Note 3 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Significant Accounting Policies [Text Block]

3.   Summary of significant accounting policies

a) Basis of presentation 

The unaudited condensed consolidated interim financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The unaudited condensed consolidated interim financial information as of September 30, 2021 and for the nine and three months ended September 30, 2021 and 2020 have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in complete consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited condensed consolidated interim financial information should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, previously filed with the SEC (the “2020 Form 10-K”) on April 13, 2021.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s condensed consolidated financial position as of September 30, 2021, its condensed consolidated results of operations for the nine and three months ended September 30, 2021 and 2020, and its condensed consolidated cash flows for the nine months ended September 30, 2021 and 2020, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

b) Principles of consolidation

The unaudited condensed consolidated interim financial statements include the accounts of all the subsidiaries and VIEs of the Company. All transactions and balances between the Company and its subsidiaries and VIEs have been eliminated upon consolidation.

c) Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company continually evaluates these estimates and assumptions based on the most recently available information, historical experience and various other assumptions that the Company believes 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.

d) Foreign currency translation

The exchange rates used to translate amounts in RMB into US$ for the purposes of preparing the condensed consolidated financial statements are as follows:

	September 30, 2021		December 31, 2020
Balance sheet items, except for equity accounts		6.4854		6.5249

	Nine Months Ended September 30,
	2021		2020
Items in the statements of operations and comprehensive loss		6.4714		6.9917

	Three Months Ended September 30,
	2021		2020
Items in the statements of operations and comprehensive loss		6.4707		6.9205

No representation is made that the RMB amounts could have been, or could be converted into US$ at the above rates.

e) Fair value measurement

Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2021 and December 31, 2020 are as follows:

			Fair value measurement at reporting date using
	As of September 30, 2021		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
	(Unaudited)
Warrant liabilities (Note 16)		3,686		-		-		3,686

			Fair value measurement at reporting date using
	As of December 31, 2020		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
Warrant liabilities (Note 16)		1,505		-		-		1,505

f) Revenue recognition

The following tables present the Company’s revenues disaggregated by products and services and timing of revenue recognition:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2021		2020		2021		2020
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Internet advertising and related services
--distribution of the right to use search engine marketing service		28,613		18,004		9,648		8,706
--online advertising placements		5,720		5,679		2,125		2,429
--data and technical services		-		900		-		300
Ecommerce O2O advertising and marketing services		514		1,276		127		269
Technical solution services		-		1,245		-		600
Total revenues	$	34,847	$	27,104	$	11,900	$	12,304

	Nine Months Ended September 30,				Three Months Ended September 30,
	2021		2020		2021		2020
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue recognized over time		34,847		25,859		11,900		11,704
Revenue recognized at a point in time		-		1,245		-		600
Total revenues	$	34,847	$	27,104	$	11,900	$	12,304

Contract costs

For the nine and three months ended September 30, 2021 and 2020, the Company did not have any significant incremental costs of obtaining contracts with customers incurred and/or costs incurred in fulfilling contracts with customers, which shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.

Contract liabilities

The table below summarized the movement of the Company’s contract liabilities for the nine months ended September 30, 2021:

	Contract liabilities
	US$(’000)
Balance as of January 1, 2021		1,436
Exchange translation adjustment		9
Revenue recognized from beginning contract liability balances		(1,305	)
Advances received from customers related to unsatisfied performance obligations		1,171
Balance as of September 30, 2021 (Unaudited)	$	1,311

Advance from customers related to unsatisfied performance obligations are generally refundable. Refund of advance from customers were insignificant for the nine and three months ended September 30, 2021 and 2020.

For the nine and three months ended September 30, 2021 and 2020, there is no revenue recognized from performance obligations that were satisfied in prior periods.

g) Research and development expenses

The Company accounts for expenses for the enhancement, maintenance and technical support to the Company’s Internet platforms and intellectual properties that are used in its daily operations in research and development expenses. Research and development costs are charged to expense when incurred. Expenses for research and development for the nine months ended September 30, 2021 and 2020 were approximately US$0.25 million and US$0.44 million, respectively. Expenses for research and development for the three months ended September 30, 2021 and 2020 were approximately US$0.09 million and US$0.11 million, respectively.

h) Lease

As of September 30, 2021, operating lease right-of-use assets and total operating lease liabilities recognized was approximately US$2.04 million and US$2.12 million, respectively.

Maturity of operating lease liabilities

	Operating leases
	US$(’000)
	(Unaudited)
Three months ending December 31, 2021		73
Year ending December 31,
-2022		315
-2023		330
-2024		336
-2025		353
-2026		370
-thereafter		866
Total undiscounted lease payments		2,643
Less: imputed interest		(527	)
Total operating lease liabilities as of September 30, 2021	$	2,116
Including:
Operating lease liabilities		193
Operating lease liabilities-Non current		1,923
	$	2,116

Operating lease expenses:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2021		2020		2021		2020
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Long-term operating lease contracts		212		7		88		2
Short-term operating lease contracts		45		114		15		35
Total	$	257	$	121	$	103	$	37

Supplemental information related to operating leases:

	Nine Months Ended September 30, 2021
	(Unaudited)
Operating cash flows used for operating leases (US$’000)		136
Right-of-use assets obtained in exchange for new lease liabilities (US$’000)		2,179
Weighted-average remaining lease term (years)		7.38
Weighted-average discount rate		6	%