Note 2 - Variable Interest Entities

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Variable Interest Entities Disclosure [Text Block]

2. Variable interest entities

The Company is not an operating company in China, but a Nevada holding company with no equity ownership in the VIEs. The Company primarily conducts its operations in China through its PRC subsidiaries, the VIEs, with which the Company has entered into contractual arrangements, and their subsidiaries in China. Summarized below is the information related to the VIEs’ assets and liabilities reported in the Company’s condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively:

	September 30, 2022		December 31, 2021
	US$(’000)		US$(’000)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	203	$	181
Accounts receivable, net		2,999		2,796
Prepayment and deposit to suppliers		3,382		5,287
Due from related parties		15		90
Other current assets, net		3		4
Total current assets		6,602		8,358
Long-term investments		445		496
Operating lease right-of-use assets		199		21
Property and equipment, net		121		168
Deferred tax assets, net		398		441
Total Assets	$	7,765	$	9,484
Liabilities
Current liabilities:
Accounts payable	$	276	$	1,119
Advance from customers		858		1,113
Accrued payroll and other accruals		61		83
Taxes payable		2,562		2,849
Operating lease liabilities		198		9
Lease payment liability related to short-term leases		99		110
Other current liabilities		109		53
Total current liabilities		4,163		5,336
Operating lease liabilities-Non current		-		10
Total Liabilities	$	4,163	$	5,346

Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets.

ZW DATA ACTION TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summarized below is the information related to the financial performance of the VIEs reported in the Company’s condensed consolidated statements of operations and comprehensive (loss)/income for the nine and three months ended September 30, 2022 and 2021, respectively:

	Nine Months Ended September 30,						Three Months Ended September 30,
	2022			2021			2022			2021
	US$(’000)			US$(’000)			US$(’000)			US$(’000)
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	20,829		$	30,932		$	6,967		$	10,314
Cost of revenues		(21,811	)		(34,614	)		(7,267	)		(11,482	)
Total operating expenses		(1,539	)		(1,184	)		(691	)		(472	)
Net loss before allocation to noncontrolling interests		(2,551	)		(5,062	)		(998	)		(1,655	)