Note 2 - Variable Interest Entities

6 Months Ended

Jun. 30, 2023

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 June 30, 2023 and December 31, 2022, respectively:

	June 30, 2023		December 31, 2022
	US$(’000)		US$(’000)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,157	$	578
Accounts receivable, net		1,045		1,745
Prepayment and deposit to suppliers		1,926		2,020
Other current assets, net		2		2
Total current assets		4,130		4,345
Long-term investments		-		165
Operating lease right-of-use assets		47		145
Property and equipment, net		89		113
Deferred tax assets, net		393		406
Total Assets	$	4,659	$	5,174
Liabilities
Current liabilities:
Accounts payable	$	204	$	205
Advance from customers		887		515
Accrued payroll and other accruals		34		63
Taxes payable		2,501		2,602
Operating lease liabilities		47		146
Lease payment liability related to short-term leases		97		101
Other current liabilities		110		320
Total current liabilities		3,880		3,952
Total Liabilities	$	3,880	$	3,952

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 for the six and three months ended June 30, 2023 and 2022, respectively:

	Six Months Ended June 30,						Three Months Ended June 30,
	2023			2022			2023			2022
	US$(’000)			US$(’000)			US$(’000)			US$(’000)
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	15,941		$	13,862		$	9,793		$	6,664
Cost of revenues		(16,048	)		(14,544	)		(9,721	)		(7,026	)
Total operating expenses		(743	)		(848	)		(373	)		(589	)
Net loss		(1,067	)		(1,553	)		(517	)		(968	)