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TABLE OF CONTENTS
M17 ENTERTAINMENT LIMITED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on May 25, 2018

Registration No. 333-224894


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



Amendment No. 2
TO

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



M17 Entertainment Limited
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

Cayman Islands
(State or other jurisdiction of
incorporation or organization)
  7370
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

13F, No. 2, Sec. 5, Xinyi Road,
Xinyi District, Taipei City 110, Taiwan
Republic of China
+886 (2) 2720-8688
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



Cogency Global Inc.
10 East 40th Street, 10th Floor
New York, N.Y. 10016
(800) 221-0102
(Name, address, including zip code, and telephone number, including area code, of agent for service)



copies to:

David T. Zhang, Esq.
Benjamin W. James, Esq.
Kirkland & Ellis International LLP
c/o 26th Floor, Gloucester Tower, The Landmark
15 Queen's Road Central, Hong Kong
+852 3761-3300

 

Chris K.H. Lin, Esq.
Daniel Fertig, Esq.
Simpson Thacher & Bartlett LLP
35th Floor, ICBC Tower
3 Garden Road, Central
Hong Kong
+852 2514-7600

Approximate date of commencement of proposed sale to the public:
as soon as practicable after the effective date of this registration statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

           Emerging growth company    ý

           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 7(a)(2)(B) of the Securities Act.    o

           † 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.



CALCULATION OF REGISTRATION FEE

               
 
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(4)

 

Class A Ordinary shares, par value US$0.0001 per share(1)

  69,101,200   US$1.50   US$103,651,800.00   US$12,904.65

 

(1)
American depositary shares 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. 333-225114). Each American depositary share represents eight Class A ordinary share(s).

(2)
Includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the Class A ordinary shares are first bona fide offered to the public, and also includes Class A ordinary shares that may be purchased by the underwriters pursuant to an option to purchase additional ADSs. These Class A ordinary shares are not being registered for the purpose of sales outside the United States.

(3)
Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933.

(4)
Previously paid.



           The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

   


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The information in this preliminary prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

Subject to Completion. Dated May 25, 2018.

7,511,000 American Depositary Shares

LOGO

M17 Entertainment Limited

Representing 60,088,000 Class A Ordinary Shares



         This is an initial public offering of American depositary shares, or ADSs, by M17 Entertainment Limited.

         M17 Entertainment Limited is offering 7,511,000 ADSs to be sold in the offering.

         Prior to this offering, there has been no public market for the ADSs or our Class A ordinary shares. It is currently estimated that the initial public offering price per ADS will be between US$10.00 and US$12.00. We have applied to list the ADSs on the New York Stock Exchange under the symbol "YQ."

         We are an "emerging growth company" as defined under applicable U.S. securities laws and, as such, we are eligible for reduced public company reporting requirements.

         Immediately prior to the completion of this offering, our outstanding issued share capital will consist of Class A ordinary shares and Class B ordinary shares. Joseph Jiexian Phua, our director and group chief executive officer, will beneficially own all of our issued Class B ordinary shares and will be able to exercise 56.3% of the total voting power of our issued and outstanding share capital immediately following the completion of this offering assuming the underwriters do not exercise their over-allotment option to purchase additional ADSs. 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 twenty votes and is convertible into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.



         We are a "controlled company" under the rules of the New York Stock Exchange, and may be exempt from certain corporate governance requirements, though we do not intend to rely on such exemptions. See "Risk Factors—Risks Related to Our ADSs and This Offering—As a "controlled company" under the rules of the New York Stock Exchange, we may be exempt from certain corporate governance requirements that could adversely affect our public shareholders."

         See "Risk Factors" beginning on page 14 to read about factors you should consider before buying the ADSs.



         Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.



       
 
 
  Per ADS
  Total
 

Initial public offering price

  US$               US$            
 

Underwriting discounts and commissions(1)

  US$               US$            
 

Proceeds, before expenses, to us

  US$               US$            

 

(1)
For a description of compensation payable to the underwriters, see "Underwriting."

         The underwriters have the option to purchase up to an additional 1,126,650 ADSs from us at the initial public offering price less the underwriting discounts and commissions within 30 days from the date of this prospectus.

         The underwriters expect to deliver the ADSs against payment in New York, New York on                        , 2018.



Citigroup   Deutsche Bank Securities



Daiwa Capital Markets   Mizuho Securities



   

Prospectus dated                        , 2018.


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TABLE OF CONTENTS

 
  Page  

Prospectus Summary

    1  

Risk Factors

    14  

Special Note Regarding Forward-Looking Statements and Industry Data

    47  

Use of Proceeds

    49  

Dividend Policy

    50  

Capitalization

    51  

Dilution

    53  

Enforceability of Civil Liabilities

    55  

Corporate History and Structure

    58  

Selected Consolidated Financial Data and Key Operating Data

    61  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    64  

Our Market Opportunity

    98  

Business

    104  

Regulation

    124  

Management

    138  

Principal Shareholders

    148  

Related Party Transactions

    151  

Description of Share Capital

    153  

Description of American Depositary Shares

    168  

Shares Eligible for Future Sale

    180  

Taxation

    182  

Underwriting

    189  

Expenses Related to This Offering

    198  

Legal Matters

    199  

Experts

    200  

Where You Can Find Additional Information

    201  

Index to Consolidated Financial Statements

    F-1  

        You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free-writing prospectus. We are offering to sell, and seeking offers to buy, the ADSs offered hereby, but only under circumstances and in jurisdictions where offers and sales are permitted and lawful to do so. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs.

        Neither we nor any of the underwriters have taken any action that would permit a public offering of the ADSs outside the United States or permit the possession or distribution of this prospectus or any related free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any related free-writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of the prospectus outside the United States.

        Until            , 2018 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

        The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements and notes appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under "Risk Factors," before deciding whether to buy the ADSs. This prospectus contains certain estimates and information from the industry reports commissioned by us and prepared respectively by Frost & Sullivan (S) Pte Ltd, or Frost & Sullivan, an independent market research firm, regarding our industries and our market positions.

Our Business

        Our mission is to empower artists.

        We operate the largest live streaming platform by revenue in Developed Asia with a market share of 19.2% in the first quarter of 2018, according to Frost & Sullivan. In our home market of Taiwan, which, according to Frost & Sullivan, represented 36.1% of the live streaming market in Developed Asia in 2017, we were ranked number one among all live streaming platforms in terms of revenue with a market share of 38.6% in the first quarter of 2018, more than double that of our closest competitor. Artists located in Taiwan were responsible for 78.1%, 87.8% and 71.6% of live streaming revenue in 2016, 2017 and the three months ended March 31, 2018, respectively. We have successfully extended our market leadership in Taiwan to other markets in Developed Asia that have close cultural proximity to Chinese-speaking countries. According to Frost & Sullivan, in the first quarter of 2018, we were number one among live streaming platforms in Hong Kong by revenue with a market share of 15.3% and we were ranked second among live streaming platforms in Japan by revenue where we increased our market share to 18.6% from 9.6% in the fourth quarter of 2017.

        Our live streaming platform, 17 Media, was launched in Taiwan in July 2015. 17 Media had 33.3 million registered users as of March 31, 2018, compared to 32.4 million and 29.3 million as of December 31, 2017 and 2016, respectively. 17 Media had 1.0 million average monthly active users in the three months ended March 31, 2018, compared to 1.0 million and 0.9 million in the three months ended December 31, 2017 and in December 2016, respectively. We also operate Paktor, which was launched in Singapore in 2013, and Goodnight, which are our main dating applications. The total number of registered users on our dating applications grew to 14.6 million as of March 31, 2018 from 13.9 million and 11.0 million as of December 31, 2017 and 2016, respectively. Our average monthly active dating users increased to 0.7 million in the three months ended March 31, 2018 from 0.6 million and 0.5 million in the three months ended December 31, 2017 and in December 2016, respectively. We are in the process of integrating our live streaming platform into our online dating applications, and our integrated platform had 47.9 million registered users as of March 31, 2018 and 1.7 million average monthly active users in the three months ended March 31, 2018, an increase from 46.3 million registered users as of December 31, 2017 and 1.6 million average monthly active users in the three months ended December 31, 2017.

        We are a tech-enabled entertainment company led by veteran media and entertainment executives. Our co-founders and core management team have over 20 years of combined experience managing top artists and producing high quality music and video content in Asia, as well as operating social and interactive entertainment platforms in Asia and globally. Because of our media and entertainment expertise, we understand the challenges facing the entertainment industry, including the gap between fans and artists. We seek to bring our users closer to their favorite artists by enabling users to interact and socialize with artists directly from their mobile devices. This model has made it possible for us to disrupt the traditional artist-agency model by creating a robust and systematic process of discovering, training, developing and promoting artists. We are able to identify and nurture high-quality artists early while avoiding substantial upfront investments.

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        We have a proven track record of using highly engaging interactive entertainment experiences across multiple media formats to drive monetization. Our high quality live streaming content, evidenced by the fact that 78.2% of the content streamed on our live streaming platform during March 2018 was from contracted artists, as well as our innovative online-to-offline events and competitions have been highly effective in attracting, engaging and growing a vibrant base of paying users. Our online competitions give fans an opportunity to show their support to their favorite artists with gifts and provide our popular artists an opportunity to increase their earnings. Average daily time spent on our live streaming platform by live streaming users increased to 40.4 minutes in March 2018 from 35.5 minutes in December 2017 and 19.0 minutes in December 2016, while average monthly paying users have increased to 32,038 in the three months ended March 31, 2018 from 25,000 in the three months ended December 31, 2017 and 10,748 in December 2016, representing a paying user ratio of 3.1%, 2.5% and 1.2% in the same respective periods. Average revenue per paying user per month on our live streaming platform was US$355.2 in the three months ended March 31, 2018 compared to US$381.1 and US$102.3 in the three months ended December 31, 2017 and in December 2016, respectively. In addition, our ability to understand, predict and influence viewers' tastes has enabled us to create a variety of successful products, including pop music albums, music videos, TV programs and variety shows. Our live streaming revenues have historically accounted for the large majority of our revenues, including 90.1% of our total net revenues in the three months ended March 31, 2018, and we expect to continue to derive the large majority of our revenues from live streaming in the foreseeable future.

        Our current structure is the result of a series of transactions that were completed in March 2017 between Machipopo, Inc., the entity that operates our live streaming business, and us, the successor of Paktor Pte. Ltd., the entity that operates our dating business. We have enjoyed significant growth since our current structure came into being. Machipopo generated live streaming revenues of US$71.8 million in 2017, or US$82.4 million in 2017 on a pro forma consolidated basis, compared to US$4.0 million in 2016. Our live streaming revenues were US$34.1 million in the three months ended March 31, 2018, compared to nil, or US$10.6 million on a pro forma consolidated basis, for the same period in 2017. M17 had a loss for the year of US$22.0 million in 2017 compared to a loss for the year of US$16.4 million in 2016 while Machipopo had a loss of US$11.6 million. Our loss for the three months ended March 31, 2018 was US$26.9 million compared to a profit of US$22.3 million, or a loss of US$17.5 million on a pro forma consolidated basis, for the same period in 2017.

Our Market Opportunities

        We define our market of Developed Asia as the combined regions of Taiwan, Japan, South Korea, Singapore and Hong Kong. Developed Asia had over 215 million people, over US$35,000 GDP per capita, US$7.6 trillion of GDP and an annualized nominal GDP growth rate of 1.56% in 2017, according to Frost & Sullivan.

        We operate within the pure-play live streaming industry, a market segment of the global media and entertainment industry, with a substantially faster projected growth rate than the overall industry in Developed Asia, according to Frost & Sullivan.

        Advances in technology and changing consumer consumption preferences are the primary drivers of our growth.

    Rise of the digital platform.  Developed Asia's mature and developed internet infrastructure supports the high levels of internet and smartphone penetration necessary for widespread access to digital technologies, such as live streaming platforms.

    Focus on increasingly diversified entertainment-oriented programs.  According to Frost & Sullivan, new forms of entertainment programs have emerged in recent years, such as reality shows and

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      short-form videos, and the continued growth of entertainment programs will drive usage of live streaming platforms, which typically concentrate on entertainment.

    Emergence of User Generated Content and Professionally-curated User Generated Content.  Live streaming platforms are often a faster and more affordable way for grassroots artists to create and distribute content to a large audience. This allows for the creation of more diversified and personalized content, which is in increasing demand in Developed Asia.

    New technology enables content innovation and creation.  Virtual and augmented reality will create a more engaging viewer experience for live streaming platforms, which will increase their appeal and stickiness with users.

        The creation, consumption and distribution of entertainment content in Developed Asia is changing dramatically and live streaming platforms are becoming increasingly more disruptive and a popular alternative to traditional media throughout the region.

Our Strengths

        We believe that the following strengths contribute to our success and set us apart from our peers:

    leading live streaming platform in Developed Asia;

    in-depth media and entertainment expertise;

    high quality content across multiple media formats;

    innovative and effective content monetization;

    vertically integrated entertainment ecosystem powered by data insights; and

    proven track record of extending our business model across Developed Asia.

Our Strategies

        We intend to pursue the following strategies to further grow our business:

    grow in Japan and expand into new markets;

    expand content offerings to increase user engagement and loyalty;

    reinvent traditional media in our markets;

    achieve profitability by increasing monetization and operating leverage;

    expand our artist base; and

    extract synergies between different product lines.

Our Challenges

        We believe some of the major risks and uncertainties that may materially and adversely affect us include the following:

    a limited operating history in a new and dynamic industry;

    a relatively new business model operating in relatively new markets;

    our ability to retain existing users and attract new users, or maintain and increase the number of our paying users and VIP users;

    our ability to attract, train and retain artists; and

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    our ability to effectively manage our growth and control our costs and expenses.

        See "Risk Factors" and other information included in this prospectus for a detailed discussion of the above and other challenges and risks.

Corporate History and Structure

        In March 2017, under a share swap agreement, all of the shareholders of Paktor exchanged their shares for equivalent classes of our shares, and our company became the holding company of Paktor. In October 2016 and January 2017, Paktor acquired 36.8% and 9.44% of the equity interests of Machipopo, respectively, and in March 2017, under the same share swap agreement through which we acquired Paktor, we also acquired all of the remaining interests of Machipopo by issuing equivalent classes of our shares to the remaining shareholders of Machipopo. As a result, we hold all of the equity interests of both Paktor and Machipopo, through which we operate our business.

        As of the date of this prospectus, we conduct our business operations across five subsidiaries and two branches. In addition, we have four VIEs in Taiwan and we do not regard the businesses operated by these VIEs as material to our operations. See "Corporate History and Structure."

        The chart below summarizes our corporate structure and identifies our principal subsidiaries and branches, as well as our VIEs in Taiwan, as of the date of this prospectus:

GRAPHIC

Corporate Information

        Our principal executive offices are located at 13F, No. 2, Sec. 5, Xinyi Road, Xinyi District, Taipei City 110, Taiwan, Republic of China. Our telephone number at this address is +886 (2) 2720-8688. Our registered office in the Cayman Islands is at the offices of Walkers Corporate Limited at Cayman

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Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 10 East 40th Street, 10th Floor, New York, N.Y. 10016.

        Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is m17.asia. The information contained on our website is not a part of this prospectus.

        As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

        We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenue of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.07 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Conventions Which Apply to This Prospectus

        Unless we indicate otherwise, all information in this prospectus reflects no exercise by the underwriters of their option to purchase up to 1,126,650 additional ADSs from us, representing 9,013,200 ordinary shares.

        Except where the context otherwise requires:

    "active user" refers to a user account, calculated based on a device identification, that has accessed our mobile platform at least once during a given period. Users who access our live streaming platform through their desktop at 17.live are not required to log-in and thus our active user data does not include users accessing our platform from desktop computers. A unique user that is active in more than one of the applications on our platform is counted as more than one active user;

    "ADSs" refer to American depositary shares, each of which represents eight Class A ordinary share(s);

    "artist" refers an artist or performer who performs or displays his or her talents on our live streaming platform;

    "China" or "PRC" refers to the People's Republic of China, excluding, for the purpose of this prospectus only, Taiwan and the special administrative regions of Hong Kong and Macau;

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    "contracted artist" refers to an artist who has signed a streamer contract or an agency agreement with us;

    "Developed Asia" refers to the distinct markets of Taiwan, Hong Kong, Singapore, South Korea and Japan;

    "Machipopo" refers to Machipopo, Inc., our subsidiary, through which we operate our live streaming platforms;

    "MAUs" refer to the average number of active users during each month within a given period;

    "NT$" or "New Taiwan Dollars" refer to the legal currency of Taiwan;

    "Paktor" refers to Paktor Pte. Ltd., our subsidiary, through which we operate our dating business;

    "paying user" refers to a user account that has purchased virtual gifts or other products and services on our platform at least once during a given period. A unique individual that purchases virtual gifts in more than one of the applications on our platform is counted as more than one paying user;

    "paying user ratio" refers to the number of paying user divided by the number of active users within a given period;

    "professionally-generated content" or "PGC" is any form of content generated in a studio or by professionals on our platform;

    "professionally-curated user generated content" or "PUGC" is any form of content generated by our contracted artists on our platform;

    "registered user" refers to an account that has been registered on our platform. An individual may register more than one account and these count as more than one registered user;

    "shares" or "ordinary shares" refer to our ordinary shares, par value US$0.0001 per share, and upon and after the completion of this offering refers to our Class A and Class B ordinary shares, par value US$0.0001 per share;

    "Singapore Dollars" refer to the legal currency of the Republic of Singapore;

    "user generated content" or "UGC" is any form of content generated by any user on an internet or mobile platform;

    "US$," "U.S. Dollars," "$" or "dollars" refer to the legal currency of the United States of America; and

    "we," "us," "our company," "our group," "our," "M17 Entertainment" or "M17" refers to M17 Entertainment Limited, a Cayman Islands company, its consolidated subsidiaries and its consolidated affiliated entities, including its variable interest entities, or VIEs.

        Our reporting currency is the U.S. Dollar. The functional currency of M17 Entertainment Limited was the Singapore Dollar in 2016 and changed to the U.S. Dollar in 2017 upon the acquisition of Machipopo in March 2017. The functional currencies of our subsidiaries are the currencies of the primary economic environment in which they operate. This prospectus contains translations of certain foreign currency amounts into U.S. Dollars for the convenience of the reader. Unless otherwise stated, all translations of New Taiwan Dollars, Hong Kong Dollars, Singapore Dollars and Japanese Yen into U.S. Dollars have been made at the rates of NT$29.6400 to US$1.00, HK$7.8128 to US$1.00, S$1.3363 to US$1.00 and ¥112.6900 to US$1.00, respectively, being the noon buying rates in The City of New York for cable transfers in New Taiwan Dollars, Hong Kong Dollars, Singapore Dollars and Japanese Yen as certified for customs purposes by the Federal Reserve Bank of New York in effect as of December 29, 2017 set forth in the H.10

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statistical release of the U.S. Federal Reserve Board for translation into U.S. Dollars. We make no representation that the New Taiwan Dollars amounts, Hong Kong Dollars, Singapore Dollars and Japanese Yen referred in this prospectus could have been, or could be, converted into U.S. Dollars at any particular rate or at all. On May 18, 2018, the noon buying rate for New Taiwan Dollars, Hong Kong Dollars, Singapore Dollars and Japanese Yen were NT$29.9500 to US$1.00, HK$7.8498 to US$1.00, S$1.3429 to US$1.00 and ¥110.7100 to US$1.00, respectively.

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THE OFFERING

        The following assumes that the underwriters will not exercise their option to purchase additional ADSs in the offering, unless otherwise indicated.

Offering Price

  We expect that the initial public offering price will be between US$10.00 and US$12.00 per ADS.

ADSs Offered by Us

 

7,511,000 ADSs (or 8,637,650 ADSs if the underwriters exercise their option to purchase additional ADSs in full).

ADSs Outstanding Immediately After This Offering

 

7,511,000 ADSs (or 8,637,650 ADSs if the underwriters exercise their option to purchase additional ADSs in full).

Ordinary Shares Outstanding Immediately After This Offering

 

We will adopt a dual class ordinary share structure immediately prior to the completion of this offering.            ordinary shares, comprising 251,384,863 Class A ordinary shares and 16,177,768 Class B ordinary shares (or 276,575,831 ordinary shares if the underwriters exercise their over-allotment option in full, comprising 260,398,063 Class A ordinary shares and 16,177,768 Class B ordinary shares) will be issued and outstanding immediately upon the completion of this offering. Class B ordinary shares issued and outstanding immediately after the completion of this offering will represent 7.4% of our total issued and outstanding shares and 56.3% of the then total voting power (or 5.8% of our total issued and outstanding shares and 55.4% of the then total voting power if the underwriters exercise their over-allotment option in full).

New York Stock Exchange Global Market symbol

 

YQ.

The ADSs

 

Each ADS represents eight Class A ordinary share(s).

 

The depositary (or the custodian) will hold the Class A ordinary shares underlying your ADSs and you will have rights as provided in the deposit agreement.

 

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares, after deducting its fees and expenses, all as provided in, and subject to the terms of, the deposit agreement.

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You may surrender your ADSs to the depositary in exchange for Class A ordinary shares, as provided in, and subject to the terms of, the deposit agreement. The depositary will charge you fees for any such exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after such amendment, you agree to be bound by the deposit agreement as amended.

 

To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Ordinary shares

 

Our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A ordinary share will be entitled to one vote, and each Class B ordinary share will be entitled to twenty votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of beneficial ownership of Class B ordinary shares by a beneficial owner thereof to any person or entity which is not an affiliate of such owner, such Class B ordinary shares will automatically and immediately convert into the same number of Class A ordinary shares. For a description of Class A ordinary shares and Class B ordinary shares, see "Description of Share Capital."

Option to Purchase Additional ADSs

 

We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to 1,126,650 additional ADSs, respectively.

Use of Proceeds

 

We estimate that we will receive net proceeds from this offering of approximately US$73.3 million (or US$84.8 million if the underwriters exercise their option to purchase additional ADSs in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us and assuming an initial public offering price of US$11.00 per ADS, being the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus.

 

We plan to use the net proceeds of this offering primarily for the following purposes:

 

US$60.0 million for expansion of our business into Japan and other new markets;

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US$10.0 million for content development, including PGC and new content formats; and

 

the remainder for strategic merger and acquisition opportunities, though we have not identified any targets, as well as working capital and other general corporate purposes.

 

See "Use of Proceeds" for additional information.

Lock-up

 

We, our directors and executive officers, and our existing shareholders 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 ending 180 days after the date of this prospectus. See "Underwriting" for more information.

Risk Factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of risks you should carefully consider before investing in the ADSs.

Depositary

 

Citibank, N.A.

Directed Share Program

 

At our request, the underwriters have reserved for sale, at the initial public offering price, approximately 5% of the total ADSs offered by this prospectus to our directors, executive officers, employees, business associates and related persons.

Concentration of Ownership

 

Once this offering is completed, our executive officers, directors, and stockholders holding more than 5% of our outstanding shares, together with their affiliates, will beneficially own, in the aggregate, approximately 69.6% of our outstanding shares and 64.8% of the voting power of our outstanding shares.

        The number of ordinary shares to be issued and outstanding after this offering excludes, unless stated otherwise, (i) ordinary shares issuable upon the exercise of any outstanding awards pursuant to our share incentive plan after the date of this prospectus; (ii) up to 1,014,120 ordinary shares issuable upon conversion of outstanding warrants in the aggregate principal amount of US$3,775,000 after this offering; and (iii) up to 19,733,333 ordinary shares issuable upon conversion of outstanding convertible notes in the aggregate principal amount of US$18,500,000 after this offering at a conversion price of US$0.9625. See "Description of Share Capital—History of Securities Issuances."

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SUMMARY CONSOLIDATED FINANCIAL DATA AND KEY OPERATING DATA

        The following summary consolidated statements of comprehensive income data for the years ended December 31, 2016 and 2017 and summary consolidated financial position data as of December 31, 2016 and 2017 of our company have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary condensed consolidated statements of comprehensive income data for the three months ended March 31, 2017 and 2018 and summary condensed consolidated financial position data as of March 31, 2017 and 2018 of our company have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

        In March 2017, under a share swap agreement, all of the existing ordinary and preference shareholders of Paktor exchanged their respective shares for equivalent classes of our shares. As a result, our company became the holding company of Paktor. The share swap agreement was regarded as a reorganization of entities and has been accounted for as if our company, through Paktor, had been in existence throughout the periods presented in the consolidated financial statements. In October 2016 and January 2017, Paktor acquired 36.8% and 9.44% of the equity interests of Machipopo, respectively, which we accounted for under the equity method. In March 2017, under the same share swap agreement through which we acquired Paktor, we also acquired all of the remaining equity interests in Machipopo by issuing equivalent classes of our shares to the remaining shareholders of Machipopo. As a result of the acquisition of Machipopo, the summary historical consolidated financial statements for the year ended December 31, 2016 may not be comparable to that for the year ended December 31, 2017.

        The following summary consolidated statements of comprehensive income data for the year ended December 31, 2016 and for the three months ended March 31, 2017 and the summary consolidated financial position data as of December 31, 2016 and March 31, 2017 of Machipopo have been derived from the audited consolidated financial statements of Machipopo included elsewhere in this prospectus.

        The consolidated financial statements of us and Machipopo are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board. Our historical results are not necessarily indicative of results expected for future periods. You should read this "Summary Consolidated Financial Data" section together with our consolidated financial statements and the related notes and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section included elsewhere in this prospectus.

        The following tables also set forth the summary unaudited pro forma summary consolidated statement of comprehensive income for the year ended December 31, 2017, as well as the three months ended March 31, 2017, each of which reflects the effect of the acquisition of Machipopo by us, which was completed in March 2017, as if such transaction had occurred on January 1, 2017. See "Management's Discussion and Analysis of Financial Condition and Results of Operation—Unaudited Pro Forma Consolidated Financial Information" for more information. The pro forma adjustments are based upon currently available information and certain assumptions that are factually supportable and that we believe are reasonable under the circumstances. The pro forma financial information does not purport to present what our actual consolidated results of operations would have been had the transactions occurred on the dates indicated, nor are they necessarily indicative of results that may be expected for any future period.

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  Year Ended December 31,   Three Months Ended
March 31,
 
 
   
   
  2017   (Unaudited)

 
 
  2016    
  Machipopo for
the period from
January 1, 2017 to
March 31, 2017
   
  2017   2018  
 
   
  Pro forma
(unaudited)
 
 
  M17   Machipopo   M17   M17   Pro forma   M17  
 
  (US$)
   
   
   
 

Net revenues

    3,682,180     4,003,236     79,502,134     10,577,834     90,079,968     1,174,722     11,752,556     37,903,577  

Cost of revenue

    (967,449 )   (7,005,558 )   (65,504,191 )   (9,219,555 )   (75,610,477 )   (572,326 )   (10,678,612 )   (27,365,783 )

Gross profit

    2,714,731     (3,002,322 )   13,997,943     1,358,279     14,469,491     602,396     1,073,944     10,537,794  

Operating expenses:

                                                 

Selling expenses

    (3,674,603 )   (2,935,157 )   (32,917,704 )   (5,462,501 )   (38,850,660 )   (731,657 )   (6,664,613 )   (19,921,400 )

General and administrative expenses

    (2,005,825 )   (2,241,078 )   (10,021,745 )   (1,004,106 )   (11,117,623 )   (843,392 )   (1,939,270 )   (12,104,969 )

Research and development expenses

    (1,876,483 )   (2,093,821 )   (7,498,434 )   (786,334 )   (8,284,768 )   (506,575 )   (1,292,909 )   (3,326,872 )

Total operating expenses

    (7,556,911 )   (7,270,056 )   (50,437,883 )   (7,252,941 )   (58,253,051 )   (2,081,624 )   (9,896,792 )   (35,353,241 )

Operating loss

    (4,842,180 )   (10,272,378 )   (36,439,940 )   (5,894,662 )   (43,783,560 )   (1,479,228 )   (8,822,848 )   (24,815,447 )

Non-operating income and expenses

                                                 

Other income

            128,280         128,280              

Other gains and losses

    (10,251,359 )   (1,313,743 )   17,029,245     (964,846 )   (18,899,094 )   26,988,566     (8,939,773 )   (1,895,824 )

Finance costs

    (28,461 )       (251,698 )       (251,698 )           (247,806 )

Share of profit/(loss) of associates accounted for under equity method

    (1,233,459 )       (3,171,282 )           (3,171,282 )        

Total non-operating income and expenses

    (11,513,279 )   (1,313,743 )   13,734,545     (964,846 )   (19,022,512 )   23,817,284     (8,939,773 )   (2,143,630 )

Profit/(loss) before income tax

    (16,355,459 )   (11,586,121 )   (22,705,395 )   (6,859,508 )   (62,806,072 )   22,338,056     (17,762,621 )   (26,959,077 )

Income tax (expenses) benefit

            692,165         922,886         230,721     9,238  

Profit/(loss) for the year

    (16,355,459 )   (11,586,121 )   (22,013,230 )   (6,859,508 )   (61,883,186 )   22,338,056     (17,531,900 )   (26,949,839 )

Other comprehensive income

                                                 

Other comprehensive income, before tax, exchange differences on translation

    (201,965 )   (2 )   168,803     (4,840 )   168,803     (323,043 )   (323,043 )   (86,657 )

Other comprehensive income for the year, net of tax

    (201,965 )   (2 )   168,803     (4,840 )   168,803     (323,043 )   (323,043 )   (86,657 )

Total comprehensive income for the year

    (16,557,424 )   (11,586,123 )   (21,844,427 )   (6,864,348 )   (61,714,383 )   22,015,013     (17,854,943 )   (27,036,496 )

Basic earnings per share

                                                 

Total basic earnings per share

    (0.78 )   (0.11 )   (0.46 )   (0.07 )   (1.11 )   1.01     (0.33 )   (0.50 )

Diluted earnings per share

                                                 

Total diluted earnings per share             

    (0.78 )   (0.11 )   (0.46 )   (0.07 )   (1.11 )   0.28     (0.33 )   (0.50 )

Non-IFRS Financial Measures (unaudited) EBITDA(1)

    (16,218,755 )   (10,755,926 )   (16,647,311 )   (6,649,872 )         22,419,855                      (24,951,157 )

Adjusted EBITDA(1)

    (15,806,059 )   (10,028,372 )   (14,754,757 )   (6,519,397 )         22,846,231                      (18,489,200 )

(1)
To see how we define and calculate EBITDA and adjusted EBITDA, a reconciliation between EBITDA and adjusted EBITDA and loss for the year (the most directly comparable IFRS financial measure) and a discussion about the limitations of non-IFRS financial measures, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures."

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  As of
December 31,
2016
  As of
December 31,
2016
  As of
December 31,
2017
  As of
March 31,
2017
  As of
March 31,
2017
(Unaudited)
  As of
March 31,
2018
(Unaudited)
 
 
  M17   Machipopo   M17   Machipopo   M17   M17  
 
  (US$)
 

Selected Consolidated Financial Position Data:

                                     

Total current assets

    14,922,590     12,325,073     39,351,205     10,288,983     18,743,454     48,587,968  

Cash and cash equivalents

    9,399,455     2,420,599     24,397,827     1,818,830     11,989,139     31,351,029  

Total non-current assets

    9,823,885     1,006,114     88,355,903     1,005,999     92,745,628     86,596,777  

Investments accounted for using equity method

    8,766,541                      

Intangible assets

    836,239     790,247     86,664,182     594,987     92,190,793     85,267,332  

Total assets

    24,746,475     13,331,187     127,707,108     11,294,982     111,489,082     135,184,745  

Total current liabilities

    19,907,696     3,738,842     26,260,401     8,601,339     10,926,598     52,300,881  

Total non-current liabilities

    27,453,837     10,811,753     118,270,556     11,794,424     74,993,071     120,282,252  

Total liabilities

    47,361,533     14,550,595     144,530,957     20,395,763     85,919,669     172,583,133  

Total equity

    (22,615,058 )   (1,219,408 )   (16,823,849 )   (9,100,781 )   25,569,413     (37,398,388 )

Total liabilities and equity

    24,746,475     13,331,187     127,707,108     11,294,982     111,489,082     135,184,745  

Key Operating Data

        The following table presents our key operating data for the periods indicated:

 
   
  Three Months Ended  
 
  The Month
of December
2016
  March 31,
2017
  June 30,
2017
  September 30,
2017
  December 31,
2017
  March 31,
2018
 

Average monthly active users

    1.4 million (1)   1.5 million (1)   1.5 million     1.5 million     1.6 million     1.7 million  

Live streaming active users

    0.9 million     0.9 million     0.9 million     0.8 million     1.0 million     1.0 million  

Dating applications active users

    0.5 million     0.6 million     0.6 million     0.7 million     0.6 million     0.7 million  

Average monthly live streaming paying users

    10,748 (2)   13,928 (2)   19,719     20,541     25,000     32,038  

Average monthly live streaming revenue per paying user (US$)

    102.3 (2)   252.7 (2)   325.8     388.6     381.1     355.2  

Paying user ratio

    1.2% (2)   1.5% (2)   2.3 %   2.5 %   2.5 %   3.1 %

Contracted artists(3)

    999 (2)   1,627     1,784     2,768     5,414     7,719  

Registered users(3)

    40.3 million     42.1 million     43.5 million     44.8 million     46.3 million     47.9 million  

Live streaming active users

    29.3 million     30.5 million     31.2 million     31.7 million     32.4 million     33.3 million  

Dating applications active users

    11.0 million     11.6 million     12.3 million     13.1 million     13.9 million     14.6 million  

(1)
Represents the combined active users of Paktor and Machipopo.

(2)
Represents the operating data of Machipopo.

(3)
Numbers provided as of the end of the period.

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RISK FACTORS

        An investment in our ADSs involves significant risks. You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ADSs. Any of the following risks could have a material and adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ADSs could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We have a limited operating history in a dynamic industry, which makes it difficult to evaluate our future prospects.

        The market for live video streaming is relatively new, highly dynamic and may not develop as expected. Our users may not fully understand the value of our services, and potential new users may have difficulty distinguishing our services from those of our competitors. Convincing potential users of the value of our services is critical to the growth of our user base and the success of our business.

        We launched our 17 Media mobile application in 2015, and the relatively short operating history makes it difficult to assess our future prospects or forecast our future results. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in this developing and rapidly evolving market. These risks and challenges include our ability to, among other things:

    increase our number of users, which include users who purchase virtual items offered on our platform, as well as the level of user engagement;

    increase our number of artists in different regions, especially Developed Asia, in order to attract paying users and increase spending and user traffic;

    develop and deploy diversified and distinguishable features and services for our users;

    develop or implement strategic initiatives to monetize our platform;

    develop a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage;

    successfully compete with other companies, some of which have substantially greater resources and market power than us, that are currently in, or may in the future enter, our industry, or duplicate the features of our services;

    attract, retain and motivate talented artists; and

    defend ourselves against litigation, regulatory, intellectual property, privacy or other claims.

        If the market for our platform does not develop as we expect or if we fail to address the needs of this dynamic market, our business will be harmed. Failure to adequately address these or other risks and challenges could harm our business and cause our operating results to suffer.

We have incurred significant net losses and negative cash flows from operations in the past, and we may not be able to achieve or subsequently maintain profitability and positive cash flows from operations in the future.

        Since our inception, we have incurred significant net losses. We believe that our future revenue growth will depend on, among other factors, the popularity of live streaming applications, as well as our ability to attract new users, increase our paying users, increase user engagement, effectively design and implement monetization strategies, develop new services and compete effectively and successfully. In addition, our ability to achieve and sustain profitability is affected by various factors, many of which are beyond our control, such as the continuous development of live streaming services in Developed Asia.

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        We may continue to incur losses in the near future due to our continued investments in technologies, research and development and our continued sales and marketing initiatives. Changes in the macroeconomic and regulatory environment or competitive dynamics and our inability to respond to these changes in a timely and effective manner may also impact our profitability. Accordingly, you should not rely on the revenues of any prior quarterly or annual period as an indication of our future performance.

Our business is based on a relatively new business model in relatively new markets and user demand may change or decrease substantially.

        Many of the elements of our business are unique, evolving and relatively unproven. The markets for our products and services, especially our live streaming platform, are relatively new and rapidly developing and are subject to significant challenges. Our business plan relies heavily upon increased revenues from our interactive entertainment platform, as well as our ability to successfully monetize our user base and products and services, and we may not succeed in any of these respects.

        As the live video streaming industry in Taiwan and other parts of Developed Asia is relatively young, there are few proven methods of projecting user demand or available industry standards on which we can rely. Furthermore, some of our current monetization methods are in a relatively initial stage. For example, if we fail to properly manage the supply and timing of our virtual items and the appropriate price points for these products and services, our users may be less likely to purchase virtual items from us. We consider industry standards and expected user demand in determining how to most effectively optimize virtual item merchandizing. We cannot assure you that our attempts to monetize our user base and products and services will continue to be successful, profitable or widely accepted, and therefore the future revenue and income potential of our business are difficult to evaluate.

We may fail to effectively manage our growth and control our costs and expenses.

        We have experienced rapid growth in our business operations and expansion of our platforms since our inception in July 2015, which places significant demands on our management, operational and financial resources. However, given our limited operating history and the rapidly evolving market in which we compete, we may encounter difficulties as we establish and expand our operations, product development, sales and marketing, and general and administrative capabilities. We face significant competition for talented artists from other companies, which include both publicly traded and privately held companies, and we may not be able to retain existing artists or hire new artists quickly enough to meet our needs and support our operations. If we fail to effectively manage our hiring needs and successfully integrate our new hires or renew our contracts with existing artists at reasonable terms, our efficiency and ability to meet our forecasts, as well as our employee morale, productivity and retention levels, could all suffer, and our business and operating results could be adversely affected.

        We expect our costs and expenses to continue to increase in the future as we broaden our user base, increase user engagement, and develop and implement new features and services that require more complexity. In addition, our cost and expenses, such as our research and development expenses, selling expenses and general and administrative expenses, have grown rapidly as we expanded our business. Historically, our costs have increased each year, and we expect to continue to incur increasing costs to support our anticipated future growth. We expect to continue to invest in our infrastructure in order to enable us to provide our services rapidly and reliably to users. Continued growth could also strain our ability to maintain reliable service levels for our users, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. If we are unable to generate adequate revenues through our monetization strategies and to manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve or subsequently maintain profitability. Our expenses may grow faster than our revenues, and our expenses may be greater than we anticipate. Managing our growth will require significant expenditures and the

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allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results and financial condition could be harmed.

Our historical growth rates may not be indicative of our future growth, and we may be unable to manage our growth and the increased complexity of our business or fail to implement our business strategies effectively.

        We have a limited operating history upon which to evaluate the viability and sustainability of our businesses. Our history of operating our businesses together is relatively short, as our live streaming and online dating businesses were launched in 2015 and 2014, respectively, and were combined in one group in March 2017. As all of our businesses are complex and expanding rapidly, our historical results may not be indicative of our future performance and you should consider our future prospects in light of the risks and uncertainties of early stage companies operating in the fast-evolving digital media industry. Some of these risks and uncertainties relate to our ability to:

    retain existing users, attract new users, increase paying user ratio and increase user engagement and monetization;

    increase the number of talented artists and attract and retain personnel;

    maintain growth rates across our platforms in multiple markets;

    maintain and expand our network of domestic, regional and global industry value chain partners;

    upgrade our technology and infrastructure to support increased traffic and expanded offerings of content and services;

    anticipate and adapt to changing user preferences;

    implement our strategy to expand our offerings on our e-commerce platform;

    conduct cost-effective marketing campaigns to increase the awareness and attractiveness of our brands;

    adapt to competitive market conditions; and

    maintain adequate control of our expenses.

        If we are unsuccessful in addressing any of these risks and uncertainties, our business, financial condition and results of operations may be materially and adversely affected.

We may fail to retain existing users or add new users, or our users may decrease their level of engagement with us.

        The size of our user base and the level of our user engagement are critical to our success. Growing our user base and increasing the overall level of user engagement on our live streaming platform are critical to our business. If our user growth rate slows down, our success will become increasingly dependent on our ability to retain existing users and enhance user engagement on our platform. For instance, if our 17 Media mobile application does not provide our users with the entertainment they seek, we may not be able to retain or attract users or increase the frequency or depth of their engagement. A number of online entertainment and communication products that achieved early popularity have since seen the size of their user base or level of user engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our user base or user engagement level in the future. A number of factors could negatively affect user retention, growth and engagement, including if:

    we are unable to attract new users to our platforms or retain existing ones;

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    we fail to introduce new and improved services, or services we introduced are not favorably received by users;

    we are unable to combat inappropriate or abusive use of our platforms, which may lead to negative public perception of us and our brands;

    information technology issue or other technical problems prevent us from delivering our services in a rapid and reliable manner or otherwise adversely affect the user experience;

    we suffer from negative publicity, fail to maintain our brands or if our reputation is damaged;

    we fail to address user concerns related to privacy and communication, safety, security or other factors; and

    there are adverse changes in our services that are mandated by, or that we elect to make to address, legislation, regulations or government policies.

        If we are unable to grow our user base or enhance user engagement, our platforms will become less attractive to our users, which would have a material and adverse impact on our business and operating results.

Artist and user misconduct and misuse of our platform and inappropriate and indecent information disseminated on our platforms may adversely impact our brand image, affect our business and subject us to liabilities.

        Because we do not require real-name registration by our artists and users and because we do not have full control over how and what artists and users will use our applications to communicate, our applications may be misused by individuals or groups of individuals to engage in immoral, disrespectful, fraudulent or illegal activities. For example, on a daily basis we detect spam accounts through which inappropriate or indecent content could be posted and fraudulent or illegal activities may be conducted. Both our monitoring team and artists are allowed to block those spam accounts appearing in the live streaming rooms. However, we are exposed to risks of inappropriate or indecent content on our live streaming applications or dating applications. We have had incidents of inappropriate or indecent content detected on our live streaming and dating application in the past, which have in some cases generated negative publicity about our brands and platforms. As a result, our 17 Media application has been previously removed from Apple App Store and/or Google Play for approximately two months in October and November 2015. We immediately took corrective action and have not been removed from either of these distribution platforms since then. In addition, we have experienced and may continue to experience abuse of the popularity indicators on our live streaming platform by artists who either secretly fund their fans' gift-giving or give gifts to themselves via separate accounts to falsely increase their popularity. Such abuse of system and any perception thereof may harm the credibility of the popularity indicators and ultimately the reputation of our platform.

        We have made substantial investments in resources, such as a dedicated team aided by proprietary software and technology, Sky Eye, to monitor content that artists and users post on our live streaming platform and the way in which our artists and users engage with each other through our live streaming platform. However, such procedures may not prevent all such content from being broadcasted or posted or activities from being carried out. Moreover, as we have limited control over real-time and offline behaviors of our users, to the extent such behaviors are associated with our platforms, our ability to protect our brand image and reputation may be limited. For example, our artists may abuse our platforms and get involved into troubles with our users offline. Our business and the public perception of our brands may be materially and adversely affected by misuse of our platforms.

        If any of our users suffers or alleges to have suffered physical, financial or emotional harm following contact initiated on our platform, we may face civil or criminal lawsuits or other liabilities

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initiated by the affected user, or governmental or regulatory actions against us. In response to allegations of illegal or inappropriate activities conducted through our platforms or any negative media coverage about us, government authorities may intervene and hold us liable for non-compliance with relevant laws and regulations concerning the dissemination of information on the internet and subject us to administrative penalties or other sanctions, such as requiring us to restrict or discontinue some of the features and services provided on our mobile application. Therefore, we may be subject to investigations or subsequent penalties if content on our live streaming application is deemed to be illegal or inappropriate under relevant laws and regulations. As a result, our business may suffer and our reputation, user base, revenues and profitability may be materially and adversely affected.

We are in the early stages of monetization and cannot guarantee that the monetization strategies we have adopted will be successfully implemented or generate sustainable revenues and profit.

        Our monetization model is new and evolving. We generate revenues through live streaming platform, dating services and other services, which accounted for approximately 91.4%, 8.1% and 0.5%, respectively, of our net revenues in 2017 on a consolidated pro forma basis. We generate revenues from selling virtual points, which can be exchanged for various virtual items on our live streaming platform, offering subscriptions to our dating services and providing advertising services on our platforms and are currently exploring additional monetization channels. If our strategic initiatives do not enhance our ability to monetize our existing services or enable us to develop new approaches for monetization, we may not be able to maintain or increase our revenues and profits or recover any associated costs. In addition, we may in the future introduce new services to further diversify our revenue streams, including services with which we have little or no prior development or operating experience. If these new or enhanced services fail to engage users, we may fail to attract or retain users or to generate sufficient revenues to justify our investments, and our business and operating results may suffer as a result.

A limited number of users on our live streaming platform contribute to a significant portion of our revenues, and we may lose these users.

        We have a large and growing base of users. However, only a limited number of users contribute a significant portion of our revenues. For example, our top 10, 100 and 500 users accounted for approximately 11.8%, 29.2% and 47.9% of our total revenues in the three months ended March 31, 2018, respectively, a decrease from 19.0%, 41.3% and 61.8% in the three months ended December 31, 2017. If we lose any of these users, or if revenues generated from a significant user group are substantially reduced due to, for example, increased competition, any deterioration in user relationship, or significant delays in payments for our services, our business, financial condition and results of operations may be materially and adversely affected. We will continue to try to diversify our revenue from different users and do not expect to continue generating a significant portion of our revenue from a limited number of users. We cannot assure you that we will successfully diversify and enlarge our paying user base.

We may not be able to successfully maintain and increase the number of our paying users and VIP users.

        We primarily generate revenue from paying users, artists, e-commerce vendors and advertisers. Our future growth depends on our ability to increase the number of our paying users, artists, e-commerce vendors and advertisers, as well as increase the average amount of revenue we receive per paying user, artists, e-commerce vendors and advertisers. Paying users include users that view our live streaming business and pay for virtual points that they can use to buy virtual items to gift to our artists. We receive a percentage of the value of the virtual gifts received by artists on our live streaming platform. However, we cannot assure you that we will be able to retain our paying users, artists and advertisers, nor can we assure you that we will be able to successfully compete with current and new competitors

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on obtaining other paying users. Our efforts to provide greater incentives for our users to purchase virtual points to become a VIP member may not continue to succeed. Our VIP members and other paying users may discontinue their memberships or other spending on our services because we no longer serve their needs, the quality of our content and services deteriorates, or the users are attracted to other live streaming platform because of a shift in their interests and preferences. If we cannot successfully maintain or increase the number of our VIP members and other paying users, our business, results of operations and prospects will be adversely affected.

A limited number of popular artists can have a material impact on our live streaming revenues.

        A majority of our revenues are from live streaming. In 2017, revenues from live streaming constituted 91.4% of our total net revenue on a consolidated pro forma basis. We expect that our business will continue to be dependent on revenues from live streaming in the future, making us particularly susceptible to changes in our ability to generate revenues from the live streaming business. Our live streaming business has experienced significant growth in recent years, but we cannot assure you that we will continue to achieve a similar growth rate in the future, as user demand for this service may change, decrease substantially or dissipate, or we may fail to anticipate and serve user demands effectively.

        We have a diverse and large base of artists, but a small number of artists can have a material impact on the popularity of our live streaming platform and our live streaming revenues. For example, our top 100 and top 500 artists accounted for approximately 36.5% and 70.5% of our total revenues in the three months ended March 31, 2018, respectively, a decrease from 47.9% and 81.9% in the three months ended December 31, 2017. As such, the loss or decrease in popularity of these artists could negatively affect their ability to facilitate user engagement and spending and lead to a loss of our live streaming revenue, which may materially and adversely affect our results of operations. Moreover, any negative publicity of our artists, even if it is personal and has nothing to do with our platform, will have an adverse impact to the reputation of our brands, and could bring serious threat to our platform and business.

Contractual disputes with our artists and agents could be costly and time-consuming and may harm our reputation and subject us to contractual liabilities.

        Artists are the content producers of our live streaming platform, and the talent of our artists is one of the key features that sets us apart from our competitors. We sign streamer contracts with artists which are negotiated on an individual basis. The contractual terms between us and our artists vary from one to two years depending on factors such as the popularity, track-record, talent and profession and revenue-generating potential of the artist. Some of our contracted artists are on fixed salaries while others share with us a certain percentage of the revenue that they generate. Moreover, substantially all of our contracted artists are bound by exclusivity clauses and such exclusivity may lead to disputes with our artists. In general, in our negotiations and contracts with artists, we seek ownership of high quality original content across multiple media formats. Nevertheless, there may be contractual disputes involving artists, entertainment companies that they have signed with and us about the intellectual property ownership of content. In addition, popular artists may ask for more favorable, or even unreasonable terms, when renewing a contract with us. Any such disputes between us and our artists, and, from time to time, other entertainment companies that they sign with, may not only involve lengthy and costly negotiations and litigations, but may also be detrimental to the quality of the content produced by our artists, deter other artists from signing or continuing to work with us, decrease user engagement on our entertainment platform and otherwise adversely affect our business, financial condition and results of operations.

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Our business operates in an industry that is highly competitive, and competition presents an ongoing threat to the success of our business. We may fail to compete effectively, and we may lose users and advertisers and become less effective in engaging platform partners.

        We face competition in several major aspects of our business, particularly from companies that provide live streaming and online dating services. Some of our competitors may have longer operating histories and significantly greater financial, technical and marketing resources than we do, and in turn may have an advantage in attracting and retaining users, advertisers and platform partners. In addition, competitors in some areas of our business may have significantly larger user bases and more established brand names than we do and may be able to more effectively leverage their user bases and brand names to provide live streaming, online dating and other products and services, and thereby increase their respective market shares. We may also face potential competition from global or regional live streaming service providers that seek to enter the Developed Asia market, whether independently or through the formation of alliances with, or acquisition of, internet companies in Developed Asia.

        We operate in multiple markets, in particular, Developed Asia. Our competitors across these markets primarily include Bigo Live and MeMe Live. In addition, there are a number of single market players that we compete with in each individual market, such as AfreecaTV in South Korea and Showroom in Japan.

        If we are not able to effectively compete in any of our lines of business, our overall user base and level of user engagement may decrease, which could reduce our paying users or advertisers or make us less effective in engaging platform partners. We may be required to spend additional resources to further increase our brand recognition and promote our products and services, and such additional spending could adversely affect our profitability. Furthermore, if we are involved in disputes with any of our competitors that result in negative publicity to us, such disputes, regardless of their veracity or outcome, may harm our reputation or brand image and in turn lead to reduced number of users, advertisers and platform partners. Any legal proceedings or measures we take in response to such disputes may be expensive, time-consuming and disruptive to our operations and divert our management's attention.

        Our competitors may unilaterally decide to adopt a wide range of measures targeted at us, including possibly designing their products to negatively impact our operations, such as sending virus-like programs to attack elements of our platforms. Some competitors may also make their applications incompatible with ours, effectively requiring users to either stop using our competitors' products or uninstall our products, leading to a reduction in our number of users. Such actions may reduce our market share, negatively affect our brands and reputation, and materially and adversely affect our business, financial condition and results of operations.

Our artist agents may not work in an effective manner as we expect and if we fail to detect fraud or other misconduct by our agents, it could harm our reputation with contracted artists.

        We rely on our agents to identify and bring to our platform talented artists. We also rely on them to train our artists to produce PUGC. However, our agents may not be able to do so in an efficient and effective manner, which could result in artist and user complaints as well as serious harm to our brands and reputation. In addition, we are exposed to the risk of fraud or other misconduct by our agents. For example, in some instances, our agents might convey false or misleading messages to our contracted artists. Although we have not received any complaints from artists against our agents, we cannot assure that we will not incur liability for misrepresentation or fraud in the future. Any such claims could subject us to costly litigation and impose a significant strain on our financial resources and attention of management personnel regardless of whether the claims have merit.

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We are a combined company and we may not be able to achieve the expected strategic benefits and synergies.

        We are a combined company of Machipopo and Paktor. Before we acquired Machipopo in March 2017, we made capital investments in strategic investments, acquisitions and partnerships to complement our organic business expansion. For example, we acquired two mobile dating applications, including Goodnight in July 2016, and in May 2018 we acquired 17 Media Japan Inc. to accelerate our expansion in Japan. These acquisitions and investments require a significant amount of capital, which decreases the amount of cash available for working capital or capital expenditures. As in the past, we continue to look for opportunities to invest in, partner with or acquire other businesses that we believe will strengthen our operations in areas such as short form videos, among others. If these investments and acquisitions do not perform as well or are not as profitable as we expect, do not bring about the synergies to our business that we anticipate, become less valuable to our business due to a change in our overall business strategy, or if the industry, regulatory or economic environments deteriorate, they could result in significant impairment of goodwill, intangible assets and investments. Moreover, acquisitions of businesses and assets may increase our capital and expenses in integrating new businesses and personnel into our own, require significant management attention and result in a diversion of resources away from our existing business, which in turn could have an adverse effect on our business operations. Further, acquisitions could result in increased leverage, potentially dilutive issuances of equity securities and exposure to potential unknown liabilities of the acquired business. The costs of identifying and consummating acquisitions may also be significant. In addition to possible shareholders' approval, we may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and comply with applicable laws and regulations, which could result in increased costs and delays.

        In the future, if appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business. However, we may fail to select appropriate acquisition targets, negotiate acceptable arrangements (including arrangements to finance acquisitions) or integrate the acquired businesses and their personnel into our own. In addition, strategic partnerships could subject us to a number of risks, including risks associated with sharing proprietary information and non-performance by third parties. Furthermore, even if we identified a target, there can be no assurance that we can complete the acquisition. Such failed attempt may impede our future expansion plan and result in waste of our resources. We may not be able to monitor or control the actions of our strategic partners and, to the extent any such strategic partner suffers negative publicity or harm to its reputation from events relating to its own business, we may also suffer negative publicity or harm to our reputation by association.

The continuing and collaborative efforts of our senior management and key employees are crucial to our success, and we may lose their services.

        We depend on the continued contributions of our senior management, especially the executive officers listed in the "Management" section of this prospectus, and other key employees, many of whom are difficult to replace. The loss of the services of any of our executive officers or other key employees could materially harm our business. Competition for talent in Taiwan and other parts of Developed Asia is intense. Our future success is dependent on our ability to attract a significant number of qualified employees and retain existing key employees. If we are unable to do so, our business and growth may be materially and adversely affected and the trading price of our ADSs could suffer. Our need to significantly increase the number of our employees and retain key employees may cause us to materially increase compensation-related costs, including stock-based compensation.

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If our artists and platform partners do not continue to contribute content or their contributions are not appreciated by users, we may experience a decline in the number of active users and a decline in user engagement.

        Our success depends on our ability to provide users with interesting and useful content, which in turn depends on the content generated by our contracted artists and other content providers. We believe that one of our competitive advantages is the quality, quantity and open nature of the content on 17 Media, and that access to rich content is one of the main reasons users visit 17 Media. We seek to foster a broader and more engaged user community, and we encourage influencers, such as celebrities and other public figures, media outlets and organizations with media rights to use our platform to express their views and share interesting, high quality content. If artists and other content providers do not continue to contribute content to 17 Media due to policy changes, their use of alternative communication channels or any other reasons, and we are unable to provide users with interesting, useful and timely content, our user base and user engagement may decline. If we experience a decline in the number of users or the level of user engagement, users may spend less on our platform and customers may not view our products and services as attractive for their advertising and marketing expenditures and may reduce their spending with us, which would materially harm our business and operating results.

We have a limited operating history in markets outside Taiwan. We may fail to meet the challenges presented by our increasing international operations.

        Our business has continued to expand outside Taiwan, our home market. For example, since we expanded into the Japanese market in August 2017, we have grown rapidly to become the second largest live streaming platform in Japan in terms of revenue in the fourth quarter of 2017, according to Frost & Sullivan. In December 2017, 55.4% of MAUs on our live streaming application were from overseas markets, including Japan, Hong Kong, Singapore and certain other developed Asian markets, while the remainder were from Taiwan. We expect to continue our global expansion as a key growth strategy, which exposes us to a number of risks, including:

    challenges in formulating effective local sales and marketing strategies targeting mobile internet users from various jurisdictions and cultures, who have a diverse range of preferences and demands;

    challenges in identifying appropriate local business partners and establishing and maintaining good working relationships with them;

    local competition;

    challenges in meeting local advertiser demands as well as online marketing practices and conventions;

    differences in user and advertiser reception and perception of our applications internationally;

    challenges in building direct sales operations, especially in developed markets;

    fluctuations in currency exchange rates;

    compliance with applicable foreign laws and regulations, including but not limited to internet content requirements, foreign exchange controls, cash repatriation restrictions, intellectual property protection rules and data privacy requirements;

    exposure to different tax jurisdictions that may subject us to greater fluctuations in our effective tax rate and assessments in multiple jurisdictions on various tax-related assertions, including transfer pricing adjustments and permanent establishment; and

    increased costs associated with doing business in foreign jurisdictions.

        Our business, financial condition and results of operations may be materially and adversely affected by these and other risks associated with our increasingly globalized operations.

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Our business is dependent on the strength and market perception of our brands.

        We market our live streaming services under "17 Media" and our online dating services under "Paktor" and "Goodnight." Our business and financial performance are highly dependent on the strength and the market perception of our brands and services. Well-recognized brands are critical to increasing our user base and, in turn, facilitating our efforts to monetize our services and enhancing our attractiveness to customers. From time to time, we conduct marketing activities across various media to enhance our brands and to guide public perception of our brands and services. In order to create and maintain brand awareness and brand loyalty, to influence public perception and to retain existing and attract new artists, mobile users, we may need to substantially increase our marketing expenditures. We cannot assure you, however, that these activities will be successful or that we will be able to achieve the brand promotion effect we expect.

        In addition, people may not understand the value of our live streaming application, and there may be a misperception that our online dating applications are used solely as a tool to randomly meet or date strangers. Convincing potential new users of the value of our services is critical to increasing the number of our users and to the success of our business.

Our operating results may fluctuate from quarter to quarter, which makes them difficult to predict.

        We are subject to seasonality and other fluctuations in our business. Our revenue is also largely affected by our promotional and marketing activities, such as competitions and events, and our revenue may increase as a result of these activities. We may also introduce new promotions or change the timing of our promotions in ways that would further cause our quarterly results to fluctuate and differ from historical patterns. Our results of operations will likely fluctuate due to these and other factors, some of which are beyond our control. In addition, our rapid growth has masked certain fluctuations that might otherwise be apparent in our results of operations. When our growth stabilizes, the seasonality in our business may become more pronounced.

        Our revenue and other operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are outside our control. Factors that may contribute to the fluctuations of our quarterly results include (i) fluctuations in overall consumer demand for live streaming services and online dating services during certain months and holidays; (ii) increases in sales and marketing and other operating expenses that we may incur to grow and expand our businesses; (iii) timing of promotional and marketing activities; and (iv) macro-economic conditions and their effect on discretionary consumer spending. Because of these and other factors, as well as the short operating history of some of our businesses, it is difficult for us to accurately identify recurring seasonal trends in our business. Accordingly, you should not rely on quarter-to-quarter comparisons of our results of operations included elsewhere in this prospectus as an indication of our future performance.

Negative publicity may harm our brands and reputation.

        Negative publicity involving us, our users, our artists, our management, our platform or our business model may materially and adversely harm our brands and our business. We cannot assure you that we will be able to defuse negative publicity about us, our management and/or our services to the satisfaction of our investors, users and artists. There may be negative publicity about our company and the misuse of our services, which may adversely affect our brands, public image and reputation. In particular, any alleged abuse of our platforms to facilitate illegal activities such as money laundering may negatively impact our image. Such negative publicity, especially when it is directly addressed against us, may also require us engaging in defensive media campaigns. This may cause us to increase our marketing expenses and divert our management's attention and may adversely impact our business and results of operations.

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We may fail to keep up with technological developments and evolving user expectations, and we may fail to maintain or attract users or generate revenues.

        We operate in a market characterized by rapidly changing technologies, evolving industry standards, new product and service announcements, new generations of product enhancements and changing user expectations. Accordingly, our performance and the ability to further monetize the services on our platform will depend on our ability to adapt to these rapidly changing technologies and industry standards, and our ability to continually innovate in response to both evolving demands of the marketplace and competitive services. There may be occasions when we may not be as responsive as our competitors in adapting our services to changing industry standards and the needs of our users. Historically, new features may be introduced by another player in the industry, and if they are perceived as attractive to users, they are often quickly copied and improved upon by others.

        Introducing new technologies into our systems involves numerous technical challenges, substantial amounts of capital and personnel resources and often takes many months to complete. For example, the market for mobile devices in Developed Asia is highly fragmented, and the lower resolution, functionality, operating system compatibility and memory currently associated with the various models of mobile devices in the Developed Asia marketplace may make the use of our services through these devices more difficult and impair the user experience. We intend to continue to devote resources to the development of additional technologies and services. We may not be able to effectively integrate new technologies on a timely basis or at all, which may decrease user satisfaction with our services. Such technologies, even if integrated, may not function as expected or may be unable to attract and retain a substantial number of mobile device users to use our live streaming and online dating mobile applications. We also may not be able to protect such technology from being copied by our competitors. Our failure to keep pace with rapid technological changes may cause us to fail to retain or attract users or generate revenues, and could have a material and adverse effect on our business and operating results.

Privacy concerns relating to our services and the use of user information could negatively impact our user base or user engagement, or subject us to governmental regulation and other legal obligations.

        We collect user profile, user location and other personal data from our users in order to better understand our users and their needs and to support our social interest graph engine and our big data analytical capabilities for more targeted services such as interest- or location-based user groups and mobile marketing services. Concerns about the collection, use, disclosure or security of personal information or chat history or other privacy-related matters, even if unfounded, could damage our reputation, cause us to lose users and subject us to regulatory investigations, all of which may adversely affect our business. While we strive to comply with applicable data protection laws and regulations, as well as our privacy policies pursuant to our terms of use and other obligations we may have with respect to privacy and data protection, any failure or perceived failure to comply with these laws, regulations or policies may result, and in some cases have resulted, in inquiries and other proceedings or actions against us by government agencies or others, as well as negative publicity and damage to our reputation and brands, each of which could cause us to lose users and have an adverse effect on our business and operating results.

        Any actual or perceived systems failure or compromise of our security that results in the unauthorized access to or release of the data or chat history of our users could significantly reduce our users' willingness to use our services, as well as harm our reputation and brands. We expect to continue expending significant resources to protect against security breaches. The risk that these types of events could seriously harm our business is likely to increase as we expand the number of services we offer and increase the size of our user base.

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        Our practices may become inconsistent with new laws or regulations concerning data protection, or the interpretation and application of existing consumer and data protection laws or regulations, which is often uncertain and in flux. If so, in addition to the possibility of fines, this could result in an order requiring that we change our practices, which could have an adverse effect on our business and operating results. Complying with new laws and regulations could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.

We may not be able to adequately protect our intellectual property, which could cause us to be less competitive and third-party infringements of our intellectual property rights may adversely affect our business.

        We rely on a combination of copyright and trademark laws and restrictions on disclosure to protect our intellectual property rights. See also "Business—Intellectual Property." Despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights. Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our intellectual property. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources.

        There have been instances where third parties have cloned and launched counterfeits of our live streaming and online dating mobile applications on app stores or internet forums. Some of these counterfeits, once installed inadvertently by mobile users, were reported to automatically download and install other applications to these users' mobile phones, charging them various fees. These counterfeits may mislead mobile users and negatively affect their perception of our application. Moreover, we may have to expend resources in connection with any legal actions that we take to curb these counterfeiting activities in order to protect our intellectual property rights, user experience and brand perception.

User growth and engagement depend upon our use of mobile technology, operating systems, networks, devices and standards that we do not control.

        We make our services available across a variety of mobile operating systems and devices. We are dependent on operating our services on popular mobile devices and using mobile operating systems that we do not control, such as Android and iOS. Any changes in such mobile operating systems or devices that degrade the functionality of our services or give preferential treatment to competitive services could adversely affect usage of our services. Further, if the number of platforms for which we develop our services increases, it will result in an increase in our costs and expenses. In order to deliver high quality services, it is important that our services work well across a range of mobile operating systems, networks, mobile devices and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing services that operate effectively with these operating systems, networks, devices and standards. In the event that it is difficult for our users to access and use our services, particularly on their mobile devices, our user growth and user engagement could be harmed, and our business and operating results could be adversely affected.

If we or our users experience disruptions in mobile telecommunications or internet services or if mobile telecommunications and internet service providers are able to block, degrade or charge for access to our products and services, we could incur additional expenses and the loss of users and advertisers.

        We depend on the ability of our users and advertisers to access mobile telecommunications services and the internet. Currently, this access is provided by companies that have significant market power in the mobile, broadband and internet access marketplaces, including incumbent mobile telecommunications companies, telephone companies, cable companies, government-owned service providers, device manufacturers and operating system providers, any of whom could take actions that

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degrade, disrupt or increase the cost of user access to our products or services, which would, in turn, negatively impact our business. The adoption of any laws or regulations that adversely affect the growth, popularity or use of mobile devices or the internet or disruption of our services in important markets for any political or other non-technical reasons could decrease the demand for, or the usage of, our products and services, increase our cost of doing business and adversely affect our business, financial condition and results of operations. We also rely on other companies to maintain reliable network systems that provide adequate speed, data capacity and security to us and our users. As mobile devices and the internet continue to experience growth in the number of users, frequency of use and amount of data transmitted, the mobile telecommunications and internet infrastructure that we and our users rely on may be unable to support the demands placed upon them. The failure of the operations of mobile telecommunications or internet infrastructure services that we or our users rely on, even for a short period of time, could undermine our operations, and our business, financial condition and results of operations could be adversely affected.

Major mobile application distribution channels may change their standard terms and conditions in a manner that is detrimental to us, or terminate their existing relationship with us.

        We rely on third-party mobile application distribution channels such as Google Play and iOS App Store to distribute most of our mobile applications to users. We expect a substantial number of downloads of our mobile applications will continue to be derived from these distribution channels. As such, the promotion, distribution and operation of our applications are subject to such distribution platforms' standard terms and policies for application developers, which are subject to the interpretation of, and frequent changes by, these distribution channels. If Google Play, iOS App Store or any other major distribution channel changes their standard terms and conditions in a manner that is detrimental to us, or terminate their existing relationship with us, our business, financial condition and results of operations may be materially and adversely affected.

If our security measures are breached, or if our products and services are subject to attacks that degrade or deny the ability of users to access our products and services, our products and services may be perceived as not being secure and users may curtail or stop using our products.

        Our products and services involve the storage and transmission of users' information, and security breaches expose us to a risk of loss of this information, litigation and potential liability. We experience cyber-attacks of varying degrees on a regular basis, including hacking into our user accounts and redirecting our user traffic to other websites, and we have been able to rectify attacks without significant impact to our operations in the past. Functions that facilitate interactivity with other websites could increase the scope of access of hackers to user accounts. Our security measures may also be breached due to employee error, malfeasance or otherwise. Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive information in order to gain access to our data or our users' data or accounts, or may otherwise obtain access to such data or accounts. Since our users may use their 17 Media, Paktor and Goodnight accounts to establish and maintain online identities, unauthorized communications from such accounts that have been compromised may damage their reputations and brands as well as ours. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation and a loss of confidence in the security of our products and services that could have an adverse effect on our business and operating results. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose users and we may be exposed to significant legal and financial risks, including legal claims and regulatory fines and penalties. Any of these actions could have a material and adverse effect on our business, reputation and operating results.

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System failure, interruptions and downtime can result in adverse publicity for our products and services and result in net revenue losses, a decrease in the number of our active users.

        Although we seek to reduce the possibility of disruptions or other outages, our services may be disrupted by problems with our own technology and system, such as malfunctions in our software or other facilities and network overload. Our systems may be vulnerable to damage or interruption from telecommunication failures, power loss, computer attacks or viruses, earthquakes, floods, fires, terrorist attacks and similar events. Parts of our system are not fully redundant, and our disaster recovery planning is not sufficient for all eventualities. Despite any precaution we may take, the occurrence of a natural disaster or other unanticipated problems at our hosting facilities could result in lengthy interruptions in the availability of our products and services. Any interruption in the ability of our users to use our products and services could reduce our future revenues, harm our future profits, subject us to regulatory scrutiny and lead users to seek alternative forms of online social interactions.

        Our servers that process user payments experience some downtime on a regular basis, which may negatively affect our brands and user perception of the reliability of our systems. Any scheduled or unscheduled interruption in the ability of users to use our payment systems could result in an immediate, and possibly substantial, loss of revenues.

        We use a limited number of telecommunication service providers to provide us with data communications capacity through local telecommunications lines and internet data centers to host our servers. Internet data centers in Developed Asia are generally owned by telecommunication service providers with their own broadband networks and are leased to various customers through third party agents. These third party agents negotiate the terms of the leases, enter into lease agreements with end customers, handle customer interactions and manage the data centers on behalf of the data center owners. With the expansion of our business, we may be required to purchase more bandwidth and upgrade our technology and infrastructure to keep up with the increasing traffic on our websites and increasing user levels on our platform overall. We cannot assure you that the telecommunications providers whose networks we lease or the third party agents that operate our data centers would be able to accommodate all of our requests for more bandwidth or upgraded infrastructure or network, that they will accommodate our requests under a term favorable to us, or that the internet infrastructure and the fixed telecommunications networks in Developed Asia will be able to support the demands associated with the continued growth in our internet usage.

        We have limited control over the prices of the services provided by telecommunication service providers and may have limited access to alternative networks or services. If the prices we pay for telecommunications and internet services rise significantly, our results of operations may be materially and adversely affected. Furthermore, if internet access fees or other charges to internet users increase, our user traffic may decline and our business as well as financial conditions may be harmed.

Part of our revenues are recognized on a deferred basis, and we cannot be certain when such revenues will be recognized in our financial statements.

        Changes in cash flow generated from our businesses may not always match our revenue trends due to our revenue recognition policy, under which proceeds from our sales of virtual items are booked as deferred revenue and such revenue is recognized only when the virtual points that we sell to our users are used to purchase virtual gifts on our platform.

        Since we do not know in advance precisely when our users will convert their virtual points into virtual gifts on our platform, it is difficult for us to accurately identify recurring seasonal trends in our business. Accordingly, you should not rely on quarter-to-quarter comparisons of our results of operations included elsewhere in this prospectus as an indication of our future performance. Moreover, a decline in our sales of virtual items in any one quarter may not be immediately reflected in our revenue results for that quarter. Such a decline, however, will negatively affect our revenue in future

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quarters. In addition, we may be unable to adjust our cost structure to reflect the changes in revenues. Accordingly, the effect of significant downturns in sales and market acceptance of our virtual items, and potential changes in the number of our active paying users may not be fully reflected in our results of operations until future periods. Our revenue recognition policy also makes it more difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from our paying users must be recognized when our paying users use their virtual points to purchase virtual gifts, which may occur in subsequent periods.

The security of the operations of, and fees charged by, third party online payment platforms may have material and adverse effects on our business.

        In all transactions conducted over online payment platforms, the secure transmission of confidential information, such as customers' credit card numbers and personal information, over public networks is essential to maintaining consumer confidence.

        We do not have control over the security measures of our third party online payment vendors, and security breaches of the online payment systems that we use could expose us to litigation and possible liability for failing to secure confidential customer information and could, among other things, damage our reputation and the perceived security of all of the online payment systems that we use. If a well-publicized internet or mobile network security breach were to occur, users concerned about the security of their online financial transactions may become reluctant to purchase our virtual items even if the publicized breach did not involve payment systems or methods used by us. In addition, there may be billing software errors that would damage customer confidence in these online payment systems. If any of the above were to occur and damage our reputation or the perceived security of the online payment systems we use, we may lose paying users and users may be discouraged from purchasing our IVAS, which may have an adverse effect on our business.

        If any of these payment systems decides to significantly increase the percentage they charge us for using their payment systems for our virtual items and other services and if we cannot find any alternative payment systems, our results of operations may be materially and adversely affected.

We may not be able to successfully halt the operations of "copycat" platforms that may misappropriate our data in the future. Those platforms may also lure away some of our users or advertisers or reduce our market share.

        "Copycat" platforms or client applications have previously misappropriated data on our platform, implanted Trojan viruses in users' mobile devices to steal user data from us and attempted to imitate our brands or the functionality of our platform. When we became aware of such platforms, we employed technological and legal measures in an attempt to halt their operations. However, we may not be able to detect all such platforms in a timely manner and, even if we could, technological and legal measures may be insufficient to stop their operations. In those cases, our available remedies may not be adequate to protect us against such platforms. Regardless of whether we can successfully enforce our rights against these platforms, any measures that we may take could require significant financial or other resources from us. Those platforms may also lure away some of our users or advertisers or reduce our market share, causing material and adverse effects to our business operations.

Claim, allegations, lawsuits, government investigations and other proceedings against us, our management or our artists may harm our reputation and have a material and adverse impact on our business and results of operations.

        We have been, and may become, subject to claims, allegations or lawsuits, including class actions and individual lawsuits, government investigations, and other proceedings brought by our competitors, customers, business partners, short sellers, investment research firms or other individuals or entities

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relating to intellectual property, consumer protection, privacy, labor and employment, unfair competition, securities, tax, marketing and communications practices, commercial disputes, breach of contract or other matters. Any such allegations or lawsuits, with or without merit, or any perceived unfair, unethical, fraudulent or inappropriate business practice by us or perceived malfeasance by our management could harm our reputation and user base and distract our management from our daily operations. For example, in August 2017, Heat Wave Media, which operates another live streaming application, initiated a lawsuit against us in the Taipei District Court of Taiwan, alleging that we engaged in unfair trade practices by poaching artists from its live streaming platform and sought compensation for damages amounting to approximately US$0.7 million. We intend to vigorously defend against this lawsuit. In addition to the related cost, managing and defending litigation and related indemnity obligations can significantly divert our management's attention. We may also need to pay damages or settle the litigation with a substantial amount of cash. All of these could have a material adverse impact on our business and results of operations.

        In addition, although allegations or lawsuits against our artists will not subject us to liability or compensation, they may otherwise generate negative publicity that significantly harms our reputation, which may in turn materially and adversely affect our user base and our ability to attract customers.

We are subject to anti-corruption, anti-bribery, anti-money laundering and other laws and regulations.

        We are subject to anti-corruption, anti-money laundering, anti-bribery and other relevant laws and regulations in the markets we operate. Although we perform compliance processes and maintain internal control systems, we may be subject to investigations and proceedings by government authorities for alleged infringements of these laws if our processes or systems are not conducted or operating properly. These proceedings may result in fines or other liabilities and could have a material adverse effect on our reputation, business, financial conditions and result of operations. If any of our subsidiaries, employees or other persons engage in fraudulent, corrupt or other unfair business practices or otherwise violate applicable laws, regulations or internal controls, we could become subject to one or more enforcement actions or otherwise be found to be in violation of such laws, which may result in penalties, fines and sanctions and in turn adversely affect our reputation, business, financial condition and result of operations.

        In addition, we currently engage third party online payment platforms to process payment for virtual gifts and VIP subscription fees for us. These third party online payment platforms are subject to anti-money laundering obligations under applicable anti-money laundering laws and regulations in jurisdictions where we operate our business, including Taiwan, Singapore and Hong Kong. All of these laws and regulations require online payment platforms to comply with certain anti-money laundering requirements, including the establishment of a customer identification program, the monitoring and reporting of suspicious transactions, the preservation of customer information and transaction records, and the provision of assistance to the public security department and judicial authority in investigations and proceedings in relation to anti-money laundering matters. In Taiwan, pursuant to the Directions Governing the Internal Control Systems of Anti-Money Laundering and Countering Terrorism Financing of the Banking Sector, Electronic Payment Institutions and Electronic Stored-value Card Issuing Institutions, online payment platforms are required to establish anti-money laundering internal control systems, which must include internal control procedures to prevent money laundering and counter terrorism financing, and file the details of such systems with the competent regulatory authority. If a third party online payment platform fails to perform its anti-money laundering obligations, it may be subject to administrative fines in accordance with the relevant regulations and/or suspension or rescission of its license. If any of our third party online payment platforms fails to comply with applicable anti-money laundering laws and regulations, our reputation could suffer and we could become subject to regulatory intervention, which could have a material adverse effect on our business, financial condition and results of operations.

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Failure to comply with PRC regulations regarding foreign exchange and enterprise income tax and value added tax may subject us to fines and other legal or administrative sanctions.

        We mainly operate our business in Taiwan, Singapore, Japan and Hong Kong. Although we do not market or make our applications available for download from any app store in the PRC, some individuals located in the PRC have been able to download our applications through the APK file on our website or while travelling outside of China. We generated revenue of US$3.3 million from users located in the PRC in 2017 and continued to collect minimal amounts in 2018. As we have not established a regular office or company bank account in the PRC, our PRC users were not able to make payments directly to us and instead made payments in Renminbi to a PRC individual not employed by us during 2017, and to one of our employees in 2018. Each of these individuals in turn transferred the fees either to our vendors or employee located in the PRC to offset payables, or to our bank accounts outside of the PRC, after deducting an agreed commission. Such business activities may subject us to various PRC regulatory requirements, such as licenses, approvals and permits. In particular, under PRC regulations, certain foreign exchange activities can only be conducted by qualified financial institutions. If we were found to be in violation of such regulations, we may be subject to fines or other penalties. In addition, if the PRC tax authorities determine that we provided services in the PRC, given the cross-border nature of the internet and because certain buyers of our services are located in the PRC, we may be subject to enterprise income tax or value added tax. The PRC tax authorities may also impose late payment fees and other penalties on us for currently unpaid taxes. If we become subject to penalties or liabilities because of our actions in the PRC, our business, reputation, results of operations, financial condition and prospects could be adversely affected.

We rely on assumptions and estimates to calculate certain key operating metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

        The numbers of active users of our various applications are calculated using internal company data that has not been independently verified. While these numbers are based on what we believe to be reasonable calculations for the applicable periods of measurement, there are inherent challenges in measuring usage and user engagement across our large user base. We treat each account as a separate user for the purposes of calculating our registered users and active users, because it may not always be possible to identify people that have set up more than one account. In reality, one user may register multiple accounts. While the main use of registered users and active users for us is to gauge how widely known our applications are, the calculations of our registered users and active users may not accurately reflect the actual number of people using our applications.

        Our measures of user growth and user engagement may differ from estimates published by third parties or from similarly titled metrics used by our competitors due to differences in methodology. If customers do not perceive our user metrics to be accurate representations of our user base or user engagement, or if we discover material inaccuracies in our user metrics, our reputation may be harmed and customers may be less willing to allocate their resources or spending to our platform, which could negatively affect our business and operating results.

We may require additional capital to support our operations and the growth of our business, and we cannot be certain that financing will be available on acceptable terms when required, or at all.

        From time to time, we may need additional financing to operate or grow our business. In the past, we have relied on financing to operate our business. Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets and other factors, and we cannot assure you that additional financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation and

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growth of our business could be significantly impaired and our operating results may be adversely affected.

We have granted, and expect to continue to grant, share options and restricted share units under our share incentive plans, which may result in increased share-based compensation expenses.

        We adopted a share incentive plan in June 2017 for the purpose of granting share-based compensation awards to employees, directors and consultants to incentivize their performance and align their interests with ours. We believe the granting of share options and restricted share units is of significant importance to our ability to attract and retain our employees, and we will continue to grant share options and restricted share units to employees in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations.

If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that has been identified, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ADSs may be materially and adversely affected.

        Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the years ended December 31, 2016 and 2017, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, or PCAOB, and other control deficiencies, including insufficient control measures over cash transaction. The two identified material weaknesses arose from (a) lack of sufficient accounting personnel with appropriate understanding of IFRS and SEC reporting requirements as well as lack of formalized accounting policies and financial reporting controls and procedures to address complex accounting issues and to facilitate preparation of consolidated IFRS financial statements; and (b) not maintaining effective controls in certain information technology environment including: (i) lack of segregation of duties in the IT department in terms of system administrator or "super user" access rights, (ii) lack of track records or log on system activities for access to system program and data, and (iii) not maintaining effective control on defining and assigning individual's rights to access systems, programs or transaction raw data. Following the identification of the material weaknesses and control deficiencies, we have taken and plan to continue to take remedial measures to remedy these weaknesses. For details of these remedies, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting." However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct the material weaknesses or our failure to discover and address any other material weakness or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

        Furthermore, it is possible that, had our independent registered public accounting firm conducted an audit of our internal control over financial reporting, such firm might have identified additional material weaknesses and deficiencies. Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-

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Oxley Act of 2002, or Section 404, will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2018. In addition, once we cease to be an "emerging growth company" as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

        During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

We have no business insurance coverage.

        Our business insurance is limited and we do not carry business interruption insurance to cover our operations. We have determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured damage to our platforms, technology infrastructures or disruption of our business operations could require us to incur substantial costs and divert our resources, which could have an adverse effect on our business, financial condition and results of operations.

If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.

        We review our intangible assets for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable, such as a decline in stock price and market capitalization. We test goodwill for impairment at least once a year. If such goodwill or intangible assets are deemed to be impaired, an impairment loss equal to the amount by which the carrying amount exceeds the fair value of the assets would be recognized. We may be required to record a significant charge in our financial statements during the period in which any impairment of goodwill or intangible assets is determined, which would negatively affect our results of operations. As of December 31, 2017, the total amount of our intangible assets was US$86.6 million.

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Our business, financial condition and results of operations, as well as our ability to obtain financing, may be adversely affected by downturns in the global or the economies of Developed Asia.

        Economic conditions in Developed Asia are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. The global macroeconomic environment is facing challenges, including the escalation of the European sovereign debt crisis since 2011, the end of quantitative easing by the U.S. Federal Reserve, the economic slowdown in the Eurozone in 2014 and the expected exit of The United Kingdom from the European Union. The Chinese economy has slowed down since 2012 and such slowdown may continue. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa, which have resulted in volatility in oil and other markets, and over the conflicts involving Ukraine and Syria. There have also been concerns on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes.

        Any severe or prolonged slowdown in the global or the economies of Developed Asia may materially and adversely affect our business, results of operations and financial condition. We derived approximately 91.4% of our net revenues in 2017 on a pro forma consolidated basis from our live streaming platform. The online entertainment industries may be affected by economic downturns. Thus, our business and prospects may be affected by the macroeconomic environment in Developed Asia. A prolonged slowdown in the economies of Developed Asia may lead to a reduced amount of online advertising, which could materially and adversely affect our business, financial condition and results of operations. In addition, our products and services may be viewed as discretionary by our users, who may choose to discontinue or reduce spending on such products and services during an economic downturn. In such an event, our ability to retain existing users and increase new users will be adversely affected, which would in turn negatively impact our business and results of operations.

        In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. The weakness in the economy could erode investors' confidence, which constitutes the basis of the credit market. The recent financial turmoil affecting the financial markets and banking system may significantly restrict our ability to obtain financing in the capital markets or from financial institutions on commercially reasonable terms, or at all. Although we are uncertain about the extent to which the recent global financial and economic crisis and slowdown of economies of Developed Asia may impact our business in the short-term and long-term, there is a risk that our business, results of operations and prospects would be materially and adversely affected by any global economic downturn or disruption or slowdown of the economies of Developed Asia.

Risks Related to Doing Business in Taiwan and Developed Asia

We face substantial political risks associated with doing business in Taiwan, particularly due to the tense relationship between Taiwan and the People's Republic of China that could negatively affect the value of your investment.

        Our principal executive offices and substantially all of our assets are located in Taiwan, and substantially all of our revenues are derived from our operations in Taiwan. Accordingly, our business, financial condition and results of operations and the market price of our common shares and the ADSs may be affected by changes in Taiwan governmental policies, taxation, inflation or interest rates and by social instability and diplomatic and social developments in or affecting Taiwan which are outside of our control. Taiwan has a unique international political status. Since 1949, Taiwan and the Chinese mainland have been separately governed. The PRC claims that there is only one China and that Taiwan is part of China. Although significant economic and cultural relations have been established during

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recent years between Taiwan and the PRC, relations have often been strained. The PRC government has refused to renounce the use of military force to gain control over Taiwan. Furthermore, the PRC government passed an Anti-Secession Law in March 2005, which authorizes non-peaceful means and other necessary measures should Taiwan move to gain independence from the PRC. Past developments in relations between them have on occasion depressed the market prices of the securities of companies in Taiwan. Relations between Taiwan and the PRC and other factors affecting military, political or economic conditions in Taiwan could materially and adversely affect our financial condition and results of operations, as well as the market price and the liquidity of our securities.

Our business is subject to complex and evolving laws and regulations in various jurisdictions. These laws, regulations and actions are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations or declines in user growth, user engagement or advertising engagement, restricted access to our services or otherwise harm our business.

        We are subject to a variety of laws and regulations in Developed Asia that involve matters central to our business, including those relating to e-commerce, social networking, privacy and data protection, live streaming services, labor laws, intellectual property, virtual items, national security, computer security, content restrictions, protection of minors, youth welfare and rights, anti-money laundering, anti-corruption and anti-bribery, prevention of financing criminal activities and terrorism, electronic payment services regulations, currency control regulations, data protection, privacy, consumer protection, competition, telecommunications and product liability. See "Regulations" for more details. The introduction of new products and services, expansion of our activities in certain jurisdictions, or other actions that we may take and may subject us to additional laws, regulations, or other government scrutiny. In addition, certain laws and regulations, including those pertaining to data protection, privacy and competition, may be more restrictive than those in the United States.

        These foreign laws and regulations in Developed Asia, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted and applied inconsistently from market to market and inconsistently with our current policies and practices. For example, regulatory or legislative actions affecting the manner in which we display content to our users or obtain consent to various practices could adversely affect user growth and engagement. Such actions could affect the manner in which we provide our services or adversely affect our financial results.

        We are also subject to laws and regulations that dictate whether, how, and under what circumstances we can transfer, process and/or receive transnational data that is critical to our operations, including data relating to users or partners outside Taiwan, and those laws and regulations are uncertain and subject to change. The regulatory framework for privacy issues in the Asian region is currently in a state of flux and is likely to remain in such state for the foreseeable future. It is possible that obligations imposed under applicable laws may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to our users or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of information or other data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which could have an adverse effect on our business. Furthermore, if third parties with whom we work, such as individual customers or users, our service partners and content creation partners, or our third party service providers, violate applicable laws or our policies, such violations may put information at risk and could have an adverse effect on our reputation and business.

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        Proposed or new legislation and regulations could also significantly affect our business. There currently are a number of proposals pending before foreign legislative and regulatory bodies. For example, the Singapore data protection regulator has proposed the imposition of a mandatory data breach notification regime. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.

        These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with and may delay or impede the development of new products, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.

Uncertainties with respect to the legal system in certain markets in Developed Asia could adversely affect us.

        The legal systems in Developed Asia vary significantly from jurisdiction to jurisdiction. Some jurisdictions have a civil law system, such as Taiwan, Korea and Japan, based on written statutes, and others are based on common law, such as Singapore and Hong Kong. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

        Each jurisdiction in Developed Asia has enacted, and may enact or amend from time to time, laws and regulations governing the distribution of videos, media content, services, messages, applications, electronic documents and other content through the internet. The relevant government authorities may prohibit the distribution of information through the internet that they deem to be objectionable on various grounds, such as public interest or public security, or to otherwise be in violation of local laws and regulations. If any of the information disseminated through our platforms were deemed by any relevant government authorities to violate content restrictions, we would not be able to continue to display such content and could be subject to penalties, including confiscation of the property used in the non-compliant acts, removal of the infringing content, temporary or permanent blocks, administrative fines, suspension of business, revocation of the registration to act as an electronic systems provider and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations.

        It is possible that a number of laws and regulations may be adopted or construed to apply to us in Developed Asia and elsewhere that could restrict our industries. Scrutiny and regulation of the industries in which we operate may further increase, and we may be required to devote additional legal and other resources to addressing this regulation. For example, existing laws or new laws regarding the regulation of currency, money laundering, banking institutions, unclaimed property, e-commerce, consumer and data protection and intermediary payments may be interpreted to cover virtual items offered on our live streaming application. Changes in current laws or regulations or the imposition of new laws and regulations in Developed Asia or elsewhere regarding our industries may slow the growth of our industries and adversely affect our financial position and results of operations.

It will be difficult to acquire jurisdiction and enforce liabilities against our assets based in some of Developed Asia.

        Substantially all of our assets are located in Developed Asia and all of our executive officers and present directors reside outside of the United States. As a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon our directors or executive officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and executive officers under Federal securities laws. Moreover, management has been advised that Taiwan and other jurisdictions within Developed Asia where we operate do not

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have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. Pursuant to Taiwan Code of Civil Procedure, a foreign judgment needs to be recognized by a Taiwan court before being enforced, which renders its enforceability uncertain. Similarly, under the laws of Japan currently in effect, Japanese courts would recognize as a valid judgment any final judgment obtained in United States courts only if certain conditions are fulfilled, including that reciprocity of judgment recognition exists between Japan and the country of the relevant foreign court. Further, it is unclear if extradition treaties now in effect between the United States and some markets within Developed Asia, such as Singapore and Japan, would permit effective enforcement of criminal penalties of the Federal securities laws in those jurisdictions. Moreover, there is no extradition treaty between the United States and Taiwan, and an extradition relies solely on the cooperation between the governments.

We may be adversely affected by the complexity, uncertainties and changes in licensing and regulation of internet businesses.

        The governments of the countries where we operate our business tend to regulate the internet industry, including the licensing and permit requirements pertaining to companies in this industry. For example, Taiwan regulatory authorities have drafted and announced the Digital Communication Law (Draft) in November 2017 under which digital communication service providers, such as social media and mobile application operators, are required to disclose relevant information, including business details, terms and conditions of use, privacy policies, notification and complaint mechanism. Digital communication service providers are also obliged to establish a proper data security framework and content monitoring mechanism. If a provider fails to comply with these requirements leading to users' suffering from damages, it may be subject to compensation claims from users or investigations from government authorities. However, the interpretation and enforcement of these laws and regulations may involve significant uncertainty. As a result, it may be difficult to determine what actions or omissions may be deemed to be violations of applicable laws and regulations in certain circumstances.

        In addition, due to the increasing popularity and use of the internet and other online services, it is possible that additional laws and regulations may be adopted with respect to the internet or other online services covering issues such as user privacy, pricing, content, copyrights and distribution. The adoption of additional laws or regulations may decrease the growth of the internet or other online services, which could in turn decrease the demand for our products and services and increase our cost of doing business.

Certain areas of Developed Asia are susceptible to severe earthquakes and typhoons that could severely disrupt the normal operation of our business and adversely affect our earnings.

        Certain areas of Developed Asia are susceptible to earthquakes, typhoons, nuclear disasters and other disasters. For example, Taiwan was hit by Typhoon Nesat and Tropical Storm Haitang in 2017. In addition, Taiwan was struck by a 6.4-magnitude earthquake in February 2018. However, we do not carry insurance to cover damage caused by earthquakes, typhoons or other natural disasters or any resulting business interruption. In the event of a major earthquake, typhoon or other natural disaster in countries where we operate our business, our business could be severely disrupted and our business and results of operations could be materially and adversely affected.

Fluctuations in foreign currency exchange rates in countries where we operate our business will affect our financial results, which we report in U.S. Dollars.

        We operate in multiple jurisdictions, which exposes us to the effects of fluctuations in currency exchange rates. We earn revenue denominated in New Taiwan Dollars, Hong Kong Dollars, Singapore Dollars, Japanese Yen, and Korean Won, among other currencies. We incur expenses for employee compensation and other operating expenses in the local currencies in the jurisdictions in which we

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operate, including the jurisdictions described above. Fluctuations in the exchange rates between the various currencies that we use could result in expenses being higher and revenue being lower than would be the case if exchange rates were stable. We cannot assure you that movements in foreign currency exchange rates will not have a material adverse effect on our results of operations in future periods. We do not generally enter into hedging contracts to limit our exposure to fluctuations in the value of the currencies that our businesses use. Furthermore, the substantial majority of our revenue is denominated in the currencies of the Developed Asia countries. Because fluctuations in the value of such currencies are not necessarily correlated, there can be no assurance that our results of operations will not be adversely affected by such volatility.

The ability of our subsidiaries and branches in Developed Asia to distribute dividends or transfer profits to us may be subject to restrictions under their respective laws.

        We are a holding company, and our subsidiaries are located throughout Developed Asia including Taiwan, Hong Kong, Japan and Singapore. Internal sources of funds to meet our cash needs include profits of our Taiwan branches and our dividends paid by our subsidiaries. The distribution of dividends to us from our subsidiaries and the transfer of cash from our Taiwan branches are subject to restrictions imposed by the applicable laws and regulations in these markets, which are more fully described in "Dividend Policy" in this prospectus. In addition, except for the limitations described in "Regulation," although there are currently no foreign exchange control regulations which restrict the ability of our subsidiaries and branches in Taiwan, Hong Kong, Japan and Singapore to distribute dividends and transfer profits to us, the relevant regulations may be changed and the ability of these subsidiaries to distribute dividends to us may be restricted in the future.

Our VIE arrangements in Taiwan may be deemed to be invalid or unenforceable or not in compliance with Taiwan laws.

        We operate part of our agency, e-sports and advertising business through our Taiwan VIEs, including Unicorn Entertainment Ltd., Crazy Entertainment Ltd., Machi E-Sports Ltd. and 17 Production Ltd. In 2017, revenue from our Taiwan VIEs constituted 0.5% of our total revenues and we do not regard the businesses operated by these VIEs to be material to our operations. We currently operate these businesses using VIEs and we will acquire these entities if the approval of the Investment Commission of the Ministry of Economic Affairs of Taiwan is granted.

        Under the current policies on PRC investments in Taiwan, PRC investors are allowed to invest, upon prior approval, in Taiwan companies that operate business in the statutory business categories listed as permitted in the Positive Listings promulgated by the Taiwan authorities, and are prohibited or restricted from investing in all other businesses. Some of the statutory categories currently listed in the corporate registration of our Taiwan VIEs are not within the Positive Listings. Those include (i) agents and managers for performing artists, entertainers, models, artists and writers, (ii) live performances, (iii) motion picture production, distribution, projection, photo-finishing and recording, cartoon production, broadcasting and television program production, distribution and broadcasting, television commercials and film special effects, and (iv) general advertising services. Our Taiwan counsel, LCS & Partners, advised that "PRC investors" refer to PRC individuals, juristic persons, organizations and other institutions, and PRC invested companies from other jurisdictions. "PRC invested companies from other jurisdictions" refer to those entities incorporated outside of the PRC and invested by PRC individuals, juristic persons, organizations and other institutions that: (i) directly or indirectly hold more than 30% of the shares or capital of such entities, or (ii) have the ability to control such entities. We do not believe, based on the advice from our Taiwan counsel, LCS & Partners, that we are a PRC investor under existing Taiwan law and court judgments. Therefore, we do not believe that we are prohibited from operating businesses that have statutory business categories not listed as permitted in the Positive Listings or that we need to seek prior approval for operating businesses that have statutory

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business categories listed as permitted in the Positive Listings. However, we cannot be certain that Taiwan authorities will not take a different view and make inquiries and take actions against us, nor can we anticipate the outcome of such inquiries or actions.

        We were advised by our Taiwan counsel, LCS & Partners, that (i) these Taiwan VIE structures are not in violation of Taiwan laws and regulations currently in effect, and (ii) the VIE contractual arrangements are valid, binding and enforceable and are not in violation of Taiwan laws and regulations currently in effect as we do not believe we are PRC investors. However, should the validity or enforceability of these contractual arrangements be challenged by Taiwan authorities, part of our agency, e-sports and advertising business in Taiwan may be materially and adversely affected.

Risks Related to Our ADSs and This Offering

An active trading market for our Class A ordinary shares or our ADSs may not develop and the trading price for our ADSs may fluctuate significantly.

        We intend to apply to list our ADSs on the New York Stock Exchange. Prior to the completion of this offering, there has been no public market for our ADSs or our Class A ordinary shares, and we cannot assure you that a liquid public market for our ADSs will develop. If an active public market for our ADSs does not develop following the completion of this offering, the market price and liquidity of our ADSs may be materially and adversely affected. The initial public offering price for our ADSs was determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of our ADSs after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.

        The trading price of our ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in Taiwan that have listed their securities in the United States. A number of Taiwanese companies or companies with business operations located mainly in Taiwan have listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of those companies' securities after their offerings may affect the attitudes of investors toward companies with business operations located mainly in Taiwan listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.

        In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations, including the following:

    variations in our revenues, earnings, cash flow and data related to our user base or user engagement;

    announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

    announcements of new products, services and expansions by us or our competitors;

    changes in financial estimates by securities analysts;

    detrimental adverse publicity about us, our services or our industry;

    additions or departures of key personnel;

    release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

    potential litigation or regulatory investigations.

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        Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.

        In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.

        The trading market for our ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ADSs, the market price for our ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ADSs to decline.

We currently do not expect to pay dividends in the foreseeable future and you must rely on price appreciation of our ADSs for return on your investment.

        We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

        Our board of directors has complete discretion as to whether to distribute dividends subject to our memorandum and articles of association and certain restrictions under Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

Substantial future sales or the expectation of substantial sales of our ADSs in the public market could cause the price of our ADSs to decline.

        Sales of our ADSs in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have 60,088,000 Class A ordinary shares outstanding represented by ADSs. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the U.S. Securities Act of 1933, as amended, or the Securities Act. The remaining Class A ordinary shares outstanding after this offering will be available for sale in the form of ADSs upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, subject to volume and other

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restrictions as applicable under Rule 144 and Rule 701 under the Securities Act. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the underwriters. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of our ADSs could decline.

Because the initial public offering price is substantially higher than the pro forma net tangible book value per share, you will experience immediate and substantial dilution.

        If you purchase ADSs in this offering, you will pay more for each ADS than the corresponding amount paid by existing shareholders for their ordinary shares. As a result, you will experience immediate and substantial dilution of approximately US$7.21 per ADS (assuming that no outstanding options to acquire ordinary shares are exercised). See "Dilution" for a more complete description of how the value of your investment in our ADSs will be diluted upon the completion of this offering.

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.

        We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase our ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

If we are a passive foreign investment company for United States federal income tax purposes for any taxable year, United States holders of our ADSs or ordinary shares could be subject to adverse United States federal income tax consequences.

        A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. A separate determination must be made after the close of each taxable year as to whether a non-United States corporation is a PFIC for that year. Based on the current and anticipated value of our assets and composition of our income and assets, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ending December 31, 2018. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you the United States Internal Revenue Service, or IRS, will not take a contrary position.

        Changes in the composition of our income or composition of our assets may cause us to become a PFIC. The determination of whether we will be a PFIC for any taxable year may depend in part upon the value of our goodwill and other unbooked intangibles not reflected on our balance sheet (which may depend upon the market value of the ADSs or ordinary shares from time to time) and also may be affected by how, and how quickly, we spend our liquid assets and the cash raised in this offering. In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our anticipated market capitalization following the listing of the ADSs or ordinary shares on the New York Stock Exchange. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years because our liquid assets and cash (which are for this purpose considered assets that produce passive income) may then represent a greater percentage of our overall assets. Further, while we believe our classification methodology and valuation approach are reasonable, it is possible that the IRS may challenge our

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classification or valuation of our goodwill and other unbooked intangibles, which may result in our being or becoming a PFIC for the current or one or more future taxable years.

        If we are a PFIC for any taxable year during which a United States person holds ADSs or ordinary shares, certain adverse United States federal income tax consequences could apply to such United States person. See "Taxation—Certain United States Federal Income Tax Considerations—Passive Foreign Investment Company."

Mr. Joseph Jiexian Phua, our director and group chief executive officer, has substantial influence over our company and his interests may not be aligned with the interests of our other shareholders.

        We will adopt a dual-class voting structure such that our ordinary shares will consist of Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Based on our dual-class voting structure, in respect of matters requiring a shareholders' vote, holders of Class A ordinary shares will be entitled to one vote per share, while holders of Class B ordinary shares will be entitled to twenty votes per share. We will issue Class A ordinary shares represented by ADSs in this offering. All of the series A preference shares beneficially owned by Mr. Joseph Jiexian Phua, our director and group chief executive officer, will automatically convert into ordinary shares immediately prior to completion of this offering, and all of the ordinary shares beneficially owned by Mr. Phua will be re-designated as Class B ordinary shares on a one-for-one basis. All of our remaining issued and outstanding ordinary shares, including the series A preference shares and series B preference shares which will automatically convert into ordinary shares on a one-to-one basis immediately prior to completion of this offering, will be re-designated as Class A ordinary shares on a one-for-one basis.

        Due to the different voting powers associated with our two classes of ordinary shares, we anticipate that upon the completion of this offering, Mr. Phua will own 56.3% of the total voting power of our total issued and outstanding ordinary shares, assuming the underwriters do not exercise their option to purchase additional ADSs. As a result, Mr. Phua will have substantial influence over our business, including significant corporate actions such as mergers, consolidations, sales of all or substantially all of our assets, election of directors and other significant corporate actions.

        Mr. Phua may take actions that are not aligned with the interests of our other shareholders and may render new investors unable to influence significant corporate decisions. This concentration of ownership as well as voting and approval rights among holders of Class B ordinary shares may discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of the ADSs. These actions may be taken even if they are opposed by our other shareholders, including those who purchase ADSs in this offering. In addition, the significant concentration of share ownership may adversely affect the trading price of the ADSs due to investors' perception that conflicts of interest may exist or arise. For more information regarding our principal shareholders and their affiliated entities, see "Principal Shareholders."

The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs.

        S&P Dow Jones and FTSE Russell have recently announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of our ADSs representing Class A ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any

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such exclusion from indices could result in a less active trading market for our ADSs. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our ADSs.

Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and ADSs.

        We have adopted amended and restated memorandum and articles of association that will become effective immediately upon completion of this offering. Our new memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our proposed dual-class voting structure to be adopted immediately prior to the completion of this offering, gives disproportionate voting power to the Class B ordinary shares beneficially owned by Joseph Jiexian Phua, our director and group chief executive officer. We anticipate that Mr. Phua will beneficially own 56.3% of the aggregate voting power of our company immediately following the completion of this offering, assuming the underwriters do not exercise their over-allotment option to purchase additional ADSs. In addition, our board of directors has the authority, without further action by our shareholders, to issue preference shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, in the form of ADS or otherwise. Preference shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preference shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

        We are an exempted company with limited liability registered under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Law (as amended) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

        Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to

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make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

        Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

        As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law (as amended) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law."

Certain judgments obtained against us by our shareholders may not be enforceable.

        We are a Cayman Islands company and all of our assets are located outside of the United States. Substantially all of our current operations are conducted in Taiwan. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Taiwan may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and Taiwan, see "Enforceability of Civil Liabilities."

As a "controlled company" under the rules of the New York Stock Exchange, we may be exempt from certain corporate governance requirements that could adversely affect our public shareholders.

        Since Mr. Joseph Jiexian Phua, our director and group chief executive officer, will have a majority of the voting power of our issued and outstanding share capital by virtue of beneficially owning all of the issued Class B ordinary shares, we will qualify as a "controlled company" under the New York Stock Exchange rules. Under these rules a company of which more than 50% of the voting power is held by an individual, group or another company is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors be independent, as defined in the New York Stock Exchange rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. Although we do not intend to rely upon any such exemptions, we could elect to rely on any or all of these exemptions in the future. Should we choose to do so, so long as we remain a controlled company relying on any such exemptions and during any transition period following the time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.

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We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

        We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenue of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.07 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided by the JOBS Act.

        The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices for corporate governance matters that differ significantly from the New York Stock Exchange corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance listing standards.

        We have applied to list our ADSs on the New York Stock Exchange. The New York Stock Exchange corporate governance listing standards permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance listing standards.

        For instance, we are not required to: (i) have a majority of the board be independent; (ii) have a compensation committee or a nominations or corporate governance committee consisting entirely of independent directors; or (iii) have regularly scheduled executive sessions with only independent directors each year. Currently, we do not plan to rely on any of these exemptions, however, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the New York Stock Exchange corporate governance listing standards applicable to U.S. domestic issuers.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

        Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

    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;

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    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.

        We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the New York Stock Exchange. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

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 vote your Class A ordinary shares.

        As a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying Class A ordinary shares in accordance with these instructions if voting is by poll, and will vote all underlying Class A ordinary shares on deposit in accordance with instructions received from a majority of holders of ADSs who provide instructions if voting is by hand, in each case, subject to the terms and limitations of the deposit agreement. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. Under our amended and restated memorandum and articles of association that will become effective immediately upon completion of this offering, the minimum notice period required for convening a general meeting is 14 days. When a general meeting is convened, you may not receive sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will provide notice thereof and arrange to deliver our voting materials as provided in the deposit agreement. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

        The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on the Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses and applicable taxes. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. Neither we nor the depositary have any obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such

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distributions. Neither we nor the depositary have any obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

You may experience dilution of your holdings due to inability to participate in rights offerings.

        We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act, or are registered under the provisions of the Securities Act. The depositary may, in certain circumstances, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

The requirements of being a public company may strain our resources and divert management's attention.

        As a public company, we will be subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, the U.S. Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act and the listing standards of the New York Stock Exchange as applicable to a foreign private issuer, which are different in some material respects from those required for a U.S. public company. We expect that the requirements of these rules and regulations will increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources. As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors, shareholders or third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

        This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including those listed under "Risk Factors," that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

        In some cases, you can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "likely to" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements about:

    our goals and strategies;

    our ability to attract new users and talent to our platform;

    our future business development, financial condition and results of operations;

    the expected growth in, and market size of, the interactive entertainment platforms, including live streaming and online dating, and such industries in Taiwan, Hong Kong, Singapore and Japan, including segments within those industries;

    expected changes in our revenue, costs or expenditures;

    our ability to continue to source and offer new and attractive products and services;

    our expectations regarding demand for and market acceptance of our brands, platforms and services;

    our expectations regarding growth in our user base and level of user engagement;

    our ability to attract, retain and monetize users;

    our ability to continue to develop new technologies and/or upgrade our existing technologies;

    our expectation regarding the use of proceeds from this offering;

    growth of and trends of competition in our industry;

    government policies and regulations relating to our industry; and

    general economic and business conditions in the markets we have businesses.

        You should read this prospectus and the documents that we refer to in this prospectus with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance. 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 prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events

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or otherwise. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

        This prospectus also contains statistical data and estimates that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Although we have not independently verified the data, we believe that the publications and reports are reliable. See "Risk Factors—Risks Related to Our Business and Industry—We rely on assumptions and estimates to calculate certain key operating metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business." Accordingly, you should not place undue reliance on such information.

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USE OF PROCEEDS

        We estimate that we will receive net proceeds from this offering of approximately US$73.3 million, or US$84.8 million if the underwriters exercise their option to purchase additional ADSs in full, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. These estimates are based upon an assumed initial offering price of US$11.00 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus. A US$1.00 change in the assumed initial public offering price of US$11.00 per ADS would, in the case of an increase, increase and, in the case of a decrease, decrease the net proceeds of this offering by US$7.0 million, or approximately US$8.0 million if the underwriters exercise their option to purchase additional ADSs in full, under these assumptions.

        The primary purposes of this offering are to create a public market for our ordinary shares in the form of ADSs for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. We plan to use the net proceeds of this offering as follows:

    US$60.0 million for expansion of our business in Japan and other new markets;

    US$10.0 million for content development, including PGC and new content formats; and

    the remainder for strategic merger and acquisition opportunities, though we have not identified any targets, expansion into new markets as well as working capital and other general corporate purposes.

        The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management will have significant flexibility in applying and discretion to apply the net proceeds of the offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.

        Pending use of the net proceeds, we intend to hold our net proceeds in demand deposits or invest them in interest-bearing government securities.

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DIVIDEND POLICY

        We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

        Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of profits, retained earnings and share premium, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends on our Class A ordinary shares, we will pay those dividends which are payable in respect of the Class A ordinary shares underlying the ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to the ADS holders who will receive payment to the same extent as holders of our Class A ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See "Description of American Depositary Shares." Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. Dollars.

        We are a holding company incorporated in the Cayman Islands. For our cash requirements, including any payment of dividends to our shareholders, we rely upon payments from our operating entities incorporated in British Virgin Islands, Taiwan, Hong Kong and Singapore. Regulations in the jurisdictions where we utilize dividend payments may restrict the ability of our subsidiaries to pay dividends to us, including:

    in Taiwan, the branch we established is not an independent entity and is not entitled to distribute dividends or make other distributions to us. However, it can still remit profits to us after making tax payments on its income from sources in Taiwan in accordance with the applicable foreign exchange control regulations. Under the applicable foreign exchange control regulations, the branch has to report remittances over NT$500,000 (US$16,869) through its bank to the Central Bank of the Republic of China (Taiwan). Moreover, it must provide the documents in support of the accuracy of its report for remittances over US$1 million or obtain approvals from the Central Bank of the Republic of China (Taiwan) for remittances whose annual aggregate amount exceeds US$50 million;

    in Singapore, under Section 403 of the Companies Act of Singapore, or the Singapore Companies Act, a company incorporated in Singapore may not pay dividends except out of profits, and any profits of a company applied towards the purchase or acquisition of its own shares in accordance with sections 76B to 76G of the Singapore Companies Act and any gains derived by the company from the disposal of treasury shares shall not be payable as dividends. Payment of dividends must also be made in compliance with the constitution of the company.

    in Japan, under the Companies Act of Japan, or the Japan Companies Act, payment of dividends is required to be authorized by resolution of a general meeting of shareholders. Also, the aggregate book value of dividends paid by the Japanese operating entity may not exceed a distributable amount calculated pursuant to the Japan Companies Act.

        See "Regulation—Taiwan—Regulations on Dividend Distributions," "Regulation—Singapore—Regulations on Dividend Distributions" and "Regulation—Japan—Regulations on Dividend Distributions and Proceeds of Sale."

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CAPITALIZATION

        The following table sets forth our capitalization as of March 31, 2018:

    on an actual basis; and

    on a pro forma basis to give effect to: (i) the automatic conversion of the issued and outstanding series A preference shares and series B preference shares into an aggregate of 98,810,046 Class A ordinary shares at a one-to-one conversion ratio immediately prior to the completion of this offering; and (ii) the issuance of 19,733,333 Class A ordinary shares upon conversion of outstanding convertible notes in the aggregate principal amount of US$18,500,000 upon this offering at a conversion price of US$0.9625; and

    on a pro forma as-adjusted basis to give effect to: (i) the issuance of up to 1,928,417 Class A ordinary shares issuable upon conversion of outstanding warrants before this offering; (ii) the issuance of up to 19,733,333 Class A ordinary shares issuable upon conversion of outstanding convertible notes in the aggregate principal amount of US$18,500,000 upon this offering at a conversion price of US$0.9625; (iii) the issuance and conversion of convertible notes in the aggregate principal amount of US$32,177,364 in May 2018 into 33,431,028 Class A ordinary shares upon this offering at a conversion price of US$0.9625; (iv) the automatic conversion of the issued and outstanding series A preference shares and series B preference shares into an aggregate of 98,810,046 Class A ordinary shares at a one-to-one conversion ratio and on a pro forma basis immediately prior to the completion of this offering; and (v) the issuance and sale of 60,088,000 Class A ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$11.00 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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        You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  As of March 31, 2018    
 
 
  Pro Forma
as adjusted
 
 
  Actual   Pro Forma  
 
   
  (unaudited)
 
 
  (US$ thousands, except for share and
per share data)

 

Warrants and convertible notes

    20,610     710     661  

Total long-term borrowings (current and non-current portion)

    7,233     7,233     7,233  

Preference share liabilities:

                   

Series A preference shares (US$0.0001 par value, 100,000,000 shares authorized, 73,610,098 shares issued and outstanding on an actual basis, and none on a pro forma and pro forma as adjusted basis)

    82,480          

Series B preference shares (US$0.0001 par value, 100,000,000 shares authorized, 25,199,948 shares issued and outstanding on an actual basis, and none on a pro forma and pro forma as adjusted basis)

    32,993          

Total preference share liabilities

    115,473          

Shareholders' capital:

                   

Share Capital—Ordinary shares (US$0.0001 par value; 300,000,000 shares authorized, 53,571,704 shares issued and outstanding on an actual basis, 172,115,083 shares issued and outstanding on a pro forma basis, and 251,384,864 Class A shares and 16,177,768 Class B shares issued and outstanding on a pro forma as adjusted basis)

    5     17     27  

Capital surplus(1)

    36,980     172,342     281,961  

Accumulated deficit

    (73,862 )   (73,862 )   (73,862 )

Other equity interest

    (521 )   (521 )   (521 )

Total equity(1)

    (37,398 )   97,975     207,604  

Total capitalization(1)

    105,918     105,918     215,498  

(1)
A US$1.00 increase (decrease) in the assumed initial public offering price of US$11.00 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, would increase (decrease) each of capital surplus, total equity and total capitalization by US$7 million, assuming the number of ADSs offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        The discussion and table above exclude:

    the exercise of any outstanding awards pursuant to our share incentive plan after March 31, 2018, of which options to purchase ordinary shares and restricted share units totaling 32,233,736 remain outstanding as of the date of this prospectus. See "Management—Share Incentive Plan" for details of these awards; and

    the issuance of up to 1,014,120 Class A ordinary shares issuable upon conversion of outstanding warrants after this offering.

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DILUTION

        If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding shares.

        Net tangible book value represents the amount of our total consolidated tangible assets, which is the amount of our total consolidated assets excluding intangible assets, less consolidated liabilities. Our net tangible book value as of March 31, 2018 was a deficit of approximately US$122.7 million, or US$2.29 per ordinary share and US$18.32 per ADS. We incurred the deficit primarily because under IFRS our outstanding preference shares are accounted for as a liability of US$115.5 million. Dilution is determined by subtracting pro forma net tangible book value per ordinary share and preference shares on an as-converted basis, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price of US$1.38 per ordinary share.

        Without taking into account any other changes in such net tangible book value after March 31, 2018, other than to give effect to (i) the automatic conversion of our outstanding series A preference shares and series B preference shares into 98,810,046 ordinary shares at a one-to-one conversion ratio immediately upon the completion of this offering; (ii) the issuance of up to 19,733,333 Class A ordinary shares issuable upon conversion of outstanding convertible notes in the aggregate principal amount of US$18,500,000 upon this offering at a conversion price of US$0.9625; (iii) the issuance and conversion of convertible notes in the aggregate principal amount of US$32,177,364 in May 2018 into 33,431,028 Class A ordinary shares upon this offering at a conversion price of US$0.9625; (iv) the automatic conversion of the issued and outstanding series A preference shares and series B preference shares into an aggregate of 98,810,046 Class A ordinary shares at a one-to-one conversion ratio and on a pro forma basis immediately prior to the completion of this offering; and (v) the issuance and sale of 60,088,000 ADSs in this offering at an assumed initial public offering price of US$11.00 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and assuming the underwriters' option to purchase additional ADSs is not exercised, our pro forma as adjusted net tangible book value as of March 31, 2018 would have been US$0.47 per outstanding ordinary share, including ordinary shares underlying our outstanding ADSs, or US$3.79 per ADS. This represents an immediate increase in net tangible book value of US$2.76 per ordinary share, or US$22.11 per ADS, to existing shareholders and an immediate dilution in net tangible book value of US$0.90 per ordinary share, or US$7.21 per ADS, to investors purchasing ADSs

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in this offering. The pro forma as adjusted information discussed above is illustrative only. The following table illustrates such dilution:

 
  Per Ordinary
Share
  Per ADS  

Assumed initial public offering price

    1.38     11.00  

Net tangible book value as of March 31, 2018

    (2.29 )   (18.32 )

Pro forma net tangible book value after giving effect to (i) the automatic conversion of all of our outstanding series A preference shares and series B preference shares, and (ii) the automatic conversion of outstanding convertible notes in the aggregate amount of US$18,500,000

    0.24     1.89  

Pro forma as adjusted net tangible book value after giving effect to: (i) the automatic conversion of all of our outstanding series A preferences shares and series B preference shares, (ii) the automatic conversion of outstanding convertible notes in the aggregate amount of US$18,500,000, (iii) the issuance of ordinary shares upon exercise of warrants, (iv) the issuance and conversion of convertible notes in the aggregate amount of US$32,177,364 in May 2018, and (v) this offering

    0.47     3.79  

Amount of dilution in net tangible book value to new investors in the offering

    0.90     7.21  

        A US$1.00 change in the assumed public offering price of US$11.00 per ADS would, in the case of an increase, increase and, in the case of a decrease, decrease our pro forma as adjusted net tangible book value as described above by US$7.0 million, the pro forma as adjusted net tangible book value per ordinary share and per ADS by US$0.02 (decrease: US$0.03) per ordinary share and by US$0.17 (decrease: US$0.25) per ADS, and the dilution per ordinary share and per ADS to new investors in this offering by US$0.10 (decrease: US$0.09) per ordinary share and US$0.83 (decrease: US$0.75) per ADS, respectively, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ADSs and other terms of this offering determined at pricing.

        The following table summarizes, on a pro forma basis as of March 31, 2018, the differences between the existing shareholders as of March 31, 2018 and the new investors with respect to the number of ordinary shares (in the form of ADSs or ordinary shares) purchased from us in this offering, the total consideration paid and the average price per ordinary share paid and per ADS at an assumed initial public offering price of US$11.00 per ADS before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 
  Ordinary Shares
Purchased
  Total Consideration   Average Price  
 
  Amount in
US$
thousands
   
  per
Ordinary
Share
   
 
 
  Number   Percent   Percent   Per ADS  

Existing shareholders

    207,474,632     77.5 %   211,083     71.9 %   1.02     8.16  

New investors

    60,088,000     22.5 %   82,621     28.1 %   1.38     11.00  

Total

    267,562,632     100.0 %   293,704     100.0 %            

        The discussion and tables above excludes:

    exercise of any outstanding awards pursuant to our share incentive plan after March 31, 2018. See "Management—Share Incentive Plan" for details of these awards;

    the issuance of up to 1,014,120 Class A ordinary shares issuable upon conversion of outstanding warrants after this offering.

        To the extent any of these awards are exercised or vested, there will be further dilution to new investors.

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ENFORCEABILITY OF CIVIL LIABILITIES

        We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection for investors. In addition, Cayman Islands companies do not have standing to sue before the federal courts of the United States.

        Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our executive officers, directors and shareholders, be subject to arbitration.

        Substantially all of our assets are located outside the United States. In addition, most of our directors and executive officers are nationals or residents of jurisdictions other than the United States and substantially all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our executive officers and directors.

        We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the U.S. District Court for the Southern District of New York in connection with this offering under the federal securities laws of the United States or of any State in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York in connection with this offering under the securities laws of the State of New York.

Cayman Islands

        Walkers (Singapore) Limited Liability Partnership, our counsel as to Cayman Islands law, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or executive officers that are predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or executive officers that are predicated upon the securities laws of the United States or any state in the United States.

        Walkers (Singapore) Limited Liability Partnership has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is a judgment in personam rather than in rem, (a) is given by a competent foreign court with jurisdiction to give the judgment, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given or, subject to judicial discretion, a non-monetary judgment in personam, (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty or an attempt by a foreign state to act in excess of its jurisdiction by enforcing sovereign acts of that state outside of its own territory, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman

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Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands.

Taiwan

        LCS & Partners, our counsel as to Taiwan law, has informed us that any final judgment obtained against us, our directors or executive officers, our Taiwan branches or Taiwan affiliated entities in any court other than the courts of Taiwan in respect of any legal suit or proceeding will be enforced by the courts of Taiwan without further review of the merits only if the court of Taiwan in which enforcement is sought is satisfied that: (i) the court rendering the judgment had jurisdiction over the subject matter according to the laws of Taiwan; (ii) the judgment and the legal procedures resulting in the judgment were not contrary to the public order or good morals of Taiwan; (iii) if the judgment was rendered by default by the court rendering the judgment, (a) we or such persons were duly served within a reasonable time in the jurisdiction of such court in accordance with the laws and regulations of such jurisdiction or (b) process was served on us or such persons with judicial assistance of Taiwan; and (iv) judgments of the courts of Taiwan would be recognized and enforceable in the jurisdiction of the court rendering the judgment on a reciprocal basis. Moreover, LCS & Partners has advised us that a party seeking to remit money in the process of enforcing a foreign judgment in Taiwan would, except under limited circumstances, be required to obtain foreign exchange approval from the Central Bank of the Republic of China (Taiwan) for the remittance out of Taiwan of any amounts recovered in respect of such judgment denominated in a currency other than New Taiwan Dollars.

Singapore

        Rajah & Tann Singapore LLP, our counsel as to Singapore law, has informed us that in Singapore, a foreign judgment for a sum of money may be enforced in one of several ways, depending on where the foreign judgment is obtained. A foreign monetary judgment obtained in a competent court in the United States, including judgments relating to a violation of U.S. federal securities law, may form the basis for commencing an action in the Singapore courts to recover a debt if certain preconditions are met, including that the judgment is final and conclusive, based on the merits, not contrary to public policy, not obtained by fraud or in proceedings contrary to natural justice and the U.S. courts had jurisdiction to give that judgment. As such, assuming that the U.S. court had jurisdiction to hear and determine the original case and there are no grounds on which to impeach the judgment, the action in the Singapore courts may be successful without having to re-litigate the merits of the case.

        An investor may not be able to commence an original action against us or our directors or executive officers, or any person, before the Singapore courts to enforce, either directly or indirectly, a U.S. judgment which concerns foreign criminal, venue or public laws. If the action requires the Singapore courts to decide on liabilities (in particular, criminal liabilities) under U.S. federal securities law, the Singapore courts are likely to decline jurisdiction to hear the action. Each claim or relief sought in the U.S. proceedings would have to be reviewed to determine if it is civil or criminal in nature.

        In addition, whether an action may be commenced in a Singapore court depends on whether the Singapore court has jurisdiction. The Singapore courts will consider, among other considerations, whether the parties have agreed by a jurisdictional clause to submit to the Singapore courts or whether there are sufficient connecting factors (including factors such as the proper law of the contract or the place in which the tort occurred) which point to Singapore being the most appropriate forum.

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        As such, Rajah & Tann Singapore LLP has advised us that there is uncertainty as to whether Singapore courts will entertain original actions predicated upon the securities laws of the United States or any state in the United States.

Japan

        Mori Hamada & Matsumoto, our counsel as to Japanese law, has advised us that in original actions or in actions for enforcement of judgments of U.S. courts brought before Japanese courts, there is, in general, doubt as to the enforceability in Japan of liabilities based solely on U.S. federal and state securities laws.

        Mori Hamada & Matsumoto has also informed us that any judgment obtained against us, our directors or executive officers, our Japan branches or Japan affiliated entities rendered by any court in any jurisdiction outside Japan is enforceable in Japan, only if the Japanese court in which enforcement is sought is satisfied that (i) the foreign judgment is final and binding; (ii) the jurisdiction of the relevant foreign court is recognized under Japanese laws, regulations, conventions or treaties; (iii) the losing party was properly served with a summons (otherwise than a public notice or other similar notice), or appeared and presented the merits of the case; (iv) the content of the foreign judgment and the court proceedings are not contrary to the public order of Japan; and (v) reciprocity of judgment recognition exists between Japan and the country of the relevant foreign court. The review by a Japanese court should be limited to the issue of whether the above requirements have been satisfied, not the appropriateness of the foreign judgment. With respect to requirement (iv), however, the Supreme Court of Japan has held that an order for punitive damages made by a foreign court is contrary to the public order of Japan.

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CORPORATE HISTORY AND STRUCTURE

Corporate History

        M17 Entertainment Limited is an exempted company incorporated in the Cayman Islands with limited liability on February 28, 2017 as our holding company. M17 holds Machipopo, which operates our live streaming business, and Paktor, which operates our online dating business.

        We began our operations as Paktor, a private company limited by shares incorporated in Singapore on May 5, 2013. Paktor launched its online dating service platform, Paktor, in Singapore in May 2013, which expanded to Taiwan and South Korea markets in August 2015 and May 2016, respectively. Paktor acquired the dating application Goodnight in July 2016. Paktor serves our Taiwan, Singapore and South Korea markets and Goodnight serves our Taiwan market. Paktor has created, operated and maintained its online dating services primarily through these platforms. Paktor has also offered offline matchmaking services in Singapore since May 2015 and in Taiwan since May 2015. In March 2017, under a share swap agreement, all the existing shareholders of Paktor exchanged their respective shares, including all of the ordinary and preference shares, for equivalent classes of our shares, and our company became the holding company of Paktor.

        Machipopo is a business company incorporated in the British Virgin Islands on July 15, 2015. Machipopo launched its live streaming platform, 17 Media, in Taiwan in July 2015, and, by the end of December 2017, expanded to cover much of Developed Asia, including Japan and Hong Kong. Machipopo launched 17 TV and 17 Music in Taiwan in July 2017. Machipopo launched its e-commerce platform, 17 Store, in Taiwan in November 2017. Machipopo has also offered offline TV programs and films in Taiwan since January 2016.

        In October 2016 and January 2017, under share purchase agreements, Paktor acquired 36.8% and 9.44% of the equity interest in Machipopo for consideration of US$10.0 million and US$2.6 million, respectively. In March 2017, under the same share swap agreement through which we combined with Paktor, we acquired all of the remaining interest of Machipopo by issuing equivalent classes of our shares to the remaining shareholders of Machipopo.

        After we combined with Paktor and acquired Machipopo, we have continued to operate our interactive entertainment platforms, including the live streaming business, through Machipopo, its subsidiaries, branches and VIEs, and the dating businesses through Paktor, its subsidiaries and branches.

        In May 2018, in order to accelerate our expansion in Japan, we acquired all of the equity interest of 17 Media Japan Inc. Prior to this acquisition, we collaborated with 17 Media Japan Inc. through Infinity e. Ventures Asia III, L.P., our business partner in Japan, who is one of our principal shareholders and who controlled all of the equity interest in 17 Media Japan Inc. before the acquisition.

Corporate Structure

        M17 Entertainment Limited is a holding company that does not have substantive operations. We conduct our interactive entertainment businesses in Developed Asia, including mainly Taiwan, Hong Kong, Singapore, Japan and South Korea through our subsidiaries, branches and VIEs. Our interactive entertainment platform includes our live streaming application and PGC applications, 17 Media, 17 TV, 17 Video and 17 Music, which are operated by Machipopo and its subsidiaries, branches and VIEs. Our dating services include our main dating applications, Paktor and Goodnight, as well as offline matchmaking services, which we operate through Paktor and its branches and subsidiaries.

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        Our principal subsidiaries and branches consist of the following entities (in chronological order based on their dates of incorporation):

    Paktor Pte. Ltd., our subsidiary established in Singapore on May 5, 2013, is a holding entity in our online and offline dating business in Singapore, Malaysia and Taiwan;

    Gaigai Pte Ltd., our subsidiary established in Singapore on March 5, 2015, is an operating entity in our dating business in Singapore;

    Paktor Pte. Ltd. Taiwan branch, our branch established in Taiwan on August 12, 2015, is an operating entity in our online and offline dating business in Taiwan;

    Machipopo, Inc., our subsidiary established in British Virgin Islands on July 15, 2015, is a holding entity in our live streaming business in Developed Asia;

    Machipopo, Inc. Taiwan branch, our branch established in Taiwan on October 1, 2015, is an operating entity in our live streaming business in Taiwan;

    17 Media (H.K.) Limited., our subsidiary established in Hong Kong on November 23, 2015, is an operating entity in our live streaming business in Hong Kong;

    Paktor MY Sbn Bhd, our subsidiary established in Malaysia on February 24, 2016, is an operating entity in our offline dating business in Malaysia; and

    17 Media Japan Inc., our subsidiary established in Japan on June 9, 2017, is an operating entity in our live streaming business in Japan.

        We will acquire the equity interests of four entities that are currently our VIEs in Taiwan, which are currently beneficially owned by our chief executive officer, co-founder, an employee and a third party, if the approval of the Investment Commission of the Ministry of Economic Affairs of Taiwan is granted, in order to develop our agency, e-sports and advertising businesses further. We do not regard the businesses operated by these four VIEs as material to our operations.

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        The chart below summarizes our corporate structure and identifies the principal subsidiaries and branches, as well as our VIEs in Taiwan, as of the date of this prospectus.

GRAPHIC

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SELECTED CONSOLIDATED FINANCIAL DATA AND KEY OPERATING DATA

        The following selected consolidated statements of comprehensive income data for the years ended December 31, 2016 and 2017 and selected consolidated financial position data as of December 31, 2016 and 2017 of our company, M17 Entertainment Limited, or M17, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following selected condensed consolidated statements of comprehensive income data for the three months ended March 31, 2017 and 2018 and selected condensed consolidated financial position data as of March 31, 2017 and 2018 of our company have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

        The following summary consolidated statements of comprehensive income data for the year ended December 31, 2016 and for the three months ended March 31, 2017 and the summary consolidated financial position data as of December 31, 2016 and March 31, 2017 of Machipopo have been derived from the audited consolidated financial statements of Machipopo included elsewhere in this prospectus.

        The consolidated financial statements of M17 and Machipopo are prepared and presented in accordance with IFRS, as issued by the International Accounting Standards Board. Our historical results are not necessarily indicative of results expected for future periods. You should read this "Selected Consolidated Financial Data" section together with our consolidated financial statements and the related notes and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section included elsewhere in this prospectus.

        The following tables also set forth the summary unaudited pro forma consolidated statement of comprehensive income for the year ended December 31, 2017 and the three months ended March 31, 2017, which reflects the effect of the acquisition of Machipopo by M17, which was completed in March 2017, as if such transaction had occurred on January 1, 2017. See "Management's Discussion and Analysis of Financial Condition and Results of Operation—Unaudited Pro Forma Consolidated Financial Information" for more information. The pro forma adjustments are based upon currently available information and certain assumptions that are factually supportable and that we believe are reasonable under the circumstances. The unaudited pro forma financial information does not purport to present what our actual consolidated results of operations would have been had the transactions

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occurred on the dates indicated, nor are they necessarily indicative of results that may be expected for any future period.

 
  Year Ended December 31,   Three Months Ended
March 31,
 
 
   
   
  2017   (Unaudited)

 
 
  2016    
  Machipopo for
the period from
January 1, 2017 to
March 31, 2017
   
  2017   2018  
 
   
  Pro forma
(unaudited)
 
 
  M17   Machipopo   M17   M17   Pro forma   M17  
 
  (US$)
   
   
   
 

Net revenues

    3,682,180     4,003,236     79,502,134     10,577,834     90,079,968     1,174,722     11,752,556     37,903,577  

Cost of revenue

    (967,449 )   (7,005,558 )   (65,504,191 )   (9,219,555 )   (75,610,477 )   (572,326 )   (10,678,612 )   (27,365,783 )

Gross profit

    2,714,731     (3,002,322 )   13,997,943     1,358,279     14,469,491     602,396     1,073,944     10,537,794  

Operating expenses:

                                                 

Selling expenses

    (3,674,603 )   (2,935,157 )   (32,917,704 )   (5,462,501 )   (38,850,660 )   (731,657 )   (6,664,613 )   (19,921,400 )

General and administrative expenses

    (2,005,825 )   (2,241,078 )   (10,021,745 )   (1,004,106 )   (11,117,623 )   (843,392 )   (1,939,270 )   (12,104,969 )

Research and development expenses

    (1,876,483 )   (2,093,821 )   (7,498,434 )   (786,334 )   (8,284,768 )   (506,575 )   (1,292,909 )   (3,326,872 )

Total operating expenses

    (7,556,911 )   (7,270,056 )   (50,437,883 )   (7,252,941 )   (58,253,051 )   (2,081,624 )   (9,896,792 )   (35,353,241 )

Operating loss

    (4,842,180 )   (10,272,378 )   (36,439,940 )   (5,894,662 )   (43,783,560 )   (1,479,228 )   (8,822,848 )   (24,815,447 )

Non-operating income and expenses

                                                 

Other income

            128,280         128,280              

Other gains and losses

    (10,251,359 )   (1,313,743 )   17,029,245     (964,846 )   (18,899,094 )   26,988,566     (8,939,773 )   (1,895,824 )

Finance costs

    (28,461 )       (251,698 )       (251,698 )           (247,806 )

Share of profit/(loss) of associates accounted for under equity method

    (1,233,459 )       (3,171,282 )           (3,171,282 )        

Total non-operating income and expenses

    (11,513,279 )   (1,313,743 )   13,734,545     (964,846 )   (19,022,512 )   23,817,284     (8,939,773 )   (2,143,630 )

Profit/(loss) before income tax

    (16,355,459 )   (11,586,121 )   (22,705,395 )   (6,859,508 )   (62,806,072 )   22,338,056     (17,762,621 )   (26,959,077 )

Income tax (expenses) benefit

            692,165         922,886         230,721     9,238  

Profit/(loss) for the year

    (16,355,459 )   (11,586,121 )   (22,013,230 )   (6,859,508 )   (61,883,186 )   22,338,056     (17,531,900 )   (26,949,839 )

Other comprehensive income

                                                 

Other comprehensive income, before tax, exchange differences on translation

    (201,965 )   (2 )   168,803     (4,840 )   168,803     (323,043 )   (323,043 )   (86,657 )

Other comprehensive income for the year, net of tax

    (201,965 )   (2 )   168,803     (4,840 )   168,803     (323,043 )   (323,043 )   (86,657 )

Total comprehensive income for the year

    (16,557,424 )   (11,586,123 )   (21,844,427 )   (6,864,348 )   (61,714,383 )   22,015,013     (17,854,943 )   (27,036,496 )

Basic earnings per share

                                                 

Total basic earnings per share

    (0.78 )   (0.11 )   (0.46 )   (0.07 )   (1.11 )   1.01     (0.33 )   (0.50 )

Diluted earnings per share

                                                 

Total diluted earnings per share

    (0.78 )   (0.11 )   (0.46 )   (0.07 )   (1.11 )   0.28     (0.33 )   (0.50 )

Non-IFRS Financial Measures (unaudited)

                                                 

EBITDA(1)

    (16,218,755 )   (10,755,926 )   (16,647,311 )   (6,649,694 )         22,419,855           (24,951,157 )

Adjusted EBITDA(1)

    (15,806,059 )   (10,028,372 )   (14,754,757 )   (6,519,219 )         22,846,231           (18,489,200 )

(1)
To see how we define and calculate EBITDA and adjusted EBITDA, a reconciliation between EBITDA and adjusted EBITDA and loss for the year (the most directly comparable IFRS financial measure) and a discussion about the limitations of non-IFRS financial measures, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures."

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  As of
December 31,
2016
  As of
December 31,
2016
  As of
December 31,
2017
  As of
March 31,
2017
  As of
March 31,
2017
(Unaudited)
  As of
March 31,
2018
(Unaudited)
 
 
  M17   Machipopo   M17   Machipopo   M17   M17  
 
  (US$)
 

Selected Consolidated Financial Position Data:

                                     

Total current assets

    14,922,590     12,325,073     39,351,205     10,288,983     18,743,454     48,587,968  

Cash and cash equivalents

    9,399,455     2,420,599     24,397,827     1,818,830     11,989,139     31,351,029  

Total non-current assets

    9,823,885     1,006,114     88,355,903     1,005,999     92,745,628     86,596,777  

Investments accounted for using equity method

    8,766,541                      

Intangible assets

    836,239     790,247     86,664,182     594,987     92,190,793     85,267,332  

Total assets

    24,746,475     13,331,187     127,707,108     11,294,982     111,489,082     135,184,745  

Total current liabilities

    19,907,696     3,738,842     26,260,401     8,601,339     10,926,598     52,300,881  

Total non-current liabilities

    27,453,837     10,811,753     118,270,556     11,794,424     74,993,071     120,282,252  

Total liabilities

    47,361,533     14,550,595     144,530,957     20,395,763     85,919,669     172,583,133  

Total equity

    (22,615,058 )   (1,219,408 )   (16,823,849 )   (9,100,781 )   25,569,413     (37,398,388 )

Total liabilities and equity

    24,746,475     13,331,187     127,707,108     11,294,982     111,489,082     135,184,745  

Key Operating Data

        The following table presents our key operating data for the periods indicated:

 
   
  Three Months Ended  
 
  The
month of
December
2016
 
 
  March 31,
2017
  June 30,
2017
  September 30,
2017
  December 31,
2017
  March 31,
2018
 

Average monthly active users

    1.4 million(1)     1.5 million(1)     1.5 million     1.5 million     1.6 million     1.7 million  

Live streaming active users

    0.9 million     0.9 million     0.9 million     0.8 million     1.0 million     1.0 million  

Dating applications active users

    0.5 million     0.6 million     0.6 million     0.7 million     0.6 million     0.7 million  

Average monthly live streaming paying users

    10,748(2)     13,928(2)     19,719     20,541     25,000     32,038  

Average monthly live streaming revenue per paying user (US$)

    102.3(2)     252.7(2)     325.8     388.6     381.1     355.2  

Paying user ratio

    1.2 %(2)   1.5 %(2)   2.3 %   2.5 %   2.5 %   3.1 %

Contracted artists(3)

    999(2)     1,627     1,784     2,768     5,414     7,719  

Registered users(3)

    40.3 million     42.1 million     43.5 million     44.8 million     46.3 million     47.9 million  

Live streaming active users

    29.3 million     30.5 million     31.2 million     31.7 million     32.4 million     33.3 million  

Dating applications active users

    11.0 million     11.6 million     12.3 million     13.1 million     13.9 million     14.6 million  

(1)
Represents the combined active users of Paktor and Machipopo.

(2)
Represents the operating data of Machipopo.

(3)
Numbers provided as of the end of the period.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled "Selected Consolidated Financial Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.

        The unaudited pro forma consolidated financial data for the three months ended March 31, 2017 and year ended December 31, 2017 presented in this section is provided supplementally and includes adjustments to give effect to the acquisition of Machipopo, Inc., which was completed in March 2017, as if such transaction had occurred on January 1, 2017. See "—Unaudited Pro Forma Consolidated Financial Information" for a discussion of the adjustments made for the presentation of the pro forma consolidated financial information.

Overview

        We operate the largest live streaming platform by revenue in Developed Asia with a market share of 19.2% in the first quarter of 2018, according to Frost & Sullivan. In our home market of Taiwan, which, according to Frost & Sullivan, represented 36.1% of the live streaming market in Developed Asia in 2017, we were ranked number one among all live streaming platforms in terms of revenue with a market share of 38.6% in the first quarter of 2018, more than double that of our closest competitor. We have successfully extended our market leadership in Taiwan to other markets in Developed Asia that have close cultural proximity to Chinese-speaking countries. According to Frost & Sullivan, in the first quarter of 2018, we were number one among all live streaming platforms in Hong Kong by revenue with a market share of 15.3%, and we were second among all live streaming platforms in Japan by revenue where we increased our market share to 18.6% from 9.6% in the fourth quarter of 2017.

        Our live streaming platform, 17 Media, was launched in Taiwan in July 2015. 17 Media had 33.3 million registered users as of March 31, 2018, compared to 32.4 million and 29.3 million as of December 31, 2017 and 2016, respectively. 17 Media had 1.0 million average monthly active users in the three months ended March 31, 2018, compared to 1.0 million and 0.9 million in the three months ended December 31, 2017 and in December 2016, respectively. We also operate Paktor, which was launched in Singapore in 2013, and Goodnight, which are our main dating applications. The total number of registered users on our dating applications grew to 14.6 million as of March 31, 2018 from 13.9 million and 11.0 million as of December 31, 2017 and 2016, respectively. Our average monthly active dating users increased to 0.7 million in the three months ended March 31, 2018 from 0.6 million and 0.5 million in the three months ended December 31, 2017 and in December 2016, respectively. We are in the process of integrating our live streaming platform into our online dating applications, and our integrated platform had 47.9 million registered users as of March 31, 2018 and 1.7 million average monthly active users in the three months ended March 31, 2018, an increase from 46.3 million registered users as of December 31, 2017 and 1.6 million average monthly active users in the three months ended December 31, 2017.

        Our current structure is the result of a series of transactions that were completed in March 2017 between Machipopo, Inc., the entity that operates our live streaming business, and us, the successor of Paktor Pte. Ltd., the entity that operates our dating business. We have enjoyed significant growth since our current structure came into being. Machipopo generated live streaming revenues of US$71.8 million in 2017, or US$82.4 million in 2017 on a pro forma consolidated basis, compared to

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US$4.0 million in 2016. Our live streaming revenues were US$34.1 million in the three months ended March 31, 2018, compared to nil, or US$10.6 million on a pro forma consolidated basis, for the same period in 2017. M17 had a loss for the year of US$22.0 million in 2017 compared to a loss for the year of US$16.4 million in 2016 while Machipopo had a loss of US$11.6 million. Our loss for the three months ended March 31, 2018 was US$26.9 million compared to a profit of US$22.3 million, or a loss of US$17.5 million on a pro forma consolidated basis, for the same period in 2017.

Factors Affecting Our Results of Operations

        Our business and operating results are affected by general factors affecting Developed Asia's interactive entertainment industry, which include:

    overall economic growth in Developed Asia;

    growth of the interactive entertainment market, especially the live streaming market; and

    governmental policies and initiatives affecting the interactive entertainment industry and live streaming industry in the markets where we operate.

        While our business is influenced by general factors affecting the interactive entertainment industry in Developed Asia generally, we believe our results of operations are more directly affected by company specific factors, including the following major factors:

Our ability to attract and retain popular artists and enrich the quality of our content offerings

        Our users join and remain active on our platform in large part because of the talented and popular artists that live stream on 17 Media. We focus on establishing deep relationships with our talented artists by contracting with them and providing to them continuous training and development opportunities in order to ensure a stable and ever-growing supply of PUGC on our platform. In March 2018, we had 7,719 contracted artists, an increase of 42.6% from 5,414 that contracted with us in December 2017, which was an increase of 441.9% from 999 that had contracted with Machipopo in December 2016. For our largest market of Taiwan, as of March 31, 2018, we had 2,663 contracted artists, an increase from 2,617 that contracted with us as of December 31, 2017 and 512 that had contracted with Machipopo as of December 31, 2016. In March 2018, our contracted artists produced a total of 177,560 hours of PUGC, an increase from 140,394 hours and 32,958 hours produced by Machipopo's artists in December 2017 and 2016, respectively. In addition, by leveraging our own production capabilities and strategic media partnerships, we offer high quality PGC across multiple media formats, including mobile and online, TV and film. We produced 823 hours of original PGC from June 2017, when we started offering PGC products, to March 2018.

        Artists are the content producers and the foundation of our thriving interactive entertainment platform. The growing supply of quality PGC and PUGC generated through our interactive entertainment platform maintains and enhances the attractiveness of our platforms to users and therefore drives the growth of our business. We actively seek to find opportunities to share the talents of our artists on other platforms and entertainment mediums, each of which serves both to enhance the individual brands of our artists and to provide a potential revenue channel for us. We will continue to invest in attracting and retaining popular artists, including popular models, singers and celebrities through cooperating with talent agencies.

Our ability to effectively monetize our interactive entertainment platform

        Our revenues and results of operations are directly affected by our ability to monetize our interactive entertainment platform, including our ability to convert more of our growing user base into paying users and increase the spending of our paying users on our platform. We monetize our platform through selling virtual points, which can be exchanged for various virtual items on our live streaming

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platform, by offering subscriptions to our dating services, providing advertising services on our platform and are exploring additional monetization channels.

        Our live streaming revenues accounted for 90.1% of our total net revenues in the three months ended March 31, 2018, 90.3% of our total net revenues in 2017 and 91.4% of our total net revenues in 2017 on a pro forma consolidated basis. Our live streaming revenues are driven primarily by the number of paying users on our live streaming platform, which has grown steadily since our inception. 17 Media, our live streaming platform, had 32,038 average monthly paying users in the three months ended March 31, 2018 and 25,000 average monthly paying users in the three months ended December 31, 2017, compared to 10,748 for Machipopo in December 2016, while the paying user ratio on our live streaming platform increased to 3.1% from 2.5% and 1.2% in the same respective periods. We have organized a variety of innovative online competitions and offline events with different themes to incentivize users to increase their spending on our platform. 17 Media's average revenue per paying user per month was US$355.2 in the three months ended March 31, 2018 compared to US$381.1 in the three months ended December 31, 2017 and US$102.3 for Machipopo in December 2016. We plan to adopt more creative designs for virtual items and promote more attractive reward systems and privileges to further incentivize users to purchase on our live streaming platform.

        Our ability to monetize our platform will be especially important as our business further expands outside of Taiwan. During the three months ended March 31, 2018, 39.5% of MAUs on our live streaming application were from Taiwan, while 58.2% of revenues from our live streaming business were from users based in Taiwan, compared to 2017, in which 59.8% of MAUs on our live streaming application were from Taiwan, while 76.5% of revenues from our live streaming business were from users based in Taiwan. See "Risk Factors—Risks Related to Our Business and Industry—We have a limited operating history in markets outside Taiwan. We may fail to meet the challenges presented by our increasing international operations." We plan to leverage our experience and success in Taiwan to achieve growth in other markets within Developed Asia that we believe have high monetization potential, such as Japan.

Our ability to attract and grow our user base and enhance user engagement

        We have a large and highly engaged user base and have experienced rapid user growth since our inception. We had 1.7 million average monthly active users in the three months ended March 31, 2018 across all our platforms, compared to 1.6 million in the three months ended December 31, 2017 and 1.5 million in the three months ended March 31, 2017, which represents the combined active users of Paktor and Machipopo. Average daily time spent on our live streaming platform by live streaming users increased to 40.4 minutes in March 2018 from 35.5 minutes in December 2017 and 19.0 minutes for Machipopo in December 2016. Leveraging our diversified interactive entertainment content portfolio and a variety of online competitions and offline events, we are able to attract and retain more users and stimulate our users to participate actively on our platform. In particular, we capitalize on our scale and leading market position in Taiwan to attract more users, while in Japan we host a variety of advertising and marketing campaigns to grow our user base. Our continued success in Taiwan and Japan is critical to achieving our continued success.

        User base growth and increased user engagement are driven primarily by our marketing efforts to promote and enhance our brands as well as our growing supply of popular UGC and PUGC and other entertainment content streamed on our platform, the popularity of our artists, and continuous improvement in user experience. During the three months ended March 31, 2018, we incurred selling expenses of US$19.9 million, an increase from US$0.7 million, or US$6.7 million on a pro forma consolidated basis for the same period in 2017. During 2017, we incurred selling expenses of US$32.9 million or US$38.9 million on a pro forma consolidated basis and plan to continue to invest in our marketing efforts in order to further grow our user base.

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Our ability to manage our costs and expenses

        Our ability to manage and control our costs and expenses is critical to the success of our business. Key components of our costs and expenses are revenue sharing fees and live streaming costs, channel costs, server and bandwidth costs and program production costs. Revenue sharing fees and live streaming costs consist primarily of payments to artists in accordance with the streamer contracts that we enter into with them. Revenue sharing fees and live streaming costs have historically accounted for the majority of our cost of revenues. Our ability to continue to manage and control our revenue sharing fees and live streaming costs while continuing to attract and maintain popular artists and maintaining the high quality of our content affects our results of operations. We expect the absolute amount of our revenue sharing fees and live streaming costs to increase as our business grows, though as a percentage of our revenues we anticipate that it will remain at similar levels or potentially decrease as the fixed salaries paid to our contracted artists decreased as a portion of the revenue sharing fees. The largest component of our operating expenses is selling expenses, which includes all expenses associated with our marketing efforts. We expect marketing expenses to continue to increase in the near future as we invest in building both our user base and attracting new talent.

Effective investment in technology

        Our cutting-edge technological capabilities and infrastructure support our business development. We invest significant resources into our research and development, focusing on improving the multi-media functionalities of our various platforms, improving user experience, and increasing monetization. We also invest in technologies to facilitate big data analysis for more targeted services to our users, such as interest- or location-based user groups and mobile marketing services. We must continue to innovate to keep pace with the growth of our business and bring forward new technologies. In addition, our technology infrastructure is critical to the scalability and flexibility of our platform. We must continue to upgrade and expand our technology infrastructure as well as improve the security and stability of our platform to better serve our community and support our business growth. We expect our research and development expenses to increase in absolute amount but decrease as a percentage of our revenue as we continue to improve our operating efficiency.

Unaudited Pro Forma Consolidated Financial Information

        The unaudited pro forma condensed consolidated financial statements for the year ended December 31, 2017 and for the three months ended March 31, 2017 are based on the historical audited consolidated financial statements of M17 and Machipopo. M17 is an exempted company incorporated in the Cayman Islands with limited liability on February 28, 2017 as our holding company, and is the successor of Paktor, which operates online dating services. Machipopo is a company incorporated in the British Virgin Islands on July 15, 2015 to develop the live streaming business. See "Corporate History and Structure—Corporate History." These pro forma consolidated financial statements give effect to the acquisition of Machipopo by M17 as if the acquisition had occurred as of January 1, 2017. The actual acquisition date was March 20, 2017.

        These unaudited pro forma consolidated financial statements have been prepared in accordance with IFRS using the accounting policies described in our audited consolidated financial statements as at December 31, 2017 and March 31, 2017. The unaudited pro-forma financial statements should be read together with our audited consolidated financial statements for the years ended December 31, 2016 and 2017, the three months ended March 31, 2017 and 2018 and notes thereto, contained elsewhere in this prospectus.

        The unaudited pro forma financial statements were prepared in accordance with Article 11 of Regulation S-X. Accordingly, the historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to

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the acquisition of Machipopo, (2) expected to have a continuing impact on us, and (3) factually supportable. The pro forma financial statements present the loss from continuing operations before nonrecurring charges or credits directly attributable to the acquisition.

        The unaudited pro-forma financial statements do not necessarily reflect what our combined results of operations would have been had the acquisition occurred on January 1, 2017. They may also not be useful in predicting future results of operations for the combined company. The actual results from operations may differ significantly from the pro forma results reflected herein. The combined results of operations do not reflect the realization of any expected cost savings or other synergies from the acquisition of Machipopo as a result of planned cost savings or other initiatives following the completion of the acquisition. The unaudited pro forma condensed combined financial information should be read in conjunction with "Risk Factors," "Capitalization," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and audited consolidated financial statements and the related notes included elsewhere in this prospectus.

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        Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information.

 
  M17 for the
year ended
December 31,
2017
  Machipopo for
the period
from January 1,
2017 to
March 31,
2017
  Pro forma
adjustments
  Notes   Pro forma
consolidated
M17 for the
year ended
December 31,
2017
 
 
  (US$)
 

Net revenues

    79,502,134     10,577,834               90,079,968  

Cost of revenue

    (65,504,191 )   (9,219,555 )   (886,731 ) (a)     (75,610,477 )

Gross profit

    13,997,943     1,358,279               14,469,491  

Operating expenses

                             

Selling expenses

    (32,917,704 )   (5,462,501 )   (470,455 ) (a)     (38,850,660 )

General and administrative expenses

    (10,021,745 )   (1,004,106 )   (91,772 ) (a)(d)     (11,117,623 )

Research and development expenses

    (7,498,434 )   (786,334 )             (8,284,768 )

Total operating expenses

    (50,437,883 )   (7,252,941 )             (58,253,051 )

Operating loss

    (36,439,940 )   (5,894,662 )             (43,783,560 )

Non-operating income and expenses

                             

Other income

    128,280                   128,280  

Other gains and losses

    17,029,245     (964,846 )   (34,963,493 ) (c)     (18,899,094 )

Finance costs

    (251,698 )                 (251,698 )

Share of profit/(loss) of associates accounted for under equity method

    (3,171,282 )       3,171,282   (b)      

Total non-operating income and expenses

    13,734,545     (964,846 )             (19,022,512 )

Loss before income tax

    (22,705,395 )   (6,859,508 )             (62,806,072 )

Income tax (expenses) benefit

    692,165         230,721   (a)     922,886  

Loss for the year

    (22,013,230 )   (6,859,508 )             (61,883,186 )

Other comprehensive income

                             

Other comprehensive income, before tax, exchange differences on translation

    168,803     (4,840 )             168,803  

Other comprehensive income for the year, net of tax

    168,803     (4,840 )             168,803  

Total comprehensive income for the year

    (21,844,427 )   (6,864,348 )             (61,714,383 )

Basic earnings per share

                             

Total basic earnings per share

    (0.46 )         (0.65 ) (e)     (1.11 )

Diluted earnings per share

                             

Total diluted earnings per share

    (0.46 )         (0.65 ) (e)     (1.11 )

Notes:

(a)
To amortize intangible assets and corresponding deferred tax liability.

(b)
To eliminate the equity in loss of Machipopo for the year ended December 31, 2017.

(c)
To eliminate the gain that was recorded due to remeasurement of the fair value of our original 48.18% interest in Machipopo at the acquisition date.

(d)
To remove transaction costs directly related to the acquisition of Machipopo.

(e)
Represents the increase in the weighted average shares in connection with the issuance of 32,941,176 common shares related to the acquisition of Machipopo as if the acquisition had taken place on January 1, 2017. For the period presented, diluted loss per common share does not differ from basic loss per common share since the effect of our stock options, restricted share units, non-cumulative convertible preference shares and convertible notes are anti-dilutive.

69


Table of Contents

 
  M17 for the
three months
ended
March 31,
2017
  Machipopo for
the three
months ended
March 31, 2017
  Pro forma
adjustments(1)
  Notes   Pro forma
consolidated
M17 for the
three months
ended
March 31,
2017
 
 
  (US$)
 

Net revenues

    1,174,722     10,577,834               11,752,556  

Cost of revenue

    (572,326 )   (9,219,555 )   (886,731 ) (a)     (10,678,612 )

Gross profit

    602,396     1,358,279               1,073,944  

Operating expenses:

                             

Selling expenses

    (731,657 )   (5,462,501 )   (470,455 ) (a)     (6,664,613 )

General and administrative expenses

    (843,392 )   (1,004,106 )   (91,772 ) (a)(d)     (1,939,270 )

Research and development expenses

    (506,575 )   (786,334 )             (1,292,909 )

Total operating expenses

    (2,081,624 )   (7,252,941 )             (9,896,792 )

Operating loss

    (1,479,228 )   (5,894,662 )             (8,822,848 )

Non-operating income and expenses

                             

Other income

                       

Other gains and losses

    26,988,566     (964,846 )   (34,963,493 ) (c)     (8,939,773 )

Finance costs

                       

Share of profit/(loss) of associates and joint ventures accounted for under equity method

    (3,171,282 )       3,171,282   (b)      

Total non-operating income and expenses

    23,817,284     (964,846 )             (8,939,773 )

Profit/(loss) before income tax

    22,338,056     (6,859,508 )             (17,762,621 )

Income tax (expenses) benefit

            230,721   (a)     230,721  

Profit/(loss) for the year

    22,338,056     (6,859,508 )             (17,531,900 )