Note 3 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

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 June 30, 2022 and for the six and three months ended June 30, 2022 and 2021 have been prepared pursuant to the rules and regulations of the 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, 2021, previously filed with the SEC (the “2021 Form 10-K”) on April 15, 2022.

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 June 30, 2022, its condensed consolidated results of operations for the six and three months ended June 30, 2022 and 2021, and its condensed consolidated cash flows for the six months ended June 30, 2022 and 2021, 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:

	June 30, 2022		December 31, 2021
Balance sheet items, except for equity accounts		6.7114		6.3757
	Six Months Ended June 30,
	2022		2021
Items in the statements of operations and comprehensive loss		6.4835		6.4718
	Three Months Ended June 30,
	2022		2021
Items in the statements of operations and comprehensive loss		6.6144		6.4596

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 June 30, 2022 and December 31, 2021 are as follows:

			Fair value measurement at reporting date using
	As of June 30, 2022		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 15)		257		-		-		257

			Fair value measurement at reporting date using
	As of December 31, 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)
Warrant liabilities (Note 15)		2,039		-		-		2,039

f) Revenue recognition

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

	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
	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		12,369		18,965		5,775		12,100
--online advertising placements		2,228		3,595		1,170		2,193
Ecommerce O2O advertising and marketing services		-		387		-		258
Total revenues	$	14,597	$	22,947	$	6,945	$	14,551

	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue recognized over time		14,597		22,947		6,945		14,551
Revenue recognized at a point in time		-		-		-		-
Total revenues	$	14,597	$	22,947	$	6,945	$	14,551

Contract costs

For the six and three months ended June 30, 2022 and 2021, the Company did not have any significant incremental costs of obtaining contracts with customers incurred and/or costs incurred in fulfilling contracts with customers, that 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 six months ended June 30, 2022:

	Contract liabilities
	US$(’000)
Balance as of January 1, 2022		1,245
Exchange translation adjustment		(62	)
Revenue recognized from beginning contract liability balances		(1,150	)
Advances received from customers related to unsatisfied performance obligations		761
Balance as of June 30, 2022 (Unaudited)	$	794

Advance from customers related to unsatisfied performance obligations are generally refundable. Refund of advance from customers were insignificant for the six and three months ended June 30, 2022 and 2021.

For the six and three months ended June 30, 2022 and 2021, 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 six months ended June 30, 2022 and 2021 were approximately US$0.12 million and US$0.16 million, respectively. Expenses for research and development for the three months ended June 30, 2022 and 2021 were approximately US$0.06 million and US$0.09 million, respectively.

h) Lease

As of June 30, 2022, operating lease right-of-use assets and total operating lease liabilities recognized was approximately US$2.04 million and US$2.14 million, respectively.

Maturity of operating lease liabilities

	Operating leases
	US$(’000)
	(Unaudited)
Six months ending December 31, 2022		246
Year ending December 31,
-2023		465
-2024		324
-2025		341
-2026		358
-2027		376
-thereafter		461
Total undiscounted lease payments		2,571
Less: imputed interest		(432	)
Total operating lease liabilities as of June 30, 2022	$	2,139
Including:
Operating lease liabilities		391
Operating lease liabilities-Non current		1,748
	$	2,139

Operating lease expenses:

	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
	US$(’000)		US$(’000)		US$(’000)		US$(’000)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Long-term operating lease contracts		193		124		103		87
Short-term operating lease contracts		29		30		14		15
Total	$	222	$	154	$	117	$	102

Supplemental information related to operating leases:

	Six Months Ended June 30, 2022
	(Unaudited)
Operating cash flows used for operating leases (US$’000)		178
Right-of-use assets obtained in exchange for new lease liabilities (US$’000)		259
Weighted-average remaining lease term (years)		6.06
Weighted-average discount rate		6	%