BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2021

1.	BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Sea Limited (the “Company”), its subsidiaries and variable interest entities (“VIEs”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information using accounting policies that are consistent with those used in the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2020. Accordingly, these unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for the six months ended June 30, 2020 and 2021 are not necessarily indicative of results to be expected for any other interim period or for the year ending December 31, 2021. The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements, but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited condensed consolidated financial statements and the notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020.

VIE disclosures

There were no pledges or collateralization of the VIEs’ assets. Creditors of the VIEs have no recourse to the general credit of the primary beneficiaries of the VIEs, and such amounts have been parenthetically presented on the face of the consolidated balance sheets. The VIEs hold certain assets, including land, data servers and related equipment for use in their operations. The VIEs do not own any facilities except for the rental of certain office premises, warehouses and data centers from third parties under operating lease arrangements. They also hold certain value-added technology licenses, registered copyrights, trademarks and registered domain names, including the official website, which are also considered as revenue-producing assets. However, none of such assets was recorded on the Company’s unaudited interim condensed consolidated balance sheets as such assets were all acquired or internally developed with insignificant cost and expensed as incurred. In addition, the Company also hires a sales and marketing as well as a research and development workforce for its daily operations and such costs are expensed when incurred. The Company has not provided any financial or other support that it was not previously contractually required to provide to the VIEs during the periods presented.

The following tables represent the financial information of the VIEs whom the Company does not have majority voting interests as of December 31, 2020 and June 30, 2021 and for the six months ended June 30, 2020 and 2021 before eliminating the intercompany balances and transactions between the VIEs and other entities within the group:

	As of December 31,		As of June 30,
	2020		2021
	$		$

ASSETS:
Current assets:
Cash and cash equivalents		94,502		97,396
Amounts due from intercompanies ⁽¹⁾		44,928		141,878
Others		79,484		66,892

Total current assets		218,914		306,166

Non-current assets:
Property and equipment, net		35,453		33,988
Long-term investments		16,080		17,313
Deferred tax assets		47,948		48,776
Others		37,662		23,682

Total non-current assets		137,143		123,759

Total assets		356,057		429,925

	As of December 31,		As of June 30,
	2020		2021
	$		$
LIABILITIES:
Current liabilities:
Accrued expenses and other payables		91,186		112,185
Deferred revenue		212,377		204,926
Amounts due to intercompanies ⁽¹⁾		70,019		116,898
Others		31,104		28,104

Total current liabilities		404,686		462,113

Non-current liabilities:
Deferred revenue		55,200		70,953
Amounts due to intercompanies ⁽¹⁾		15,710		30,910
Others		18,418		6,759

Total non-current liabilities		89,328		108,622

Total liabilities		494,014		570,735

	For the Six Months ended June 30,
	2020			2021
	$			$

Revenue
- Third party customers		262,801			333,847
- Intercompanies		70,363			84,876

Net loss		(28,770	)		(19,089	)

	For the Six Months ended June 30,
	2020			2021
	$			$

Net cash generated from (used in) operating activities		59,030			(12,218	)
Net cash (used in) generated from investing activities		(25,122	)		500
Net cash generated from financing activities		32,220			14,025

⁽¹⁾

Amounts due from or to intercompanies consist of intercompany receivables or payables to the other companies within the group arising from intercompany transactions and funds advanced for working capital purpose.