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ORGANIZATION | 12 Months Ended
--- | ---
Dec. 31, 2014
ORGANIZATION [Abstract] |
ORGANIZATION |
1. | ORGANIZATION
500.com Limited (the “Company”) was incorporated under the laws of the Cayman Islands on April 20, 2007 under the name Fine Success Limited, which was changed to 500wan.com on May 9, 2011 and further changed to the current name on October 9, 2013. As of December 31, 2014, the Company has four wholly owned subsidiaries in British Virgin Islands, Hong Kong, the United States of America (‘”USA”) and the People's Republic of China (“PRC”), respectively and also consolidates three variable interest entities and four subsidiaries of variable interest entities (collectively “VIEs”), details of which are as follows:
Entity |  | Date of establishment |  | Place of establishment |  | Percentage of ownership by the Company |  |  | Principal activities
Subsidiaries |  |  |  |  |  |  |  |  |  |
Fine Brand Limited (“BVI”) |  | February 9, 2011 |  | British Virgin Islands |  |  | 100 | % |  | Investment Holding
500wan HK Limited (“500wan HK”) |  | March 8, 2011 |  | Hong Kong |  |  | 100 | % |  | Investment Holding
500.com USA Corporation (“500.com USA”) |  | July 21, 2014 |  | USA |  |  | 100 | % |  | Investment Holding
E-Sun Sky Computer (Shenzhen) Co., Ltd. (“E-Sun Sky Computer”) |  | June 18, 2007 |  | PRC |  |  | 100 | % |  | Software Service
VIEs |  |  |  |  |  |  |  |  |  |
Shenzhen E-Sun Network Co., Ltd. (“E-Sun Network”) |  | December 7, 1999 |  | PRC |  |  | - |  |  | Online Lottery Service
Shenzhen Youlanguang Science and Technology Co., Ltd. (“Youlanguang Technology”) |  | December 16, 2008 |  | PRC |  |  | - |  |  | Online Lottery Service
Shenzhen Guangtiandi Science and Technology Co., Ltd. (“Guangtiandi Technology”) |  | December 16, 2008 |  | PRC |  |  | - |  |  | Online Lottery Service
Shenzhen E-Sun Sky Network Technology Co., Ltd. (“E-Sun Sky Network”)* |  | May 22, 2006 |  | PRC |  |  | - |  |  | Online Lottery Service
Shenzhen Wubai Zhifu Co.,Ltd (“500Fu”)** |  | April 23, 2014 |  | PRC |  |  | - |  |  | Third party payment service
Lhasa Yicai Network Technology Co., Ltd. (“Lhasa Yicai”)** |  | October 17, 2014 |  | PRC |  |  | - |  |  | Online Lottery Service
Beijing Baifengrun Science and Technology Co., Ltd. (“Baifengrun Technology”)*** |  | June 13, 2014 |  | PRC |  |  | - |  |  | Development, operation of mobile phone games
* | A subsidiary of E-Sun Network
** | A subsidiary of E-Sun Sky Network
*** | A subsidiary of Guangtiandi Technology
The Company, its subsidiaries and VIEs are hereinafter collectively referred to as the “Group”. The Group provides online lottery purchase services in the PRC. The Group's principal geographic market is in the PRC. The Company does not conduct any substantive operations on its own but instead conducts its business operations through E-Sun Sky Computer and the VIEs. PRC laws and regulations prohibit or restrict foreign ownership of Internet businesses. To comply with these foreign ownership restrictions, the Group operates its websites and provides online lottery purchase services in the PRC through the VIEs. Prior to December 28, 2013, the Company entered into exclusive business cooperation agreements, power of attorney, equity interest pledge agreements, exclusive option agreements, financial support agreements and supplementary agreements to the exclusive option agreements (previously named as exclusive technical consulting and service agreements, power of attorney, equity pledge agreements, equity interest disposal agreements, financial support agreements, business operation agreements and intellectual properties license agreements prior to June 1, 2011) (the “Contractual Arrangements”), with the VIEs through E-Sun Sky Computer, which obligates E-Sun Sky Computer to absorb a majority of the expected losses from the activities of the VIEs' activities, and entitles E-Sun Sky Computer to receive a majority of residual returns from the VIEs. Through these aforementioned agreements, the Company maintains the ability to approve decisions made by the VIEs, and the ability to acquire the equity interests in the VIEs when permitted by the PRC laws via E-Sun Sky Computer. As a result of the Contractual Arrangements, the Company consolidates the VIEs as required by Accounting Standards Codification (“ASC”) 810, “Consolidation”. Effective on January 1, 2010. The Company is required to continue to consolidate the VIEs under the new guidance in Accounting Standards Update (“ASU”) 2009-17 because the Company has been determined to 1) be the most closely associated with the VIEs and the subsidiary of E-Sun Network among the members of the related party group who share the power to direct the activities of the VIEs that most significantly impact their economic performance, and 2) has the obligation to absorb losses or the right to receive benefits of the VIEs that could potentially be significant to the VIEs. On December 28, 2013, 500.com Limited agreed to provide unlimited financial support to the VIEs for their operations. In addition, pursuant to the power of attorney agreements entered into among 500.com Limited, E-Sun Sky Computer and the nominee shareholders of the VIEs, on December 28, 2013, the nominee shareholders of the VIEs assigned the rights to attend the VIEs' shareholders' meetings and to vote on all of the matters in the VIEs that require shareholders' approval, which was entrusted to E-Sun Sky Computer to 500.com Limited. As a result of the assignment of power of attorney from E-Sun Sky Computer to 500.com Limited and the provision of unlimited financial support from 500.com Limited to the VIEs, 500.com Limited has been determined to be most closely associated with the VIEs within the group of related parties and replaced E-Sun Sky Computer as the primary beneficiary of the VIEs on December 28, 2013. The carrying amounts of the assets, liabilities, the results of operations and cash flows of the VIEs included in the Company's consolidated balance sheets, statements of comprehensive income and statements of cash flows are as follows:
|  | As of December 31,2013 |  |  | As of December 31,2014 |  |  | As of December 31,2014 |
|  | RMB |  |  | RMB |  |  | US$ |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 27,831 |  |  |  | 330,690 |  |  |  | 53,298 |
Restricted cash |  |  | 15,090 |  |  |  | 12,667 |  |  |  | 2,042 |
Short-term investments |  |  | - |  |  |  | 70,182 |  |  |  | 11,311 |
Accounts receivable |  |  | 50,778 |  |  |  | 48,550 |  |  |  | 7,825 |
Amounts due from intergroup companies |  |  | 105,169 |  |  |  | 10,484 |  |  |  | 1,690 |
Prepayments and other current assets |  |  | 92,395 |  |  |  | 149,256 |  |  |  | 24,055 |
Deferred tax assets, current portion |  |  | 15,287 |  |  |  | 39,068 |  |  |  | 6,297 |
Total current assets |  |  | 306,550 |  |  |  | 660,897 |  |  |  | 106,518 |
Non-current assets: |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment, net |  |  | 28,703 |  |  |  | 35,283 |  |  |  | 5,687 |
Intangible assets, net |  |  | 1,130 |  |  |  | 1,535 |  |  |  | 247 |
Deposits |  |  | 5,771 |  |  |  | 9,903 |  |  |  | 1,596 |
Long-term investments |  |  | - |  |  |  | 5,114 |  |  |  | 824 |
Deferred tax assets, non-current |  |  | 157 |  |  |  | 343 |  |  |  | 55 |
Other non-current assets |  |  | 2,738 |  |  |  | 1,794 |  |  |  | 289 |
Total non-current assets |  |  | 38,499 |  |  |  | 53,972 |  |  |  | 8,698 |
TOTAL ASSETS |  |  | 345,049 |  |  |  | 714,869 |  |  |  | 115,216 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Short-term loans |  |  | 12,802 |  |  |  | - |  |  |  | - |
Amounts due to intergroup companies |  |  | 3,470 |  |  |  | 140,856 |  |  |  | 22,702 |
Accrued payroll and welfare payable |  |  | 8,336 |  |  |  | 24,828 |  |  |  | 4,002 |
Accrued expenses and other current liabilities |  |  | 72,857 |  |  |  | 100,367 |  |  |  | 16,176 |
Income tax payable |  |  | 1,863 |  |  |  | 4,680 |  |  |  | 754 |
Total current liabilities |  |  | 99,328 |  |  |  | 270,731 |  |  |  | 43,634 |
Non-current liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Long-term payables |  |  | 29,328 |  |  |  | 42,540 |  |  |  | 6,856 |
Total non-current liabilities |  |  | 29,328 |  |  |  | 42,540 |  |  |  | 6,856 |
TOTAL LIABILITIES |  |  | 128,656 |  |  |  | 313,271 |  |  |  | 50,490 |
|  | For the years ended December 31, |
|  | 2012 |  |  | 2013 |  |  | 2014 |  |  | 2014 |
|  | RMB |  |  | RMB |  |  | RMB |  |  | US$ |
Net revenues |  |  | 113,566 |  |  |  | 182,255 |  |  |  | 447,898 |  |  |  | 72,188 |
Net income |  |  | 3,720 |  |  |  | 19,759 |  |  |  | 185,205 |  |  |  | 29,850 |
|  | For the years ended December 31, |
|  |  | 2012 |  |  |  | 2013 |  |  |  | 2014 |  |  |  | 2014 |
|  |  | RMB |  |  |  | RMB |  |  |  | RMB |  |  |  | US$ |
Net cash generated from (used in) operating activities |  |  | (22,690 | ) |  |  | (157,646 | ) |  |  | 422,702 |  |  |  | 68,127 |
Net cash generated from (used in) investing activities |  |  | 1,587 |  |  |  | 156,033 |  |  |  | (107,041 | ) |  |  | (17,252 | )
Net cash generated from (used in) financing activities |  |  | (966 | ) |  |  | 13,052 |  |  |  | (12,802 | ) |  |  | (2,063 | )
There was no pledge or collateralization of the VIEs' assets. Creditors of the VIEs have no recourse to the general credit of the Company, which is the primary beneficiary of the VIEs. In addition, the Company has not provided any financial support to its VIEs as of December 31, 2014.

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