Note 5 - Prepayments and Deposit to Suppliers

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Prepayments and Deposits to Suppliers Disclosure [Text Block]

5. Prepayments and deposit to suppliers

	As of December 31,
	2021		2020
	US$(’000)		US$(’000)
Deposits to advertising resources providers		934		307
Prepayments to advertising resources providers		5,185		3,696
Deposit and prepayment for other investing contracts		1,000		-
Other deposits and prepayments		440		654
		7,559		4,657

As of December 31, 2021 and 2020, contractual deposits were primarily paid to the Company’s major Internet resources suppliers and other advertising resource suppliers. The contractual deposits will be refunded to the Company upon expiration of the contracts, which are generally for a one-year period.

According to the contracts signed between the Company and its suppliers, the Company is required to pay certain of the contract amounts in advance. These prepayments will be recognized as cost of revenues when the related services are delivered by the suppliers. As of December 31, 2021 and 2020, prepayments were primarily paid for the purchase of Internet advertising resources from the Company’s major suppliers.

As of December 31, 2021, deposit and prepayment for other investing contracts represented a US$1.0 million refundable deposit paid for a potential acquisition transaction, which will be refunded if no definitive agreement is reached among the parties before the expected closing date, i.e., May 31, 2022. As of the date hereof, the Company is in the progress of the due diligence process of the target company.

Due to the Chinese government’s recent policies which banned cryptocurrency mining business commencing since May 2021, the Company cancelled a cryptocurrency mining machine purchase agreement with its supplier. The Company paid an aggregate of US$1.5 million prepayment for this contract before cancellation of the contract, and was refunded by the supplier of US$1.0 million, the remaining balance of the US$0.5 million was charged off as the Company’s other losses for the year ended December 31, 2021 due to subsequent collection is considered remote.

Other deposits and prepayments as of December 31, 2021 and 2020 represented deposits and prepayments to the Company’s other services providers, which primarily included deposits for office lease contracts, prepayment for various kinds of professional consulting services, etc.