A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors SUMMARY OF RISK FACTORS We believe some of the major risks and uncertainties that may materially and adversely affect us include the following: BUSINESS AND OPERATIONAL RELATED RISKS Risks Applicable Across Multiple Businesses ● We may fail to maintain or grow the size of our user base or the level of engagement of our users. ● Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our markets could have a material adverse effect on our business and operations. ● Our results of operations are subject to fluctuations. 5 Table of Contents ● We are subject to extensive and changing laws and government regulations across our business. ● We face competition in our businesses. ● We may be subject to intellectual property-related risks. ● Existing or future investments or acquisitions may not be successful. ● Our businesses involve third parties over whose actions we have no control. ● Fluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we report in U.S. dollars. ● We may have exposure to greater than anticipated tax liabilities, and our financial position and results of operations may be adversely affected by the implementation of legislation or internationally accepted principles. ● We may use artificial intelligence (“AI”) in our business, and challenges with properly managing its use or more successful use of AI by our competitors could adversely affect our business and results of operations. ● We may be liable for security breaches and attacks against our or our third-party partners’ platforms and networks, particularly with regard to confidential user information and personal or other data or any other privacy or data protection compliance issue, and our platforms and games may contain unforeseen “bugs”, vulnerabilities or errors. ● We collect, process, transmit, and store personal information in connection with the operation of our businesses and are subject to complex and evolving international laws and regulations regarding privacy and data protection. ● We may not succeed in managing or expanding our business across the expansive and diverse markets and segments in which we operate. ● We have a history of net losses and we may not remain profitable in the future. ● Any future occurrence of natural disasters, epidemics, pandemics or other outbreaks, wars, conflicts or other catastrophic events could also adversely affect our business. Risks Related to Our E-Commerce Business ● We face uncertainties relating to the growth and profitability of the e-commerce industry in our markets and we may face challenges and uncertainties in implementing our e-commerce strategy. ● We face risks related to logistics and fulfillment. ● We may be held liable for actions by our marketplace participants. ● We may suffer losses relating to the products we sell on Shopee. Risks Related to Our Digital Financial Services Business ● We face regulatory risks relating to our digital financial services business. ● We face uncertainties and risks relating to our digital financial services business. ● We face credit risks. ● Changes in interest rates may adversely impact us. 6 Table of Contents ● Determining our allowance for credit losses requires many assumptions and complex analyses. If our estimates are not correct, our business may be adversely affected. ● If our collection efforts on delinquent loans are ineffective or unsuccessful, the performance of our loans would be adversely affected. ● We face funding risks. ● Our banking business may subject us to additional material business, operational, financial, legal and compliance requirements and risks. ● We face risks relating to our insurance business. ● We face risks relating to our e-wallet business. ● We could be held liable if our digital financial services and products are used for fraudulent, illegal or improper purposes. Risks Related to Our Digital Entertainment Business ● We derive a significant portion of digital entertainment revenue and gross profit from a limited number of online games. ● We have a limited track record in game development and global game distribution. ● We rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and interact with user-generated content. ● Our games are subject to scrutiny regarding the appropriateness of their content. ● Malicious actors may compromise the quality of our user experience. ● Our live events may introduce risks around public safety and harm our reputation. Other Operational Risks ● We rely on technology and internet infrastructure, data center and cloud service providers and telecommunications networks in the markets where we operate. ● We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees. ● We face manpower-related risks. ● We may be subject to risks related to litigation and regulatory proceedings. ● We rely on structural arrangements to establish control over certain entities and government authorities may determine that these arrangements do not comply with existing laws and regulations. We are also subject to other risks relating to such structural arrangements. BUSINESS AND OPERATIONAL RELATED RISKS Risks Applicable Across Multiple Businesses We may fail to maintain or grow the size of our user base or the level of engagement of our users. The size and engagement level of our user base are critical to our success. Our business and financial performance have been and will continue to be significantly determined by our success in adding, retaining and engaging active users. We invest significant resources to grow and maintain our user base and increase user engagement, whether through innovation, providing new or improved content or services, marketing efforts or other means. 7 Table of Contents Our user base and engagement levels may not continue growing at satisfactory rates, or at all. Our user base and engagement could be adversely affected if: ● we fail to maintain the popularity of our platforms among users; ● we are unable to maintain the quality of our existing content and services; ● we are unsuccessful in innovating or introducing new, best-in-class content and services; ● we fail to adapt to changes in user preferences, market trends or advancements in technology, including AI; ● technical, regulatory, governmental or other reasons prevent us from delivering our content or services in a timely and reliable manner, or at all, or otherwise affect the user experience; ● there are user concerns related to privacy, data protection, safety, fund security or other factors; ● monetization and cost reduction measures by us cause users to reduce their activity on our platforms or shift to other platforms; ● new games cause players to shift from our existing games without growing the overall size of our user base or online games platform; ● there are adverse changes to our platforms or offerings that are mandated by, or that we elect to make, to address legislation, regulation, government orders, or litigation, including settlements or consent decrees; ● our users fail to accept or comply with our terms of service or the privacy policies that we have implemented or may implement, or we adopt terms, policies, or procedures that are perceived negatively by our users; ● our marketing campaigns or promotional strategies fail to achieve the intended effect among users – for example, users may develop negative perceptions towards our marketing campaigns or promotional strategies; ● we are unable to achieve the expected synergies among our businesses or achieve synergies in a cost-effective manner, or we fail to balance the interests of all participants in our ecosystem; ● we fail to maintain the brand image of our businesses or our reputation is damaged or changes negatively; or ● changes to demographic trends or adverse economic developments negatively affect our markets. Our efforts to avoid or address any of these events could require us to incur substantial expenditure to modify or adapt our content, services or platforms. We may not be able to avoid or address such events in a timely or satisfactory manner, or at all. If we fail to retain or grow our user base, or if our users reduce their engagement with our platforms, our business, financial condition and results of operations could be materially and adversely affected. 8 Table of Contents Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our markets could have a material adverse effect on our business and operations. We have businesses in diverse global markets and are subject to risks associated with doing business internationally and in differing economic, political and regulatory environments. Our business, financial condition and results of operations may be influenced to a significant degree by geopolitical, macro-economic and social conditions globally and in our markets. A general slowdown or volatility in the global economy, including trade frictions and restrictions, recessions, inflations, or a tightening of credit markets, could adversely affect our business, financial condition and results of operations. A rise in inflation, increases in interest rates including by the United States Federal Reserve System, bank failures or limited liquidity in accessing bank deposits globally, or slowdown in economic growth in our markets or neighboring regions, could have a material adverse effect on our business, financial condition, liquidity and results of operations. Changes in consumer behavior due to adverse economic conditions may also negatively impact us as such developments could lead to a decrease in consumer spending and reduction in demand for our products and services, which may adversely affect our business, financial condition, results of operations or competitive position. Growth of the economy of our various markets has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in our markets or neighboring regions, or in the policies of the governments or of the laws and regulations in each respective market could have a material adverse effect on the overall economic growth of our markets. The economies in emerging markets generally differ from developed markets in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange, government policy on public order and allocation of resources. In some of our markets, governments continue to play a significant role in regulating industry development by imposing industrial policies and trade-related measures. Some local governments also exercise significant control over the economic growth, foreign capital investments, tax, import and export duties, quotas, custom duties, tariffs and related regulations and the public order in their respective jurisdictions through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policies, or providing preferential treatment to particular industries or companies. Governmental actions to control inflation, interest rate adjustments and other policies and regulations have often involved, among other measures, price controls, currency devaluations, capital controls and limits on imports. These measures, or the perception that any of them could occur, may cause decreased economic activity and consumer spending in our markets, which may adversely affect our business, financial condition and results of operations. Our business, financial condition and results of operations may also be adversely affected by changes in government policies or regulations, such as exchange rates and exchange control policies, inflation rates, interest rates, tariff and inflation control policies, price control policies, import duties and restrictions, liquidity of domestic capital and lending markets, electricity rationing policies, tax policies, including royalty, tax increases and retroactive tax claims, and other political, diplomatic, social and economic developments in or affecting the markets where we operate. Our markets and other regions globally have experienced, and may in the future experience, geopolitical and social instability, including strikes, demonstrations, protests, marches, other types of civil disorder, war or armed conflict, refugee migration or other types of unrests. For example, ongoing geopolitical tensions, the introduction or threat of new or changed tariffs and trade restrictions, and other geopolitical developments have resulted in significant disruptions to supply chains, commodities markets, energy prices, logistics and business activities globally. In addition, there have been and remain tensions surrounding the Taiwan Strait. If such tension intensifies, our business in Taiwan may not be able to operate normally or at all. Such tensions or any deteriorations in relations among the U.S., Taiwan and the PRC may negatively impact our ability to continue to do business in Taiwan. It is possible that geopolitical, macro-economic and social instability globally and in our markets may negatively impact economic growth and world trade, decrease consumer spending, cause uncertainty and volatility in the financial markets, increase costs, or disrupt supply chains globally or in our markets, and may accordingly adversely affect our business, financial condition and results of operations. We cannot predict the duration or outcome of these events and actions or whether future developments would have any material adverse impact on our business. These and other instabilities and any adverse changes could increase our costs, increase our exposure to legal and business risks, disrupt our office operations or the business activities of our ecosystem participants, or affect our ability to expand or retain our user base. 9 Table of Contents The impact of tariffs, proposed tariffs, import and export controls or other trade regulations and policies could materially and adversely affect our business and financial results. Various jurisdictions in which we operate may be the subject of, may propose or impose new or additional tariffs, or may otherwise be impacted by duties, taxes, trade restrictions, foreign exchange or capital controls, embargoes, sanctions or other regulatory requirements with little or no advance notice. These changes, or the perception that they could occur, may significantly affect the global economy and stability of global financial markets, thereby reducing economic activity and demand for goods and services, and could impact consumer behavior, supply chains, interest rates, user activities, transaction volumes, and other aspects of our business that are influenced by geopolitical and macro-economic events, which could materially adversely impact our operations and financial performance. These concerns may be elevated in some of the markets in which we operate, many of which are primarily exporting jurisdictions. For example, such changes could lead to recession, unemployment, and other reductions in consumer income or consumer spending, reduce consumer purchasing sentiment, disrupt credit markets, deteriorate the quality of our loan portfolio, reduce the willingness or ability of users to repay their loans from us, disrupt supply chains, increase the costs of goods and services, and require us to adjust our pricing models and operational strategies across different businesses. Given the inherent uncertainty regarding both the duration and the extent of these policy measures, mitigation strategies may not be effective. If we fail to adapt to these policies or regulatory changes, retaliatory actions, and shifting trade policies or fail to adapt to the impact these developments may have on the economy, either globally or in our markets, our overall financial performance could be materially and adversely affected. In addition, governments or government agencies in any of our markets could censor, ban or block access to our services, mobile applications, platforms or the internet generally for various reasons, including political tensions, wars or other conflicts between countries, content restrictions, national security, data protection or regulatory concerns, or due to some misunderstanding. For example, due to unanticipated government actions, in early 2022, Free Fire was made unavailable in the Google Play Store and iOS App Store in India, and currently remains unavailable. Users generally need to access the internet and app stores to access, download or use our services and mobile applications. If governments either directly or indirectly block, limit or otherwise restrict us from publishing or making available our products and services to users, block, limit or restrict our users from accessing our products, services or mobile applications, prevent us from onboarding new users, prevent data transfers to or from certain markets or services, or take similar actions against us, our business, financial condition and results of operations could be negatively impacted, and we could experience loss or slower growth of our user base, financial loss, and adverse impact to our reputation. Further, any government actions taken against our service providers, partners or other third-party intermediaries on which our business relies could cause our products and services to become unavailable for extended periods of time or even indefinitely. Governments or government agencies may take legislative, executive, administrative or other measures or implement policies to regulate foreign investments, including applying heightened scrutiny, imposing additional requirements, prohibitions and restrictions on investments by companies based on the place of incorporation or country of origin of such companies or their shareholders or beneficial owners or where companies have employees or service providers, store data or develop or provide their products and services. Any adverse implementation or changes in foreign investment restrictions or interpretations against us of such restrictions in our markets may affect our ability to operate and maintain our business in such markets. In the event of such restrictions, we may face additional legal and regulatory compliance costs and risks, lose investments we have made or exit such markets, our users may develop a negative perception of us, and our business, financial condition and results of operations could be negatively affected. Our results of operations are subject to fluctuations. We are subject to seasonality and other fluctuations in our business. Our revenue and expenses are affected by our promotional and marketing activities, including the timing of promotions, and may fluctuate due to changes in user base, user engagement, user behavior and preferences and seasonality, and other factors. Maintaining our scale may also put strain on our existing resources due to increased capital expenditures and operating expenses, including sales and marketing expenses, staff hiring and procurement of infrastructure. See “—We may not succeed in managing or expanding our business across the expansive and diverse markets and segments in which we operate.” 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 we face operating in evolving industries in many emerging markets. Our revenue, profits, operating expenses 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 results include, among others, (i) fluctuations and changes in overall consumer demand for our products and services in certain markets or overall or during certain months and holidays, including the calendar year-end holiday season, or due to certain short-lived consumer trends, hype or other factors; (ii) timing of new products and services releases and monetization rates of our products and services or content enhancements in different markets; (iii) increases in sales and marketing and other operating expenses; (iv) timing of promotional and marketing activities; (v) macro-economic conditions including recessionary fears, rising inflation or interest rates, and their effect on consumer spending; (vi) geopolitical conditions and wars; and (vii) other risk factors as described in this annual report. As a result, our businesses may not continue to grow as fast as in the past years or at all. Should our businesses experience a slowdown in growth, flattening or decrease in scale or profit, there could be material fluctuations in our financial results, which could negatively affect our stock performance. 10 Table of Contents In addition, changes in cash flow generated from our games may not match our revenue trends due to revenue recognition policies under U.S. GAAP, which require proceeds from our sales of in-game virtual items to be recorded as deferred revenue and recognized over a period of time based on estimated service periods. As deferred revenue may contribute a significant amount of the revenue we report each quarter, a decrease in bookings in any one quarter may not significantly reduce our revenues for that quarter but could negatively affect our revenues in future quarters or periods. The reverse is also true. Accordingly, the effects of declines or increases in our bookings are not fully reflected in our results of operations until future periods. We are subject to extensive and changing laws and government regulations across our business. Our business is affected by laws and regulations across multiple jurisdictions that affect the industries in which we operate, and their scope and stringency have increased significantly in recent years. We are subject to a variety of regulations, including those relating to game operations, game ratings, e-commerce, social networking, internet applications or content services, digital platforms, marketing, advertising, AI technology and services, privacy, personal information, data use, data transfer, data processing, data localization, data storage, data retention and data protection, cybersecurity, livestreaming and video services, antitrust or competition laws, employment and labor laws, national language requirements, intellectual property, virtual items, user-generated content, loot boxes, national security, nationalization, content restrictions, platform regulations, sale of regulated or prohibited items, protection of minors, data of minors, consumer protection, pricing, product safety and product liability, logistics or postal operations, warehouse or fulfillment operations, prevention of money laundering and financing criminal activity and terrorism, anti-bribery and anti-corruption regulation, economic or other trade prohibitions or sanctions, electronic contracts and other communications, digital financial services regulation, payment services regulation, lending regulation, foreign investment and currency control regulation and regulations related to logistics, insurance, and banking. The relevant laws and regulations, as well as their interpretations, are often evolving and may sometimes be unclear in certain perspectives. Some of these regulations also involve licensing or approval requirements, and the variety of potentially applicable laws and regulations can make it difficult to know or determine which licenses or approvals are necessary, or the processes for obtaining them. For these same reasons, we also cannot be certain that we will be able to maintain the licenses or approvals that we have previously obtained, or that once they expire, we will be able to renew them. We are also uncertain as to whether we will be able to obtain the licenses or approvals we apply for in a timely manner or at all. If we fail to obtain, maintain or renew any required licenses or approvals, comply with the licensing conditions or make any necessary filings, or are found to require licenses or approvals that we believed were not necessary or we were previously exempted from obtaining, we may be subject to various penalties, such as loss of the revenue or assets that were generated through the unlicensed business activities, imposition of fines, suspension or cancelation of the applicable license, written reprimands, termination of relevant businesses or offerings, criminal prosecution and the discontinuation or restriction of our operations, or other disputes. Any such penalties or disputes may disrupt our business operations and materially and adversely affect our business, financial condition and results of operations. Laws and regulations and their enforcement vary from jurisdiction to jurisdiction and are often evolving, and may be unclear or inconsistent with other applicable laws. At the same time, authorities may introduce protectionist measures or may observe regulatory developments in other jurisdictions and seek to implement similar measures, including measures to bring their respective jurisdictions in line with international standards, that may be more stringent or restrictive, thus potentially subjecting us to more extensive regulation in each market. Such laws or regulations may be effective on short notice, take retroactive effect or become effective without consultation with the industry. Future expansion of our services and geographic coverage, including the expansion of our existing businesses or expansion into new business sectors, could subject us to additional regulatory requirements and other risks that may be costly or difficult to comply with. As the digital economies of our markets develop and new regulations and compliance requirements are introduced, there may be ambiguity regarding the applicability and scope of new and existing regulations and compliance requirements, which may in turn cause uncertainty to our business operations, user engagements and investor confidence. We may require more time than expected to adapt to these new requirements and may face delays during the implementation or transition period. Any failure to comply in a timely manner with such new requirements may disrupt our business operations, damage our reputation, cause regulatory scrutiny or action, cause us to lose users or reduce user engagement. News or rumors about potential introductions of new regulations, restrictions or compliance requirements may also result in significant uncertainties to our business operations and may negatively affect the market price of our ADSs. 11 Table of Contents In addition, laws and regulations concerning data protection, privacy, content, competition, AI, and age and content restrictions, among others, may impose different obligations and are expected to become more restrictive in certain of our markets. There are a number of recently enacted and amended such laws and regulations as well as legislative and regulatory proposals in various jurisdictions where we operate that could impose new obligations or limitations in areas affecting our business. There are also jurisdictions that are considering or have passed legislation or regulations implementing data transfer restrictions or requiring local storage and processing of data or similar requirements, which could affect our business operations. If we are required to make changes to or are otherwise restricted in the manner in which we transfer data between and among countries and regions or share data among our businesses, it could affect our ability to and the manner in which we provide our content, products and services, which could adversely affect our business, financial condition and results of operations. We may be required to implement different operating practices and protocols depending on the requirements of each local market, which may be costly, and increase the complexity of delivery of our content, products and services. There has been increased scrutiny over the power and influence of large technology companies and platform businesses globally. Competition authorities scrutinize technology companies and platform businesses around issues such as exclusivity, tying or bundling, and abuse of market power as well as the relationship between platform businesses and their users. In addition, lawmakers, government agencies and regulators may, among other things, prohibit future acquisitions, divestitures or combinations, impose significant fines or penalties including divestiture, or impose other obligations, disclosure requirements or restrictions on digital platforms and services or take other actions to limit or require us to modify our operations with platform users or otherwise place restrictions on our business models due to regulatory or antitrust concerns. We may also be required by government regulators to restructure our corporate structure or product offerings to meet existing or new regulatory requirements. Such restrictions and changes may alter the way in which we do business, increase our costs or liabilities, reduce demand for our platforms or subject us to uncertainties, which could adversely affect our business, financial condition and results of operations. From time to time, we have received inquiries from or are subject to inquiries and investigations by competition authorities. For example, Shopee has been the subject of investigations by competition authorities in connection with its use of logistic services provided by an affiliated business. Unfavorable laws, regulations, decisions, administrative rulings, interpretations of competition rules, or other actions by government or regulatory authorities applying those laws and regulations, including inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products and services, increase our cost of doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation or otherwise have a material effect on our business, financial condition and results of operations. Regulators may regularly re-examine and increase legislation, regulation and enforcement of compliance obligations, which may require us or our business partners to revise or expand compliance programs, including the procedures we use to verify the identity of or information about our users, make disclosures to our users, interact with our users, and monitor transactions on our platforms. Such new legislation, government policies or compliance requirements may also make it more burdensome for us to operate our businesses or expand our offerings, or for our users to use our services and products, any of which could potentially discourage users from using our services and products. We may also make changes to or expand our product offerings or services in a manner that subjects our businesses to additional legislation, regulations or other compliance obligations, which may result in similar burdens and risks to our businesses. We face competition in our businesses. We face competition in each of our business lines and the failure to compete effectively in any of them could materially and adversely affect our business, financial condition and results of operations. 12 Table of Contents Our e-commerce business faces competition from global and regional players and retailers that operate across several markets, and from single-market players and retailers. Global e-commerce or internet companies are also making efforts to compete in our markets or e-commerce to further expand their footprints in such markets. Such competitors may have longer operating history, different business models and growth strategies, and greater access to financial, technological and marketing resources than we do. We compete with online and offline players to attract, engage, and retain buyers based on the variety and value of products and services listed on our marketplaces, overall user experience and convenience, online communication tools, social features, integration with mobile and networking applications and tools, mobile applications and availability, quality and costs of payment, customer support and logistics services. We also compete to attract and retain sellers based on the number and the engagement of buyers, the effectiveness, cost, and quality of the services we offer to sellers, commission rates, and the availability of support and other platform services. We also compete to attract and retain content creators for e-commerce. As e-commerce is evolving in our markets, competition for market share is particularly intense. Our competitors may also consolidate or be acquired by other competitors, allowing them to obtain greater market share, gain access to greater resources and gain real advantages over us. In addition, we may face increasing competition from social media and social-commerce platforms, online and app-based search engines through which products and services may be researched and sold, other content-providing market players, and other online and app-based means of discovering, using, or acquiring goods and services. Social media platforms with high levels of user engagement may be able to leverage content and user connections and traffic on their platform to increase the visibility and attractiveness of a wide variety of brands and products. Our digital financial services business faces competition from existing online and offline consumer and SME financial products and services. We expect competition to intensify as existing and new competitors introduce new services or enhance existing services. Some of our competitors may have more experience, greater financial resources, lower funding cost, greater brand recognition or a larger base of customers than we have. New entrants tied to established brands may engender greater user confidence in the safety and efficacy of their services, along with greater liquidity. We may also face pricing pressures and other forms of competition such as increased incentives from competitors. Some potential competitors may charge lower commissions to merchants or subsidize users through other services they offer. Such competition may result in the need for us to alter the pricing we offer to give discounts or increase our incentives, which could reduce our profit and negatively affect our business, financial condition and results of operations. Competitors in the banking space such as traditional banks and larger financial institutions may be able to offer more extensive or enhanced products and services, or offer such products and services at more attractive rates, credit or other better terms, including more attractive rates on deposits and rates on loans. As a result, we may be forced to increase our deposit rates, or lower the rates we charge for loans or the fees we charge for other services, or devote significant financial resources to our marketing efforts or developing customized products and services. For our consumer and SME credit business, we compete with other non-bank fintech companies, neobanks, credit unions, multi-finance companies, off-card financing, private credit card and point-of-sale service providers. Banks and larger financial institutions may also build solutions to compete in the consumer and SME lending space. If such competitors appear more attractive to high quality customers or credit users, such customers or users may be less likely to use our products and services, and we may have a decreased pool of high-quality customers or credit users. For our payment processing business, certain competitors may have longstanding relationships with certain merchants to accept the payment services they offer, which may make it difficult or costly for us to establish partnerships with these merchants. Our competitors may also be able to obtain certain licenses that we are unable to obtain, which may hinder our ability to offer certain products or access certain pools of liquidity that are the subject of such licenses, for instance taking deposits. In addition, certain of our competitors in certain product areas and markets may not be subject to the same regulatory requirements that we are. Our digital entertainment business competes globally on the basis of a number of factors, including user base, game portfolio, quality of user experience, brand awareness and reputation, relationships with game developers, access to developer talent, monetization strategies and access to distribution and payment channels. Our competitors for game publishing include companies with a presence in just one or several markets, as well as companies offering global publishing platforms. Our competitors for game development include global developers, who may have more experience, better reputation and more data obtained from developing games that target the same user pool. Our competitors may capitalize on their significant financial, technical or know-how resources to develop, distribute and operate mobile, console and PC online games or acquire other game or developer studios. Some developers may choose to distribute games themselves through other channels such as the iOS App Store, the Google Play Store, Steam, or through consoles which may compete with games distributed and developed by us. In addition, we face competition from other games, platforms and entertainment formats for the time, attention and entertainment spending of our online game players. If other leisure time activities are perceived by our players to offer greater variety, affordability, interactivity and overall enjoyment, our digital entertainment business may be materially and adversely affected. 13 Table of Contents We may offer new products and services or develop new or enhanced features and functionality of our platforms, which may lead to increased or additional competition. We may also periodically change or remove new features and functionality, and optimize our operational efficiency and increase monetization efforts, which may not be well received and decrease the time spent by users on our platforms. We may need to compete with existing service-providers who have more experience and infrastructure than us. We may also face potential protectionist policies, political measures or regulatory challenges that are more supportive of local players in such markets, which may, among other things, hinder our ability to compete effectively in such markets. We may be subject to intellectual property-related risks. We rely on a wide portfolio of intellectual properties to operate our businesses. We may not be able to effectively protect these intellectual properties against infringement, or efforts to safeguard our intellectual properties may be costly. We rely on a combination of trademark, patent, fair trade practice, copyright and trade secret protection laws, as well as confidentiality procedures and contractual provisions, to protect our intellectual properties. We also enter into confidentiality agreements with our employees and any third parties who may access our proprietary information, and we rigorously control access to our proprietary technology and information. Our intellectual property protection measures may not be sufficient, and confidentiality agreements may be breached by counterparties. There may not be adequate remedies available to us for any such infringement or breach. For example, in the event any third-party game developer, publisher or hacking group infringes the copyright of our self-developed game, our users may lose interest in our games. In addition, policing any unauthorized use of our intellectual properties is difficult, time-consuming and costly, and the steps we take may be inadequate to prevent the misappropriation of our intellectual properties. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We may not prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Further, we may be unable to obtain trademark protection for our technologies and brands, and our existing trademark registrations and applications, and any trademarks that may be used in the future may not provide us with competitive advantages or distinguish our products and services from those of our competitors. In addition, our trademarks may be contested, circumvented or found to be unenforceable, weak or invalid, and we may not be able to prevent third parties from infringing or otherwise violating them. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. From time to time, we receive notices from third parties or are named in lawsuits by third parties alleging infringement of their proprietary intellectual property rights or in connection with claims relating to our content, products or marketing activities. For example, with respect to our e-commerce business, we receive complaints alleging that items offered on or sold through our Shopee platform infringe third-party copyrights, trademarks and patents or other intellectual property rights, or contain obscene, defamatory or libelous content. Although we have adopted measures to reduce infringements or offense by product listings on our Shopee platform before they appear on the marketplace, these efforts may not always be successful. The Office of the U.S. Trade Representative had previously identified the Shopee platform in several of our markets as “notorious markets”in its annual Review of Notorious Markets for Counterfeiting and Piracy. While the Shopee platform is currently not identified as having any notorious markets, the Office of the U.S. Trade Representative may again identify the Shopee platform in certain or all of the markets in which we operate as notorious markets in the future. Since December 2020, the European Commission placed Shopee on its Counterfeit and Piracy Watch List. Any public perception that counterfeit, pirated, or otherwise inappropriate or illegal items are commonplace on Shopee, even if factually incorrect, or perceived delays in our removal of these items could damage our reputation and result in regulatory action against us and diminish the value of our brand name. We may be subject to allegations of civil or criminal liability for alleged intellectual property infringement, including based on allegedly unlawful activities carried out by third parties through our platforms. We may also be subject to fines or sanctions by local authorities for infringing products or improper content offered on our marketplace, including requiring the removal of the infringing products or a temporary or permanent block of our platform. Any current or future use of AI (including AI technologies provided by third parties) in our platforms, offerings, services and features may also lead to liability, disputes or negative public perception. If the content, analyses or recommendations that AI applications are used in are or are alleged to be deficient, inaccurate, inappropriate or biased, or if the use of AI results in, or is alleged to have resulted in, the infringement of the intellectual property of third parties, we may be subject to legal claims or liability and our business, financial condition and results of operations may be materially and adversely affected. 14 Table of Contents We may implement further measures to protect users and ourselves against potential intellectual property liabilities, and these measures could cost us substantial additional resources or require us to discontinue certain service offerings. In addition, these measures may reduce the attractiveness of our platforms to users. For example, a seller whose listings are removed or suspended by us, regardless of our compliance with the applicable laws, rules and regulations, may dispute our actions and commence action against us for damages based on breach of contract or other causes of action or make public complaints or allegations. Any costs incurred as a result of such liability or asserted liability could also adversely affect our business, financial condition and results of operations. As the number of interactive games increases and the features and content of these games continue to overlap, software developers and distributors have increasingly become subject to infringement claims. Some of our game content is highly realistic and features materials that are based on real world objects or people, which may also be the subject of claims of infringement, including right of publicity, copyright, trademark and unfair competition claims. Despite any steps taken by us to avoid knowingly violating the intellectual property rights of others, third parties may still claim that content we develop or license from third parties infringes their intellectual property rights. We have received intellectual property related claims in the past. In addition, as we allow user-generated content on our platforms, we may also become subject to third party claims relating to such content. Any such claims that we need to defend, whether or not meritorious, or litigation we take to enforce our intellectual property rights may be time-consuming, distracting to management and costly, and we may not prevail in any such litigation. We may also be forced to stop distributing, cease using or redesign the relevant content or product, obtain a license from the claimant, which, if available at all, may not be available on commercially favorable terms. Existing or future investments or acquisitions may not be successful. We have invested in or acquired, and may in the future invest in or acquire, teams, businesses, services, assets or technologies from time to time. We may fail to select appropriate investment or acquisition targets, or we may not be able to negotiate optimal arrangements, including arrangements to finance such investments or acquisitions. Investments and acquisitions entail uncertainties and risks, such as: ● we may fail to successfully achieve the intended objectives; ● our investments or acquisitions may be viewed negatively by customers, financial markets or investors; ● the costs of identifying and consummating these transactions may be significant; ● acquisitions and the subsequent integration of new assets and businesses into our own could require significant management attention and could divert resources from our existing businesses; ● we may have difficulty in transitioning and integrating the business, technologies, products, personnel or operations of the acquired businesses; ● we may face unforeseen operating challenges; ● our relationships with existing employees, customers and business partners of our group, or those of the target, may be impaired; ● we may assume pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business; 15 Table of Contents ● an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; ● we may face challenges associated with managing additional or geographically remote businesses; ● investments and acquisitions could result in the use of substantial amounts of cash or significant capital contributions, which could limit other potential uses for our cash; ● investments and acquisitions could result in increased leverage, dilutive issuances of equity securities, adverse tax consequences, goodwill impairment charges, investment impairment charges or write-offs, and amortization expenses for other intangible assets; ● if we incur debt to fund any investments or acquisitions, such debt may subject us to material restrictions on our ability to conduct our business, including financial maintenance covenants; ● we may need to issue new shares as acquisition consideration or to raise additional capital to fund the acquisition consideration, which may dilute our existing investors’ interest in us; ● we may assume unknown material liabilities of acquired companies, or may be exposed to claims and disputes by shareholders and third parties, including intellectual property claims and disputes; ● we may be unsuccessful in accurately projecting revenue, cost or other metrics of the invested or acquired entity in the due diligence process; ● the invested or acquired assets or businesses may not generate the financial results we expect; and ● the market value of our investments or acquisitions may fluctuate, particularly in volatile markets, or they may become obsolete. These factors could adversely affect our financial results. In addition, we may fail to obtain any required approvals and licenses from relevant government authorities. We may become subject to new governmental regulations in connection with our investments and acquisitions, which could result in increased costs and new strategic risks. Any of these risks may materially and adversely affect our business, financial condition and results of operations. Our businesses involve third parties over whose actions we have no control. Each of our e-commerce, digital financial services and digital entertainment businesses involves the participation of third parties such as third-party game developers, owners of other third-party intellectual properties, users who generate content on our platforms, including livestreaming or other real-time content dissemination, sellers and merchants who own the content and services offered through our platforms, as well as intermediaries and other third-party service providers including other financial institutions providing financial services. We rely on third-party infrastructure such as data centers and a number of third-party channels to provide content and services to our users, as well as performing other functions of our platforms. For example, we primarily rely on third-party application distribution channels, such as the iOS App Store and the Google Play Store, to allow users to download and access our applications and games. If our third-party distribution channels voluntarily or involuntarily suspend their services to us or our users, including taking down or removing our applications in response to government actions or other legal action or pursuant to their own policies or otherwise require us to change our services, and we are unable to arrange for alternative measures in a timely manner or at all, our users will have difficulties accessing our applications and games or making payments for our products and services. In addition, governments may take actions against third-party distribution channels or partners, which could affect our users’ ability to access our services. Consequently, we will lose users temporarily or permanently, and our business, financial condition and results of operations could be materially and adversely affected. We may not be able to control the actions of these or other third parties and thus are subject to various risks associated with working with or relying on third parties in our businesses, including: ● risks relating to third-party sellers on our platforms and merchant partners, including deficiencies in the quality of products, misrepresentations of or about products, listing or sale of restricted or prohibited products, failure to comply with applicable laws and regulations, and potential intellectual property issues (see “—We may be subject to intellectual property-related risks”); 16 Table of Contents ● risks relating to third-party publishing or distribution channels we use to make our applications available for download, such as the iOS App Store and the Google Play Store; ● risks relating to content generated by third parties and any user-generated content in our games (see “—We rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and interact with user-generated content”), e-commerce platform, or other platforms, including content posted in real-time, which may be illegal, obscene, defamatory, infringing or otherwise inappropriate or unlawful; ● risks relating to third-party payment service providers or payment intermediaries we depend on to provide users with various payment options or e-wallet top-up options, such as the iOS App Store and the Google Play Store, payment on delivery, bank transfers, direct carrier billing, credit cards, debit cards, telecommunication card and over-the-counter top-up and payment through other third-party payment services; ● risks relating to third-party banks, financial institutions and financial intermediaries we depend on to conduct our digital financial services business, such as correspondent banks and remittance services partners; ● risks relating to services by third-party logistics service providers (see “—We face risks related to logistics and fulfillment”); ● risks relating to third-party developers, independent software vendors, or technology systems or service providers; ● risks relating to third-party collection agents in relation to our credit products and loans receivable; ● risks relating to manpower agencies and independent contractors (see “—We face manpower-related risks”); ● risks relating to business process outsourcing vendors, including customer service agents; ● risks relating to users’ personal data that is received or used by third parties in connection with our services, such as when sellers or third-party payments or logistics providers receive user information in connection with payment services, order fulfillment or user onboarding; ● risks relating to third-party banks, insurance, lending and wealth management service providers providing services on our platforms. If such third-party service providers engage in activities that are negligent, fraudulent, or otherwise harm the interest of users subscribing to such services or products through our platforms, we may be subject to legal and financial harm, including potential contractual or non-contractual liability, reputational damage, litigation risk or user loss even if due to actions or activities not related to, attributable to or caused by us, or within our control; ● risks relating to users of our services or platforms who engage in fraud or other conduct that violates our terms of service, other policies, or the law; ● risks relating to our business or banking partners or counterparties being sanctioned or otherwise being found to have violated our agreements, other policies, or the law; ● risks relating to third-party data center providers and cloud services for the storing of data from our users and operations, including any risks relating to users’ personal data hosted by such service providers. In addition, we do not control the operation of these facilities and rely on contracts to employ their use. The owners of the data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, we may be required to transfer our servers and other infrastructure to new data center facilities, or change to other service providers, and we may incur significant costs and possible lengthy service interruptions in connection with doing so; and 17 Table of Contents ● damage to our reputation if third parties on our platforms or our other business partners do not properly perform their functions and negatively affect our users’ experience with our platforms. Although we take efforts to prevent third parties from engaging in prohibited conduct via the content and services available on our platforms, we may not detect every unlawful, improper or fraudulent third-party action. In some of our markets, we may be liable for certain third-party conduct under local law, including if users commit fraud or cause other users of our services to incur losses. While we have agreements with some of these parties that obligate them to carry out their respective dealings in a lawful and professional manner and to indemnify us for losses subject to applicable laws, any legal protection we may have could be insufficient to compensate us for our losses or may not repair the damage to our reputation. If any of our third-party service providers and channel providers deliver unsatisfactory service, engage in fraudulent or prohibited actions, or are unable or refuse to continue to provide services to us and our users for any reason, our business, financial condition and results of operations may be materially and adversely affected. Fluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we report in U.S. dollars. We operate in multiple markets and receive revenues in currencies other than the U.S. dollar, which exposes us to the effects of fluctuations in currency exchange rates as we report our financials and key operational metrics in U.S. dollars. We earn revenue denominated in local currencies of our markets in Southeast Asia, Taiwan and Brazil, among other currencies, while some of our costs and expenses are paid in other foreign currencies. We generally pay license fees to game developers in U.S. dollars, and incur operating expenses in the local currencies in the markets in which we operate. From time to time, we may pay acquisition considerations in U.S. dollars. We do not rely on any single currency as we earn revenue in different local currencies across our markets and keep a significant cash position in U.S. dollars. Fluctuations in the exchange rates among the various currencies that we use could cause fluctuations in our operational and financial results. Our expenses may become higher and our revenue and operating metrics may become lower than would be the case if exchange rates were stable or if we were operating and reporting in one currency. Movements in foreign currency exchange rates, including movements or volatility resulting from changes in macro-economic or geopolitical events such as those disclosed above, including inflation, deflation, recession, and governmental actions such as tariffs, trade policy, fiscal policy, and monetary policy, may have a material adverse effect on our results of operations, and may cause our financial and operational metrics, which are reported in U.S. dollars, to be materially adversely affected or not to be fully representative of our underlying business performance. Furthermore, we operate in a number of jurisdictions that have historically experienced significant levels of inflation and volatility in the value of their currencies, which, if continued in the future, may result in government intervention in the economy, including monetary, fiscal, or trade policies, exchange controls or other currency restrictions, which could adversely affect our business, financial condition and results of operations. Changes in the relative value of local currencies in the markets where we operate, including relative to the U.S. dollar, could also have negative effects on the level of economic activity and employment in those markets and may materially adversely affect our business, financial condition and results of operations. We might not be able to adjust the price of our products and services sufficiently to offset the effects of such events on our operations, and any changes to our prices might reduce demand for our products and services. Additionally, a significant amount of our revenue and some of our operating metrics are denominated in certain local currencies that have been subject to significant volatility in the past. Because fluctuations in the value of these local currencies are not necessarily correlated, our results of operations in any period may be adversely affected by such volatility. See “Item 3. Risk Factors—Risks Applicable Across Multiple Businesses—Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our markets could have a material adverse effect on our business and operations,” “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Major Factors Affecting Our Results of Operations” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.” 18 Table of Contents We may enter into foreign exchange derivatives transactions and incur relevant costs from time to time to manage our exposure to exchange rate risk. Such derivatives transactions, while intended to be non-speculative, are designed to protect us against increases or decreases in exchange rates, but not both. If we entered into derivatives transactions to protect against, for example, decreases in the value of a local currency and such local currency instead increases in value, we may incur financial losses. Increases in currency volatility or other changes in the relative value of the local currencies we use could also increase the costs of such foreign exchange derivatives transactions and expose us to additional costs or losses. Any such losses could materially and adversely affect our business, financial condition and results of operations. We may have exposure to greater than anticipated tax liabilities, and our financial position and results of operations may be adversely affected by the implementation of legislation or internationally accepted principles. Tax legislation relating to the digital economy is still developing. Governments in our markets may promulgate or strengthen the implementation of tax regulations and impose more tax obligations on our services and product offerings, which could increase the costs to our users and merchants and make our services and product offerings less competitive. For example, Shopee as a marketplace operator has been or could be required to report transactions made by sellers and other service providers through the platform to the tax authorities in certain markets and may also be subject to additional tax or withholding obligations. Governments in some of our markets have discussed promulgating or have promulgated laws to require e-commerce marketplace operators, payment service providers and lending platforms to assist in the enforcement of tax requirements on sellers, borrowers, lenders or other relevant parties and collection of taxes with respect to revenues or profits generated by sellers or stamp duties. If we are held responsible, whether financially or operationally for such taxes, our business, financial condition and results of operations may be materially and adversely affected. We may also be requested by government authorities to supply information about our users, such as transaction records and user information, and assist in the enforcement of other tax regulations, which could affect our relationships with users. In addition, a number of markets have been pursuing fundamental changes to the tax laws applicable to multinational companies like us, including adopting global OECD guidelines, introducing the Base Erosion and Profit Shifting Pillar 2 rules, and enacting taxes relevant to the provision of digital services, including with respect to digital services taxes, sales taxes, value-added taxes, withholding taxes, tariffs, revenue-based taxes, excise taxes or other similar taxes. Possible implications may include multiple levels of taxation, additional obligations, prospectively or retrospectively, as well as imposition of interest and penalties if non-compliance is determined. The application of tax laws of various jurisdictions to our business activities is subject to interpretation and also depends on our ability to operate our business in a manner consistent with our tax positions, corporate structure and intercompany arrangements. A certain degree of judgment is required in evaluating our tax positions and determining our provision for income taxes. The tax authorities of the jurisdictions where we operate may challenge our methodologies for intercompany and related party arrangements, including transfer pricing. We could face adverse tax consequences if local tax authorities assert that any transactional arrangements among our group entities were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under the applicable laws, rules and regulations, and adjust the income of such group entities in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by our group entities for tax purposes, which could in turn increase their tax liabilities. In addition, local tax authorities may impose late payment fees and other penalties on our entities for the adjusted but unpaid taxes according to the applicable regulations. If the manner in which we operate does not achieve the intended tax consequences, or if the tax authorities take different interpretations with respect to these factors or our tax obligations, our business, financial condition and results of operations could be adversely affected. In addition, in some jurisdictions where we operate, tax laws and regulations or their application to our business may involve uncertainty, or have uncertain application to novel business arrangements, and the interpretation of such laws and regulations by the relevant revenue or enforcement authorities may differ from our own or be unpredictable or the subject of disputes or controversy. We may, from time to time, be and, in some cases, are subject to inquiries, investigations or audits from or disputes with tax authorities of the relevant jurisdictions on various tax matters, including challenges to positions asserted on income, withholding, tax credits, stamp duties or other tax returns. Developments in an audit, investigation, or other tax controversy can have an adverse effect on our business, financial condition and results of operations. Due to the inherent complexity and uncertainty of these matters, interpretations of certain tax laws by authorities, and judicial, administrative, and regulatory processes in certain jurisdictions, the outcome of any such controversy may be materially different from our expectations or our financial provisioning. 19 Table of Contents We may use AI in our business, and challenges with properly managing its use or more successful use of AI by our competitors could adversely affect our business and results of operations. We may incorporate AI solutions into our platforms, offerings, services and features, or in support of internal business operations. If AI models, algorithms, data processing or automated decision-making, or any content, analyses, or recommendations that utilize AI, are or are alleged to be deficient, inaccurate, inappropriate, or biased, or if the use of AI results in, or is alleged to have resulted in, the infringement of the intellectual property of third parties, we may be subject to legal claims or liability and our business, financial condition and results of operations may be adversely affected. AI technologies, including generative AI and machine learning models, present a growing risk and ability for third parties to generate systems which are able to imitate or copy our proprietary intellectual property at large scale and for a low cost. AI systems could be used to generate huge volumes of derivative works that imitate or replicate our intellectual property, leading to unauthorized content that competes with our products, dilutes our brand value, and undermines our ability to monetize our intellectual property effectively. Such unauthorized use of AI to generate content similar to our intellectual property may reduce consumer demand for our products, as third parties may access or create AI-generated alternatives that offer comparable experiences without requiring licensing fees or other revenue-sharing arrangements. The use of AI applications may result in data leakage or unauthorized use or exposure of personal data, or other information. Such leakage or unauthorized use or exposure of personal data related or other information to or arising from our use of AI applications could result in legal claims or liability. AI systems may also be vulnerable to evolving cybersecurity threats, including via manipulation or exploitation by malicious actors, which could compromise the security and integrity of our use of AI. AI also presents emerging ethical issues and is subject to rapidly developing legal and regulatory frameworks in our markets, and if our use of AI becomes controversial or becomes subject to new laws or regulations in any of our markets, we may experience reputational harm or legal liability or otherwise need to make changes to our business practices and offerings. Uncertainty around new and evolving AI uses may require significant additional investment to develop models and proprietary datasets, responsible-use frameworks and new approaches and processes to attribute or compensate content creators. Developing, testing and deploying AI systems may also increase the cost of our platforms, offerings, services and features. Further, as with any new offerings based on new technologies, consumer reception and monetization pathways are uncertain, our strategies may not be successful and our business and financial results could be adversely impacted. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. We may be liable for security breaches and attacks against our or our third-party partners’ platforms and networks, particularly with regard to confidential user information and personal or other data or any other privacy or data protection compliance issue, and our platforms and games may contain unforeseen “bugs”, vulnerabilities or errors. Our business stores, generates and processes a large amount of data, including personal data and payment information from users, and any failure to prevent or mitigate security breaches and the improper access, use or disclosure of such data could impact our operations negatively and harm our reputation. We also maintain certain other proprietary and confidential data relating to our business and personal data of our users and personnel. Although we have employed significant resources to develop and implement security measures aimed at preventing breaches, our cybersecurity and data protection measures have not and may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, physical or electronic break-ins, phishing attacks, data leaks, social engineering, security breaches or other attacks and similar disruptions and fraudulent behavior or improper use by our employees or third party partners that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain. Additionally, as AI capabilities develop, hackers and sophisticated organizations may use these technologies to create new sophisticated fraud or attack methods that are increasingly automated, targeted, coordinated and more difficult to defend against. Any security breach, including personal data breaches or incidents, including cybersecurity incidents, could result in unauthorized access to our systems or a user’s system, misappropriation of our or a user’s information or data, loss, corruption or alteration of such data, financial loss, deletion or modification of user information, damage to our systems or those of our users, or a denial-of-service or other interruption to our business operations. Any such incidents could impact our operations and could expose us to claims, litigation, regulatory or other governmental investigations, administrative fines, and potential liability, as well as remediation costs and increased cybersecurity or data protection costs. We have in the past been and are likely again in the future to be subject to these types of attacks and security breaches. As techniques used to obtain unauthorized access to or otherwise breach or sabotage systems change frequently, we may not be aware that we have been attacked and we may be unable to anticipate or implement adequate measures to protect against these security breaches until they have been launched against us, our platforms or services, our users or our third-party service providers. We may not have the resources, technical sophistication, or ability to anticipate or prevent rapidly evolving or sophisticated types of cyberattacks or other types of security breaches. 20 Table of Contents In addition, our confidential or proprietary information or our users’ personal data or payment information may, in some instances, be stored or processed by certain third-party partners, which poses similar risks. If an actual or perceived breach of our or our third-party partners’ security occurs, public perception of the effectiveness of our security measures and brand could be harmed, demand for our platforms or services may be reduced, our operations may be disrupted, we may incur significant legal liabilities, financial loss, and remediation costs, and our business, financial conditions and results of operations could be materially and adversely affected. While we take measures to require third-party service providers to adopt necessary security measures and to protect against data breaches in accordance with applicable laws and regulations, we also face similar risks where personal data is shared with third-party service providers. If our third party partners engage in activities that are negligent, fraudulent, illegal or otherwise harm the trustworthiness and security of our platforms, including improper disclosure or use of user data, or if our third party partners otherwise fail to meet their data security and privacy obligations, or users are otherwise dissatisfied with their service quality on or off our platforms, we may be subject to user complaints and suffer reputational harm, even if due to actions or activities not related to, attributable to or caused by us, or within our control. Any compromise of our or our third-party partners’ security or data could have a series of significant consequences, ranging from violation of applicable security, privacy or data protection, consumer and other laws, regulatory or other governmental investigations, enforcement actions, to other legal and financial exposure, including potential contractual liability, reputational damage, litigation risk or user loss. Our platforms services, applications, websites and games have in the past contained and may in the future contain errors, “bugs” or other vulnerabilities that are not detected until after the applications, products or services are published or released, particularly given our use of complex and rapidly developing technologies. Additionally, many of our products and services are available on multiple operating systems or multiple devices offered by different manufacturers, and changes or updates to such operating systems or devices may cause errors, vulnerabilities, or functionality problems in our products, including rendering our products or services inoperable by some users. Any such errors or a significant unavailability of our platforms, services or games or any breach of users’ data protection rights due to these errors, “bugs” or vulnerabilities could affect the overall user experience, which could cause users to reduce their time on or interest in our platforms, services or games, or not recommend our content and services to others. Such errors could also result in non-compliance with applicable laws and regulations, cause financial loss, or create legal liability for us. Resolving such errors could also disrupt our operations, cause us to divert resources from other matters, or materially harm our business, financial condition and results of operations. In addition, “cheating” programs or other unauthorized software tools and modifications that enable players to cheat in games harm the experience of players who play fairly and could negatively impact the volume of purchases of in-game items. Also, vulnerabilities in the design of our products, services and of the platforms on which they run could be discovered after their release and exploited by malicious actors before they are remedied. This may lead to loss of revenues or increased cost of developing technological measures to respond to these, either of which could negatively affect our business, reputation, financial condition and results of operations. 21 Table of Contents We collect, process, transmit, and store personal information in connection with the operation of our businesses and are subject to complex and evolving international laws and regulations regarding privacy and data protection. Our businesses are subject to an increasingly complex and at times divergent data privacy, data protection, data use, data governance, AI and information security laws and requirements in the markets in which we operate and where our users, merchant partners, customers and other participants are located. In addition, certain of our digital financial services businesses may be subject to more stringent and restrictive banking secrecy laws or other heightened requirements with respect to customer data. We are also subject to agreements with third parties such as Apple, Alphabet, Meta and others that place conditions and requirements on the processing of data and on data collected via their services. As we continue to operate internationally and as laws continue to evolve and change, we will be subject to additional data protection laws and requirements. The privacy and data protection-related laws, rules and regulations of jurisdictions we operate in may change or evolve to become more comprehensive or restrictive as compared to laws, rules and regulations we are currently subject to. In addition, such laws, rules and regulations, including any penalties, may differ or be inconsistent from jurisdiction to jurisdiction. Complying with privacy and data protection related laws, rules and regulations for an increasing number of jurisdictions could require significant resources and costs. Such laws, rules and regulations may also restrict the transfer of data across jurisdictions, require data localization, require us to obtain user consent for the use and collection of their data, to delete or limit the processing of their data, and require us not to sell or engage in marketing data with respect to certain users, among other things, which may impose additional and substantial operational, administrative and compliance burdens on us, and may also restrict our operations and expansions in new markets. The costs to comply with, or our actual or perceived failure to comply with, new or changing laws, rules and regulations regarding privacy and data protection, privacy and data protection laws, rules and regulations in new markets, or contractual obligations related to privacy and data protection may adversely affect our business, financial condition and results of operation. Further, as we develop integrated and personalized products and services to enhance our user experience, we have expanded our data profile through additional data types and sources, across multiple channels, and involving new partners. This expansion has amplified the impact of these various laws and regulations on our businesses. As a result, we are required to constantly monitor our data practices and potentially change them when necessary or appropriate. If we fail to comply with any of these laws, we may face potentially significant fines, reputational loss and customer loss, and may be subject to proceedings or actions against us by governmental entities, consumers or others relating to privacy and data protection. We may not succeed in managing or expanding our business across the expansive and diverse markets and segments in which we operate. Our business has become increasingly complex given the scale of our operations, product offerings and the diverse markets in which we operate. It is costly to establish, develop and maintain international operations, adapt our business model to new or diverse regulatory environments and to promote our brand internationally. Our international operations may not become or be profitable on a sustainable basis. As our operations continue to expand, our technology infrastructure systems and corporate, legal and compliance functions will need to be scaled to support our operations, and if they fail to do so, our business, financial condition and results of operations may be adversely affected. The markets where we operate or expand to are diverse and unique, with varying levels of economic and infrastructure development and distinct legal and regulatory systems, and do not operate seamlessly across borders as a single or common market. Managing our businesses across these markets requires considerable management attention and resources. Operating across multiple distinct markets also requires certain additional costs, including costs relating to staffing, logistics, intellectual property protection, regulatory and legal compliance, tariffs and other trade barriers and higher tax rates in certain markets, where applicable. We may be less well-known or have fewer local resources, and we may be unsuccessful in adapting our business practices, culture and operations. From time to time, we may test the waters for certain businesses in new markets where we believe there may be an opportunity to use our experience in highly diverse environments to reach underserved buyers and sellers. We may also exit from certain markets or cease certain operations in certain markets due to a variety of factors. Our operations and expansions in new markets may become subject to risks associated with: ● user acceptance of new technologies, especially in the new markets to which we may expand in the future; ● lack of experience operating in these new markets, including our ability to understand different user behaviors or culture in new markets and roll-out relevant products and services localized to each market’s needs or preferences; 22 Table of Contents ● challenges in adapting our approach and strategies in existing markets to new markets; ● recruiting and retaining talented and capable management and employees in various markets; ● our ability to appropriately deploy resources and management attention that otherwise would be focused on the development of our existing markets and businesses; ● limited technology infrastructure and low levels of use of the internet; ● challenges caused by distance, language and cultural differences, and local and regional competitive landscapes; ● providing content and services that appeal to the tastes and preferences of users in a larger number of markets; ● implementing our businesses in a manner that complies with local laws and practices, which may differ significantly from market to market, including laws regarding data protection, privacy, network security, cybersecurity, encryption and payments; ● maintaining adequate internal and accounting control across various markets, each with its own accounting principles that must be reconciled to U.S. GAAP upon consolidation; ● compliance with privacy laws and data security laws and compliance costs across different legal systems; ● currency exchange rate fluctuations; ● protectionist laws and business practices that could, among other things, hinder our ability to execute our business strategies and put us at a competitive disadvantage relative to domestic companies, including restrictions on foreign ownership; ● actions by governments or others to restrict access to our products and services, whether these actions are taken for political, security or other reasons, or that may cause us to discontinue our operations in a particular market; ● complex local tax regimes; ● differing, complex and potentially adverse customs, import and export laws, tariff and tax rules and regulations or other trade barriers or restrictions which may be applicable to transactions conducted through cross-border business, related compliance obligations and consequences of non-compliance, and any new developments in these areas; ● establishing strategic partnerships, as well as maintaining our relationships with any of our existing or future strategic partners; ● potential political, economic and social instability, including future major geopolitical events, and related actions taken by other countries in response, or perceived, threatened or actual security concerns; and ● higher costs associated with doing business in a larger number of markets. Any of the foregoing could negatively affect our business, financial condition and results of operations. As our business segments may be relatively new in certain markets, the relevant regulations are evolving and expanding. From time to time, we are subject to formal and informal reviews, inquiries and investigations by governments and regulatory authorities. Unfavorable regulations, laws, decisions or enforcement actions could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products and services, increase our cost of doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation, impede our growth or monetization strategy, or otherwise have a material adverse effect on our operations. 23 Table of Contents We have a history of net losses and we may not remain profitable in the future. We had recorded net losses for a period of time before 2023. We turned profitable in 2023 and had a net income of US$162.7 million, US$447.8 million, and US$1.6 billion in 2023, 2024 and 2025, respectively. While we have delivered positive total net income in 2023, 2024 and 2025, we may not sustain this performance, including the same level of profitability, growth or business scale given, among other things, the uncertainty in global markets and future fluctuations in our performance. Our operating expenses or capital expenditures may increase as we continue to invest in our businesses. Such investments may not generate immediate positive financial returns and may result in increased or higher than expected costs, operating losses or other losses in the short term with no assurance that we will eventually achieve the intended long-term benefits or maintain profitability. These factors, among others, set out in this “Item 3. Key Information—D. Risk Factors” section, may negatively affect our ability to sustain profitability in the near term. Any future occurrence of natural disasters, epidemics, pandemics or other outbreaks, wars, conflicts or other catastrophic events could also adversely affect our business. Our business, financial condition and results of operations could be materially and adversely affected by severe weather conditions, natural disasters, geopolitical events, terrorist attacks, international conflicts, wars, sanctions, the occurrence or re-occurrence of other outbreaks, epidemics or pandemics, including COVID-19, avian influenza, severe acute respiratory syndrome, the influenza A (H1N1) or H7N9, and other catastrophic events that disrupt our operations, adversely affect our markets or the economy generally or adversely affect our employees, third-party service providers, business partners or a significant portion of our users. Risks Related to Our E-Commerce Business We face uncertainties relating to the growth and profitability of the e-commerce industry in our markets and we may face challenges and uncertainties in implementing our e-commerce strategy. Our future results of operations and ability to grow our platforms and to sustain or increase profitability will depend on numerous factors affecting the development of the e-commerce retail industry in our markets, which may be beyond our control. These factors include: ● the growth rate of internet, broadband, personal computer and smartphone penetration and usage in our markets, including any changes or fluctuations in growth rates or usage; ● the trust and confidence level of e-commerce consumers, as well as changes in customer demographics and consumer tastes and preferences; ● the selection, pricing and popularity of products that online sellers offer; ● attracting and retaining a wide range of merchants, brands and retailers; ● providing effective technologies, infrastructure and services that meet the evolving needs of consumers and merchants; ● economic landscape, macro-economics, and consumer discretionary spending; ● competition from online and offline players, such as alternative retail channels or business models that better address the needs or preferences of consumers, including social commerce or multi-category service e-commerce platforms; ● the differing and quickly changing laws and regulations applicable to e-commerce businesses in our markets, including any required licenses or permits, exposure to additional liability, including for conduct by or content originating from third parties, and new labor legislation or changes to any employment or independent contractor classification frameworks; and 24 Table of Contents ● the development of logistics and fulfillment (especially last-mile delivery and warehousing infrastructure), payment and other ancillary services associated with e-commerce. Our e-commerce revenue is currently concentrated, with our top three markets accounting for over half of our total e-commerce revenue in 2025. If we were to experience a material decline in Shopee’s major markets, especially those profitable or near profitable markets, or we are prohibited from operating or subject to restrictions limiting our operations in such markets, it could materially and adversely affect our business, financial condition results of operations and the prospects and profitability of our e-commerce business. Our investments and future investments in new markets may not generate sufficient user engagement or revenues to justify continued investment. We may not gain market share in such new markets or turn profitable. We face risks related to logistics and fulfillment. We rely on our own logistics operations as well as third-party logistics service providers to deliver Shopee’s orders. Interruptions or failures in such logistics services could prevent the timely or successful delivery of Shopee’s orders. These interruptions or failures may be due to unforeseen events that are beyond our control or the control of our third-party logistics service providers, such as inclement weather, wars and conflicts, supply chain interruptions, including disruptions to fuel or energy supplies, natural disasters, virus outbreaks, transportation disruptions or labor unrest, government inspections or regulatory orders mandating service halts or temporary or permanent shutdowns or due to fraud, theft or other individual wrongdoings. Our logistics operations as well as third-party logistics service providers are subject to risks associated with transportation safety, fraud, theft, robbery, or other natural events or human errors, which may result in personal injury, loss or damage to the parcels or other consequences. If Shopee’s orders are not delivered on time or are delivered in a damaged state, our users may have less confidence in our services. We have in the past received customer complaints from time to time regarding our delivery services. Further, we may incur additional costs and may not be able to pass such costs to our users or third-party service providers. As we continue to develop our last-mile delivery, fulfillment services and warehousing capacity as well as expand the categories of services we offer through Shopee, we expect these developments to potentially require additional capital expenditures or increase our operating expenses. In addition, we may acquire land or land use rights to build warehouses and to support such capabilities, which may expose us to risks relating to declining real estate value, construction risks and additional regulatory requirements. If we fail to accurately predict demand for such services, or accurately adjust our operations in response to evolving business needs and economic and regulatory conditions, such as increases in fuel or energy costs, we may suffer increased costs or impairment charges. Any such adjustments may also not achieve their desired or expected results. The development of our logistics and fulfillment capabilities may also become increasingly complex and challenging to operate as they expand, and we may not be able to acquire land, land use rights, set up warehouses, or lease suitable facilities to directly handle delivery of products to our customers, on commercially acceptable terms or at all. In addition, the classification of certain types of contingent workers, such as agency workers, contractors, outsourced workers, dispatched workers, and others who provide services for our logistics, customer service and other operations, is currently being challenged in some of our markets. If, as a result of changes to law or regulation or for any other reason, we are required to reclassify members of our contingent workforce as employees, we may incur significant additional expenses for manpower costs, including expenses associated with the application of wage and hour laws, benefits, social security contributions, taxes, and potential penalties. Any such reclassification may require us to fundamentally change our e-commerce business model with respect to such workforce or decrease our operational efficiency and consequently would have a material and adverse effect on our business, financial condition, results of operations and cash flows. 25 Table of Contents We may be held liable for actions by our marketplace participants. With the increasing use of e-commerce marketplaces and development of legislation in different markets towards e-commerce marketplaces, proposed and newly enacted laws and regulations as well as court decisions in certain markets may increase our liability as a marketplace platform for the actions of, content created by, and/or products sold by users of our Shopee platform. We may also be held directly or secondarily liable for intellectual property infringement, product related claims or consumer protection deficiencies, privacy and data protection incidents, regulatory violations by sellers, or other similar conduct of sellers over which we have limited or no influence or control. As Shopee is readily identifiable, buyers may seek claims against us rather than the seller, which in the aggregate could be costly to defend. We also receive inquiries or demands from regulators and law enforcement regarding defective, unregistered, unlicensed, fraudulent or restricted products sold by sellers through our Shopee platform. We have developed robust consumer protection policies and procedures focused on requiring sellers to comply with applicable laws and creating a secure and reliable shopping environment for our buyers. When these policies and procedures are circumvented or fail to operate sufficiently, our business could be adversely impacted and our reputation could be harmed. In addition, we could face civil or criminal liability for unlawful activities by our sellers. We may suffer losses relating to the products we sell on Shopee. In connection with our direct sales and certain value-added services on our Shopee platform, we purchase certain products from manufacturers and third parties and subsequently sell such products on our Shopee platform. This subjects us to risks relating to such products and to managing our inventory turnover. We depend on our forecasts of demand and popularity for a variety of products to make decisions regarding product purchases. Our customers may not order products at the levels expected by us due to our failure to forecast accurately, unfavorable market conditions or changes in consumer trends. In addition, if the supply of products from manufacturers and third parties deteriorates, we may be unable to obtain the products that buyers want to purchase. Manufacturers and third parties may discontinue selling products due to factors that may or may not be within our control. Our inability to secure timely and sufficient supplies of products would negatively affect inventory levels and our platform popularity. We do not always have the right to return unsold items to sellers or suppliers. If we fail to efficiently manage our inventory, we may suffer losses. We may also be subject to legal claims in relation to such products or the conduct of our sellers from time to time. We cannot guarantee that all products we purchase for direct sale are of the quality expected by our buyers. If buyers have any disputes with us regarding the products we sell, including disputes relating to product quality or authenticity, we may suffer reputational loss or liability and may need to incur additional costs to address such disputes, which in turn may adversely affect our business and results of operations. Risks Related to Our Digital Financial Services Business We face regulatory risks relating to our digital financial services business. The provision of financial services such as e-wallet services, payment processing, consumer and SME credit products, banking, insurtech and wealth services are typically more regulated and subject to a broad range of complex laws and regulations that are rapidly changing. The monetary, financial, commercial, or equivalent authorities in the markets in which we operate could impose a wide variety of measures to regulate us, including new or additional licensing requirements, capital commitments, governance standards, ownership or control restrictions, reporting obligations or other regulatory requirements, requiring us to devote substantial operational and financial resources to comply with such requirements. Regulators in certain of our markets have been reviewing credit offerings to consumers with a view to limiting over-indebtedness and adopting fair dealing practices to guard against predatory lending practices. In Thailand, for example, the credit limit for loans offered under our personal loans license cannot exceed (i) one and a half times of the average monthly income of the borrower or the average monthly cash inflows in the borrower’s deposit accounts, where the average income or cash inflows is below THB30,000 (US$953) a month; or (ii) five times of the average monthly income of the borrower or the average monthly cash inflow in the borrower’s deposit accounts, where the average income or cash inflow is equal to or more than THB30,000 (US$953), based on the total income sources or cash flow of the borrower’s deposit accounts at all financial institutions over a period of the past six months or such longer period as may be required by the regulator. In Indonesia, the Financial Services Authority (“OJK”) has capped the maximum interest rate and fees chargeable by a peer-to-peer lending company per day to, for consumptive loans (mostly loans taken by individuals): (i) 0.3% for tenures less than or equal to 6 months, and (ii) 0.2% for tenures more than 6 months; and for productive loans (mostly loans taken by businesses): (i) 0.1%-0.275% (depending on loan quantum) for tenures less than or equal to 6 months, and (ii) 0.1% for tenures more than 6 months. There may be further changes to the maximum interest rate and fees. Measures such as the above, if widely adopted by the regulators in the markets in which we operate, could restrict how we structure and price our credit products, limit borrower eligibility, or otherwise constrain our ability to extend credit. These developments could reduce our addressable customer base, dampen demand, or negatively impact the profitability and growth of our credit offerings in the affected markets. 26 Table of Contents Moreover, as our digital financial services business evolves, it is possible that financial services regulators in one or more of our markets would require us to form a local financial conglomerate, including via a local financial holding company. Such requirements could result in (i) increased information reporting requirements; (ii) additional capital requirements on the financial conglomerate or affiliates; (iii) changes in our shareholding or governance structure; and (iv) increased restrictions and liabilities on the financial conglomerate, among other things. While we will work closely with regulators to mitigate and manage any potential impact of such requirements, we cannot be certain that we will be successful in reducing or managing any such negative impact. We face uncertainties and risks relating to our digital financial services business. Although there are trends of uptick of digital financial services and products across the globe, there is no guarantee that this will continue or will result in widespread market acceptance of our digital financial services and products across all or any of the markets in which we operate. We may be unable to achieve the required level of market acceptance in order for us to recoup our investment costs or to offset the cost of the associated risks involved in providing such services and products. Our ability to achieve or maintain market acceptance for our digital financial services and products are affected by a number of factors, such as the community’s lack of trust in digital financial services and products being provided by a company that is not a traditional financial institution, entrenched preferences in traditional payment or funding methods, insufficient use cases for our digital payment services and lack of infrastructure support locally. Even if there is adequate acceptance of our digital financial services and products, we continue to be subject to the changing needs and demands of users, which may change for a multitude of reasons such as availability of alternative payment methods and other products that are more popular or widely accepted. While we endeavor to consistently increase demand for our digital financial services and products by broadening and improving our use cases and product offerings, we cannot predict with certainty the reasons for the changes in user demands, and the consequential effects of such changes on our business. In our digital financial services business, the larger the number of users, the greater the potential to generate revenue. In particular, the Shopee ecosystem offers a unique advantage for Monee in terms of user acquisition. Monee invests in acquiring users both on- and off-Shopee. If we experience a decline in growth in our Shopee user numbers or decrease in Shopee user base or user engagement level or if we are unable to effectively develop a sizeable off-Shopee user base, our digital financial service business may be negatively impacted. In addition, changes in tariffs, trade policies, or other regulations relating to international trade may also harm the growth and financial results of our digital financial services business, which mainly focuses on the export-heavy markets in Southeast Asia and is relatively more sensitive to the uncertain economic environment. The changes, or even the fear of them, could hurt the regional and local economy. If the economy slows down, we may face challenges to grow our digital financial business and manage the quality of our loan book. We may also have to adjust our pricing and business strategy. Should these adverse conditions occur, they may undermine the financial performance and reduce the return on the investments in our digital financial services business. See “Item 3. Risk Factors —Risks Applicable Across Multiple Businesses —Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our markets could have a material adverse effect on our business and operations.” Our digital financial services revenue is currently concentrated, with our top three markets accounting for over half of our total digital financial services revenue in 2025. If we were to experience a material decline in Monee’s major markets due to any reason including those described under this section or we are prohibited from operating or subject to restrictions limiting our operations in such markets, it would materially and adversely affect our financial results and the prospects and profitability of our digital financial services business. We face credit risks. The success of our credit and banking businesses depends on the effective management of credit risk. Credit risks may be affected by changes in the political, economic or social environment, volatility in the financial markets resulting from bank failures and disruptions to the banking system, market concerns related to the liquidity, solvency or capitalization of banks or other financial institutions, such as the availability and terms of government assistance to financial institutions under financial pressure and limited liquidity in accessing bank deposits, or credit cycles, rising interest rates, changes in user base or consumer behavior, legal or regulatory changes, and other factors. 27 Table of Contents Our ability to assess creditworthiness may be impaired if the strategies or policies we use to manage our credit risks do not achieve their desired effect. If our assessment of, assumptions used or expectations concerning the above-mentioned factors differ from actual developments, if the quality of our total loan portfolio deteriorates, for any reason, or if future actual losses exceed our estimates of expected losses, we may be required to increase our provisions for credit losses or be subject to increased liquidity risks, which may adversely impact our business, financial condition and results of operations. As our loan portfolio grows, the amount of reported non-performing loans may also increase due to factors beyond our control. As such, any unexpected increase in the level of our non-performing loans could have a material adverse effect on our financial condition. Changes in interest rates may adversely impact us. The overall profitability of the credit products offered by our digital financial services business is affected by the interest rate environment and risk exposure of different products in each market and the overall market and product mix, among other things. We offer different credit products in different markets and the interest rates we are able to charge on our products vary by market and by product giving effect to market conditions and product designs. As we grow our loan book in different markets across different products, the blended interest rates of our credit products can fluctuate as a result of country and product mix, and as a result of overall interest rate and regulatory environments in our markets. See also “—We face regulatory risks relating to our digital financial services business” relating to regulatory changes that may affect interest rates. If the interest rates we are able to charge on our credit products decrease due to various reasons, including a change in market or product mix, growth of the target user base or changes in regulatory requirements, among other things, our net interest margins may decrease, which in turn may result in a decrease of profitability of our digital financial services business. Determining our allowance for credit losses requires many assumptions and complex analyses. If our estimates are not correct, our business may be adversely affected. We allow for and reserve against credit risks based on our assessment of expected credit losses in our loan portfolios. We compute our allowance for credit loss based on our historical lifetime credit loss experience, adjusted for current conditions and forward-looking factors specific to the receivables and economic environment, and the allowance we make for credit losses are calculated on an aggregate basis for various customer segments based on geographic regions and products that are considered to have similar credit characteristics and risk of loss. There are various factors used to help us assess the credit risks of our banking and consumer and SME credit businesses. These factors may be based on limited history or be beyond our control, and we may be unable to accurately predict the creditworthiness of a borrower, merchant or consumer due to inaccurate assumptions. The process of determining the allowance for credit losses is judgmental and subject to uncertainties. Future changes in economic conditions, consumer behavior or regulatory environment could necessitate adjustments to our allowance for credit losses. If the quality of our total loan portfolio deteriorates beyond expectations, for any reason, or if the future actual losses exceed our estimates of expected losses, we may be required to increase our provisions for credit losses, which may adversely affect our business, result of operations and financial condition. If our collection efforts on delinquent loans are ineffective or unsuccessful, the performance of our loans would be adversely affected. Our ability to effectively manage and collect on our loans may affect the financial and operational performance of our credit business. We may fail to quickly identify and reduce our exposure to borrowers that are likely to default on their payment obligations. Our ability to collect on loans is dependent on the consumer’s continuing financial stability, and consequently, collections can be adversely affected by a number of factors, including the macro-economy, job loss, divorce, death, illness, or personal bankruptcy. It is possible that a higher percentage of consumers will seek protection under bankruptcy or debtor relief laws due to the possibility of a recession and market volatility. Moreover, upon a borrower’s default, we may need to devote internal resources or engage third-party or in-house collection agencies to collect the receivables, which may not be successful. If any collection personnel are involved with any misconduct or there are perceptions that these collection practices are considered to be aggressive or not compliant with relevant laws and regulations, our reputation and business may be harmed or may become subject to fines or other penalties. 28 Table of Contents We face funding risks. As we further diversify our credit product offerings and services, including to new markets, and our business scale remains large or further increases, we may increasingly rely on alternative funding methods such as partnering with external funding providers (including securitization of our credit portfolio through asset-backed financings). If we are unable to fund our credit business at ideal funding cost, it may affect our credit product or loan offering capabilities, lead to loss of users or borrowers or slower growth, or constrain our working capital. For our asset-backed financings, the investors’ recourse is generally limited to the underlying assets. However, depending on the terms of the asset-backed financings, we may be required to provide a guarantee or other credit support to the special purpose vehicle acting as the issuer of the asset-backed securities, or repurchase the receivables sold by us which fail to meet certain prescribed eligibility criteria. Any obligation to make future repurchases could have an adverse effect on our business, financial position, results of operations and cash flows. Our banking business may subject us to additional material business, operational, financial, legal and compliance requirements and risks. We offer banking services in Singapore, Indonesia and the Philippines. The banking business is heavily regulated and subject to various laws, regulatory requirements and guidelines imposed by the relevant regulators. Such laws, regulations and guidelines may impose rules or restrictions on the type of banking products and services we offer, eligibility criteria of our customers, related party transactions, exposure and lending limits, market entry, risk management, corporate governance, regulatory capital requirements, regulatory ratios, and tax and accounting policies, among other things. Our banking business is also subject to various capital adequacy, liquidity and reserve requirements, and needs to hold capital buffers. For example, our Singapore bank, while currently operating at a restricted phase, upon becoming a fully functioning digital full bank, is subject to a minimum paid-up capital requirement of S$1.5 billion (or approximately US$1.2 billion). Our Indonesian bank is also required to fulfil a minimum core capital amount of at least IDR3 trillion (US$181.1 million). Aside from these minimum capital requirements, our banking businesses are also required to ensure that there are sufficient capital instruments to satisfy regulatory ratios and limits such as those relating to risk-based capital adequacy requirements and large exposures to counterparties. The amount of capital that our banking business is required to hold in order to satisfy these regulatory or risk-based requirements could increase due to growth of our banking business and actions by banking regulators including any changes in laws, rules and regulations. If our banks do not receive additional capital when needed for any reason, it may have a material adverse effect on our ability to grow and expand our banking business within such capital-dependent regulatory ratios and limits. Any material increases in regulatory reserve, compulsory deposits, minimal capital requirements or regulatory ratios and limits may have a material adverse effect on the financial performance of our banking business. Laws, regulations and guidelines applicable to banking may change or increase, and we may not be able to adapt to new or revised laws, regulations and guidelines in a timely manner or at all. Changes in regulations in the markets in which we operate may expose us to increased compliance costs and limit our ability to pursue certain business opportunities or offer certain products and services. Local regulators may have the authority to inspect our operations and conduct periodic or ad hoc audits of our operations to assess our compliance with the relevant regulatory requirements and guidelines. They may also have the authority to impose fines, sanctions or order remediation. Moreover, we are a new player in the banking industry, and have limited experience operating banks. As digital banks, we may offer products which are different from existing products offered by traditional banks in the market. There is no guarantee that such product offerings will be accepted by users or generate the expected results. As a new player with new product offerings, we also face risks and costs associated with operations and compliance. Our operating expenses may increase as we seek to continue to grow our banking business and we may not succeed in increasing our revenue sufficiently to offset our expenses. As a result, our banking business as a whole has been loss-making and may not become profitable in the near term or at all. 29 Table of Contents Furthermore, disruptions to the banking system and the surrounding speculation and uncertainty related to liquidity, solvency and capitalization of other industry players may negatively impact the industry’s reputation and lead to a level of distrust towards banks, especially in relation to new entrants or smaller scale players like us, which could adversely affect our banking business’ ability to access additional funds and attract more customer deposits. In April 2025, our Singapore digital bank became the parent bank of our Philippines bank and they have since been considered part of the same banking group. Banking groups are generally subject to additional regulatory requirements arising from being collectively regulated as a group and are required under regulatory requirements to comply with capital and financial reporting requirements on a consolidated group basis, and implement group oversight by the parent bank over the banking group’s regional operations. Any operational, reputational, financial or compliance issues that may affect one bank may also consequentially have adverse effects on the other bank in the banking group. From time to time, our banks may also function as a means to access or market other digital financial services, in compliance with prevailing local laws and regulations. Our banks may market or distribute credit, payments, insurance or wealth products in collaboration with our other digital financial services entities or third-party partners. Such marketing or distribution services are generally regulated in most markets, with additional outsourcing requirements or accountability obligations being attributed to our banks. To the extent we are unable to manage any regulatory, operational, financial or reputational risks arising from such collaboration, it could adversely affect users’ trust in our brand and services and our ability to launch new collaborations or maintain existing collaborations. If we fail to comply with laws, regulations or guidelines, or our strategies to develop and grow our banking business, including products and services, fail to achieve their intended effect, our business, financial condition, results of operations and reputation could be materially and adversely affected. We face risks relating to our insurance business. We act as insurance underwriters in Indonesia and the Philippines. We have limited operating history as an insurance underwriter and the scale of our underwriting business is still small. We also conduct insurance brokerage and agency businesses in many of our markets to distribute embedded or standalone products on our e-commerce platform and through third-party digital and offline channels. Demand for insurance depends on numerous factors, including general macro-economic conditions, regulatory constraints and competition. Negative market conditions may impair our ability to underwrite insurance at rates we consider appropriate and commensurate relative to the risk assumed, and could result in a decline in policies sold, an increase in the frequency of claims and premium defaults, and an uptick in the frequency of fraudulent claims. Furthermore, we may implement more stringent underwriting or risk control measures in response to product performance or economic conditions, which could adversely affect business growth. Accordingly, we may experience periods with excess underwriting capacity and unfavorable premium rates, and if we cannot underwrite insurance at appropriate rates, our ability to transact business will be materially and adversely affected. We must accurately and timely evaluate and pay claims that are made under the policies we underwrite. Many factors affect our ability to pay claims accurately and timely, including the efficacy of claims processing, and our ability to develop or select and implement appropriate procedures and systems to support our claims functions. Any failure to pay claims accurately or timely could also lead to regulatory and administrative actions or litigation, or result in damage to our reputation, which could materially and adversely affect our business, financial condition, results of operations and prospects. If we experience higher than expected claims, our liquidity may be constrained and our financial condition and results of operations may be adversely affected. For our insurance brokerage and insurance agency businesses, we derive revenues primarily from fees paid by the insurer partners. Regulators are increasingly scrutinizing insurance distribution through digital channels and may impose new or enhanced compliance obligations. In addition, fee rates can change based on the prevailing economic, regulatory, taxation and competitive factors as well as consumer demand and the growing availability of alternative methods for clients to meet their risk-protection needs. Sales of insurance products embedded with Shopee listings, for example, electronic gadget insurance or product liability insurance, are also affected by the transaction volume of the relevant underlying products on Shopee. We may not be able to adequately manage these risks. If we fail to do so, the financial condition and results of operations of our insurance business may be adversely affected. 30 Table of Contents We face risks relating to our e-wallet business. Our own e-wallet business is subject to risks including: (i) changes to rules or practices applicable to payment systems that link to our e-wallet, (ii) increasing operating costs, including fees charged by banks to process transactions through our e-wallet and fees charged by payment schemes to link to our e-wallet, and higher costs from obligations to implement enhanced authentication processes, security or anti-fraud and (iii) failure to manage user funds appropriately or loss of user funds, whether due to employee fraud, security breaches, technical errors or otherwise. In addition, any breach, compromise, or failure to otherwise detect or prevent fraudulent activity involving our data security systems could result in us being subject to significant fines and higher transaction fees, and loss of our ability to accept credit, debit or prepaid card payments from our customers, process electronic funds transfers, or facilitate other types of digital payments. We could be held liable if our digital financial services and products are used for fraudulent, illegal or improper purposes. Despite measures we have taken and continue to take, our digital financial services and products remain susceptible to potentially illegal or improper uses, which could damage our reputation and subject us to liability. These may include the use of our payment services in connection with fraudulent sales of goods or services, unauthorized purchases or transfers, software and other intellectual property piracy, money laundering, bank fraud and prohibited sales of restricted products. Criminals are using increasingly sophisticated methods to capture consumer personal information and login credentials, including automated, targeted, coordinated and other methods which are difficult to defend against, and engage in illegal activities such as counterfeiting and to gain unauthorized access to other users’ accounts. We could be subject to fraud-related claims if confidential information obtained from our users is used for unauthorized purposes. Our risk management policies and procedures may not be fully effective in identifying, monitoring and managing these risks. We are unable to monitor in each case the sources of funds from users of our digital financial services and products, or the ways in which they are used. An increase in fraudulent or unlawful transactions or publicity regarding payment disputes could harm our reputation and reduce consumer confidence in our services. The use of our products and services for illegitimate, fraudulent, unlawful or similar transactions can also expose us to governmental and regulatory sanctions, including U.S. anti-money laundering and economic sanctions violations. We may incur losses from claims of users who allegedly did not authorize a purchase or funds transfer due to fraud, erroneous transmissions or other reasons. Third parties may attempt to abuse access to and misuse our platforms to commit fraud by, among other things, creating fictitious accounts using stolen or synthetic identities or personal information, making transactions with stolen financial instruments, abusing or misusing our services for financial gain or fraudulently inducing users of our platforms and services into engaging in fraudulent transactions. Due to the digital nature of our services and products, third parties may perform abusive schemes or cyber or fraud attacks that are often difficult to detect and may reach a scale that would otherwise not be possible in physical transactions. Risks Related to Our Digital Entertainment Business We derive a significant portion of digital entertainment revenue and gross profit from a limited number of online games. Our digital entertainment business substantially depends on a small number of popular games, including our self-developed game, Free Fire, for revenue and profit. In 2025, Free Fire contributed a significant majority of our digital entertainment revenue and profits. If we are unable to identify, source, develop and launch new games titles that gain widespread popularity and generate significant revenue, our revenue and revenue growth may continue to depend on the success of just a few game titles. A significant amount of the digital entertainment revenue we report may consist of deferred revenue, which may not correspond to bookings for the same period. See “—Business and Operational Related Risks—Risks Applicable Across Multiple Businesses— Our results of operations are subject to fluctuations.” Any negative developments or occurrences to any of our key revenue-earning games including Free Fire, such as decline in popularity, content quality issues, competing products, content restrictions, government actions, regulatory or legal changes that affect our ability to monetize our games, reductions in consumer spending and engagement levels, delay or failure in producing new engaging content, or real or perceived security risks or data breaches could lead to material decline or slower growth. We may also select and invest significant financial and human resources in games that later prove unsuccessful. There may also be unforeseen delays in the launch of new games. If we are unable to source or launch new popular games in a timely manner, our game players may seek entertainment elsewhere. As the gross margin of self-developed game content tends to be higher than that of content licensed from third parties, any fluctuations in the mix of our revenue generated from self-developed game content and licensed game content may also affect our profitability. 31 Table of Contents We have a limited track record in game development and global game distribution. While we have developed Free Fire, we are still relatively new to game development and global game distribution. We may be unable to continue to identify market opportunities and develop new games, and subsequent self-developed games may not always have the same or comparable levels of success. Development of new games and global game distribution require considerable cost and resources, including research, testing, marketing, infrastructure and staff expenses. As we strive to expand our offerings, we may seek to publish titles on new hardware or software platforms and may need to commit resources to specific development methodologies for those platforms which are different from those with which we have experience. Free Fire is currently available in more than 160 markets. Other games we develop may also be offered in multiple jurisdictions. Future growth of our digital entertainment business, including through our self-developed games, may subject us to additional regulatory and compliance requirements and other new risks. We may have to adopt differing methods and processes to adhere to each jurisdiction’s laws and regulations, which could result in undue delays in launching such self-developed games or adversely affect our business, financial condition and results of operations. We rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and interact with user-generated content. We license many of our online games from third-party game developers. Our game license agreements with game developers typically have an initial term of 3 or more years, renewable unless either party elects not to renew. However, we may not be able to develop or procure new games or renew existing licenses on terms acceptable to us. Our game developer partners may terminate our agreements prior to their expiration if we are not in compliance with the relevant terms or conditions and we fail to remedy such non-compliance in time, or they may refuse to renew the agreements. Any failure on our part to effectively localize, operate, market or monetize their games, safeguard their intellectual properties, or otherwise perform our obligations under the license agreements may cause substantial harm to our relationships with game developers, who may then choose other game operators to distribute their games. Some of our most popular games are owned or developed by Tencent Holdings Limited and its affiliates, or Tencent, one of our shareholders. In November 2018, we obtained a right of first refusal from Tencent to publish its mobile and PC games in Indonesia, Taiwan, Thailand, the Philippines, Malaysia and Singapore, subject to certain terms and conditions. The term of this right of first refusal is for an initial term of five years, with an automatic renewal option for consecutive 2-year terms unless either party elects not to renew with 3 months’ notice. The term of this right of first refusal was automatically renewed in 2025. Although we have already launched certain games under such right of first refusal arrangement, there is no guarantee that we will continue to publish the existing games or publish more games under such right of first refusal arrangement or renew such contract on terms satisfactory to us or at all, or that any games published under such arrangement will yield a positive result. As part of our continued efforts to encourage user participation and user content creation, we have introduced and continued to explore game features that enable users to contribute and interact with user-generated content. While we believe the move towards having more user-generated content is aligned with major emerging industry trends, we are unable to predict and cannot guarantee that such features in our existing or new games will contribute to the penetration or profitability of our games or achieve their desired or expected results. In certain circumstances, the actions of our third-party game developers, content creators, contributors, or other third-party partners, which are beyond our control, could materially and adversely affect the success of our games, causing our games revenue to fluctuate or even be lower than expected. Actions by game developers could include software updates resulting in adverse changes in gameplay that are poorly received by our users, game or update releases with insufficient content to attract users or maintain the level of their engagement, or delays in any release of anticipated games in our pipeline or game updates. User-generated content features make it relatively easy for developers, content creators or contributors, and other users to upload and contribute content, which may result in content moderation challenges, including the possibility that infringing or inappropriate content is added to our games or platforms. There is no guarantee that we will be able to successfully implement policies or procedures to moderate user-generated content or identity and block infringing or inappropriate content before it is uploaded or before other users view it, which could lead to legal or regulatory actions being taken against our games or platforms or user complaints and litigations. 32 Table of Contents Our games are subject to scrutiny regarding the appropriateness of their content. Our games are subject to reviews, ratings, age restrictions or other restrictions mandated by laws in some of our markets or arising out of ratings systems by third-party application distribution channels, including restrictions on processing of data of minors, content, advertisement or distribution. For example, in Vietnam, online game publishers are required to obtain certain licenses, permits, certificates or acknowledgements of announcement from the competent authority, depending on the classification of each game to be provided to the market. In Thailand, applications to publish online games need to be reviewed and approved by the Thailand Film and Video Censorship Committee. Apple uses its own proprietary app rating system and Google Play uses the International Age Rating Coalition rating system. If we are unable to obtain the ratings we have targeted for our games, it could delay the launch or upgrade of our games. Legislation or regulations may be introduced in our markets to impose age, spending or playtime restrictions or to allow government censorship or to establish a system for protecting users from the potential influence of graphic violence, gaming addiction or other objectionable elements contained in various types of games. Some of our games may be subject to stricter regulations caused by government actions or legal proceedings, including those imposed against other developers’ games which are in the same genre as ours, and these restrictions may vary by jurisdiction. We may be required to modify our game content or features or alter our marketing or monetization strategies to comply with new governmental regulations or ratings assigned to our current or future games, which could delay or prohibit the release of new games or upgrades and reduce the existing and potential scope of our user base. We may also be required to modify or remove certain game features to react to government actions, court decisions such as injunctions or complaints from activist groups or organizations. If we are required or elect to do so, it could adversely affect our monetization, user base and financial results. If any of our key games, including Free Fire, is banned or temporarily suspended by any government, court or distribution channels, our business, financial condition and results of operations may be materially and adversely affected. The WHO’s Eleventh Revision of the International Classification of Diseases lists gaming addiction as a disorder. While the effects of gaming and whether gaming addiction is a disorder continue to be discussed and researched by health officials and others, the WHO and other governments may continue to take measures against gaming addiction, such as imposing gaming curfews or spending limits for minors and establishing treatment programs aimed at addressing gaming addiction. There are increasing discussions in many jurisdictions globally regarding whether certain game mechanics, such as loot boxes, should be subject to a higher level or different type of regulation to protect consumers. Some jurisdictions have seen enforcement or actions initiated by activist groups or organizations to protect consumers, in particular minors and other susceptible persons. For example, in February 2021, the National Association of Centers for the Defense of the Rights of Children and Adolescents in Brazil, a youth rights group in Brazil, filed lawsuits against a number of electronic games companies and distribution platforms, including our gaming entity in Brazil, in a court dedicated to resolving matters concerning children and adolescents regarding alleged loot box mechanisms in the games. In addition, to the extent lawmakers, regulators or our third-party platform providers or game distribution channels, such as Apple and Alphabet, impose age or content-related restrictions or restrict the use of loot boxes or similar mechanism in games, we may experience a decline in our user base or revenues generated from these games or may need to adjust our game content or monetization strategy in order to continue distribution on such platforms or channels. If new or amended legislation or regulations, which may vary significantly across jurisdictions and which we may be required to comply with, require certain game mechanics of our games to be modified or removed, such requirements would increase the costs of operating our games, impact player engagement and monetization, or may otherwise harm our business performance. In addition, the increased attention focused on potential liability issues or alleged harm as a result of any lawsuits and legislative proposals could harm our reputation or otherwise impact our business. 33 Table of Contents As debate in the industry continues, we cannot predict the likelihood, timing, scope or terms of gaming-related laws or regulations in our markets, or the extent to which implementation or public reactions of such laws or regulations (including lawsuits brought against game companies by alleged victims of gaming addiction or other issues relating to gaming content) may adversely affect our reputation and business. We may need to adjust our game content or monetization strategy to respond to local legal or regulatory requirements. Moreover, public dialogue concerning online games may have an adverse impact on our reputation and users’ willingness to play our games. Any costs incurred as a result of this potential liability or reputational concerns could harm our business, financial condition and results of operations. Malicious actors may compromise the quality of our user experience. Many of our games, including those which are on a freemium or free-to-play model, use virtual economies, comprising virtual assets that may be acquired over time by users. These virtual economies allow the acquisition of in-game items through skill or through luck. The availability and possession of in-game items may lead malicious actors to attempt to profit through abuse, fraud, or exploitation of in-game systems. Other actors may create software tools that allow users to circumvent controls in the game on gameplay, for the purpose of acquiring in-game assets or improving user performance in competitions that have rewards of perceived value. Software exploits, hacks, automated toolkits, and other practices risk compromising user enjoyment of our games. Steps taken to prevent and remedy abuse and protect against malicious actors are costly, time-consuming, and may involve disputes with customers over whether their conduct violated our terms of service. Legal disputes may arise over the dispossession of in-game items and virtual assets, or restricting or banning access to our games by users who have been determined to be violating the terms of service by engaging in malicious conduct involving hacks, forbidden off-platform transactions, software exploits, or account brokerage or sale. Similarly, steps taken to prevent and remedy abuse may be deemed insufficient by our user community and lead to deterioration of our user base. Steps taken to deter malicious actors from taking these steps may also compromise our reputation or perception by our user base. We state in our terms of service that unauthorized purchases to obtain the use of in-game items may result in the user having such items removed, user accounts being banned, and potential other legal action. However, there is no guarantee that our efforts to control fraudulent transactions will be successful, or that our user community will see these actions as necessary and helpful to foster a healthy gaming environment. Our live events may introduce risks around public safety and harm our reputation. We arrange, conduct, and host public events, for example, as part of our esports competitions. Where these events are attended by large numbers of people, there are inherent risks to public safety and our reputation. These can include risks of fire, natural disaster, defects in facilities, pathology or contagion from food, water, or sanitary concerns, public unrest from riots or protest, the behavior of third parties beyond our control and other safety issues which may lead to negative publicity, property damage, personal injury, or death to attendees and participants, which may adversely affect our business and harm our reputation. Other Operational Risks We rely on technology and internet infrastructure, data center and cloud service providers and telecommunications networks in the markets where we operate. We are continuously upgrading our technology to provide improved performance, increased scale, security and better integration among our three businesses. If we experience problems with the functionality and effectiveness of our software or platforms, or are unable to maintain and constantly improve our technology infrastructure to handle our business needs and ensure a consistent and acceptable level of service for our users, our business, financial condition and results of operations, as well as our reputation, could be materially and adversely affected. In addition, our businesses depend on the performance and reliability of our internet ecosystem and infrastructure and contracted data center and cloud service providers in the markets where we operate. Adopting new technologies and upgrading our internet ecosystem and infrastructure require significant investments in time and resources, including adding new hardware, updating software and recruiting and training new engineers. Adverse consequences for the failure to do so may include unanticipated system disruptions, security breaches, computer virus attacks, slower response times, impaired quality of experience for our users and delays in reporting accurate operating and financial information. 34 Table of Contents We rely on technology and internet infrastructure, data center and cloud service providers and telecommunications networks in the markets where we operate, including to provide us with data communications capacity primarily through local telecommunications networks and data centers to host our servers. The technology infrastructure in some of the markets where we operate, including the availability of computing hardware or semiconductor components, may not support the demands associated with continued growth in internet usage. We and our users may not have access to alternative services in the event of disruptions or failures of, or other problems with, the operators of such services, or if such operators otherwise fail to provide such services. Some of these operators and providers may take measures that could degrade or disrupt, as well as restrict or prohibit the use of their lines for our businesses. We have no control over the costs of the services provided by such operators and providers to us and our users or the market prices of computing hardware or semiconductor components. If the prices charged for telecommunications, technology and internet infrastructure, data center and cloud services or the power needed to operate these services rise significantly, or if we or our users experience service interruptions or otherwise lose access to such services or experience prolonged shortages of computing hardware or semiconductor components, our business, reputation, financial condition and results of operations could be adversely affected. We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees. Our future success significantly depends on the continued service of our executives and other key employees. If we lose the services of any member of management or any key personnel, we may not be able to locate a suitable or qualified replacement and we may incur additional expenses to recruit and train a replacement, which could severely disrupt our business and growth. In addition, from time to time, there may be changes in our management team that may be disruptive to our business. We will need to identify, hire, develop, motivate and retain highly skilled employees. Identifying, recruiting, training, integrating and retaining qualified individuals requires significant time, expense and attention. We may also be subject to local hiring restrictions in certain markets, particularly in connection with the hiring of foreign employees, which may affect the flexibility of our management team and workforce. If our management team, including any new hires that we make, fail to work together effectively and execute our plans and strategies, or if we are unable to recruit and retain employees effectively, our ability to achieve our strategic objectives will be adversely affected and our business and growth prospects will be harmed. Competition for highly skilled personnel is intense. We may need to invest significant amounts of cash and equity to attract and retain new employees and we may not be able to realize returns on these investments. We face manpower-related risks. We have a significant employee base across various markets. In addition, we rely on third parties and contingent workers, such as agency workers, contractors, dispatched workers, outsourced workers and others, to operate or provide services for our logistics, customer services and certain other operations. We may require additional manpower during promotional activities and holiday seasons. Our inability to effectively meet our manpower needs can hinder our ability to execute our business strategy, negatively impact cost and service levels, and adversely affect our business and results of operations. Further, our workforce may attempt, successfully or unsuccessfully, to dispute the applicable labor classification or form one or more unions or enter into collective bargaining agreements against us or their respective employers. Work stoppages or strikes could occur within a unionized workforce. We may be required to participate in or facilitate such unionization or collective bargaining efforts within certain jurisdictions. These disputes or union-related efforts could increase our costs, decrease our operational flexibility, and impact how we are able to staff our operations and supplement our workforce. See “—We face risks related to logistics and fulfillment.” In addition, in order to optimize our operating efficiency, we have made adjustments to a number of teams across various markets and may in the future implement other such adjustments. Any adjustments may yield unintended consequences and costs, such as attrition beyond the intended adjustments, and could make it more difficult for us to hire new personnel in the future. A failure to properly manage our operating efficiency may materially and adversely affect our business, reputation, financial condition and results of operations. 35 Table of Contents We may need additional capital, but may be unable to obtain it on favorable terms or at all. We may require additional cash capital resources in order to fund future growth and the development of our businesses, including expansion of our e-commerce and digital financial service businesses and any investments or acquisitions we may decide to pursue. We may seek to issue additional equity or debt securities, obtain new or expanded credit facilities or enter into securitization or channeling arrangements. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including market conditions, our future financial condition, results of operations, cash flows, share price performance, liquidity of international capital and lending markets, governmental regulations over foreign investment and the e-commerce, digital financial services, and digital entertainment industries in our various markets. In addition, incurring indebtedness would subject us to increased debt service obligations and could result in operating and financing covenants that would restrict our operations. There can be no assurance that financing will be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, could severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. Moreover, any issuance of equity or equity-linked securities could result in significant dilution to our existing shareholders. We have limited insurance coverage. We do not have extensive insurance coverage. While we have obtained insurance to cover certain potential risks and liabilities for certain businesses we operate, we have not insured against many other risks and liabilities (including the risk of business interruption), and the coverage of any insurance we have may be insufficient to compensate for losses that may occur. Any uninsured liabilities, damage or losses 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. Industry data, projections and estimates contained in this annual report are inherently uncertain and subject to interpretation. Certain facts, forecasts and other statistics relating to the industries in which we compete contained in this annual report have been derived from various sources, which may have used different assumptions and estimates to derive their published data. While we generally believe such sources to be reliable, we have not independently verified the accuracy or completeness of such information. Such sources may not be prepared on a comparable basis or may not be consistent with other sources. Industry data, projections and estimates are inherently uncertain as they require certain assumptions and judgments. Moreover, geographic markets and the industries we operate in are not rigidly defined or subject to standard definitions, and are the result of subjective interpretation. Accordingly, our use of the terms referring to our geographic markets and industries such as e-commerce, digital financial services, and digital entertainment markets may be subject to interpretation, and the resulting industry data, projections and estimates may not be reliable. Our industry and market data should be interpreted in light of the defined geographic markets and defined industries we operate in. Any discrepancy in interpretation could lead to different industry data, measurements, projections and estimates and result in errors and inaccuracies. For these reasons, you should not place undue reliance on such information. Our user metrics and other estimates are subject to inherent challenges in measuring our operating performance. From time to time we disclose certain metrics, including, without limitation, our Game QAUs, Game QPUs, orders, GMV, loans outstanding, and non-performing loans, to evaluate trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how our services are used across large populations throughout our markets. For example, we may not be able to distinguish individual users who have multiple accounts unless certain official individual identification information is provided to us. Our user metrics are also affected by technology on certain mobile devices that automatically runs in the background of our applications when another phone function is used, and this activity can cause our system to miscount the user metrics associated with such accounts. Our user metrics may also differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in assumptions, methodologies or data used. Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. For instance, if a significant understatement or overstatement of active users were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to remedy an unfavorable trend. If partners or investors do not perceive our user, geographic or other operating metrics to accurately represent our user base, or if we discover material inaccuracies in our user, geographic or other operating metrics, our reputation may be seriously harmed. 36 Table of Contents If we fail to maintain an effective internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud. As a public company, we are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and determine the effectiveness of our internal control over financial reporting, report any material weaknesses in such internal controls and for our independent registered public accounting firm to issue an attestation report on management’s assessment on the effectiveness of internal control over financial reporting. Our management has concluded that our internal control over financial reporting is effective as of December 31, 2025. See “Item 15. Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued an attestation report on management’s assessment on the effectiveness of internal control over financial reporting. However, if we fail to maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which could cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, and investor confidence in us and the market price of our ADSs may decline. 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 New York Stock Exchange, regulatory investigations and civil or criminal sanctions. We may be subject to risks related to litigation and regulatory proceedings. Our businesses and our directors and officers may be, and in some instances are or have been, subject to claims, lawsuits (including class actions and individual lawsuits), regulatory and government investigations, and other actions or proceedings relating to alleged infringement or violation of third-party intellectual property rights, consumer protection, privacy and data protection, content restrictions, labor and employment (including workforce classification), import and export practices, antitrust or competition, securities, tax, marketing and communications practices, contracts, commercial disputes, consumer complaints, products and services offered by us and third parties (including AI-related products and services) and various other matters. The number and significance of our legal disputes and inquiries have increased as we have grown larger, as our business has expanded in scope and geographic reach, and as our services have increased in complexity. As a public company, our public profile has grown, which may result in increased litigation as well as increased public awareness of any such litigation. In addition, we may be, and in some instances are or have been, the target of securities class action or derivative lawsuits, as well as other types of claims. We will need to defend against such lawsuits, including any appeals, and we may also initiate legal proceedings to protect our rights and interests. We may also be, and in some instances are or have been, subject to regulatory and government investigations or actions in various jurisdictions. There is substantial uncertainty regarding the scope and application of many of the laws and regulations to which we are subject, and this increases the risk that we will be subject to actions or claims alleging violations of those laws and regulations. Any adverse outcome could have a material adverse effect on our reputation, business, financial condition and results of operations. Regardless of its outcome, any legal proceeding can have a material adverse effect on us due to costs, diversion of our resources, negative publicity and other factors. We may decide to settle legal disputes, including on terms that are unfavorable to us. If any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that we may choose not to appeal or that may not be reversed upon appeal. We may have to seek a license or settlement terms to continue practices alleged or found to be in violation of a third party’s rights. If we are required or choose to enter into royalty or licensing arrangements or other settlement terms, such arrangements may not be entered into on reasonable terms, or at all, and may significantly increase our operating costs and expenses. As a result, we may also be required to develop or procure alternative technology or products or discontinue the use of certain allegedly infringing technology or products, and doing so could require significant effort and expense, or may not be feasible. In addition, the terms of any settlement or judgment in connection with any legal claims, lawsuits, or proceedings may require us to cease some or all of our operations, make changes to our business operations or other practices, terminate agreements, arrangements or transactions found to be in violation of applicable laws or regulations, or pay fines or substantial amounts to the other party to those proceedings and could materially and adversely affect our business, financial condition and results of operations. 37 Table of Contents We rely on structural arrangements to establish control over certain entities and government authorities may determine that these arrangements do not comply with existing laws and regulations. We are also subject to other risks relating to such structural arrangements. The laws and regulations in some of the markets in which we operate place restrictions on foreign investment in and ownership of entities engaged in a number of business activities. To comply with the relevant laws and regulations, we and certain of our wholly-owned subsidiaries in the Cayman Islands and Singapore have entered into a series of contractual arrangements with certain local entities, or VIEs, and their shareholders who are local citizens, which enable us to (i) exercise effective control over such VIEs, (ii) receive substantially all of the economic benefits and absorb the losses of such VIEs, and (iii) have an exclusive call option to purchase all or part of the equity interests in or assets of such VIEs when and to the extent permitted under the relevant laws. Because of these contractual arrangements, we have control over and are the primary beneficiary of such VIEs and hence consolidate their financial results under U.S. GAAP. For the year ended December 31, 2025, revenue from all our VIEs (which excludes entities for which we have majority direct equity ownership) accounted for less than 3% of our total revenue. None of our VIEs is individually a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements among Our VIEs, Their Shareholders and Us.” In Thailand, we conduct our business activities using a tiered shareholding structure in which direct foreign ownership in each Thai entity is less than 50%. See “Item 4. Information on the Company—C. Organizational Structure—Thailand Shareholding Structure.” As Thai laws only consider the immediate level of shareholding, no cumulative or look-through calculation is applied to determine the foreign ownership status of a company when it has several levels of foreign shareholding. Such shareholding structure has allowed us to consolidate our Thai operating entities as our subsidiaries. While we believe the structural or contractual arrangements we use are in compliance with applicable local laws, the local or national authorities or regulatory agencies in such jurisdictions may reach a different conclusion, which could lead to an action being brought against us, the VIEs and their shareholders by administrative orders or in local courts. If local authorities find that our arrangements do not comply with their prohibition or restrictions on foreign investment in our lines of business, or if the relevant government otherwise finds that we or any of our subsidiaries, VIEs or their subsidiaries are in violation of the relevant laws or regulations or lack the necessary registrations, permits or licenses to operate our businesses in such jurisdictions, they would have broad discretion in dealing with such violations or failures, including: ● revoking the business licenses or operating licenses of such entities; ● discontinuing or placing restrictions or onerous conditions on the operations of our VIEs or Thai subsidiaries, or on our operations through any transactions between our company or our Cayman Islands or Singapore subsidiaries on the one hand and our VIEs, subsidiaries of such VIEs or our Thai subsidiaries on the other hand; ● imposing fines, prohibiting payments by our VIEs or their shareholders to us as contemplated in the contractual arrangements with our VIEs, confiscating income from us, our Cayman Islands or Singapore subsidiaries, VIEs or Thai subsidiaries, or imposing other requirements with which such entities may not be able to comply; ● imposing criminal penalties, including fines and imprisonment on our VIEs or Thai subsidiaries, their shareholders or directors; ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and their shareholders, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIEs or Thai subsidiaries; or ● restricting or prohibiting us from providing funding to our business and operations in Vietnam and Thailand. 38 Table of Contents Any of these actions could disrupt the business operations of such entity and may damage our reputation, which would in turn adversely affect our business, financial condition and results of operations. If any of these occurrences results in our inability to direct the activities of our VIEs or Thai subsidiaries that most significantly impact such entity’s economic performance, or prevent us from receiving the economic benefits or absorbing losses from such entity, we may not be able to consolidate the entity in our consolidated financial statements in accordance with U.S. GAAP. The shareholders of our VIEs are our local employees or other local citizens. None of these shareholders has a significant equity interest in our company and thus their interests may not be aligned with ours, or they may have other potential conflicts of interest with us. These shareholders of our VIEs may breach, or cause our VIEs to breach, the existing contractual arrangements we have with them and our VIEs, which would adversely affect our ability to effectively control our VIEs and receive economic benefits and absorb losses from them. Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company. If our VIEs or their shareholders fail to perform their respective obligations under any such contractual arrangements, fail to conduct their operations in an acceptable manner or take other actions that are detrimental to our interests, we may incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies, including seeking specific performance or injunctive relief, and claiming damages. Such legal remedies may differ between jurisdictions, and may be more difficult to pursue than those available in the United States. In addition, if any third parties claim any interest in the equity interests of our VIEs, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may be impaired. If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of the laws where our VIEs are located and through arbitration, litigation or other legal proceedings and therefore will be subject to uncertainties in the legal systems in the relevant jurisdiction. Our contractual arrangements with our VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be. As part of our structural arrangements with our VIEs, certain of our VIEs hold certain licenses and assets that are used in the operation of their business in the relevant jurisdictions. If any of our VIEs go bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of the business activities conducted by such VIEs. Under the structural arrangements, our VIEs may not, in any manner, sell, transfer, mortgage or dispose of their assets or legal or beneficial interests in the business without our prior consent. If our VIEs undergo a voluntary or involuntary liquidation proceeding, their independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate the business the VIEs currently conduct, which could adversely affect our business, financial condition and results of operations. There are risks relating to joint venture or partnership arrangements. We may carry out operations through joint ventures, subsidiaries that are not wholly owned by us, or other partnerships with third parties in certain markets. Such arrangements may carry a higher risk than operating through wholly owned subsidiaries. If there are disagreements between us and the other shareholders of entities operating under such arrangements, we cannot assure you that we will be able to resolve them in a manner that will be in our best interests. We may also not be able to make decisions as quickly as compared to wholly owned operations. These other shareholders may have interests that are inconsistent with ours. All or any such factors could have an adverse effect on our businesses, prospects, financial condition and results of operations. There may also be heightened government scrutiny of shareholding arrangements in industries or sectors that have foreign ownership restrictions. If local or national authorities reach a different conclusion, they would have broad discretion including imposing penalties, and the business operations of such entity could be disrupted, and our reputation may be damaged. 39 Table of Contents MARKETS RELATED RISKS Our businesses and operations in Taiwan may be materially and adversely impacted if we are deemed to be a PRC investor. There have been and remain tensions surrounding the Taiwan Strait. Such tensions may affect the economic and social activities in Taiwan, which may in turn affect our businesses and operations in Taiwan. There have historically been prohibitions and restrictions imposed on investments, directly and indirectly, by PRC investors in Taiwan. “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 (each intermediate holding company shall be separately assessed based on this 30% test to determine whether it is deemed a PRC invested company from other jurisdictions), or (ii) have the ability to control such entities. 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. In addition, if a PRC investor is a juristic person, organization, or other institution invested by (a) the “political party,” military, administrative or political agency of PRC, or (b) PRC invested companies from other jurisdictions (defined in “Item 4. Information on the Company—B. Business Overview—Regulation—Taiwan—Regulations on Foreign Investment”) invested by the agency listed in item (a) above, the Taiwan authorities may restrict or prohibit such PRC investor from investing in businesses in Taiwan. Under Taiwan company law, a Taiwan company is required to select from a statutory list of business categories for inclusion in its corporate registration based on various aspects of its business operations. Some of the statutory categories currently listed in the corporate registration of our Taiwan operating entities, such as computer recreational activities, software publication, third-party payments, general advertising services and sales of certain medical or cosmetics related goods, are not within the Positive Listings. The other statutory business categories currently listed in the business scope of the corporate registration of our Taiwan operating entities are within the Positive Listings, including the data processing services listed in the corporate registration of our e-commerce and digital entertainment business entities, and the software design services currently listed in the corporate registration of our digital entertainment business entity. We do not believe, based on 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 PRC investment approval for operating businesses that have statutory business categories listed as permitted in the Positive Listings. We currently operate our businesses in Taiwan through our wholly-owned branch offices or subsidiaries in Taiwan. Such entities were acquired or established upon approval by the relevant Taiwan government authorities. However, should the Taiwan authorities deem us to be a PRC investor, the Taiwan authorities may take a range of actions, including: ● imposing fines between NT$120,000 (US$3,825) to NT$25,000,000 (US$796,940) and further fines if the non-compliance is not rectified as ordered; ● ordering us to reduce any direct or indirect ownership or control by PRC investors in our company; ● requesting us to divest some or all of our ownership or control in our operating entities in Taiwan; ● suspending the rights of shareholders of our Taiwan operating entities; and ● discontinuing the operations and revoking the business licenses of our Taiwan operating entities. If any such action is taken, our operations in Taiwan and our business, financial condition and results of operations may be materially and adversely affected. Uncertainties with respect to the legal system in certain of our markets could adversely affect us. The legal systems in many of our markets vary significantly from jurisdiction to jurisdiction. Some jurisdictions have a civil law system based on written statutes and others are based on common law. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. 40 Table of Contents Many of the markets in which we operate have not developed a fully integrated legal system, and laws and regulations may not cover all aspects of economic activities in such markets with a high degree of certainty or predictability. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties for various reasons, and the application of some of these laws and regulations to our businesses is not settled. Since local administrative and court authorities may have significant discretion in interpreting and implementing statutory provisions, legal principles and contractual terms, it may be difficult to evaluate or predict the outcome of administrative and court proceedings or the level of legal protection we have in many markets in which we operate. For example, most of our consumer-facing contracts are signed electronically or online, and local courts may not support the enforceability of some of such contracts due to various reasons, including the way such contracts are signed, or perfection of securities imposed on loans in our consumer credit business. In addition, local courts may have broad discretion to reject enforcement of foreign court decisions or arbitration awards. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or claims. In addition, the legal and regulatory uncertainties in such markets may be exploited by other parties through unmerited or frivolous legal actions, claims concerning the conduct of third parties, or threats in attempt to extract payments or benefits from us. Many jurisdictions in our markets have enacted, and may enact or amend from time to time, laws and regulations governing the distribution of content and communications, including games, services, advertising, marketing, messages, applications, electronic documents, personal data and other information through the internet or on digital platforms. 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, protection of minors, data protection, obscene, offensive or defamatory content, or to otherwise be in violation of local laws and regulations. If any information disseminated through our platforms were deemed by any relevant government authorities to violate content restrictions, we may 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. Many of the legal and regulatory requirements in markets where we operate are based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. There are other circumstances where key regulatory definitions are unclear, imprecise or missing, or where interpretations that are adopted by regulators or governmental authorities are inconsistent with previous interpretations or interpretations adopted by courts in analogous cases. As a result, we may not be aware of our violation or alleged violation of certain policies and rules until sometime after the violation. In addition, any administrative and court proceedings in our markets may be protracted, resulting in substantial costs and diversion of resources and management attention. It is possible that laws and regulations may be adopted or construed to apply to us that could restrict or otherwise impact 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 such 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 goods, services and products offered in our businesses. Changes in current laws or regulations or the imposition of new laws and regulations regarding our industries may slow the growth of our industries and adversely affect our financial condition and results of operations. If we are unable to comply with changing laws, regulations or guidelines, or our strategies to develop and grow our businesses fail to achieve their intended effect, our business, financial condition and results of operations, as well as our reputation, could be materially and adversely affected. It is not certain if Sea Limited will be classified as a Singapore tax resident. Under the Income Tax Act 1947 of Singapore, or the Singapore Income Tax Act, a company established outside Singapore but whose governing body, being the board of directors, usually exercises de facto control and management of its business in Singapore could be considered a tax resident in Singapore. However, such control and management of the business should not be deemed to be in Singapore if physical board meetings are mainly conducted outside of Singapore. Where board resolutions are passed in the form of written consent signed by the directors each acting in their own jurisdictions, or where the board meetings are held by teleconference or videoconference, it is possible that the place of de facto control and management will be considered to be where the majority of the board are located when they sign such consent or attend such conferences. 41 Table of Contents We believe that Sea Limited is not a Singapore tax resident for Singapore income tax purposes. However, the tax residence status of Sea Limited is subject to determination by the Inland Revenue Authority of Singapore, or IRAS, and uncertainties remain with respect to the interpretation of the term “control and management” for the purposes of the Singapore Income Tax Act. If IRAS determines that Sea Limited is a Singapore tax resident for Singapore income tax purposes, the income of Sea Limited on a standalone basis that is received or deemed by the Singapore Income Tax Act to be received in Singapore, where applicable, may be subject to Singapore income tax. If Sea Limited is regarded as a Singapore tax resident, any dividends received or deemed received by Sea Limited in Singapore from subsidiaries located in a foreign jurisdiction with a rate of income tax or tax of a similar nature of less than 15% may be subject to additional Singapore income tax. Income is considered to have been received in Singapore when it is: (i) remitted to, transmitted or brought into Singapore; (ii) applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in Singapore; or (iii) applied to purchase any movable property that is brought into Singapore. In addition, as Singapore does not impose withholding tax on dividends declared by Singapore resident companies, if Sea Limited is considered a Singapore tax resident, dividends paid to the holders of our ordinary shares and ADSs will not be subject to withholding tax in Singapore. Regardless of whether or not Sea Limited is regarded as a Singapore tax resident, holders of our ordinary shares or the ADSs who are not Singapore tax residents would generally not be subject to Singapore income tax on gains derived from the disposal of our ordinary shares or the ADSs if such shareholders do not maintain a permanent establishment in Singapore, to which the disposition gains may be effectively connected, and the entire process (including the negotiation, deliberation, execution of the acquisition and sale, etc.) leading up to the actual acquisition and sale of the ADSs or our ordinary shares is performed outside of Singapore. For Singapore resident shareholders, if the gain from disposal of our ordinary shares or the ADSs is considered by IRAS as revenue in nature, such gain will generally be subject to Singapore income tax, and not taxable in Singapore if the gain is considered by IRAS as capital gains in nature to the extent that it does not fall within the ambit of Section 10L of the Singapore Income Tax Act. See “Item 10. Additional Information—E. Taxation—Singapore Taxation—Income Tax—Gains With Respect to Disposition of Our ADSs or Our Ordinary Shares.” It will be difficult to acquire jurisdiction and enforce liabilities against our assets based in some of our markets. Substantially all of our assets are located outside the United States. In addition, substantially all 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 our shareholders to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in the United States 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 the United States based on the civil liability provisions of the United States federal securities laws against us and our directors and executive officers. Even if our shareholders are successful in bringing an action of this kind, they may be unable or may find it difficult to enforce a judgment against our assets or the assets of our directors and executive officers due to the laws of the Cayman Islands and of the jurisdictions that comprise our markets. Management has been advised that many of the jurisdictions within Southeast Asia do not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. It is unclear if extradition treaties now in effect between the United States and some of our markets would permit effective enforcement of criminal or other penalties, including those under U.S. federal securities laws. The ability of our subsidiaries to distribute dividends to us may be subject to restrictions under the laws of their respective jurisdictions. We are a holding company, and have subsidiaries located globally. Part of our primary internal sources of funds to meet our cash needs is our share of the dividends, if any, paid by our subsidiaries. The distribution of dividends to us from the subsidiaries in the markets where we operate may be subject to restrictions imposed by the applicable laws and regulations. See “Item 4. Information on the Company—B. Business Overview—Regulation.” In addition, although there are currently no foreign exchange control regulations which restrict the ability of our subsidiaries in most of our markets to distribute dividends 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. 42 Table of Contents Restrictions on currency exchange may limit our ability to receive and use our cash effectively. A significant portion of our revenue and expenses are denominated in currencies subject to exchange control. If revenue denominated in such currencies increases or expenses denominated in such currencies decrease in the future, we may need to convert a portion of our revenue into other currencies to meet our foreign currency obligations. Currently, in Taiwan, a single remittance by a company for an amount over US$1 million or its equivalent in foreign currency shall be reported and documents supporting the accuracy of such report shall be provided to the bank handling such remittance before the remittance is conducted. In addition, remittances by a company in annual aggregate amounts exceeding US$50 million or its equivalent in foreign currency may not be processed without the approval of the Central Bank of the Republic of China (Taiwan). In Vietnam, exchanging Vietnamese dong into foreign currency must be conducted at a licensed credit institution such as a licensed commercial bank or licensed foreign currency exchange agent. Conversion of Thai baht to another currency is subject to regulations promulgated by the Ministry of Finance and Bank of Thailand. Conversion of Indonesian rupiah into any foreign currency that exceeds a certain specific threshold is required to have an underlying transaction and supported by underlying transaction documents. In Malaysia, the foreign exchange policy requires the approval of the Central Bank of Malaysia (“BNM”) for certain cross-border remittances that are either set out in the foreign exchange policy notices (“FEP Notices”) or applied for on an ad hoc basis. BNM has the discretion whether to grant its approval, and to impose any condition on such approval so there is no assurance that its approval will be granted. We may be unable to convert such local currencies into U.S. dollars or other foreign currencies to pay dividends or for other purposes on a timely basis or at all. RISKS RELATED TO THE ADSs The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors. The trading price of the 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, including the performance and fluctuation of the market prices of other companies with business operations located mainly in the same markets as us that have listed their securities in the United States. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: ● variations in our quarterly or annual revenue, earnings and cash flow; ● guidance or other projections we may provide to the public, including any changes or failure to meet any guidance or other projections; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● announcements of new content and services or plans of expansion or exits by us or our competitors; ● changes in financial estimates by securities analysts and data providers, or our failure to meet these estimates or the expectations of investors; ● downgrades by industry or securities analysts that publish research or reports on us; ● detrimental adverse publicity about us, our businesses or our industries or investor sentiment with respect to our competitors, our shareholders and investors, and our industry in general; ● 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, including the perception that these sales could occur; ● dilution of the ownership interests of our ADS holders due to conversions of our 2026 convertible notes, which we may choose to settle by issuing ADSs; ● current or potential litigation, government actions or regulatory investigations, including class actions; 43 Table of Contents ● volatility in the stock market, including price and volume fluctuations in the overall stock market, changing trends in the economy, interest rate hikes or other interest rate-related decisions; and ● general political, economic, or market conditions, or other events or factors, including those resulting from war, incidents of terrorism, pandemics, and other disruptive external events, or responses to these events. Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade. Shareholders of public companies have often brought securities class action suits against those companies following periods of volatility or decline in the market price of their securities. Sea Limited has been a defendant in multiple putative securities class actions. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.” Involvement in a securities class action lawsuit 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 meritorious, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully established 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. As we operate globally, we may receive an increasing degree of media coverage. We have been the subject of media coverage involving concerns around our markets, our products or services and business developments and our efficiency initiatives, and we continue to receive publicity relating to these concerns among others. Any publicity that is unfavorable or perceived to be unfavorable may affect our business, brand and reputation. For example, such publicity could have an adverse effect on the size, engagement, and loyalty of our user base as well as result in increased scrutiny of our business, including our business practices and policies. Substantial future sales or perceived potential sales or issuances of our ADSs, Class A ordinary shares or other equity securities could cause the price of our ADSs to decline significantly. As of March 31, 2026, the aggregate principal amount outstanding of our 2026 convertible notes was approximately US$996.7 million. The holders of our 2026 convertible notes may convert their convertible notes in accordance with the instruments governing such convertible notes at the initial conversion rate of 2.0964 ADSs per US$1,000 principal amount. To the extent our convertible notes are convertible in a given period and converted and we issue ADSs to settle our obligations, the ownership interest of our ADS holders will be further diluted. Our founder has control over key decision making as a result of his control of a majority of the voting power of our outstanding share capital and has substantial influence over our company. We have adopted a dual-class voting structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares since our IPO. On February 14, 2022, our shareholders approved the amendment and restatement of our memorandum and articles of association at our annual general meeting. Upon the effectiveness of such amendment, the voting power of our Class B ordinary shares increased from three votes per share to 15 votes per share on all matters subject to vote at general meetings of our company and Forrest Xiaodong Li, our founder, Chairman and Chief Executive Officer, is the sole beneficial owner of all our Class B ordinary shares. The voting power of our Class A ordinary shares of one vote per share remains unchanged. Due to the different voting powers associated with our two classes of ordinary shares, as of March 31, 2026, our founder beneficially owns an aggregate of approximately 57.6% of the total voting power of our outstanding ordinary shares. As a result, our founder has substantial influence over our business, including significant corporate actions including mergers, consolidations, and election of directors. As a board member and officer, Mr. Li owes a fiduciary duty to our company and must act in good faith in a manner he reasonably believes to be in the best interests of our company. As a shareholder, even a controlling shareholder, Mr. Li is entitled to vote his shares in his own interests, which may not always be in the interests of our shareholders generally. Certain actions may be taken even if they are opposed by our other shareholders. This concentrated control could discourage, delay or prevent a change of 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 our ADSs. It could also discourage a potential investor from acquiring our ADSs represented by our Class A ordinary shares, which has less voting power compared with our Class B ordinary shares, and may harm the trading price of our ADSs. In the event of his death, the Class B ordinary shares beneficially owned by Mr. Li will be automatically converted into an equal number of Class A ordinary shares. 44 Table of Contents The depositary for the ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying our ADSs at shareholders’ meetings if holders of ADSs do not give voting instructions to the depositary, except in limited circumstances, which could adversely affect the interests of such holders. Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our Class A ordinary shares underlying our ADSs at shareholders’ meetings if holders of ADSs do not give voting instructions to the depositary, unless: ● we have failed to timely provide the depositary with our notice of meeting and related voting materials; ● we have instructed the depositary that we do not wish a discretionary proxy to be given; ● we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or ● a matter to be voted on at the meeting would have a material adverse impact on shareholders. The effect of this discretionary proxy is that, if holders of ADSs fail to give voting instructions to the depositary, they cannot prevent our Class A ordinary shares underlying our ADSs from being voted, absent the situations described above, and it may make it more difficult for holders of our ADSs to influence our management. We have granted, and may continue to grant, share incentives, which may result in increased share-based compensation expenses and dilution to shareholders. We adopted our 2009 Share Incentive Plan, last amended and restated in April 2022, or the 2009 Plan, for the purpose of granting share-based compensation awards to officers, employees, directors and other eligible persons to incentivize their performance and align their interests with ours. In April 2022, our board of directors approved the amendment and restatement of the 2009 Plan to increase the maximum aggregate number of shares available under the 2009 Plan, pursuant to which on January 1 of each of 2023, 2024, 2025 and 2026, the maximum aggregate number of ordinary shares which may be issued under the 2009 Plan will increase by 3% of the total number of ordinary shares of all classes of the company outstanding on that day immediately before the increase. The current maximum aggregate number of ordinary shares which may be issued pursuant to all awards under the 2009 Plan is 246,892,991. We are authorized to grant options, share appreciation rights, share awards of restricted shares and non-restricted shares, restricted share units and other types of awards the administrator of the 2009 Plan decides. We account for compensation costs for all share options using a fair-value based method and recognize expenses in our consolidated statements of operations in accordance with U.S. GAAP. As of March 31, 2026, outstanding awards granted under the 2009 Plan consisted of (i) options to purchase 37,367,856 Class A ordinary shares, (ii) 7,688,641 restricted Class A ordinary share units, and (iii) 161,658 share appreciation rights. As a result of our grants of awards under the 2009 Plan, we incurred share-based compensation expense of US$685.0 million, US$715.8 million and US$625.0 million in 2023,2024 and 2025, respectively. For more information on our share incentive plan, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” We will incur additional share-based compensation expenses in the future as we continue to grant share-based incentives. We believe the granting of share-based compensation is of significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant share-based compensation to employees in the future. As a result, our expenses associated with share-based compensation may remain significant or increase, which may have an adverse effect on our results of operations. Because we do not expect to pay dividends in the foreseeable future, holders of ADSs must rely on price appreciation of our ADSs for return on their investment. We currently intend to retain most 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, holders of ADSs should not rely on an investment in ADSs as a source for any future dividend income. 45 Table of Contents Our board of directors has complete discretion as to whether to distribute dividends. 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 our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on the investment in our ADSs will likely depend entirely on 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 the holders purchased our ADSs. Holders of ADSs may not realize a return on their investment in our ADSs and may even lose their entire investment in our ADSs. Our memorandum and articles of association contain anti-takeover provisions and a dual-class voting structure that could have a material adverse effect on the rights of holders of our Class A ordinary shares and our ADSs. Our 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 memorandum and articles of association contain a dual-class voting structure that gives disproportionate voting power to the Class B ordinary shares, all of which are held by Forrest Xiaodong Li, our founder, Chairman and Chief Executive Officer. As of March 31, 2026, our founder beneficially owned an aggregate of approximately 57.6% of the total voting power of our outstanding ordinary shares. In addition, in September 2022, Tencent granted an irrevocable voting proxy with respect to all its Class A ordinary shares to our board of directors to vote on matters that are subject to the vote of shareholders of Sea. Such proxy gives our board of directors (duly constituted from time to time) approximately 8.3% of voting power. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” Our board of directors has the authority, without further action by our shareholders, to issue preferred 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 ordinary shares, in the form of ADS or otherwise. Preferred 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 preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and our ADSs may be materially and adversely affected. Holders of ADSs may face difficulties in protecting their interests, and their ability to protect their rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law. We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) 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 duties 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 duties 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 (save for the memorandum and articles of association, register of mortgages and charges, and special resolutions of shareholders) 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 make them available to our shareholders. This may make it more difficult for holders of ADSs 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. 46 Table of Contents 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 United States. To the extent we choose to follow home country practice with respect to corporate governance matters, 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, our 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. The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and holders of ADSs may not be able to exercise their right to vote their Class A ordinary shares. Holders of ADSs are only able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with the provisions of the deposit agreement. Holders of ADSs may not have the same voting rights as the holders of our Class A ordinary shares and may not receive voting materials in time to be able to exercise the right to vote. Under the deposit agreement, holders of ADSs must vote by giving voting instructions to the depositary. If we ask for instructions from the holders of ADSs, upon receipt of voting instructions from the holders of ADSs, the depositary will try to vote the underlying Class A ordinary shares in accordance with these instructions. If we do not instruct the depositary to ask for instructions from the holders of ADSs, the depositary may still vote in accordance with instructions given by the holders of ADSs, but it is not required to do so. Holders of ADSs are not able to directly exercise the right to vote with respect to the underlying Class A ordinary shares unless holders of ADSs withdraw their Class A ordinary shares from the depositary and become a registered holder of such shares. When a general meeting is convened, holders of ADSs may not receive sufficient advance notice to withdraw their Class A ordinary shares to allow them to vote with respect to any specific matter. If we ask for instructions from holders of ADSs, the depositary will notify holders of ADSs of the upcoming vote and will arrange to deliver our voting materials to holders of ADSs. We have agreed to give the depositary prior notice of shareholder meetings as far in advance of the meeting date as practicable. Nevertheless, we cannot assure you that holders of ADSs will receive the voting materials in time to ensure that holders of ADSs can instruct the depositary to vote the Class A ordinary shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out voting instructions. This means that holders of ADSs may not be able to exercise the right to vote and may have no legal remedy if the Class A ordinary shares underlying our ADSs are not voted as they requested. Holders of ADSs may be subject to limitations on the transfer of their ADSs. Our ADSs are transferable on the books of the depositary. 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. 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 domestic public companies in the United States. As a foreign private issuer under the Exchange Act, we are exempt from certain disclosure and other requirements and obligations that are applicable to U.S. domestic issuers, including: (i) 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; (ii) the sections of the Exchange Act regulating the solicitation of proxies in respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Act imposing “short swing” liability for insiders who profit from certain trades; and (iv) the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 47 Table of Contents We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a quarterly basis through press releases. Press releases relating to financial results and material events are 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 may be less timely compared with that required to be filed with the SEC by U.S. domestic issuers. As a result, holders of ADSs may not be afforded the same protections or information, which would be made available to them, were they investing in a U.S. domestic issuer. We are subject to the corporate governance requirements of the New York Stock Exchange. However, New York Stock Exchange rules permit a foreign private issuer like us to follow the corporate governance practices of our home country in lieu of certain New York Stock Exchange rules. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance requirements. To the extent we choose to follow home country practice, 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. If we are a passive foreign investment company for United States federal income tax purposes for any taxable year, United States holders of ADSs or our ordinary shares could be subject to adverse United States federal income tax consequences. Depending upon the value and the nature of our assets and the amount and nature of our income over time, we could be classified as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. We will be classified as a PFIC in any taxable year if either: (i) 75% or more of our gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. Passive income generally includes dividends, interest (which may include interest from our non-banking credit business), royalties, rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains. For this purpose, cash is generally categorized as a passive asset and the company’s unbooked intangibles associated with active business activity are taken into account as a non-passive asset. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own (or are deemed to own), directly or indirectly, 25% or more (by value) of the stock. In addition, although the law in this regard is not entirely clear, we treat our VIEs as being owned by us for U.S. federal income tax purposes. As a publicly traded foreign corporation we intend for this purpose to treat the aggregate fair market value of our gross assets as being equal to the aggregate value of our outstanding stock (“market capitalization”) plus the total amount of our liabilities and to treat the excess of the fair market value of our assets over their book value as a non-passive asset to the extent attributable to our non-passive income. Because we currently hold, and expect to continue to hold, a substantial amount of cash and cash equivalents and other passive assets used in our business, and because the value of our gross assets is likely to be determined in large part by reference to our market capitalization, we may become a PFIC for a given taxable year if the market price of the ADSs or Class A ordinary shares were to decrease significantly. The application of the PFIC rules is subject to uncertainty in several respects, and we must make a separate determination after the close of each taxable year as to whether we were a PFIC for such year. If we are a PFIC for any taxable year during which a U.S. investor held the ADSs or Class A ordinary shares, the U.S. investor might be subject to increased U.S. federal income tax and to additional reporting obligations. We do not intend to provide the information necessary for the U.S. investor to make a qualified electing fund election with respect to the ADSs or Class A ordinary shares. See “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” Based on our income and assets, and the value of the ADSs, we do not believe that we were a PFIC, for U.S. federal income tax purposes, for the taxable year ended December 31, 2025, and do not anticipate becoming a PFIC for the current taxable year or for the foreseeable future. Nevertheless, because PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and assets, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.