美國
證券和交易委員會
華盛頓特區20549
表格
截至季度結束日期的財務報告
or
在從____到_____的過渡期間
委託文件編號：001-39866
(根據其章程規定的註冊人準確名稱)
|
|
|
|
（設立或組織的其他管轄區域） |
（納稅人識別號碼） |
（總部地址）（郵政編碼）
+
(註冊人電話號碼，包括區號)
不適用
（前名稱、地址及財政年度，如果自上次報告以來有更改）
在法案第12(b)條的規定下注冊的證券：
|
每個類別的標題 |
交易標的 |
在其上註冊的交易所的名稱 |
||
|
|
|
|
請勾選以指示註冊人（1）在過去12個月內（或在註冊人被要求提交此類報告的較短期間內）是否已提交根據《1934年證券交易法》第13條或第15(d)條要求提交的所有報告，以及（2）在過去90天內是否受到此類提交要求：
請在以下勾選方框表示註冊人是否已在Regulation S-T Rule 405規定的前12個月(或在註冊人需要提交此類文件的較短期間內)提交了每個互動數據文件。
請勾選註冊者是大型加速文件提交者、加速文件提交者、非加速文件提交者、小型報告公司還是新興增長公司。請參見《證交易法》規則120億.2 中「大型加速文件提交者」、「加速文件提交者」、「小型報告公司」和「新興增長公司」的定義。
| 大型加速量申報人 ☐ | 加速量申報人 ☐ |
| 小型報告公司 |
|
| 新興成長公司 |
如果是新興成長型公司，在選中複選標記的同時，如果公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則，則表明該公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則。☐
請在方框中標記註冊方是否爲殼公司（如《交易所法》規則120億.2所定義）。 是
截至2024年11月19日，註冊方擁有
目錄
|
頁面 |
|||
公開公司會計監督委員會（PCAOB）歷來無法對我們的核數師進行審查，這是針對他們爲我們的基本報表所執行的審計工作，而PCAOb無法對我們的核數師進行審查，使我們的投資者無法獲得此類審查的好處。 “PCAOB”歷史上，公開公司會計監督委員會（PCAOB）無法檢查我們的核數師，針對他們爲我們的基本報表執行的審計工作，而PCAOb無法檢查我們的核數師，使我們的投資者無法從這些檢查中獲益。
我們的核數師，ARK Pro CPA & Co.（「ARK」），是我公司SEC備案文件中出具審計報告的獨立註冊會計師，作爲在美國上市公司的核數師，以及在美國註冊的會計師事務所，受美國法律約束，根據該法律，PCAOB定期開展檢查，評估其遵守適用專業準則的情況。我們的核數師位於中國香港特別行政區（「香港」），中國，PCAOb無法在2022年之前進行檢查和調查的司法管轄區。因此，我們及我公司證券投資者未能從這些PCAOb檢查的益處中受益。2022年12月15日，PCAOb宣佈已能夠完全獲准檢查和調查設於2022年在中國內地和香港總部的PCAOb註冊會計師事務所。然而，PCAOb過去無法檢查香港核數師，相較於接受PCAOb檢查的中國內地和香港之外的核數師，評估我公司獨立註冊會計師的審計程序或質量控制程序的有效性更加困難，這可能導致我公司的審計程序、報告的財務信息以及我們的基本財務報表質量令投資者和潛在投資者失去信心。
根據《外國公司問責法案》（HFCAA），我們的普通股可能被取消上市並禁止在美國交易， 該法案已被《加速外國公司問責法案》修訂， 如果PCAOB無法完全檢查或調查位於中國大陸和香港的核數師，我們的普通股可能會被取消上市，或者面臨被取消上市的威脅，這可能導致我們普通股的價值大幅下降或變得一文不值，因此您可能會失去全部或大量投資。
在2020年12月18日，《保持外國公司問責法案》（HFCAA）簽署成爲法律，規定如果證券交易委員會（SEC）認定發行人提交的審計報告是由一家未被PCAOB檢查的註冊公共會計師事務所出具，並且自2021年起連續三年，那麼SEC將禁止其普通股在美國的國家證券交易所或場外交易市場進行交易。此外，在2021年6月22日，美國參議院通過了《加速保持外國公司問責法案》，禁止任何註冊單位的證券在美國任何證券交易所上市或在場外交易，如果該註冊單位財務報表的核數師連續兩年未接受PCAOB檢查，而不是HFCAA法案中規定的連續三年。2021年12月2日，SEC採納了最終修正案，以實施HFCAA的披露和提交要求，根據該規定，如果發行人提交的年度報告包含一份由PCAOB認定無法完全檢查或調查的註冊公共會計師事務所出具的審計報告，SEC將把該發行人標識爲「委員會認定發行人」，並在被認定爲委員會認定發行人後連續三年對其實施交易禁令。2022年12月29日，《加速保持外國公司問責法案》被簽署成爲法律。
2021年12月16日，審計委員會發出了HFCAA確定性報告（"2021 PCAob確定性"），通知證券交易委員會決定審計委員會無法完全檢查或調查總部設在中國大陸和香港的註冊會計師事務所，因爲中國當局採取的立場，我們的核數師受到了這一決定的影響。2022年5月13日，在我們提交了截至2021年12月31日財政年度的10-k表格年度報告後，證券交易委員會確認將我們確定爲HFCAA下的委員會確定的發行人。
在2022年8月26日，PCAOB與中國證券監督管理委員會（「CSRC」）及中華人民共和國財政部（「MOF」）簽署了一份協議聲明，規定了對總部位於中國大陸和香港的審計公司的檢查及調查的相關事項（「協議」）。協議中聲明，中國當局承諾PCAOB在其檢查或調查中可以直接查看完整的審計工作底稿，並擁有對選定的審計公司和審計業務的唯一裁量權。該協議爲PCAOB提供了全面檢查和調查在中國大陸和香港註冊的公共會計公司的權限。PCAOB隨後全面測試了協議所要求的各個方面的合規性，以判斷是否可以完全訪問。這包括派遣PCAOB工作人員團隊在2022年9月至11月期間的九周內，前往香港進行現場檢查和調查。
2022年12月15日，PCAOB發佈了其2022年HFCAA決定報告，通知美國證券交易委員會（SEC），PCAOB確認其已能夠在2022年完全獲得檢查和調查中國大陸和香港總部的PCAOb註冊的上市會計師事務所的完全訪問權限。PCAOB董事會撤銷了其2021年的PCAOB決定，即PCAOB無法完全檢查或調查在中國大陸和香港總部註冊的上市會計師事務所。基於這個原因，我們預計在提交截至2022年12月31日的年度報告後，不會被確定爲委員會識別的發行人。然而，PCAOB能否繼續滿意地對中國大陸和香港總部註冊的PCAOb註冊的上市會計師事務所進行檢查存在不確定性，並取決於一系列我們及我們的核數師無法控制的因素。
公開公司會計監督委員會（PCAOB）正在繼續要求在中國大陸和香港獲得完全的訪問權限，並已計劃在2023年初及以後恢復定期檢查，繼續進行正在進行的調查並根據需要啓動新的調查。PCAOB不必等待另一年來重新評估其決定。如果中華人民共和國當局以任何方式阻礙PCAOB完全檢查或調查的訪問，PCAOB將立即考慮發佈與《證券法執法改革和增強法案》一致的新決定。
我們無法保證我們的核數師不會被判斷爲註冊爲一個無法完全受美國審計監督委員會檢查或調查兩年的公共會計事務所，因爲中國當局的立場和/或未來可能出現的其他原因。每年，美國審計監督委員會將判斷能否完全檢查和調查中國大陸和香港等其他司法管轄區內的審計公司。如果美國審計監督委員會未來再次判斷無法完全檢查和調查中國大陸和香港的核數師，我們可能會因此被確定爲具有委員會確定身份的發行人。如果發生這種情況，納斯達克可能決定將我們的普通股除牌，並不能保證我們將能夠繼續在其他非美國的股票交易所上市，或者我們的普通股將立即在美國境外市場得到發展。在美國證券交易所禁止交易或取消上市我們的普通股，或者有被除牌的威脅時，我們的普通股價值可能會大幅下跌或變得毫無價值，因此您可能會失去所有或大部分投資。
ZW DATA ACTION TECHNOLOGIES INC.
簡明合併資產負債表
(以千爲單位，除股票數量和每股數據外)
|
九月三十日， 2024 |
12月31日， 2023 |
|||||||
|
（美元） |
（美元） |
|||||||
|
(未經審計) |
||||||||
|
資產 |
||||||||
|
流動資產： |
||||||||
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現金及現金等價物 |
$ | $ | ||||||
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應收賬款淨額（扣除帳戶風險準備金）爲 $ |
||||||||
|
預付款和向供應商存入資金 |
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其他流動資產淨額 |
||||||||
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總流動資產 |
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長期投資 |
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經營租賃使用權資產 |
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物業和設備，淨值 |
||||||||
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無形資產-淨額 |
||||||||
|
|
||||||||
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總資產 |
$ | $ | ||||||
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負債和股東權益 |
||||||||
|
流動負債: |
||||||||
|
應付賬款 * |
$ | $ | ||||||
|
客戶預付款 * |
||||||||
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應計的工資和其他應計* |
||||||||
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應付稅款* |
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營運租賃負債* |
||||||||
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短期租賃相關的租金支付責任* |
||||||||
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來自投資者的預付款 |
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其他流動負債* |
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|
總流動負債 |
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ZW DATA ACTION TECHNOLOGIES INC.
合併資產負債表（續）
(以千爲單位，除股票數量和每股數據外)
|
九月三十日， 2024 |
12月31日， 2023 |
|||||||
|
（美元） |
（美元） |
|||||||
|
(未經審計) |
||||||||
|
長期負債： |
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|
開多期借款來自關聯方 |
||||||||
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總負債 |
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承諾和 contingencies |
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|
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股東權益： |
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|
ZW數據行動科技公司的股東權益 |
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|
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額外實收資本** |
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法定儲備金 |
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|
累積赤字 |
( |
) | ( |
) | ||||
|
累計其他綜合收益 |
||||||||
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股東總數’ 股權 |
||||||||
|
非控制權益 |
||||||||
|
總股本 |
||||||||
|
總負債和股權 |
$ | $ | ||||||
請參見未經審計的簡明合併財務報表附註
ZW DATA ACTION TECHNOLOGIES INC.
綜合損失及綜合損益簡明綜合表
(以千爲單位，除股票數量和每股數據外)
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
（美元） |
（美元） |
（美元） |
（美元） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
收入 |
$ | $ | $ | $ | ||||||||||||
|
收入成本 |
||||||||||||||||
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毛（虧損）/利潤 |
( |
) | ( |
) | ||||||||||||
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運營費用 |
||||||||||||||||
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銷售與營銷費用 |
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一般和行政費用 |
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研發費用 |
||||||||||||||||
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總營業費用 |
||||||||||||||||
|
營業損失 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
其他收入/（費用） |
||||||||||||||||
|
利息收入 |
||||||||||||||||
|
其他費用，淨額 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
長期投資的減值 |
( |
) | ( |
) | ||||||||||||
|
子公司處置獲得收益 |
||||||||||||||||
|
權證負債公允價值變動 |
||||||||||||||||
|
其他總收益/(費用) |
||||||||||||||||
|
稅前損失（稅收利益/費用）和非控制性權益 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
所得稅收益/（費用） |
( |
) | ||||||||||||||
|
淨虧損 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
ZW DATA ACTION TECHNOLOGIES INC.
綜合損失及綜合損益簡明綜合表（續)
(以千爲單位，除股票數量和每股數據外)
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
（美元） |
（美元） |
（美元） |
（美元） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
淨虧損 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
歸屬於非控股權益公司的淨虧損 |
( |
) | ||||||||||||||
|
ZW數據行動科技公司歸屬於淨損失。 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
淨虧損 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
外幣翻譯收入/(損失) |
( |
) | ( |
) | ( |
) | ||||||||||
|
綜合損失 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
歸屬於非控股權益綜合收益 |
( |
) | ||||||||||||||
|
ZW數據行動科技公司應歸屬綜合損失 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
每股虧損 |
||||||||||||||||
|
每股普通股的虧損 |
||||||||||||||||
|
基本和稀釋** |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
普通股平均流通股數： |
||||||||||||||||
|
基本和稀釋** |
||||||||||||||||
請參見未經審計的簡明合併財務報表附註
ZW DATA ACTION TECHNOLOGIES INC.
現金流量表簡明綜合報表
(以千爲單位)
|
截至9月30日的九個月 |
||||||||
|
2024 |
2023 |
|||||||
|
（美元） |
（美元） |
|||||||
|
(未經審計) |
(未經審計) |
|||||||
|
經營活動現金流量 |
||||||||
|
淨虧損 |
$ | ( |
) | $ | ( |
) | ||
|
調整淨虧損爲經營活動使用的現金淨額 |
||||||||
|
折舊和攤銷 |
||||||||
|
運營租賃權利資產攤銷 |
||||||||
|
基於股份的補償費用 |
||||||||
|
子公司處置獲得收益 |
( |
) | ||||||
|
開多長期投資的減值 |
||||||||
|
固定資產處置損失 |
||||||||
|
信用損失準備金 |
||||||||
|
權證負債公允價值變動 |
( |
) | ||||||
|
遞延所得稅 |
( |
) | ||||||
|
其他非經營（收入）/虧損 |
( |
) | ( |
) | ||||
|
營運資產和負債的變化 |
||||||||
|
應收賬款 |
( |
) | ||||||
|
預付款和向供應商存入資金 |
( |
) | ( |
) | ||||
|
其他流動資產 |
||||||||
|
應付賬款 |
( |
) | ||||||
|
來自客戶的預付款 |
( |
) | ||||||
|
應計工資和其他應計費用 |
( |
) | ( |
) | ||||
|
其他流動負債 |
( |
) | ||||||
|
應付稅款 |
( |
) | ||||||
|
營運租賃負債 |
( |
) | ( |
) | ||||
|
用於經營活動的淨現金 |
( |
) | ( |
) | ||||
|
投資活動現金流量 |
||||||||
|
車輛和辦公設備的購買 |
( |
) | ( |
) | ||||
|
對持有投資實體的投資和預付款 |
( |
) | ( |
) | ||||
|
長期投資處置帶來的淨收益 |
||||||||
|
期間獲得的現金 |
||||||||
|
期間解除合併的現金 |
( |
) | ||||||
|
其他投資合同的存入資金 |
( |
) | ||||||
|
對非關聯方的短期貸款 |
( |
) | ||||||
|
對非關聯方的短期貸款和利息收入的償還 |
||||||||
|
投資活動提供的淨現金流量/（使用的現金流量） |
( |
) | ||||||
ZW DATA ACTION TECHNOLOGIES INC.
簡明合併現金流量表（續）
(以千爲單位)
|
截至9月30日的九個月 |
||||||||
|
2024 |
2023 |
|||||||
|
（美元） |
（美元） |
|||||||
|
（未經審計） |
（未經審計） |
|||||||
|
來自融資活動的現金流量 |
||||||||
|
來自投資者的預付款 |
||||||||
|
來自非控股權益的資本出資 |
||||||||
|
融資活動提供的淨現金 |
||||||||
|
匯率波動對現金和現金等價物的影響 |
( |
) | ||||||
|
現金和現金等價物的淨增加/（減少） |
( |
) | ||||||
|
期初的現金和現金等價物 |
||||||||
|
期末的現金和現金等價物 |
$ | $ | ||||||
|
現金流信息的補充披露 |
||||||||
|
繳納的所得稅 |
$ | $ | ||||||
|
已支付的利息支出 |
$ | $ | ||||||
請參見未經審計的簡明合併財務報表附註
ZW DATA ACTION TECHNOLOGIES INC.
股東權益簡明綜合表
2024年9月30日結束的九個月及三個月
（以千計，股票數量除外）
|
普通股票* |
股東實繳資本* |
法定儲備金 |
累積赤字 |
累計其他綜合收益/（虧損） |
非控制權益 |
股東權益總額 |
||||||||||||||||||||||||||
|
股份數量 |
金額 |
|||||||||||||||||||||||||||||||
|
（美元） |
（美元） |
（美元） |
（美元） |
（美元） |
（美元） |
（美元） |
||||||||||||||||||||||||||
|
2024年1月1日餘額 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
|
被收購的VIE中的非控股權益 |
- | |||||||||||||||||||||||||||||||
|
非控股權益的資本投入 |
- | - | - | - | - | - | ||||||||||||||||||||||||||
|
本期淨虧損 |
- | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
|
外幣兌換調整 |
- | |||||||||||||||||||||||||||||||
|
2024年6月30日餘額（未經審計） |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
|
以股份補償的方式向僱員、董事和顧問提供服務 |
||||||||||||||||||||||||||||||||
|
處置VIE中的非控股權益 |
- | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
|
本期淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
|
外幣兌換調整 |
- | ( |
) | ( |
) | |||||||||||||||||||||||||||
|
截至2024年9月30日的餘額（未經審計） |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
請參見未經審計的簡明合併財務報表附註
ZW DATA ACTION TECHNOLOGIES INC.
股東權益簡明綜合表
截至2023年9月30日的九個月和三個月
（以千計，股票數量除外）
|
普通股 |
追加實收資本 |
法定儲備金 |
累積赤字 |
累計其他綜合收益/(損失) |
總股本 |
|||||||||||||||||||||||
|
股份數量 |
金額 |
|||||||||||||||||||||||||||
|
（美元） |
（美元） |
（美元） |
（美元） |
（美元） |
（美元） |
|||||||||||||||||||||||
|
2023年1月1日餘額** |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
|
與採用ASU No. 2016-13，金融工具-信用損失（主題326）相關的累積效應調整 |
( |
) | ( |
) | ||||||||||||||||||||||||
|
員工和董事所提供的服務換取的股份報酬 |
||||||||||||||||||||||||||||
|
本期淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||||||||||
|
外幣兌換調整 |
- | |||||||||||||||||||||||||||
|
2023年6月30日餘額（未經審計） |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
|
員工和董事所提供的服務換取的股份報酬 |
||||||||||||||||||||||||||||
|
本期淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||||||||||
|
外幣兌換調整 |
- | ( |
) | ( |
) | |||||||||||||||||||||||
|
2023年9月30日的資產負債表(未經審計) |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
請參見未經審計的簡明合併財務報表附註
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
|
1. |
組織和經營性質 |
ZW 數據行動技術公司（以下簡稱「公司」）成立於2006年4月，註冊地爲德克薩斯州，並於2006年10月更改註冊地成爲內華達州公司。2009年6月26日，公司與中國上網在線傳媒集團有限公司（以下簡稱「Share Exchange」）進行了一項股份交易交易，該公司是根據英屬維爾京群島法律組建的公司。由於股份交換，中國網BVI成爲公司的全資子公司，公司現在是一家控股公司，通過與中國大陸運營公司簽訂的某些合同安排，從事爲中國的中小企業提供互聯網廣告、精準營銷、電子商務在線到線下（O2O）廣告和營銷服務以及相關數據和技術服務。該公司還開發基於區塊鏈的網頁/移動應用程序併爲客戶提供軟件解決方案，即軟件即服務（SaaS）服務。
|
2. |
變量利益實體 |
公司在中國並不是一家運營公司，而是一家位於內華達州的控股公司，並不擁有VIEs的股權。公司主要通過其在中國的子公司，即VIEs，開展業務，並與其簽訂了合同安排，以及它們在中國的子公司。以下是截至2024年9月30日和2023年12月31日，報告在公司簡明合併資產負債表中的VIEs資產和負債相關信息的總結：
|
9月30日, 2024 |
12月31日， 2023 |
|||||||
|
美元（千） |
美元（千） |
|||||||
|
(未經審計) |
||||||||
|
資產 |
||||||||
|
流動資產： |
||||||||
|
現金及現金等價物 |
$ | $ | ||||||
|
應收賬款，淨額 |
||||||||
|
預付款和向供應商存入資金 |
||||||||
|
其他流動資產淨額 |
||||||||
|
總流動資產 |
||||||||
|
物業和設備，淨值 |
||||||||
|
|
||||||||
|
總資產 |
$ | $ | ||||||
|
負債 |
||||||||
|
流動負債: |
||||||||
|
應付賬款 |
$ | $ | ||||||
|
來自客戶的預付款 |
||||||||
|
應計工資和其他應計費用 |
||||||||
|
應付稅款 |
||||||||
|
與開空租賃相關的租賃付款負債 |
||||||||
|
其他流動負債 |
||||||||
|
總流動負債 |
||||||||
|
總負債 |
$ | $ | ||||||
由於合併這些VIE而確認的負債並不代表對公司一般資產的額外索賠。
以下是與公司在截至2024年和2023年9月30日的九個月和三個月的簡明合併營業報表和綜合虧損中報告的VIEs財務表現相關的信息：
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
收入 |
$ | $ | $ | $ | ||||||||||||
|
收入成本 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
總營業費用 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
淨虧損 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
3. |
流動性和資本資源 |
公司出現了運營虧損，並可能繼續出現運營虧損，因此在公司實施未來的業務計劃時，將產生負現金流。在截至2024年9月30日的九個月內，公司產生了運營虧損爲美元
公司計劃優化其互聯網資源成本投資策略，以提高核心業務的毛利潤率，並進一步加強應收賬款管理，與主要供應商協商更有利的付款條款，這些都將有助於大幅增加經營現金流。爲了進一步改善流動性，公司還計劃通過優化各辦公室的人員配置來降低運營成本，如有必要，還將縮減辦公租賃空間。從2022年初開始，公司向客戶推出了saas-雲計算服務。公司的saas-雲計算服務基於其自開發的區塊鏈集成框架（「BIF」）平台提供。BIF平台使公司客戶能夠利用該平台作爲企業管理軟件，在線記錄、分享和存儲經營數據，和/或爲其知識產權和證書生成獨特設計的非同質化代幣（「NFTs」）。雖然新saas-雲計算服務業務的收入及其盈利能力未達到公司的預期，但公司仍然期望這些服務能產生積極的現金流並改善流動性，因爲它們依賴於公司自開發的軟件平台技術，從而減少對第三方服務提供商大量現金流出的需求。
如果公司未能實現這些目標，公司可能需要額外融資來執行其業務計劃。如果需要額外融資，公司無法預測這種額外融資形式將是股權、債務還是其他形式，公司可能無法及時以可接受的條件或根本無法獲得必要的額外資本。如果融資來源不可用，或者公司在增加毛利率和減少營運虧損方面不成功，公司可能無法實施當前擴張計劃、償還債務或應對競爭壓力，任何這些情況都將對公司的業務、前景、財務狀況和經營結果產生重大不利影響。這些因素嚴重懷疑公司在財務報表發佈後一年內繼續作爲持續經營實體的能力。
截至2024年9月30日的未經審計的簡明合併財務報表是在公司將繼續作爲持續經營的假設下編制的，這包括資產的實現和負債在合理時間內在正常業務過程中的償還等。公司作爲持續經營的能力取決於其不確定增加毛利潤率、減少核心業務的營運虧損和/或獲得額外的股權和/或債務融資的能力。截至2024年9月30日的附表財務報表不包括可能因這些不確定性結果而產生的任何調整。如果公司無法繼續作爲持續經營，它可能不得不清算其資產，且可能收到的金額低於財務報表中載列的價值。
|
4. |
自定義化學品摘要 重要會計政策 |
|
a) |
介紹的基礎： |
未經審計的簡明合併中期基本報表是根據美國通用會計原則（"U.S. GAAP"）編制和呈現的。
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
截至2024年9月30日和截至2024年和2023年9月30日的九個和三個月的未經審計的簡明綜合中期財務信息已按照美國證券交易委員會（"SEC"）的規定和制度編制。 根據這些規定，通常包含在按照美國通用會計準則編制的完整合並財務報表中的某些信息和腳註披露已被省略。 未經審計的簡明綜合中期財務信息應與已在公司年度報告中包括的財務報表和附註一起閱讀，該年度報告是公司截至2023年12月31日的財政年度已在2024年6月28日向SEC提交的《2023年10-K表格》。
管理層認爲，已做出了所有必要的調整（包括正常循環調整），以便公允地表達截至2024年9月30日的公司簡明綜合財務狀況，以及截至2024年和2023年9月30日的簡明綜合經營業績以及2024年和2023年9月30日的簡明綜合現金流量情況（如適用）。中期經營業績未必反映全財政年度或任何未來期間的經營結果。
|
b) |
合併原則 |
未經審計的簡明合併中期基本報表包括公司的所有子公司和VIE的帳戶。在合併時，公司與其子公司及VIE之間的所有交易和餘額均已被排除。
|
c) |
估計的使用 |
按照美國公認會計原則編制基本報表要求管理層做出估計和假設，這些估計和假設影響這些合併基本報表日期資產和負債的報告金額及相關的或有資產和負債的披露，以及報告期間營業收入和費用的報告金額。公司根據最新可獲得的信息、歷史經驗以及公司認爲在當時情況下合乎合理的各種其他假設，持續評估這些估計和假設。由於使用估計是財務報告過程的一個重要組成部分，實際結果可能與這些估計有所不同。
|
d) |
外匯翻譯 |
用於將人民幣（中國大陸法定貨幣「RMB」）轉換爲美元以編制簡明綜合基本報表的匯率如下：
|
2024年9月30日 |
2023年12月31日 |
|||||||
|
除權益科目外的資產負債表項目 |
||||||||
|
截至9月30日的九個月 |
||||||||
|
2024 |
2023 |
|||||||
|
損益表和綜合收益表中的項目 |
||||||||
|
截至9月30日的三個月 |
||||||||
|
2024 |
2023 |
|||||||
|
損益表和綜合損益表中的項目 |
||||||||
未作出任何陳述，表明人民幣金額可以或可在上述匯率下轉換爲美元。
|
e) |
目前預計信貸損失 |
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
2023年1月，2016年6月，FASB發佈了ASUNo. 2016-13, “金融工具-信貸損失（主題 326）：金融工具上信貸損失的計量”。該ASU中的修訂要求對以攤餘成本持有的金融資產進行預期信貸損失的計量和確認，取代現有的已產生損失減值模型，改爲預期損失方法。作爲一家SEC較小的報告公司，公司自2023年1月1日起， 採用修訂的追溯過渡方法，並未在可比期間重新列示相關帳戶。相反，公司在2023年1月1日確認了一個累積影響調整，將其累計赤字的期初餘額增加了美元
信貸損失準備金反映了公司對於預計在相關金融資產生命週期內將發生的信貸損失的當前估計。信貸損失準備金被呈現爲從金融資產的攤銷成本基礎中扣除的一個估值帳戶，以呈現金融資產預期收回金額。
公司在設立、監控和調整信貸損失準備金時考慮各種因素，包括賬齡和賬齡趨勢、客戶/其他方的信用狀況以及特定客戶/其他方相關的特定風險。公司還監控其他風險因素和前瞻性信息，如特定國家風險和可能影響客戶/其他方償付能力的經濟因素，以設立和調整其信貸損失準備金。公司通過對具有相似特徵的財務資產進行集體評估以及在識別具有已知爭議或收款問題的特定客戶/其他方時，通過個別評估來評估收回能力。應收賬款和對無關方的短期貸款在所有催收努力終止後進行覈銷。
以下表格總結了截至2024年和2023年9月30日的九個月和三個月內公司信用損失的變動：
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美元（千） |
美元（千） |
美元（千） |
美元（千） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
應收賬款的信用損失： |
||||||||||||||||
|
期初餘額 |
||||||||||||||||
|
在採納ASU No. 2016-13《金融工具-信貸損失（第326號規範）》時的累積效應調整 |
||||||||||||||||
|
期間內的信用損失準備/(沖銷) |
||||||||||||||||
|
期間內已註銷 |
||||||||||||||||
|
匯兌調整 |
( |
) | ||||||||||||||
|
期末餘額 |
||||||||||||||||
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
其他流動資產的信用損失: |
||||||||||||||||
|
期初餘額 |
||||||||||||||||
|
ASU No. 2016-13的採納累積影響調整，金融工具-信用損失（第326號） |
||||||||||||||||
|
期間內的信用損失準備/(逆轉) |
( |
) | ||||||||||||||
|
期間內核銷 |
||||||||||||||||
|
匯兌調整 |
||||||||||||||||
|
期末餘額 |
||||||||||||||||
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
|
f) |
公允價值衡量 |
2024年9月30日和2023年12月31日，根據公允價值層次，按照循環基礎計量的負債情況如下：
|
報告日期的公允價值測量使用 |
||||||||||||||||
|
截至 2024年9月30日 |
報價市場交易 |
重要 |
重要 |
|||||||||||||
|
美元（千） |
美元（千） |
美元（千） |
美元（千） |
|||||||||||||
|
(未經審計) |
||||||||||||||||
|
權利債務（注14） |
||||||||||||||||
|
報告日期的公允價值測量使用 |
||||||||||||||||
|
截至 2023年12月31日 |
報價市場交易 |
重要 |
重要 |
|||||||||||||
|
美元（千） |
美元（千） |
美元（千） |
美元（千） |
|||||||||||||
|
權證負債（附註14） |
||||||||||||||||
|
g) |
股票拆分 |
公司董事會批准了公司已發行和流通的普通股每股面值$的股票逆向拆股的比率爲1股換股。
當反向拆股生效時，每個 流通的普通股股份被轉換爲一股新發行的流通普通股。 在反向拆股中發行了碎股。任何因反向拆股而產生的普通股碎股都向上四捨五入至最近的整股。與任何本應因反向拆股而產生的碎股無現金或其他補償。
由於反向股票拆分，
ZW數據行動科技有限公司。
簡要合併基本報表的附註（未經審計）
除非另有說明，所有基本報表中的股份數量、Warrants 數量、股份價格、行使價格和每股數據均已追溯重述，彷彿反向拆股在所呈現的期間開始時就已發生。
|
h) |
收入確認 |
下表展示了公司的營業收入，按產品和服務以及收入確認時間進行分類：
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
互聯網廣告及相關服務 |
||||||||||||||||
|
--分配使用搜索引擎營銷服務的權利 |
||||||||||||||||
|
--在線廣告投放 |
||||||||||||||||
|
基於Blockchain的Saas-雲計算服務 |
||||||||||||||||
|
營業收入總額 |
$ | $ | $ | $ | ||||||||||||
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美元（千） |
美元（千） |
美元（千） |
美元（千） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
隨時間確認的營業收入 |
||||||||||||||||
|
在某個時間點確認的營業收入 |
||||||||||||||||
|
營業收入總額 |
$ | $ | $ | $ | ||||||||||||
合同餘額
下表總結了截至2024年9月30日公司的合同負債的變動情況：
|
合同負債 |
||||
|
美元（'000） |
||||
|
截至2024年1月1日的餘額 |
||||
|
交易所翻譯調整 |
||||
|
從開始的合同負債餘額確認的營業收入 |
( |
) | ||
|
與未滿足績效義務相關的客戶預付款 |
||||
|
截至2024年9月30日的餘額（未經審計） |
||||
與未滿足績效義務相關的客戶預付款通常是可退款的。截至2024年和2023年9月30日的九個月和三個月內，客戶預付款的退款金額微不足道。
截至2024年和2023年9月30日的九個月和三個月內，未確認來自於之前期間已滿足的履行義務的營業收入。
ZW數據行動科技有限公司。
簡要合併基本報表的附註（未經審計）
|
i) |
企業合併 |
我們根據 ASC 話題 805 採用收購法來覈算我們的業務組合。商業組合收購方法要求將轉讓的考慮分配給資產，包括我們獲得的可單獨識別的資產和負債，基於它們的估計公允價值。 收購中支付的考慮按照資產交易日的資產轉讓的公允價值、負債發生和發行的股權工具，以及收購日的附帶條件考慮而計量。 作爲收購的直接費用在發生時計入費用。 收購的可識別資產、負債和附帶負債不論有無非控股權益，都應當在收購日獨立的以其公允價值計量。 （i） 收購成本、非控股權益的公允價值和在被購公司先前持有的股權利益的公允價值之和超過（ii） 被購公司可識別淨資產的公允價值的超額部分應當被確認爲商譽。 如果收購成本低於子公司所獲淨資產的公允價值，則差額直接確認爲收入。
收購北京怡恩科技有限公司。
公司以人民幣1元現金對北京易恩科技有限公司（「北京易恩」）收購了51%的股權。在截至2024年9月30日的三個月內，公司以人民幣1元的現金對價出售了其在北京易恩的股權。
|
j) |
租賃 |
截至2024年9月30日，尚未確認任何經營租賃權益資產和總經營租賃負債。
經營租賃費用：
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
長期經營租賃合同 |
||||||||||||||||
|
短期經營租賃合同 |
||||||||||||||||
|
總計 |
$ | $ | $ | $ | ||||||||||||
與經營租賃相關的補充信息:
|
截至9月30日的九個月 |
||||||||
|
2024 |
2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
(未經審計) |
|||||||
|
用於經營租賃的經營現金流量（千美元） |
||||||||
|
剩餘平均租賃期限（年） |
- | |||||||
|
加權平均折扣率 |
% | |||||||
|
5. |
應收賬款，淨額 |
|
九月三十日 2024 |
十二月 31, 2023 |
|||||||
|
美元（'000） |
美元（'000） |
|||||||
|
（未經審計） |
||||||||
|
應收賬款 |
||||||||
|
信用損失補貼 |
( |
) | ( |
) | ||||
|
應收賬款，淨額 |
||||||||
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
所有板塊應收賬款都不帶利息。公司保留了一個估計的信用損失準備金，以將其應收賬款減少到其認爲將會收回的金額。公司根據賬齡數據、歷史收款經驗、客戶特定事實、當前經濟狀況以及合理可支持的未來經濟狀況預測，對其應收賬款進行集體（池）基礎評估，並確定信用損失準備金。截至2024年9月30日的九個月和三個月，公司分別提供了約美元
|
6. |
預付賬款和存入資金給供應商 |
|
9月30日, 2024 |
2023年12月31日, 2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
||||||||
|
向廣告資源供應商存款 |
||||||||
|
向廣告資源供應商預付款 |
||||||||
|
用於投資活動的存款 |
||||||||
|
其他存款和預付款 |
||||||||
|
7. |
其他流動資產 |
|
9月30日, 2024 |
2023年12月31日, 2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
||||||||
|
與投資者實體股權出售相關的應收款項 |
||||||||
|
對非關聯方的短期貸款 |
||||||||
|
短期貸款利息應收款項 |
||||||||
|
員工預支，用於業務操作 |
||||||||
|
其他流動資產合計 |
||||||||
|
信用損失準備金 |
( |
) | ( |
) | ||||
|
其他流動資產淨額 |
||||||||
截至2024年9月30日，公司向兩個無關方提供了無擔保、計息的短期貸款，具體如下。這些短期貸款被記錄爲其他流動資產。
2022年1月5日，公司提供了美元的短期營運資金貸款
ZW數據行動科技有限公司。
簡要合併基本報表的附註（未經審計）
2023年1月11日，公司向另一無關方提供了一筆短期貸款，金額爲美元
該公司定期評估向非關聯方提供的短期貸款以評估預期的信貸損失，並維持估計的信貸損失備抵額，以將其短期貸款減少到其認爲可以收取的金額。公司對短期貸款進行個人評估，並根據借款人的信譽、賬齡信息、過去與借款人的交易歷史及其當前狀況，以及當前的經濟狀況和對未來經濟狀況的合理和可支持的預測來確定信用損失備抵額。在截至2024年9月30日的九個月和三個月中，公司逆轉了美元
截至2024年9月30日，其他流動資產還包括一筆未償還的短期貸款餘額，金額爲美國$
|
8. |
長期投資 |
|
金額 |
||||
|
美金（’000） |
||||
|
截至2024年1月1日的餘額 |
||||
|
交易所翻譯調整 |
||||
|
年度現金投資 |
||||
|
年度處置 |
( |
) | ||
|
年度提供的減值損失 |
( |
) | ||
|
截至2024年9月30日的餘額（未經審計） |
||||
截至2024年9月30日，除完全減值的長期投資外，公司還享有一個
ZW數據行動科技有限公司。
簡要合併基本報表的附註（未經審計）
在2024年5月27日，公司出售了大約
公司將每項沒有明顯可確定公允價值的投資以成本減去減值（如有），加上或減去由於相同或類似投資的有序交易中可觀察價格變化而導致的變動進行計量。
截至2024年9月30日的九個月期間，公司對其長期投資提供了$
|
9. |
物業及設備（淨額） |
|
九月三十日 2024 |
12月31日 2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
||||||||
|
車輛 |
||||||||
|
辦公設備 |
||||||||
|
電子設備 |
||||||||
|
租賃改良 |
||||||||
|
物業和設備，成本 |
||||||||
|
減：累計折舊 |
( |
) | ( |
) | ||||
|
物業及設備（淨額） |
||||||||
截至2024年9月30日和2023年9月30日的九個月的折舊費用約爲美元
|
10. |
無形資產, 淨值 |
|
截至2024年9月30日（未經審計） |
||||||||||||||||
|
項目 |
總計 賬面 價值 |
累計 攤銷 |
減值 |
淨 賬面 價值 |
||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
可攤銷的無形資產： |
||||||||||||||||
|
-- |
||||||||||||||||
|
雲計算軟體科技 |
( |
) | ( |
) | ||||||||||||
|
許可產品使用權 |
( |
) | ( |
) | ||||||||||||
|
-- |
||||||||||||||||
|
互聯網廣告追蹤系統 |
( |
) | ( |
) | ||||||||||||
|
直播概念科技 |
( |
) | ( |
) | ||||||||||||
|
-- |
||||||||||||||||
|
區塊鏈集成框架 |
( |
) | ( |
) | ||||||||||||
|
Bo!資訊應用程序 |
( |
) | ( |
) | ||||||||||||
|
其他計算機軟體 |
( |
) | ||||||||||||||
|
總計 |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
ZW數據行動科技有限公司。
簡要合併基本報表的附註（未經審計）
|
截至2023年12月31日 |
||||||||||||||||
|
項目 |
毛額 賬面價值 價值 |
累計 攤銷 |
減值 |
淨值 賬面價值 價值 |
||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
受攤銷影響的無形資產： |
||||||||||||||||
|
-- |
||||||||||||||||
|
雲計算軟件科技 |
( |
) | ( |
) | ||||||||||||
|
許可產品使用權 |
( |
) | ( |
) | ||||||||||||
|
-- |
||||||||||||||||
|
互聯網廣告追蹤系統 |
( |
) | ( |
) | ||||||||||||
|
直播概念科技 |
( |
) | ( |
) | ||||||||||||
|
-- |
||||||||||||||||
|
區塊鏈集成框架 |
( |
) | ( |
) | ||||||||||||
|
Bo!資訊應用程序 |
( |
) | ( |
) | ||||||||||||
|
其他計算機-半導體軟件 |
( |
) | ||||||||||||||
|
總計 |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
截至2024年9月30日和2023年9月30日的九個月的攤銷費用約爲美元
根據對有限壽命無形資產的調整後賬麪價值扣除減值損失，其加權平均剩餘使用壽命爲
|
11. |
應計工資和其他應計費用 |
|
9月30日, 2024 |
2023年12月31日, 2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
||||||||
|
應計工資和員工福利 |
||||||||
|
應計營業費用 |
||||||||
|
12. |
稅務 |
截至2024年9月30日和2023年12月31日，應付稅款包括：
|
9月30日, 2024 |
2023年12月31日, 2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
||||||||
|
應付營業稅和附加稅 |
||||||||
|
應付企業所得稅 |
||||||||
|
gsun:法定準備成員 |
||||||||
ZW DATA ACTION TECHNOLOGIES INC.
未經審計的簡明合併財務報表附註
截至2024年和2023年9月30日止九個月的期間，公司所得稅益/(費用)包括:
|
截至9月30日的九個月 |
截至9月30日的三個月 |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
美金（’000） |
美金（’000） |
美金（’000） |
美金（’000） |
|||||||||||||
|
(未經審計) |
(未經審計) |
(未經審計) |
(未經審計) |
|||||||||||||
|
當前 |
||||||||||||||||
|
待攤費用 |
( |
) | ||||||||||||||
|
所得稅收益/（費用） |
( |
) | ||||||||||||||
截至2024年9月30日和2023年12月31日，公司的遞延稅款資產如下：
|
9月30日, 2024 |
2023年12月31日, 2023 |
|||||||
|
美金（’000） |
美金（’000） |
|||||||
|
(未經審計) |
||||||||
|
可抵扣的淨營業損失的稅務影響 |
||||||||
|
經營租賃成本 |
||||||||
|
開多長期投資的減值 |
||||||||
|
無形資產減值 |
||||||||
|
壞賬準備 |
||||||||
|
估值準備 |
( |
) | ( |
) | ||||
|
|
||||||||
截至2023年12月31日和2024年9月30日，美國控股公司已產生約爲US$的累計淨營業損失（「NOLs」）。
截至2024年9月30日和2023年12月31日，公司在中國子公司和VIEs所產生的可結轉的淨經營損失（NOLs）約爲US$
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The Company recorded approximately US$
For the nine and three months ended September 30, 2024, the Company recorded approximately US$
|
13. |
Long-term borrowing from a related party |
Long-term borrowing from a related party is a non-interest bearing loan from a related parity of the Company relating to the original paid-in capital contribution in the Company’s wholly-owned subsidiary Rise King Century Technology Development (Beijing) Co., Ltd. (“Rise King WFOE”), which is not expected to be repaid within one year.
|
14. |
The Financing and warrant liabilities |
The Company issued warrants to certain institutional investors and the Company’s placement agent in the registered direct offerings consummated in February 2021 (the “2021 Financing”) and December 2020 (the “2020 Financing”) which warrants were accounted for as derivative liabilities and measured at fair value with changes in fair value be recorded in earnings in each reporting period. As of September 30, 2024, the warrants issued in the 2021 and 2020 Financing have expired. For the nine and three months ended September 30, 2024, the Company did not recognize any change in fair value of warrant liabilities. For the nine and three months ended September 30, 2023, the Company recorded a gain of approximately US$
Warrants issued and outstanding as of September 30, 2024 and their movements during the nine months then ended are as follows:
|
Warrant Outstanding* |
Warrant Exercisable* |
|||||||||||||||||||||||
|
Number of underlying shares |
Weighted |
Weighted |
Number of underlying shares |
Weighted |
Weighted |
|||||||||||||||||||
|
Balance, January 1, 2024 |
$ | $ | ||||||||||||||||||||||
|
Granted/Vested |
||||||||||||||||||||||||
|
Expired |
( |
) | ( |
) | ||||||||||||||||||||
|
Balance, September 30, 2024 (Unaudited) |
- | $ | - | $ | ||||||||||||||||||||
|
15. |
Restricted net assets |
The Company is a Nevada holding company with operations primarily conducted in China through its PRC subsidiaries, the consolidated VIEs and VIEs’ subsidiaries. The Company’s ability to pay dividends to U.S. investors may depend on receiving distributions from its PRC subsidiaries and settlement of the amounts owed under the VIE agreements from the consolidated VIEs. Any limitation on the ability of the Company’s PRC subsidiaries and the consolidated VIEs to make payments to the Company, or the tax implications of making payments to the Company, could have a material adverse effect on its ability to pay dividends to the U.S. investors.
The PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. The Company’s PRC subsidiaries, the consolidated VIEs and their subsidiaries in China are also required to set aside at least
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Under the PRC Enterprise Income Tax (“EIT”) Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise to its immediate holding company outside China are subject to a
There are no restrictions for the consolidated VIEs to settle the amounts owed under the VIE agreements to Rise King WFOE. However, arrangements and transactions among affiliated entities may be subject to audit or challenge by the PRC tax authorities. If at any time the VIE agreements and the related fee structure between the consolidated VIEs and Rise King WFOE is determined to be non-substantive and disallowed by Chinese tax authorities, the consolidated VIEs could, as a matter of last resort, make a non-deductible transfer to Rise King WFOE for the amounts owed under the VIE agreements. This would result in such transfer being non-deductible expenses for the consolidated VIEs but still taxable income for Rise King WFOE. If this happens, it may increase the Company’s tax burden and reduce its after-tax income in the PRC, and may materially and adversely affect its ability to make distributions to the holding company. The Company’s management is of the view that the likelihood that this scenario would happen is remote.
The Company’s PRC subsidiaries generate all of their revenue in Renminbi, Renminbi is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of the Company’s PRC subsidiaries to pay dividends/make distributions to the Company. The Chinese government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of the Company’s PRC subsidiaries to remit sufficient foreign currency to the Nevada holding company for the holding company to pay dividends to the U.S. investors. Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and foreign debt. Currently, the Company’s PRC subsidiaries may purchase foreign currency for settlement of current account transactions, including payment of dividends to the Nevada holding company, without the approval of the State Administration of Foreign Exchange of China (the “SAFE”) by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate the Company’s ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by the SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit the Company’s ability to utilize revenue generated in Renminbi to pay dividends in foreign currencies to holders of the Company’s securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, the SAFE and other relevant Chinese governmental authorities. This could affect the Company’s ability to obtain foreign currency through debt or equity financing for its PRC subsidiaries.
To date, none of the Company’s subsidiaries has made any distribution of earnings or issued any dividends to their respective shareholder in or outside of China, or to the Nevada holding company, and the Nevada holding company has never declared or paid any cash dividends to U.S. investors.
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The Company does not have any present plan to make any distribution of earnings/issue any dividends directly or indirectly to its Nevada holding company or pay any cash dividends on its common stock in the foreseeable future, because the Company currently intend to retain most, if not all, of its available funds and any future earnings to operate and expand the Company’s business.
|
16. |
Employee defined contribution plan |
Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the PRC subsidiaries of the Company make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The employee benefits were expensed as incurred. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits were approximately US$
|
17. |
Concentration of risk |
Credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, and deposits and loans to unrelated parties. As of September 30, 2024,
Concentration of customers
|
Customer A |
Customer B |
Customer C |
Customer D |
Customer E |
Customer F |
Customer G |
|
|
Nine Months Ended September 30, 2024 |
|||||||
|
Revenues, customer concentration risk |
- |
* |
* |
- |
* |
* |
* |
|
Three Months Ended September 30, 2024 |
|||||||
|
Revenues, customer concentration risk |
- |
* |
* |
- |
|
|
|
|
Nine Months Ended September 30, 2023 |
|||||||
|
Revenues, customer concentration risk |
* |
* |
* |
|
- |
- |
- |
|
Three Months Ended September 30, 2023 |
|||||||
|
Revenues, customer concentration risk |
* |
* |
* |
|
|
|
|
|
As of September 30, 2024 |
|||||||
|
Accounts receivable, customer concentration risk |
* |
* |
* |
|
|
|
|
|
As of December 31, 2023 |
|||||||
|
Accounts receivable, customer concentration risk |
|
|
|
|
|
|
|
The following tables summarized the information about the Company’s concentration of customers for the nine and three months ended September 30, 2024 and 2023, respectively:
* Less than 10%.
- No transaction incurred for the reporting period/no balance existed as of the reporting date.
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Concentration of suppliers
The following tables summarized the information about the Company’s concentration of suppliers for the nine and three months ended September 30, 2024 and 2023, respectively:
|
Supplier A |
Supplier B |
Supplier C |
Supplier D |
Supplier E |
|||||
| Nine Months Ended September 30, 2024 | |||||||||
|
Cost of revenues, supplier concentration risk |
|
|
|
|
- |
||||
| Three Months Ended September 30, 2024 | |||||||||
|
Cost of revenues, supplier concentration risk |
* |
|
* |
* |
- |
||||
| Nine Months Ended September 30, 2023 | |||||||||
|
Cost of revenues, supplier concentration risk |
|
- |
* |
- |
|
||||
| Three Months Ended September 30, 2023 | |||||||||
|
Cost of revenues, supplier concentration risk |
|
- |
* |
- |
|
* Less than 10%.
- No transaction incurred for the reporting period.
|
18. |
Commitments and contingencies |
In June 2023, the Company acquired a
The Company may from time to time become a party to various legal or administrative proceedings arising in its ordinary course of business. The Company evaluates the status of each legal matter and assesses the potential financial exposure. If the potential loss from any legal proceedings or litigation is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimated. As of the date hereof, based on the information currently available, the Company believes that the loss contingencies that may arise as a result of currently pending legal proceedings are not reasonably likely to have a material adverse effect on the Company’s business, results of operations, financial condition, and cash flows.
|
19. |
Segment reporting |
The Company follows ASC Topic 280 “Segment Reporting”, which requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and evaluating their performance. Reportable operating segments include components of an entity about which separate financial information is available and which operating results are regularly reviewed by the chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, to make decisions about resources to be allocated to the segment and assess each operating segment’s performance.
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Nine Months Ended September 30, 2024 (Unaudited)
|
Internet Ad and related service |
Ecommerce |
Blockchain technology |
Corporate |
Inter-segment and reconciling item |
Total |
|||||||||||||||||||
|
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
|||||||||||||||||||
|
Revenues |
||||||||||||||||||||||||
|
Cost of revenues |
||||||||||||||||||||||||
|
Total operating expenses |
||||||||||||||||||||||||
|
Depreciation and amortization expense included in cost of revenues and total operating expenses |
||||||||||||||||||||||||
|
Operating income/(loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
|
Impairment on long-term investments |
( |
) | ( |
) | ||||||||||||||||||||
|
Gain on disposal of subsidiaries |
- | |||||||||||||||||||||||
|
Net income/(loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
|
Total assets-September 30, 2024 |
( |
) | ||||||||||||||||||||||
|
Total assets-December 31, 2023 |
( |
) | ||||||||||||||||||||||
Three Months Ended September 30, 2024 (Unaudited)
|
Internet Ad and related service |
Ecommerce |
Blockchain technology |
Corporate |
Inter-segment and reconciling item |
Total |
|||||||||||||||||||
|
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
|||||||||||||||||||
|
Revenues |
||||||||||||||||||||||||
|
Cost of revenues |
||||||||||||||||||||||||
|
Total operating expenses |
||||||||||||||||||||||||
|
Depreciation and amortization expense included in cost of revenues and total operating expenses |
||||||||||||||||||||||||
|
Operating income/(loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
|
Gain on disposal of subsidiaries |
||||||||||||||||||||||||
|
Net income/(loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Nine Months Ended September 30, 2023 (Unaudited)
|
Internet Ad and related service |
Ecommerce |
Blockchain technology |
Corporate |
Inter-segment and reconciling item |
Total |
|||||||||||||||||||
|
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
|||||||||||||||||||
|
Revenues |
||||||||||||||||||||||||
|
Cost of revenues |
||||||||||||||||||||||||
|
Total operating expenses |
|
|||||||||||||||||||||||
|
Depreciation and amortization expense included in cost of revenues and total operating expenses |
||||||||||||||||||||||||
|
Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
|
Change in fair value of warrant liabilities |
||||||||||||||||||||||||
|
Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
|
Total assets-September 30, 2023 |
( |
) | ||||||||||||||||||||||
|
Total assets-December 31, 2022 |
( |
) | ||||||||||||||||||||||
|
(1) |
|
Three Months Ended September 30, 2023 (Unaudited)
|
Internet Ad and related service |
Ecommerce |
Blockchain technology |
Corporate |
Inter-segment and reconciling item |
Total |
|||||||||||||||||||
|
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
US$ (‘000) |
|||||||||||||||||||
|
Revenues |
||||||||||||||||||||||||
|
Cost of revenues |
||||||||||||||||||||||||
|
Total operating expenses |
||||||||||||||||||||||||
|
Depreciation and amortization expense included in cost of revenues and total operating expenses |
||||||||||||||||||||||||
|
Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
|
Change in fair value of warrant liabilities |
||||||||||||||||||||||||
|
Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
|
(1) |
|
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
20. |
Loss per share |
Basic and diluted loss per share for each of the periods presented are calculated as follows (All amounts, except number of shares and per share data, are presented in thousands of U.S. dollars):
|
Nine Months Ended September 30, |
Three Months Ended September 30, |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
Net (income)/loss attributable to noncontrolling interests from continued operations |
( |
) | ||||||||||||||
|
Net loss attributable to ZW Data Action Technologies Inc. (numerator for basic and diluted loss per share) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
Weighted average number of common shares outstanding -Basic and diluted* |
||||||||||||||||
|
Loss per share-Basic and diluted* |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
For the nine and three months ended September 30, 2024 and 2023, the diluted loss per share calculation did not include any outstanding warrants to purchase the Company’s common stock, because they were out-of-the-money and their effect was anti-dilutive.
ZW DATA ACTION TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
21. |
Share-based compensation expenses |
In September 2024, under its 2023 Omnibus Securities and Incentive Plan, the Company granted and issued
In April 2023, under its 2020 Omnibus Securities and Incentive Plan, the Company granted and issued
In June 2022, the Company granted and issued
The table below summarized share-based compensation expenses recorded for the nine and three months ended September 30, 2024 and 2023, respectively:
|
Nine Months Ended September 30, |
Three Months Ended September 30, |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
US$(’000) |
US$(’000) |
US$(’000) |
US$(’000) |
|||||||||||||
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||
|
Sales and marketing expenses |
||||||||||||||||
|
General and administrative expenses |
||||||||||||||||
|
Research and development expenses |
||||||||||||||||
|
Total |
||||||||||||||||
|
22. |
Subsequent events |
The Company’s principal business activity is to provide advertising and marketing services to small and medium enterprises in the PRC, which is particularly sensitive to changes in general economic conditions. The general economic downturn in the PRC lead by a challenging macroeconomic environment had caused and may continue to cause decreases in or delays in advertising spending, and had negatively impacted and may continue to negatively impact the Company’s short-term ability to grow revenues. While the Chinese government has introduced various stimulus measures in 2024 to boost the economy and the property sector, there remains uncertainty as to the future impact of the recent economic downturn in the PRC. The Company will continue to assess the impact of general economic conditions on its operations for future periods.
Except for the above mentioned matters, no other material events which are required to be adjusted or disclosed as of the date of this consolidated financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements.
The Public Company Accounting Oversight Board (the “PCAOB”) had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprived our investors of the benefits of such inspections.
Our auditor, ARK Pro CPA & Co. (“ARK”), the independent registered public accounting firm that issues the audit report in our SEC filings, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States, pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is located in Hong Kong Special Administrative Region of the PRC ("Hong Kong"), China, a jurisdiction where the PCAOB was unable to conduct inspections and investigations before 2022. As a result, we and investors in our securities were deprived of the benefits of such PCAOB inspections. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong in 2022. However, the inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China mainland and Hong Kong that have been subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
Our common stock may be delisted and prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended by the Accelerating Holding Foreign Companies Accountable Act, if the PCAOB is unable to inspect or investigate completely auditors located in China mainland and Hong Kong. The delisting of our common stock or the threat of their being delisted could cause the value of our common stock to significantly decline or be worthless, and thus you could lose all or substantial portion of your investment.
On December 18, 2020, the Holding Foreign Companies Accountable Act, or the HFCAA, was signed into law that states if the SEC determines that issuers have filed audit reports issued by a registered public accounting firm that has not been subject to PCAOB inspection for three consecutive years beginning in 2021, the SEC shall prohibit its common stock from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for two consecutive years, instead of three consecutive years as enacted in the HFCAA. On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements of the HFCAA, pursuant to which the SEC will identify an issuer as a “Commission-Identified Issuer” if the issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for three consecutive years. On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law.
On December 16, 2021, the PCAOB issued a HFCAA Determination Report (the “2021 PCAOB Determinations”) to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong because of positions taken by the Chinese authorities, and our auditor was subject to this determination. On May 13, 2022, the SEC conclusively identified us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 10-K for the fiscal year ended December 31, 2021.
On August 26, 2022, the PCAOB signed a Statement of Protocol on agreement governing on inspections of audit firms based in mainland China and Hong Kong, with China Securities Regulatory Commission (“CSRC”) and Ministry of Finance (“MOF”) of the PRC, in regarding to governing inspections and investigations of audit firms headquartered in mainland China and Hong Kong (the “Agreement”). As stated in the Agreement, the Chinese authorities committed that the PCAOB has direct access to view complete audit work papers under its inspections or investigations and has sole discretion to the selected audit firms and audit engagements. The Agreement opens access for the PCAOB to inspect and investigate the registered public accounting firms in mainland China and Hong Kong completely. The PCAOB then thoroughly tested compliance with every aspect of the Agreement necessary to determine complete access. This included sending a team of PCAOB staff to conduct on-site inspections and investigations in Hong Kong over a nine-week period from September to November 2022.
On December 15, 2022, the PCAOB issued its 2022 HFCAA Determination Report to notify the SEC of its determination that the PCAOB was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong completely in 2022. The PCAOB Board vacated its 2021 PCAOB Determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong. For this reason, we do not expect to be identified as a Commission-Identified Issuer following the filing of our annual report for the fiscal year ended December 31, 2022. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control.
The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and is already making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB does not have to wait another year to reassess its determinations. Should the PRC authorities obstruct the PCAOB’s access to inspect or investigate completely in any way and at any point, the PCAOB will act immediately to consider the need to issue new determinations consistent with the HFCAA.
We cannot assure you that our auditor will not be determined as a register public accounting firm that the PCAOB is unable to inspect or investigate completely for two consecutive years because of positions taken by the Chinese authorities and/or any other causes in the future. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB in the future again determines that it is unable to inspect and investigate completely auditors in China mainland and Hong Kong, we may be identified as a Commission-Identified Issuer accordingly. If this happens, Nasdaq may determine to delist our common stock, and there is no certainty that we will be able to continue listing our common stock on other non-U.S. stock exchanges or that an active market for our common stock will immediately develop outside of the U.S. The prohibiting from trading in the United States or delisting of our common stock or the threat of their being delisted could cause the value of our common stock to significantly decline or be worthless, and thus you could lose all or substantial portion of your investment.
Overview
Our company was incorporated in the State of Texas in April 2006 and re-domiciled to become a Nevada corporation in October 2006. As a result of a share exchange transaction we consummated with China Net BVI in June 2009, we are now a holding company, which through certain contractual arrangements with operating companies in the PRC, is engaged in providing Internet advertising, precision marketing, blockchain-based SaaS services, and ecommerce O2O advertising and marketing services and the related data and technical services to SMEs in the PRC.
Through our PRC operating subsidiaries and VIEs, we primarily operate a one-stop services for our clients on our Omni-channel advertising, precision marketing and data analysis management system. We offer a variety channels of advertising and marketing services through this system, which primarily include distribution of the right to use search engine marketing services we purchased from key search engines, provision of online advertising placements services on our web portals, provision of ecommerce O2O advertising and marketing services as well as provision of other related value-added data and technical services to maximize market exposure and effectiveness for our clients. Beginning in early 2022, we introduced our SaaS services to customers. The SaaS services were designated in providing one-stop blockchain-powered enterprise management solutions via our BIF platform in forms of unique NFT generations, data record, share and storage modules subscriptions etc.
Basis of presentation, management estimates and critical accounting policies
Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the accounts of our company, and all of our subsidiaries and VIEs. We prepare financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the financial reporting period. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. In order to understand the significant accounting policies that we adopted for the preparation of our condensed consolidated interim financial statements, readers should refer to the information set forth in Note 4 “Summary of significant accounting policies” to our audited financial statements in our 2023 Form 10-K.
We believe that the assumptions and estimates associated with revenue recognition, estimation of current expected credit loss and fair value measurement of warrant liabilities have the greatest potential impacts on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
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Our revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Our revenues from distribution of the right to use search engine marketing service are recognized on a gross basis, because we determine that we are a principal in the transaction who control the services before they are transferred to our customers. |
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We maintain an allowance for credit losses for accounts receivable and short-term loans provided to unrelated parties, which are recorded as valuation accounts that are deducted from the amortized cost basis of the related financial assets to present the net amount expected to be collected on the financial assets. The allowance for credit losses reflects our current estimate of credit losses expected to be incurred over the life of the related financial assets. We consider various factors in establishing, monitoring, and adjusting our allowance for credit losses, including the aging and aging trends, customer/other parties’ creditworthiness and specific exposures related to particular customers/other parties. We also monitor other risk factors and forward-looking information, such as country specific risks and economic factors that may affect a customer/other party’s ability to pay in establishing and adjusting its allowance for credit losses. We assess collectability by reviewing the financial assets on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers/other parties with known disputes or collectability issues. Accounts receivable and short-term loans to unrelated parties are written off after all collection efforts have ceased. |
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We determined that the warrants we issued in various financing activities should be accounted for as derivative liabilities and measured at fair value with changes in fair value be recorded in earnings in each reporting period. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value of our warrant liabilities was determined based on significant unobservable inputs, such as volatility of our stock price, risk free interest rate. |
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A. |
RESULTS OF OPERATIONS FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 |
The following table sets forth a summary, for the periods indicated, of our consolidated results of operations. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period. All amounts are presented in thousands of U.S. dollars.
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Nine Months Ended September 30, |
Three Months Ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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(US $) |
(US $) |
(US $) |
(US $) |
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(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
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Revenues |
13,190 | 25,317 | 3,239 | 9,181 | ||||||||||||
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Cost of revenues |
12,735 | 25,746 | 3,184 | 9,185 | ||||||||||||
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Gross (loss)/ profit |
455 | (429 | ) | 55 | (4 | ) | ||||||||||
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Operating expenses |
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Sales and marketing expenses |
208 | 148 | 75 | 55 | ||||||||||||
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General and administrative expenses |
3,462 | 3,659 | 1,972 | 1,547 | ||||||||||||
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Research and development expenses |
- | 18 | - | - | ||||||||||||
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Total operating expenses |
3,670 | 3,825 | 2,047 | 1,602 | ||||||||||||
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Loss from operations |
(3,215 | ) | (4,254 | ) | (1,992 | ) | (1,606 | ) | ||||||||
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Other income/(expenses) |
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Interest income |
233 | 230 | 66 | 79 | ||||||||||||
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Other expenses, net |
(30 | ) | (20 | ) | (2 | ) | (6 | ) | ||||||||
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Impairment of long-term investments |
(2 | ) | (207 | ) | - | 2 | ||||||||||
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Gain on disposal of subsidiaries |
23 | - | 23 | - | ||||||||||||
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Change in fair value of warrant liabilities |
- | 185 | - | 13 | ||||||||||||
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Total other income/(expenses) |
224 | 188 | 87 | 88 | ||||||||||||
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Loss before income tax benefit/(expense) |
(2,991 | ) | (4,066 | ) | (1,905 | ) | (1,518 | ) | ||||||||
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Income tax benefit/(expense) |
4 | - | - | (2 | ) | |||||||||||
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Net loss |
(2,987 | ) | $ | (4,066 | ) | $ | (1,905 | ) | $ | (1,520 | ) | |||||
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Net loss attributable to noncontrolling interests |
7 | - | (9 | ) | - | |||||||||||
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Net loss attributable to ZW Data Action Technologies Inc. |
$ | (2,980 | ) | $ | (4,066 | ) | $ | (1,914 | ) | $ | (1,520 | ) | ||||
Revenues
The following tables set forth a breakdown of our total revenues, disaggregated by type of services for the periods indicated, with inter-company transactions eliminated:
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Nine Months Ended September 30, |
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2024 |
2023 |
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Revenue type |
(Amounts expressed in thousands of US dollars, except percentages) |
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-Internet advertising and related data service |
$ | 2,700 | 20.5 | % | $ | 427 | 1.7 | % | ||||||||
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-Distribution of the right to use search engine marketing service |
9,740 | 73.8 | % | 24,815 | 98.0 | % | ||||||||||
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Internet advertising and related services |
12,440 | 94.3 | % | 25,242 | 99.7 | % | ||||||||||
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Blockchain-based SaaS services |
750 | 5.7 | % | 75 | 0.3 | % | ||||||||||
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Total |
$ | 13,190 | 100 | % | $ | 25,317 | 100 | % | ||||||||
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Three Months Ended September 30, |
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2024 |
2023 |
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Revenue type |
(Amounts expressed in thousands of US dollars, except percentages) |
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-Internet advertising and related data service |
$ | 2,700 | 83.4 | % | $ | 145 | 1.6 | % | ||||||||
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-Distribution of the right to use search engine marketing service |
539 | 16.6 | % | 9,011 | 98.1 | % | ||||||||||
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Internet advertising and related services |
3,239 | 100 | % | 9,156 | 99.7 | % | ||||||||||
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Blockchain-based SaaS services |
- | - | 25 | 0.3 | % | |||||||||||
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Total |
$ | 3,239 | 100 | % | $ | 9,181 | 100 | % | ||||||||
Total Revenues: Our total revenues decreased to US$13.19 million and US$3.24 million for the nine and three months ended September 30, 2024, respectively, from US$25.32 million and US$9.18 million for the same periods last year, respectively, which was primarily due to the decrease in our main stream service revenues, i.e., distribution of the right to use search engine marketing services.
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Internet advertising revenues for both the nine and three months ended September 30, 2024 was approximately US$2.7 million, compared with US$0.43 million and US$0.15 million for the nine and three months ended September 30, 2023, respectively. The increase primarily resulted from the Company providing influencer marketing services during the three months ended September 30, 2024 which offer higher growth opportunities and profitability. |
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Revenue generated from distribution of the right to use search engine marketing service for the nine and three months ended September 30, 2024 was approximately US$9.74 million and US$0.54 million, respectively, compared with approximately US$24.82 million and US$9.01 million for the nine and three months ended September 30, 2023, respectively. The decline in revenue from this business category was primarily attributable to the Company shifting its business strategy to focus more on profitability. |
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For the nine and three months ended September 30, 2024, we generated approximately US$0.75 million and nil in revenue from our blockchain-based SaaS services, respectively, compared with approximately US$0.08 million and US$0.03 million for the nine and three months ended September 30, 2023, respectively. |
Cost of revenues
Our cost of revenues consisted of costs directly related to the offering of our Internet advertising, precision marketing and related data and technical services, and software platform amortization cost related to our blockchain-based SaaS service. The following table sets forth our cost of revenues, disaggregated by type of services, by amount and gross profit ratio for the periods indicated, with inter-company transactions eliminated:
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Nine Months Ended September 30, |
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2024 |
2023 |
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(Amounts expressed in thousands of US dollars, except percentages) |
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Revenue |
Cost |
GP ratio |
Revenue |
Cost |
GP ratio |
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-Internet advertising and related data service |
$ | 2,700 | $ | 2,430 | 10 | % | $ | 427 | $ | 350 | 18 | % | ||||||||||||
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-Distribution of the right to use search engine marketing service |
9,740 | 9,674 | 0.7 | % | 24,815 | 24,766 | 0.2 | % | ||||||||||||||||
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Internet advertising and related services |
12,440 | 12,104 | 2.7 | % | 25,242 | 25,116 | 0.5 | % | ||||||||||||||||
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Blockchain-based SaaS services |
750 | 631 | 15.9 | % | 75 | 630 | -740 | % | ||||||||||||||||
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Total |
$ | 13,190 | $ | 12,735 | 3.5 | % | $ | 25,317 | $ | 25,746 | -2 | % | ||||||||||||
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Three Months Ended September 30, |
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2024 |
2023 |
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(Amounts expressed in thousands of US dollars, except percentages) |
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Revenue |
Cost |
GP ratio |
Revenue |
Cost |
GP ratio |
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-Internet advertising and related data service |
$ | 2,700 | $ | 2,430 | 10 | % | $ | 145 | $ | 116 | 20 | % | ||||||||||||
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-Distribution of the right to use search engine marketing service |
539 | 544 | -0.9 | % | 9,011 | 8,859 | 2 | % | ||||||||||||||||
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Internet advertising and related services |
3,239 | 2,974 | 8.2 | % | 9,156 | 8,975 | 2 | % | ||||||||||||||||
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Blockchain-based SaaS services |
- | 210 | - | 25 | 210 | -740 | % | |||||||||||||||||
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Total |
$ | 3,239 | $ | 3,184 | 1.7 | % | $ | 9,181 | $ | 9,185 | -0.04 | % | ||||||||||||
Cost of revenues: Our total cost of revenues decreased to US$12.74 million and US$3.18 million for the nine and three months ended September 30, 2024, respectively, from US$25.75 million and US$9.19 million for the nine and three months ended September 30, 2023, respectively. Our cost of revenues primarily consists of search engine marketing resources purchased from key search engines, amortization of software platform development cost and other direct costs associated with providing our services. The decrease in our total cost of revenues for the nine and three months ended September 30, 2024 was primarily due to the decrease in costs associated with distribution of the right to use search engine marketing service we purchased from key search engines during the periods, which was in line with the decrease in the related revenues as discussed above.
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Costs for internet advertising and data service primarily consist of cost of internet traffic flow and technical services we purchased from other portals and technical suppliers for obtaining effective sales lead generation to promote business opportunity advertisements placed on our own ad portals. It also includes the cost of influencer marketing services that corresponds with our influencer marketing business. For the nine and three months ended September 30, 2024, our total cost of revenues for Internet advertising and data service was approximately US$2.43 million, compared with approximately US$0.35 million and US$0.12 million for the nine and three months ended September 30, 2023, respectively. The gross margin rate of our Internet advertising and data service was 10% for the nine and three months ended September 30, 2024, compared with 18% and 20% for the nine and three months ended September 30, 2023, respectively. |
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Costs for distribution of the right to use search engine marketing service was direct search engine resources consumed for the right to use search engine marketing service that we purchased from key search engines and distributed to our customers. We purchased these search engine resources from well-known search engines and/or their delegated agencies in China, for example, Baidu, Qihu 360 and Sohu (Sogou) etc. We purchased the resources in relatively large amounts under our own name at a relatively lower rate compared to the market rates. We charged our clients the actual cost they consumed on search engines for the use of this service and a premium at certain percentage of that actual consumed cost. For the nine and three months ended September 30, 2024, our total cost of revenues for distribution of the right to use search engine marketing service was US$9.67 million and US$0.54 million, respectively, compared with US$24.77 million and US$8.86 million for the same periods last year, respectively. The decrease in cost of revenues for the nine and three months ended September 30, 2024 was in line with the decrease in revenues from this business category. Gross margin rate of this business category was 0.7% and -0.9% for the nine and three months ended September 30, 2024, respectively, compared with 0.2% and 2% gross margin rate incurred for the same periods last year, respectively. |
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For the nine months and three months ended September 30, 2024, cost for our blockchain-based SaaS services was approximately US$0.63 million and US$0.21 million, respectively, compared with approximately US$0.63 million and US$0.21 million for the nine and three months ended September 30, 2023, respectively. Costs for our blockchain-based SaaS services consist of the amortized cost of our self-developed BIF platform. Gross margin rate of this business category was 15.9% and nil for the nine and three months ended September 30, 2024, respectively, compared with -740% gross margin rate for the same periods last year. |
Gross (loss)/profit
As a result of the foregoing, for the nine months ended September 30, 2024, we incurred a gross profit of approximately US$0.46 million, compared with a gross loss of approximately US$0.43 million for the nine months ended September 30, 2023. For the three months ended September 30, 2024, we incurred an approximately US$0.06 million gross profit, compared with a gross loss of approximately US$0.004 million for the three months ended September 30, 2023. Our overall gross margin was 3.5% and 1.7% for the nine and three months ended September 30, 2024, respectively, compared with -1.7% and -0.04% for the same periods last year, respectively. For the nine months ended September 30, 2024, the gross margin rate of our main stream of service revenues, i.e. distribution of the right to use search engine marketing services, improved to 0.7%, compared with 0.2% gross margin rate for the same period last year. In addition, for the nine months ended September 30, 2024, the gross margin rate of our blockchain-based SaaS services was 15.9%, compared with -740% for the same period last year.
Operating Expenses
Our operating expenses consist of sales and marketing expenses, general and administrative expenses and research and development expenses. The following tables set forth our operating expenses, divided into their major categories by amount and as a percentage of our total revenues for the periods indicated.
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Nine Months Ended September 30, |
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2024 |
2023 |
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(Amounts expressed in thousands of US dollars, except percentages) |
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Amount |
% of total revenue |
Amount |
% of total revenue |
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Total revenues |
$ | 13,190 | 100 | % | $ | 25,317 | 100 | % | ||||||||
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Gross profit/(loss) |
455 | 3.5 | % | (429 | ) | -1.7 | % | |||||||||
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Sales and marketing expenses |
208 | 1.6 | % | 148 | 0.6 | % | ||||||||||
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General and administrative expenses |
3,462 | 26.2 | % | 3,659 | 14.5 | % | ||||||||||
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Research and development expenses |
- | - | 18 | 0.1 | % | |||||||||||
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Total operating expenses |
$ | 3,670 | 27.8 | % | $ | 3,825 | 15.1 | % | ||||||||
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Three Months Ended September 30, |
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2024 |
2023 |
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(Amounts expressed in thousands of US dollars, except percentages) |
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Amount |
% of total revenue |
Amount |
% of total revenue |
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Total revenues |
$ | 3,239 | 100 | % | $ | 9,181 | 100 | % | ||||||||
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Gross profit/(loss) |
55 | 1.7 | % | (4 | ) | -0.04 | % | |||||||||
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Sales and marketing expenses |
75 | 2.3 | % | 55 | 0.6 | % | ||||||||||
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General and administrative expenses |
1,972 | 60.9 | % | 1,547 | 16.9 | % | ||||||||||
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Research and development expenses |
- | - | - | - | ||||||||||||
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Total operating expenses |
$ | 2,047 | 63.2 | % | $ | 1,602 | 17.4 | % | ||||||||
Operating Expenses: Our total operating expenses was approximately US$3.67 million and US$2.05 million for the nine and three months ended September 30, 2024, respectively, compared with approximately US$3.83 million and US$1.60 million for the nine and three months ended September 30, 2023, respectively.
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Sales and marketing expenses: Sales and marketing expenses was US$0.21 million and US$0.08 million for the nine and three months ended September 30, 2024, respectively, compared with approximately US$0.15 million and US$0.06 million for the nine and three months ended September 30, 2023, respectively. Our sales and marketing expenses primarily consist of staff salaries and benefits, performance bonuses, travel expenses, communication expenses and other general office expenses of our sales department. Due to certain aspects of our business nature, the fluctuation of our sales and marketing expenses usually does not have a direct linear relationship with the fluctuation of our net revenues. |
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General and administrative expenses: General and administrative expenses was US$3.46 million and US$1.97 million for the nine and three months ended September 30, 2024, respectively, compared with US$3.66 million and US$1.55 million for the nine and three months ended September 30, 2023, respectively. Our general and administrative expenses primarily consist of salaries and benefits of management, accounting, human resources and administrative personnel, office rentals, depreciation of office equipment, allowance for doubtful accounts, professional service fees, maintenance, utilities and other general office expenses of our supporting and administrative departments. For the nine months ended September 30, 2024, the change in our general and administrative expenses was primarily due to the following reasons: (1) the increase in share-based compensation expenses of approximately US$1.55 million, due to the issuance of 0.375 million fully-vested shares of the Company’s restricted common stock during the three months ended September 30, 2024, compared to the same period last year; (2) the decrease in allowance for expected credit losses of approximately US$0.58 million; and (3) the decrease in other general administrative expenses of approximately US$1.17 million, as a result of the cost reduction plan executed by the management. For the three months ended September 30, 2024, the changes in our general and administrative expenses was primarily attributable to the following reasons: (1) the increase in share-based compensation expenses of approximately US$1.63 million, due to the issuance of 0.375 million fully-vested shares of the Company’s restricted common stock during the three months ended September 30, 2024, compared to the same period last year; (2) the decrease in other general administrative expenses of approximately US$0.43 million, as a result of the cost reduction plan executed by management; and (3) the decrease in allowance for expected credit losses of approximately US$0.77 million, respectively. |
Loss from operations: As a result of the foregoing, we incurred a loss from operations of approximately US$3.22 million and US$4.25 million for the nine months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024 and 2023, we incurred a loss from operations of approximately US$1.99 million and US$1.61 million, respectively.
Interest Income: For the nine and three months ended September 30, 2024, interest income recognized were primarily related to the interest we earned from the short-term loans we provided to unrelated parties.
Impairment on long-term investments: For the nine months ended September 30, 2024, we recognized approximately US$0.002 million in impairment loss on long-term investments, which was related to our cash investments in one of our unconsolidated investee entities whose business activities had become dormant. For the nine months ended September 30, 2023, we recognized approximately US$0.21 million impairment loss on long-term investments.
Change in fair value of warrant liabilities: We issued warrants in financing activities. We determined that these warrants should be accounted for as derivative liabilities, as the warrants are dominated in a currency (U.S. dollar) other than our functional currency (Renminbi or Yuan). For the nine and three months ended September 30, 2024, we did not recognize any change in fair value of these warrant liabilities, compared to a gain of change in fair value of approximately US$0.19 million and US$0.01 million for the nine and three months ended September 30, 2023, respectively.
Loss before income tax benefit/(expense): As a result of the foregoing, our loss before income tax benefit was approximately US$2.99 million and US$4.066 million for the nine months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024, we incurred an approximately US$1.91 million loss before income tax expense, compared with an approximately US$1.52 million loss before income tax expense for the three months ended September 30, 2023.
Income Tax benefit/(expense): For the nine months ended September 30, 2024 and 2023, we recognized approximately US$0.004 million and nil, respectively, in income tax benefits. For the three months ended September 30, 2024 and 2023, we recognized approximately nil and US$0.002 million, respectively, in income tax expenses. These benefits were related to the net operating loss incurred by one of our operating VIEs for each respective period. We anticipate these losses will likely be utilized against future earnings of this entity.
Net loss: As a result of the foregoing, for the nine months ended September 30, 2024 and 2023, we incurred a total net loss of approximately US$2.99 million and US$4.066 million, respectively. For the three months ended September 30, 2024, we recognized a net loss of approximately US$1.91 million, compared with a net loss of approximately US$1.52 million for the three months ended September 30, 2023.
B. LIQUIDITY AND CAPITAL RESOURCES
Cash Transfer within Our Organization and the Related Restrictions
We are a Nevada holding company with operations primarily conducted in China through our PRC subsidiaries, VIEs and VIEs’ subsidiaries. The intercompany flow of funds within our organization is effected through capital contributions and intercompany loans. We do not have written policies regarding intercompany cash transfer within our organization. In accordance with our current internal cash management practices, all intercompany cash transfer within our organization requires prior approval by our financial director and our chief financial officer/or our chief executive officer before execution.
As we conduct our operations primarily in China through our PRC subsidiaries, VIEs and their subsidiaries, and we intend to transfer most of our cash raised from the U.S. stock market to these operating entities to support their operations and expansions, our ability to pay dividends to U.S. investors may depend on receiving distributions from our PRC subsidiaries and settlement of the amounts owed under the VIE agreements from the consolidated VIEs. Any limitation on the ability of our PRC subsidiaries and the consolidated VIEs to make payments to us, or the tax implications of making payments to us, could have a material adverse effect on our ability to pay dividends to our U.S. investors.
The PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries, the consolidated VIEs and their subsidiaries in China are also required to set aside at least 10% of their respective after-tax profit based on the PRC accounting standards and regulations each year to the statutory surplus reserve, until the balance in the reserve reaches 50% of the registered capital of the respective PRC entities. In accordance with these PRC laws and regulations, our PRC subsidiaries, the consolidated VIEs and their subsidiaries are restricted in their ability to transfer a portion of their net assets to us. As of September 30, 2024 and December 31, 2023, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of our PRC subsidiaries, the consolidated VIEs and their subsidiaries that are included in our consolidated net assets, were approximately US$13.26 million and US$13.41 million, respectively. Appropriations to the enterprise expansion fund and staff welfare and bonus fund of a foreign-invested PRC entity and appropriation to the discretionary surplus reserve of other PRC entities are at the discretion of the board of directors. To date, none of our PRC subsidiaries, the consolidated VIEs and their subsidiaries appropriated any of these non-mandatory funds and reserves. Furthermore, if these entities incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments.
Under the PRC Enterprise Income Tax (“EIT”) Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise to its immediate holding company outside China are subject to a 10% withholding tax. A lower withholding tax rate will be applied if there is a tax treaty arrangement between mainland China and the jurisdiction of the foreign holding company. Hong Kong has a tax arrangement with China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirements that the Hong Kong enterprise owns at least 25% of the PRC enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and provides that the recipient can demonstrate it is a Hong Kong tax resident and it is the beneficial owner of the dividends. The PRC government adopted regulations in 2018 which stipulate that in determining whether a non-resident enterprise has the status as a beneficial owner, comprehensive analysis shall be conducted based on the factors listed therein and the actual circumstances of the specific case shall be taken into consideration. Specifically, it expressly excludes an agent or a designated payee from being considered as a “beneficial owner”. We own our PRC subsidiaries through China Net HK. China Net HK currently does not hold a Hong Kong tax resident certificate from the Inland Revenue Department of Hong Kong, there is no assurance that the reduced withholding tax rate will be available for us. If China Net HK is not considered to be the “beneficial owner” of the dividends by the Chinese local tax authority, any dividends paid to it by our PRC subsidiaries would be subject to a withholding tax rate of 10%.
There are no restrictions for the consolidated VIEs to settle the amounts owed under the VIE agreements to our WFOE. However, arrangements and transactions among affiliated entities may be subject to audit or challenge by the PRC tax authorities. If at any time the VIE agreements and the related fee structure between the consolidated VIEs and our WFOE is determined to be non-substantive and disallowed by Chinese tax authorities, the consolidated VIEs could, as a matter of last resort, make a non-deductible transfer to our WFOE for the amounts owed under the VIE agreements. This would result in such transfer being non-deductible expenses for the consolidated VIEs but still taxable income for our WFOE. If this happens, it may increase our tax burden and reduce our after-tax income in the PRC, and may materially and adversely affect our ability to make distributions to the holding company. Our management is of the view that the likelihood that this scenario would happen is remote. To date, the VIEs have settled to our WFOE the amount owed under the VIE agreements of RMB15.25 million (approximately US$2.27 million) in the aggregate.
Our PRC subsidiaries generate all of their revenue in Renminbi, Renminbi is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends/make distributions to us. The Chinese government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to us for us to pay dividends to the U.S. investors. Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and foreign debt. Currently, our PRC subsidiaries may purchase foreign currency for settlement of current account transactions, including payment of dividends to us, without the approval of the State Administration of Foreign Exchange of China (the “SAFE”) by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by the SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, the SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our PRC subsidiaries.
To date, none of our subsidiaries has made any distribution of earnings or issued any dividends to their respective shareholder in or outside of China, or to the Nevada holding company, and the Nevada holding company has never declared or paid any cash dividends to U.S. investors.
We do not have any present plan to make any distribution of earnings/issue any dividends directly or indirectly to our Nevada holding company or pay any cash dividends on our common stock in the foreseeable future because we currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
Cash Flow Analysis for the Nine Months Ended September 30, 2024 and 2023
Cash and cash equivalents represent cash on hand and deposits held at call with banks. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of September 30, 2024, we had cash and cash equivalents of approximately US$1.12 million.
Our liquidity needs include (i) net cash used in operating activities that consists of (a) cash required to fund the initial build-out, continued expansion of our network and new services and (b) our working capital needs, which include deposits and advance payments to search engine resources and other advertising resources providers, payment of our operating expenses and financing of our accounts receivable; and (ii) net cash used in investing activities that consist of the investment to expand technologies related to our existing and future business activities, investment to enhance the functionality of our current advertising portals for providing advertising, marketing and data services and to secure the safety of our general network, and investment to establish joint ventures with strategic partners for the development of new technologies and services. To date, we have financed our liquidity needs primarily through proceeds we generated from financing activities.
The following table provides detailed information about our net cash flow for the periods indicated:
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Nine Months Ended September 30, |
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2024 |
2023 |
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Amounts in thousands of US dollars |
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|
Net cash used in operating activities |
$ | (1,228 | ) | $ | (1,536 | ) | ||
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Net cash provided by/(used in) investing activities |
645 | (1,499 | ) | |||||
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Net cash provided by financing activities |
876 | - | ||||||
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Effect of foreign currency exchange rate changes |
13 | (42 | ) | |||||
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Net increase/(decrease) in cash and cash equivalents |
$ | 306 | $ | (3,077 | ) | |||
Net cash used in operating activities
For the nine months ended September 30, 2024, our net cash used in operating activities of approximately US$1.23 million were primarily attributable to:
| (1)
|
net loss excluding approximately US$0.71 million of non-cash expenses of depreciation and amortizations, approximately US$0.02 million amortization of operating lease right-of-use assets, approximately US$1.64 million of share-based compensation expenses, approximately US$0.02 million of gain on disposal of subsidiaries, approximately US$0.002 million impairment on long-term investments, approximately US$0.003 million loss on disposal of fixed assets, approximately US$0.77 million allowance for credit losses, approximately US$0.004 million deferred tax benefit and approximately US$0.23 million non-operating income, yielded the non-cash, non-operating items excluded net loss of approximately US$0.10 million. |
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(2) |
the receipt of cash from operations from changes in operating assets and liabilities such as: |
|
- |
accounts payable increased by approximately US$0.30 million; and |
|
- |
other current liabilities and taxes payable increased by approximately US$0.39 million. |
|
(3) |
offset by the use from operations from changes in operating assets and liabilities such as: |
|
- |
accounts receivable increased by approximately US$1.43 million; |
|
- |
prepayment and deposit to suppliers increased by approximately US$0.02 million; |
|
- |
Advances from customers decreased by approximately US$0.09 million; and |
|
- |
accruals and operating lease liabilities decreased by approximately US$0.02 million in the aggregate, due to settlement of these operating liabilities during the period. |
For the nine months ended September 30, 2023, our net cash used in operating activities of approximately US$1.54 million were primarily attributable to:
|
(4) |
net loss excluding approximately US$0.97 million of non-cash expenses of depreciation and amortizations; approximately US$0.31 million amortization of operating lease right-of-use assets, approximately US$0.10 million share-based compensation, approximately US$0.19 million gain from change in fair value of warrant liabilities, approximately US$1.35 million allowance for credit losses, approximately US$0.01million loss on disposal of fixed assets and approximately US$0.23 million non-operating income, yielded the non-cash, non-operating items excluded net loss of approximately US$1.55 million. |
|
(5) |
the receipt of cash from operations from changes in operating assets and liabilities such as: |
|
- |
accounts receivable decreased by approximately US$0.66 million, primarily due to collections from two major clients during the period; and |
|
- |
advance from customers increased by approximately US$0.43 million. |
|
(6) |
offset by the use from operations from changes in operating assets and liabilities such as: |
|
- |
prepayment and deposit to suppliers increased by approximately US$0.39 million; |
|
- |
account payables decreased by approximately US$0.003 million; |
|
- |
the other current liabilities and taxes payables decreased by approximately US$0.08 million; and |
|
- |
accruals, operating lease liabilities and short-term lease payment payables decreased by approximately US$0.60 million in the aggregate, due to the settlement of these operating liabilities during the period. |
Net cash used in investing activities
For the nine months ended September 30, 2024, (1) we purchased office equipment of approximately US$0.003 million; (2) we made an additional investment of approximately US$0.002 million to one of our unconsolidated investee entities; (3) we collected US$0.49 million in short-term loan principal from short-term loans we provided to unrelated parties in previous periods; (4) we received total interest payment of approximately US$0.41 million, which was attributable to short-term loans we provided to unrelated parties in previous periods; (5) we received approximately US$0.15 million in proceeds from the disposal of long-term investments; (6) we acquired cash of approximately US$0.009 million through the acquisition of a 51% equity interest in Beijing Yi En; (7) we recognized deconsolidation of cash during the period of US$0.006 million; and (8) we made deposits on investment contracts of approximately US$0.40 million. In the aggregate, these transactions resulted in a net cash inflow from investing activities of approximately US$0.65 million for the nine months ended September 30, 2024.
For the nine months ended September 30, 2023, (1) we provided to an unrelated party a short-term loan of US$2.0 million. The loan is unsecured and bears a fixed annualized interest rate of 12%. The original maturity date of this loan was July 17, 2023. On July 1, 2023, we extended the term of this loan for a six-month period to January 18, 2024; (2) we collected an US$0.10 million short-term loan, which was provided to another unrelated party in April 2022; (3) we received a total interest income of approximately US$0.07 million, which was attributable to short-term loans we provided to unrelated parties in previous periods; (4) we made an additional investment of approximately US$0.04 million to one of our unconsolidated investee entities; (5) we received an approximately US$0.43 million proceeds from the disposal of our equity interest in another unconsolidated investee entity to an unrelated party; and (6) we made an deposit of approximately US0.05 million for equipment purchase. In the aggregate, these transactions resulted in a net cash outflow from investing activities of approximately US$1.50 million for the nine months ended September 30, 2023.
Net cash provided by financing activities
For the nine months ended September 30, 2024, (1) we received an advance from investors of approximately US$0.81 million; and (2) we recognized capital contribution from noncontrolling interests of approximately US$0.07 million. In contrast, no cash was provided by or used in financing activities for the nine months ended September 30, 2023.
Future Liquidity, Material Cash Requirements and Capital Resources
Our future short-term liquidity needs within 12 months from the date hereof primarily include deposits and advance payments required for the purchase of search engine marketing resources and other online marketing resources to be distributed to our customers and payments for our operating expenses, which mainly consist of office rentals and employee salary and benefit.
In addition, in order to further develop our core business, i.e., our internet advertising and related data service business, broaden and diversify the online marketing channels for customers, reinforce our industry competitive advantage and secure our client base, we are actively seeking target companies with complementary online marketing resources for acquisition and/or joint ventures cooperation. It is not yet certain when the potential acquisition and/or cooperation will be consummated and what form(s) of consideration will be transferred by us. If this transaction were to be consummated, it will materially decrease our liquidity in the short run when the cash consideration, if any, is transferred. However, upon consummation of the acquisition, operating profits and new cash inflow may be generated from the acquired subsidiary, which may also help to improve the overall gross margin and cash flow status of our core business through the expected synergies of combining operations of the new acquired subsidiary and our own. Except this, we do not have other material non-operational cash requirements within 12 months from the date hereof.
We plan to optimize our internet resources cost investment strategy to improve the gross profit margin of our core business. Additionally, we will focus on improving accounts receivables collection management and negotiating better payment terms with major suppliers. These efforts are expected to substantially boost our cash flows from operations. In addition, to further improve our liquidity, we plan to reduce our operating costs through optimizing the personnel structure among different offices, and reduce our office leasing spaces, if needed. Beginning in early 2022, we began offering our SaaS services to customers. Our SaaS services are provided based on technologies of our self-developed Blockchain Integrated Framework (“BIF”) platform, which allows clients to utilize the BIF platform as an enterprise management software to record, share and store operating data on-chain, and/or to generate unique designed Non-fungible Token (“NFTs”) for their intellectual properties and certificates. Although revenues from the new SaaS services business and its profitability have not met our expectations, we anticipate that it will generate positive cash flow and improve our liquidity. This is because these services leverage our self-developed software platform, which does not require significant cash outflow to third-party service providers.
In addition, for the next 12 months from the date hereof, we anticipate to generate additional cash inflows and/or improve our liquidity through the following: (1) our current outstanding short-term working capital loans provided to unrelated parties will mature within the next 12 months that we anticipate collecting these loan principals and the related interest income within the next 12 months; (2) if at any time we anticipate insufficiency of our working capital, we can apply for revolving credit facility from commercial banks in the PRC to supplement our short-term liquidity deficit. We have not experienced any difficulties in obtaining such credit facility before, and this could result in fixed obligations and incremental cost of interest; (3) in consideration of the long-term cooperation history and good track records with our major suppliers, we plan to negotiate with our suppliers for more favorable payment terms; and (4) we plan to reduce our operating costs through optimizing the personnel structure among different offices and reduce our office leasing spaces, if needed. This may incur incremental costs related to employee layoff compensation and contract termination penalty.
If we fail to achieve these goals, we may need additional financing to execute our business plan. If additional financing is required, we cannot predict whether this additional financing will be in the form of equity, debt, or another form, and we may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition and results of operations. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
The unaudited condensed consolidated financial statements as of September 30, 2024 have been prepared under the assumption that we will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time. Our ability to continue as a going concern is dependent upon our uncertain ability to increase gross profit margin and reduce operating loss from our core business and/or obtain additional equity and/or debt financing. The accompanying financial statements as of September 30, 2024 do not include any adjustments that might result from the outcome of these uncertainties. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on the financial statements.
In the long term, beyond the next 12 months, we plan to further broaden the application scenarios of our blockchain-based SaaS services to be offered to the customers, continue expanding our core Internet advertising and marketing business through acquisitions, and develop Internet advertising and marketing channels that target overseas Internet users. As such, we may decide to enhance our liquidity position or increase our cash reserve for future investments through additional equity financing in the U.S. capital market. This would result in further dilution to our shareholders. We cannot assure you that such financing will be available in amounts or on terms acceptable to us, or at all.
C. Off-Balance Sheet Arrangements
None.
D. Disclosure of Contractual Obligations
In June 2023, we acquired a 9.9% equity interest in Wuhan Ju Liang, through subscription of a RMB0.99 million (approximately US$0.14 million) in registered capital of the entity in cash, which amount was committed to be paid up before August 1, 2052.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable to smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal accounting and financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the fiscal quarter ended September 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that during the period covered by this report, the Company’s disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2024 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We are currently not a party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against us in all material aspects. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
This information has been omitted based on the Company’s status as a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
During our fiscal quarter ended September 30, 2024, of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as those terms are defined in Item 408(a) of Regulation S-K.
The exhibits listed on the Exhibit Index below are provided as part of this report.
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Exhibit No. |
Document Description |
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101 |
The following materials are filed herewith: (i) Inline XBRL Instance, (ii) Inline XBRL Taxonomy Extension Schema, (iii) Inline XBRL Taxonomy Extension Calculation, (iv) XBRL Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) Inline XBRL Taxonomy Extension Definition. |
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104 |
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ZW DATA ACTION TECHNOLOGIES INC. |
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Date: November 19, 2024 |
By: |
/s/ Handong Cheng |
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Name: Handong Cheng |
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Title: Chief Executive Officer and Acting Chief Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer) |
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