Note 19 - Concentration of Risk

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

19. 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, 2022, 20% of the Company’s cash and cash equivalents were held by major financial institutions located in China, the remaining 80% was held by financial institutions located in the United States of America. The Company believes that these financial institutions located in China and the United States of America are of high credit quality. For accounts receivable and deposits and loans to unrelated parties, the Company extends credit based on an evaluation of the customer’s or other parties’ financial condition, generally without requiring collateral or other security. In order to minimize the credit risk, the Company delegated a team responsible for credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. Further, the Company reviews the recoverable amount of each individual receivable at each balance sheet date to ensure that adequate allowances are made for doubtful accounts. In this regard, the Company considers that the Company’s credit risk for accounts receivable and deposits and loans to unrelated parties are significantly reduced.

Concentration of customers

The following tables summarized the information about the Company’s concentration of customers for the nine and three months ended September 30, 2022 and 2021, respectively:

	Customer A	Customer B	Customer C	Customer D	Customer E	Customer F	Customer G
Nine Months Ended September 30, 2022
Revenues, customer concentration risk	*	*	*	*	*	*	-
Three Months Ended September 30, 2022
Revenues, customer concentration risk	10%	*	*	*	*	*	-
Nine Months Ended September 30, 2021
Revenues, customer concentration risk	*	11%	*	*	*	*	*
Three Months Ended September 30, 2021
Revenues, customer concentration risk	*	*	19%	*	*	*	*
As of September 30, 2022
Accounts receivable, customer concentration risk	-	-	35%	31%	17%	12%	-
As of December 31, 2021
Accounts receivable, customer concentration risk	-	-	33%	32%	11%	-	19%

* 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, 2022 and 2021, respectively:

	Supplier A	Supplier B	Supplier C
Nine Months Ended September 30, 2022
Cost of revenues, supplier concentration risk	53%	27%	*
Three Months Ended September 30, 2022
Cost of revenues, supplier concentration risk	63%	13%	14%
Nine Months Ended September 30, 2021
Cost of revenues, supplier concentration risk	*	77%	-
Three Months Ended September 30, 2021
Cost of revenues, supplier concentration risk	*	85%	-

* Less than 10%.

- No transaction incurred for the reporting period.