risk factors disclosed in “Item 3. Key Information—3.D. Risk Factors” and the documents that we refer to in this annual report thoroughly and with the understanding that our actual future results may be materially different from and worse than what we expect. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

2


 

Part I

Item 1. Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

Agora, Inc. is a Cayman Islands holding company and does not conduct operations by itself. It conducts a substantial part of its operations through its PRC consolidated variable interest entities, or the VIEs. The VIE structure is used to provide investors with exposure to foreign investment in China-based companies where PRC law prohibits direct foreign investment in the operating companies in China. Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services and certain other businesses. Accordingly, the VIEs hold our key operating licenses, provide services to our customers, and enter into contracts with our suppliers in China. As we may be required to obtain and maintain permits and licenses to operate our business in China in such services and businesses, we have, through our WFOEs, entered into a series of contractual arrangements, as amended and restated, with the VIEs as well as their shareholders. The terms contained in these contractual arrangements, enable the Company to (i) direct the activities of the VIEs that most significantly impact the VIEs’ economic performance, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC law. As a result of these contractual arrangements, Agora, Inc. is considered the primary beneficiary of the VIEs for accounting purposes and is able to consolidate the financial results of the VIEs in the consolidated financial statements in accordance with U.S. GAAP. The VIEs are owned by certain nominee shareholders, not Agora, Inc. All of these nominee shareholders are also beneficial owners of Agora, Inc. It is important to note that investors in the ADSs are purchasing equity securities of a Cayman Islands holding company rather than equity securities issued by Agora, Inc.’s subsidiaries and the VIEs. More specifically, investors in the ADSs or our ordinary shares would not be holding any ownership interest, directly or indirectly, in the VIEs under current PRC laws and regulations as investors would only have the contractual relationship with the operating entities in China. As used in this annual report, “we,” “us,” “our company,” or “our” refers to Agora, Inc. and its subsidiaries, and, in the context of describing our consolidated financial information, business operations and operating data, the consolidated VIEs.

Corporate Structure and Contractual Arrangements

Our corporate structure involves unique risks to investors in the ADSs. In 2020, 2021 and 2022, the amount of revenues generated by the VIEs accounted for 86.7%, 68.2%, and 53.3%, respectively, of our total revenues. As of December 31, 2021 and 2022, total assets of the VIEs, excluding amounts due from other companies in the Group, equaled to 6.6% and 6.2% of our consolidated total assets as of the same dates, respectively. Our contractual arrangements with the VIEs have not been tested in court in the PRC. If the PRC government deems that our contractual arrangements with the VIEs 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 material penalties or be forced to relinquish our interests in those operations or otherwise significantly change our corporate structure. This would result in the VIEs being deconsolidated. When we rely on contractual arrangements with the VIEs to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance, it may be less effective than having ownership in providing operational control and we may incur substantial costs to enforce the terms of the arrangements, and may not be successful. We and our investors face significant uncertainty about potential future actions by the PRC government that could affect the legality and enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect our ability to consolidate the financial results of the VIEs and the financial performance of our company as a whole. The ADSs may decline in value or become worthless if we are unable to effectively enforce our contractual rights over the assets and operations of the VIEs. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure” for a detailed discussion.

3


 

The following diagram illustrates our corporate structure as of the date of this annual report, including our significant subsidiaries and Zhaoyan(1):

https://cdn.kscope.io/d0dd938521bf32e8cbfdb4560b358766-img232035472_0.jpg 

 

(1) Mr. Zhao, our founder, chief executive officer and chairman, holds 90% of the equity interests in Zhaoyan, and Ms. Yan Chen, an employee and a nominee shareholder, holds the remaining 10%.

We conduct a significant portion of our operations in the PRC through Shanghai Zhaoyan Network Technology Co., Ltd., or Zhaoyan. We have controlling financial interest over Zhaoyan through a series of contractual arrangements by and among Shanghai Dayin Network Technology Co., Ltd., or Shanghai Dayin, Zhaoyan and Zhaoyan’s shareholders. These contractual arrangements, as described in more detail below, collectively allow us to (i) direct the activities of Zhaoyan that most significantly impact Zhaoyan’s economic performance, (ii) receive substantially all of the economic benefits of Zhaoyan, and (iii) have an exclusive option to purchase all or part of the equity interests in Zhaoyan when and to the extent permitted by PRC law. These contractual arrangements include the share pledge agreement, voting rights proxy agreement, irrevocable powers of attorney, exclusive technology consulting and services agreement, and exclusive option agreement, as the case may be. As a result of these contractual arrangements, Agora, Inc. is considered the primary beneficiary of Zhaoyan for accounting purposes and is able to consolidate the financial results of Zhaoyan in the consolidated financial statements in accordance with U.S. GAAP.

We do not have any equity interests in Zhaoyan which is owned by certain nominee shareholders. As a result, rights through these contractual arrangements may be less effective than equity ownership, and we could face heightened risks and costs in enforcing these contractual arrangements, because there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the legality and enforceability of these contractual arrangements. If the PRC government finds such agreements to be illegal, we could be subject to severe penalties or be forced to relinquish our interests in Zhaoyan. Occurrence of any of these events could adversely affect our business, operating results and financial condition, and our securities could decline in value or become worthless as a result.

 

4


 

Below is a summary of the currently effective contractual arrangements by and among Shanghai Dayin, Zhaoyan and Zhaoyan’s shareholders.

Agreements that Provide us with Controlling Financial Interest over Zhaoyan

Share Pledge Agreement. Pursuant to the Share Pledge Agreement, dated June 18, 2015, by and among Shanghai Dayin, Zhaoyan and Zhaoyan’s then shareholders, and a joinder agreement entered into by and among Ms. Yan Chen, Shanghai Dayin and Zhaoyan on January 19, 2021, each of Zhaoyan’s shareholders pledged and the joinder shareholder agrees to pledge all of their equity interests in Zhaoyan to Shanghai Dayin to guarantee their and Zhaoyan’s performance of their obligations under the contractual arrangements. In the event of a breach by Zhaoyan or Zhaoyan’s shareholders of contractual obligations under these agreements, Shanghai Dayin, as pledgee, will be entitled to dispose of the pledged equity interests in Zhaoyan. The shareholders of Zhaoyan also undertake that, during the term of the share pledge agreement, without the prior written consent of Shanghai Dayin, they shall not dispose of the pledged equity interests, create or allow any encumbrance on the pledged equity interests or increase the registered capital of Zhaoyan. If there is any increased registered capital pursuant to the terms of this agreement, such increased registered capital would also be deemed as pledged equity interest. Following the terms of the Share Pledge Agreement, the shareholders of Zhaoyan, except for the joinder shareholder, have registered the pledge partially at the State Administration for Market Regulation on July 29, 2015 who shall further register the remaining in the future. The joinder shareholder shall register the pledge in the future.

Voting Rights Proxy Agreement and Irrevocable Powers of Attorney. Under the Voting Rights Proxy Agreement, dated as of June 18, 2015, by and among Shanghai Dayin, Zhaoyan and Zhaoyan’s then shareholders, the related irrevocable powers of attorney executed by Zhaoyan’s then shareholders on the same date pursuant to the Voting Rights Proxy Agreement, and a joinder agreement entered into by and among Ms. Yan Chen, Shanghai Dayin and Zhaoyan on January 19, 2021, each of Zhaoyan’s shareholders irrevocably granted Shanghai Dayin’s designated representative full power of attorney to exercise his or her rights as a shareholder of Zhaoyan, including rights to convene and attend shareholders’ meetings, nominate and elect directors, and appoint and dismiss the senior management of Zhaoyan. Unless otherwise agreed pursuant to the Voting Rights Proxy Agreement, it will remain effective until the earlier of: (1) the end of a ten-year term, which will automatically extend annually unless Shanghai Dayin provides 30 days’ prior written notice to Zhaoyan and Zhaoyan’s shareholders; and (2) the termination of the term of operation of Zhaoyan. The related irrevocable powers of attorney will remain effective until the expiration or early termination of the Voting Rights Proxy Agreement.

Agreement that Allows us to Receive Economic Benefits from Zhaoyan

Exclusive Technology Consulting and Services Agreement. Under the Exclusive Technology Consulting and Services Agreement, dated as of June 18, 2015, by and between Shanghai Dayin and Zhaoyan, and a joinder agreement entered into by and among Ms. Yan Chen, Shanghai Dayin and Zhaoyan on January 19, 2021, Shanghai Dayin has the exclusive right to provide to Zhaoyan consulting and services related to, among other things, information consulting, assisting in information collection and market research, and providing training to personnel. Shanghai Dayin has the exclusive ownership of intellectual property rights created as a result of the performance of this agreement. Zhaoyan shall pay Shanghai Dayin an annual service fee, which may only be adjusted with the approval of Shanghai Dayin and ShengWang HongKong Limited, or ShengWang HK (previously known as Agora IO Hongkong Limited). Unless otherwise agreed pursuant to the agreement, this agreement will remain effective until the earlier of: (1) the end of a ten-year term, which will automatically extend annually unless Shanghai Dayin provides 30 days’ prior written notice to Zhaoyan; (2) Shanghai Dayin terminates the agreement because of Zhaoyan’s breach of the agreement; and (3) the termination of the term of operation of Zhaoyan.

Agreement that Provides us with the Option to Purchase the Equity Interest in Zhaoyan

Exclusive Option Agreement. Pursuant to the Exclusive Option Agreement, dated as of June 18, 2015, by and among Shanghai Dayin, Zhaoyan and Zhaoyan’s then shareholders, and a joinder agreement entered into by and among Ms. Yan Chen, Shanghai Dayin and Zhaoyan on January 19, 2021, each of Zhaoyan’s shareholders irrevocably granted Shanghai Dayin an exclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permitted under PRC law, all or part of their equity interests in Zhaoyan, and the purchase price shall be the registered capital of Zhaoyan pro rata to Zhaoyan’s shareholders’ shareholdings or the lowest price permitted by applicable PRC law, as applicable. The shareholders of Zhaoyan undertake that, without the prior written consent of Shanghai Dayin or us, they shall not, among other things, increase or decrease the registered capital of Zhaoyan, dispose of its assets, incur any debts or guarantee any liabilities, terminate any material agreements or enter into any agreements that are in conflict with any of the existing material agreements, distribute or vote to distribute any profits, interests or dividends, amend its articles of association or provide any loans to third parties. Unless otherwise agreed pursuant to the agreement, the Exclusive Option Agreement will remain effective until the earliest of: (1) the end of a ten-year term that is automatically extended annually unless Shanghai Dayin gives Zhaoyan a termination notice 30 days before the term ends; (2) all equity interests in Zhaoyan held by Zhaoyan’s shareholders are transferred or assigned to Shanghai Dayin or its designated representatives; and (3) the termination of the term of operation of Zhaoyan.

 

5


 

In the opinion of King & Wood Mallesons, our PRC legal counsel:

the ownership structures of Shanghai Dayin and Zhaoyan in China do not and will not violate any applicable PRC law, regulation or rule currently in effect; and
the contractual arrangements among Shanghai Dayin, Zhaoyan and Zhaoyan’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.

However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. We have been further advised by King & Wood Mallesons that if the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the business we engage in, we could be subject to severe penalties including being prohibited from continuing operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”

Material Licenses and Permits

The following table sets out the license and permit from PRC authorities used in our operations in China as of the date of this annual report.

License/Permit

Holder

Expiration Date

Value-added Telecommunication Business Operation License

Zhaoyan

July 12, 2023

 

As advised by our PRC legal counsel, as of the date of this annual report, our PRC subsidiaries and Zhaoyan have obtained all material licenses, permissions and approvals necessary for our current main business operation in China and no such licenses, permissions or approvals had been denied.

 

6


 

As of the date of this annual report, other than the licenses, permissions and approvals we had obtained, we were not required to obtain other permissions or approvals from the CSRC, the CAC or any other PRC authorities to operate our business in China. We have been closely monitoring regulatory development in China regarding any necessary permissions or approvals from the CSRC, the CAC or other PRC authorities to operate our business in China. However, there are uncertainties as to the related interpretation and implementation of regulatory requirements. It is possible that we may be required by the PRC regulators to update our existing licenses or to obtain additional licenses, permissions or approvals under the current or future laws, rules and regulations applicable to our business as promulgated and amended from time to time. Any failure by us, our PRC subsidiaries and Zhaoyan, even inadvertently, to maintain compliance with applicable PRC laws and regulations, or obtain and maintain required licenses and permissions, in a timely manner or at all, may result in the suspension or termination of our business activities in the PRC, and even subject us, our PRC subsidiaries or Zhaoyan to administrative penalties. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our business is subject to a variety of PRC, U.S. and international laws and regulations, including those regarding privacy, cybersecurity and data protection, and our customers may be subject to regulations related to the handling and transfer of certain types of sensitive and confidential information. Any failure of our platform to comply with or enable our customers to comply with applicable laws and regulations could harm our business, operating results and financial condition,” “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the VIEs 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. Occurrence of any of these events could adversely affect our business, operating results and financial condition, and our securities could decline in value or become worthless as a result” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be required to obtain and maintain permits and licenses to operate our business in China.”

In addition, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which came into effect on September 8, 2006 and were amended on June 22, 2009 include, among other things, provisions that purport to require that an offshore special purpose vehicle that is controlled by PRC domestic companies or individuals and that has been formed for the purpose of an overseas listing of securities through acquisitions of PRC domestic companies or assets using shares of such special purpose vehicles or shares held by its shareholders as considerations to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. While the application of the M&A Rules remains unclear, we believe, that the CSRC approval was not required in the context of our offered securities because (i) our WFOEs were incorporated as wholly-owned by means of foreign direct investments or by merger with or acquisition of any PRC domestic companies with cash other than in exchange of the shares as defined under the M&A Rules; and (ii) that no provision in the M&A Rules clearly classified our contractual arrangements as a type of transaction subject to the M&A Rules. However, there is uncertainty as to how the M&A Rules will be interpreted or implemented. There can be no assurance that the relevant PRC government agencies, including the CSRC, would reach the same conclusion as us. If the CSRC or other PRC regulatory body subsequently determines that we need to obtain the CSRC’s approval for our offered securities or if the CSRC or any other PRC government authorities promulgates any interpretation or implements rules that would require us to obtain CSRC or other governmental approvals for our offered securities, we may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies. In any such event, these regulatory agencies may impose fines and penalties on our operations in China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offering into the PRC or take other actions that could adversely affect our business, operating results and financial condition.

Apart from above, as of the date of this annual report, we were not required to obtain other permissions or approvals from the CSRC, the CAC or any other PRC authorities to offer the securities being registered to foreign investors. However, there are uncertainties as to the related interpretation and implementation of current regulatory requirements and such regulations are subject to change. If the current or future laws, rules and regulations as promulgated and amended from time to time mandate specific actions to be completed by China-based companies listed on a foreign stock exchange like us, we face uncertainties as to whether such actions can be timely completed, or at all. Complying with these laws and requirements could cause us to incur substantial expenses. Additionally, to the extent we are found to be not in compliance with these laws and requirements, we may be subject to fines, regulatory orders to suspend our operations or offerings, or other regulatory and disciplinary sanctions, which could materially and adversely affect our business, financial condition and results of operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our business is subject to a variety of PRC, U.S. and international laws and regulations, including those regarding privacy, cybersecurity and data protection, and our customers may be subject to regulations related to the handling and transfer of certain types of sensitive and confidential information. Any failure of our platform to comply with or enable our customers to comply with applicable laws and regulations could harm our business, operating results and financial condition.” and “Item 4. Information on the Company—A. History and Development of the Company—Potential CSRC Approval Required for the Listing of our ADSs” for more details.

 

7


 

However, the RTE-PaaS industry is still at a nascent stage of development and the laws and regulations regarding licenses for value added telecommunication services in the PRC are continuously evolving, it is possible that the businesses described in relevant rules and regulatory requirements for the licenses, may further be interpreted and applied in a manner that is inconsistent with our understanding above, which means that we may be required by the PRC regulators to update our existing licenses or to obtain additional licenses under the current or future laws, rules and regulations applicable to our business as promulgated and amended from time to time.

We will continuously assess the need to obtain and renew permits and licenses to operate our business, closely consult the supervisory authority having jurisdiction over us, and follow their guidance in a timely manner to ensure we run our business legally. However, we may fail, on acceptable terms and in a timely manner, or at all, to obtain, maintain or update the permits and licenses we may need to operate and expand our business from time to time and as required by the supervisory authorities. If we do not receive or maintain the approvals, or we inadvertently conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to administrative penalties by relevant PRC regulators with measures including fines, and in very extreme cases, confiscation of the gains derived from the operations, being required to discontinue or restrict our operation and being placed in the credit blacklist made by the PRC regulator, and our business, operating results and financial condition could be materially adversely affected.

Transfer of Funds and Other Assets

Under relevant PRC laws and regulations, we do not have an ownership interest over the VIEs. Therefore, we are permitted to remit funds to the VIEs through loans rather than capital contributions, and to receive funds from VIEs through services fees rather than dividends.

In 2020, 2021 and 2022, we did not make any loans to the VIEs. The VIEs fund their operations primarily using cash generated from operating and financing activities.

As of December 31, 2022, Agora, Inc. had made cumulative capital contributions of US$198.3 million to our PRC subsidiary through intermediate holding companies, and were accounted as long-term investments of Agora, Inc. These funds have been used by our PRC subsidiaries for their operations. In 2020, 2021 and 2022, the VIEs transferred US$63.6 million, US$38.6 million and US$24.4 million, respectively, to our PRC subsidiaries as payment of service fees.

As of December 31, 2021 and 2022, the aggregated payment of service fees from the VIEs to our PRC subsidiaries amounted to US$144.9 million and US$169.3 million, respectively. As of December 31, 2021 and 2022, the outstanding balance of service fees owed by the VIEs to our PRC subsidiaries amounted to US$32.0 million and US$41.8 million, respectively. The fees pertain to the research and development services between the VIEs and the WFOEs under the VIE agreements, as well as technical consulting services between the VIEs and our other PRC subsidiaries.

Cash flow between Agora, Inc., its subsidiaries, and the consolidated VIEs in 2020, 2021 and 2022 is summarized as follows. There were no other assets transferred between Agora, Inc., its subsidiaries, and the consolidated VIEs in 2020, 2021 and 2022.

 

For the Year Ended December 31,

 

2020

2021

2022

 

(in US$ thousands)

Payment of service fees from the VIEs to our PRC subsidiaries

63,561

38,565

24,380

Payment of research and development consulting fees from Primary Beneficiary of VIEs to the VIEs

80

3,204

3,799

Capital injections from Agora, Inc. to Other Subsidiaries

410,312

275,406

14,041

Capital injections from Other Subsidiaries to Primary Beneficiary of VIEs

42,220

30,896

 

For a condensed consolidating schedule of financial information that disaggregates the operations and depicts the financial position, cash flows, and results of operations for the same periods for which audited consolidated financial statements are required, see “Item 4. Information on the Company—A. History and Development of the Company—Financial Information Related to the VIEs.” Please also see the consolidated financial statements included at the end of this annual report for more detailed financial information.

For the service fees owed by the VIEs to the WFOEs under the VIE agreements, unless otherwise required by PRC tax authorities, we are able to settle such amounts under the current effective PRC laws and regulations, provided that the VIEs have sufficient funds to do so. Agora, Inc. has not previously declared or paid any cash dividend or dividend in kind, and has no plan to declare or pay any dividends in the near future on our shares or the ADSs representing our ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. See “Item 8—Financial Information—8.A. Consolidated Statements and Other Financial Information—Dividend Policy.”

8


 

Investors in our securities should note that to the extent cash in the business is in the PRC or a PRC entity, the funds may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of Agora, Inc., its subsidiaries, or the VIEs by the PRC government to transfer cash. Our PRC subsidiaries are permitted to pay dividends to their shareholders, and eventually to Agora, Inc., only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Such payment of dividends by entities registered in China is subject to limitations, which could result in limitations on the availability of cash to fund dividends or make distributions to holders of our securities. For example, our PRC subsidiaries and the VIEs are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For details about the applicable PRC regulations and rules relating to such cash transfers through our Group and the associated risks, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends, loans and other distributions on equity paid by our principal operating subsidiaries to fund offshore cash and financing requirements. Any limitation on the ability of our PRC operating subsidiaries to make payments to us could adversely affect our ability to conduct our business,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We are subject to restrictions on currency exchange.”

For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future.

 

Taxation Scenario(1)

 

Preferential Tax and
Treaty Rates
(Scenario A)

Statutory Tax and
Treaty Rates (Scenario B)

Hypothetical pre-tax earnings(2)

100%

100%

Tax on earnings at preferential rate (Scenario A, 15%) or statutory rate (Scenario B, 25%)(3)

(15)%

(25)%

Net earnings available for distribution

85%

75%

Failure of tax planning strategies – distribution to WFOE subject to double taxation at 25%

(18.8)%

Amounts to be distributed as dividend from WFOE

85%

56.2%

Withholding tax at standard rate of 10%(4)

(8.5)%

(5.6)%

Net distribution to Parent/Shareholders

76.5%

50.6%

 

(1)
For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China.
(2)
Under the terms of VIE agreements, our PRC subsidiaries may charge the VIEs for services provided to VIEs. These service fees shall be recognized as expenses of the VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminated in consolidation. For income tax purposes, our PRC subsidiaries and VIEs file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the VIEs and as income by our PRC subsidiaries and are tax neutral.
(3)
Certain of our subsidiaries and VIEs qualify for a 15% preferential income tax rate in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.
(4)
The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements. If in the future, the accumulated earnings of the VIEs exceed the fees paid to our PRC subsidiaries, or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities, we have other tax-planning strategies that can be deployed on a tax neutral basis.

Should all tax planning strategies fail, the VIEs could, as a matter of last resort, make a non-deductible transfer to our PRC subsidiaries for the amounts of the stranded cash in the VIEs. This would result in the double taxation of earnings: one at the VIEs level (for non-deductible expenses) and one at the PRC subsidiaries level (for presumptive earnings on the transfer). Such a transfer and the related tax burdens would reduce our after-tax loss to approximately 5.1% of the pre-tax loss. Our management is of the view that the likelihood that this scenario would happen is remote.

9


 

Financial Information Related to the VIEs

The following tables present the summary financial information for the VIEs and their subsidiaries, the WFOEs that are the primary beneficiary of VIEs, and other entities within the Group for the periods presented.

Selected Condensed Consolidating Statements of Comprehensive Loss Data

 

For the Year Ended December 31, 2022

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Third-party revenues

-

62,507

12,490

85,686

(13)

160,670

Inter-company revenues(1)

-

26,173

7,981

-

(34,154)

-

Research and development (Interco)(1)

-

-

-

(34,154)

34,154

-

Other costs and expenses

(2,759)

(144,120)

(51,963)

(69,360)

13

(268,189)

Other operating income

(150)

(11,318)

442

2,782

-

(8,244)

Income (loss) from subsidiaries and VIEs

(114,872)

(53,540)

(32,039)

-

200,451

-

Income (loss) from non-operations

(2,599)

6,046

9,549

(16,950)

-

(3,954)

Income (loss) before income tax expenses

(120,380)

(114,252)

(53,540)

(31,996)

200,451

(119,717)

Less: income tax expenses

-

(620)

-

(43)

-

(663)

Net income (loss)

(120,380)

(114,872)

(53,540)

(32,039)

200,451

(120,380)

Net income (loss) attributable to ordinary shareholders

(120,380)

(114,872)

(53,540)

(32,039)

200,451

(120,380)

 

 

For the Year Ended December 31, 2021

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Third-party revenues

40,621

12,744

114,617

167,982

Inter-company revenues(1)

31,060

12,661

(43,721)

Research and development (Interco)(1)

(43,721)

43,721

Other costs and expenses

(1,056)

(121,915)

(50,841)

(77,431)

(251,243)

Other operating income

71

935

1,562

2,568

Income (loss) from subsidiaries and VIEs

(73,925)

(30,126)

(5,660)

109,711

Income (loss) from non-operations

2,626

6,359

103

90

9,178

Income (loss) before income tax expenses

(72,355)

(73,930)

(30,058)

(4,883)

109,711

(71,515)

Less: income tax expenses

5

(68)

(777)

(840)

Net income (loss)

(72,355)

(73,925)

(30,126)

(5,660)

109,711

(72,355)

Net income (loss) attributable to ordinary shareholders

(72,355)

(73,925)

(30,126)

(5,660)

109,711

(72,355)

 

10


 

 

 

For the Year Ended December 31, 2020

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Third-party revenues

18,307

3

115,254

133,564

Inter-company revenues(1)

9,513

53,841

577

(63,931)

Research and development (Interco)(1)

(577)

(63,354)

63,931

Other costs and expenses

(510)

(39,806)

(47,406)

(52,705)

(140,427)

Other operating income

546

1,126

1,672

Income (loss) from subsidiaries and VIEs

(3,765)

7,204

1,247

(4,686)

Income (loss) from non-operations

1,160

1,017

23

438

2,638

Income (loss) before income tax expenses

(3,115)

(3,765)

7,677

1,336

(4,686)

(2,553)

Less: income tax expenses

(473)

(89)

(562)

Net income (loss)

(3,115)

(3,765)

7,204

1,247

(4,686)

(3,115)

Less: cumulative undeclared dividends on convertible redeemable preferred shares

(6,715)

(6,715)

Less: accretion on convertible redeemable preferred shares to redemption value

(193,466)

(193,466)

Net income (loss) attributable to ordinary shareholders

(203,296)

(3,765)

7,204

1,247

(4,686)

(203,296)

 

(1)
It represents the elimination of the intercompany service charges at the consolidation level for research and development services with primary beneficiary of VIEs and technical consulting services with other subsidiaries.

11


 

Selected Condensed Consolidating Balance Sheet Data

The following tables present the summary balance sheet data for the VIEs and other entities as of the dates presented.

 

As of December 31, 2022

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

27,727

14,825

986

2,135

45,673

Short-term investments

117,683

253,997

10,359

382,039

Accounts receivable, net

10,829

235

21,739

32,803

Prepayments and other current assets

1,251

5,081

570

424

7,326

Contract Asset

634

634

Held-for-sale assets

13,913

3,009

82

17,004

Amounts due from intercompany(3)

785,226

479,534

85,492

2,338

(1,352,590)

Total current assets

931,887

778,179

90,926

37,077

(1,352,590)

485,479

Property and equipment, net

8,418

503

4,025

12,946

Operating lese right-of-use assets

1,805

97

442

2,344

Intangible Assets

2,518

58

151

2,727

Goodwill

31,928

31,928

Long-term investments

39,000

46,659

8,500

94,159

Other non-current assets

380

460

2,048

2,888

Investments in subsidiaries(2)

(28,264)

(27,597)

55,861

Investments in VIEs(2)

(24,558)

24,558

Prepayment for land use right

168,244

168,244

Total non-current assets

10,736

232,355

(23,440)

15,166

80,419

315,236

Total assets

942,623

1,010,534

67,486

52,243

(1,272,171)

800,715

Liabilities and shareholders’ equity (deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

1,965

9

8,129

10,103

Advances from customers

1,421

4,583

2,348

8,352

Taxes payable

12

1,301

218

336

1,867

Current operating lease liabilities

1,638

294

1,932

Accrued expenses and other current liabilities

2,658

17,477

15,577

11,299

47,011

Held-for-sale liabilities

243

2,145

2,388

Amounts due to intercompany(3)

211,693

1,014,136

72,551

54,210

(1,352,590)

Total current liabilities

214,363

1,038,181

95,083

76,616

(1,352,590)

71,653

Long term payables

36

19

55

Long-term operating lease liabilities

206

134

340

Deferred tax liabilities

375

32

407

Total non-current liabilities

617

185

802

Total liabilities

214,363

1,038,798

95,083

76,801

(1,352,590)

72,455

Total shareholders’ equity (deficit)

728,260

(28,264)

(27,597)

(24,558)

80,419

728,260

Total liabilities, mezzanine equity and shareholders’ equity (deficit)

942,623

1,010,534

67,486

52,243

(1,272,171)

800,715

 

12


 

 

 

As of December 31, 2021

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

148,218

128,960

5,704

2,786

285,668

Short-term investments

75,616

386,473

7,547

469,636

Accounts receivable, net

6,892

1,102

24,625

32,619

Prepayments and other current assets

1,012

5,221

1,309

1,259

8,801

Contract Asset

962

962

Amounts due from intercompany(3)

701,202

216,147

71,334

10,109

(998,792)

Total current assets

926,048

743,693

80,411

46,326

(998,792)

797,686

Property and equipment, net

10,605

950

7,639

19,194

Operating lese right-of-use assets

4,335

2,335

766

7,436

Intangible Assets

6,339

127

231

6,697

Goodwill

56,142

56,142

Long-term investments

37,006

16,919

53,925

Other non-current assets

2,793

814

312

3,919

Investments in subsidiaries(2)

73,273

15,014

(88,287)

Investments in VIEs(2)

5,560

(5,560)

Total non-current assets

73,273

132,234

9,786

25,867

(93,847)

147,313

Total assets

999,321

875,927

90,197

72,193

(1,092,639)

944,999

Liabilities and shareholders’ equity (deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

1,482

76

3,751

5,309

Advances from customers

382

7,195

1,491

9,068

Taxes payable

12

1,704

478

241

2,435

Current operating lease liabilities

2,330

1,168

459

3,957

Accrued expenses and other current liabilities

449

19,519

17,345

15,721

53,034

Amounts due to intercompany(3)

132,599

774,011

47,788

44,394

(998,792)

Total current liabilities

133,060

799,428

74,050

66,057

(998,792)

73,803

Long term payables

254

13

228

495

Long-term operating lease liabilities

2,027

1,120

305

3,452

Deferred tax liabilities

945

43

988

Total non-current liabilities

3,226

1,133

576

4,935

Total liabilities

133,060

802,654

75,183

66,633

(998,792)

78,738

Total shareholders’ equity (deficit)

866,261

73,273

15,014

5,560

(93,847)

866,261

Total liabilities, mezzanine equity and shareholders’ equity (deficit)

999,321

875,927

90,197

72,193

(1,092,639)

944,999

 

(2)
It represents the elimination of the investment among Agora, Inc., other subsidiaries, primary beneficiary of VIEs, and VIEs and VIEs’ subsidiaries.
(3)
It represents the elimination of intercompany balances among Agora, Inc., other subsidiaries, primary beneficiary of VIEs, and VIEs and VIEs’ subsidiaries.

The following table represents the roll-forward of the amount due to intercompany for the VIEs as of December 31, 2022:

 

For the Year Ended December 31, 2022

 

(in US$ thousands)

Amount due to intercompany

 

Balance as of December 31, 2021

(44,394)

Service fees accrued in fiscal year 2022

(34,154)

Value added taxes

(2,049)

Payment of service fees in fiscal year 2022

24,380

Other accrued/paid

(1,746)

Foreign currency translation

3,753

Balance as of December 31, 2022

(54,210)

 

13


 

Selected Condensed Consolidating Statements of Cash Flow Data

The following tables present the summary cash flow data for the VIEs and other entities for the periods presented.

 

For the Year Ended December 31, 2022

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Purchase of service from Group companies(4)

(3,798)

(24,380)

28,178

Sales of service from Group Companies(4)

18,038

6,341

3,799

(28,178)

Operating activities with external parties

414

(63,973)

(21,880)

33,059

(52,380)

Net cash (used in) generated from operating activities

414

(45,935)

(19,337)

12,478

(52,380)

Investment in inter-company-others(5)

(292)

(30,896)

(13,749)

44,937

Other investing activities

(81,574)

(49,277)

(154)

(13,057)

(144,062)

Net cash used in investing activities

(81,866)

(80,173)

(13,903)

(13,057)

44,937

(144,062)

Proceeds from inter-financing-others(5)

14,041

30,896

(44,937)

Other financing activities

(39,039)

(2,111)

(41,150)

Net cash provided by financing activities

(39,039)

11,930

30,896

(44,937)

(41,150)

 

 

For the Year Ended December 31, 2021

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments

Consolidated Total

 

(in US$ thousands)

Purchase of service from Group companies(4)

(3,204)

(38,565)

41,769

Sales of service from Group Companies(4)

26,707

11,858

3,204

(41,769)

Operating activities with external parties

1,922

(46,583)

(26,440)

51,101

(20,000)

Net cash (used in) generated from operating activities

1,922

(19,876)

(17,786)

15,740

(20,000)

Investment in inter-company-others(5)

(241,495)

(52,220)

(23,911)

317,626

Other investing activities

124,434

(169,944)

3,136

(15,316)

(57,690)

Net cash used in investing activities

(117,061)

(222,164)

(20,775)

(15,316)

317,626

(57,690)

Proceeds from inter-financing-others(5)

275,406

42,220

(317,626)

Other financing activities

251,992

(55)

251,937

Net cash provided by financing activities

251,992

275,351

42,220

(317,626)

251,937

 

 

14


 

 

For the Year Ended December 31, 2020

 

Agora, Inc.

Other Subsidiaries

Primary Beneficiary
of VIEs

VIEs and VIEs’ Subsidiaries

Elimination Adjustments