ZW Data Action Technologies Inc. (Nasdaq: CNET) (the "Company"), an
integrated online advertising, precision marketing, data analytics
and other value-added services provider serving enterprise clients,
today announced its unaudited financial results for the three
months ended March 31, 2022.
Financial Highlights
- Gross profit of $0.13 million for
the first quarter of 2022, compared to a gross loss of $0.72
million for the same period last year;
- Gross profit margin improved to
1.8% for the first quarter of 2022, compared to -8.5% for the same
period last year;
- Working capital of $10.92 million
as of March 31, 2022, compared to $11.10 million as of December 31,
2021.
First Quarter 2022 Financial
Results
Revenues
For the first quarter of 2022, revenues
decreased by $0.74 million, or 8.9%, to $7.65 million from $8.40
million for the same period last year. The decrease in revenues was
primarily attributable to the decrease in revenues from our
Internet advertising and related services business segment, as a
result of the regional COVID-19 rebound in many provinces in China
during the first quarter of fiscal 2022, which affected business of
most of our small medium enterprises (“SMEs”) clients.
Cost of revenues
Total cost of revenues decreased by $1.60
million, or 17.5%, to $7.52 million for the first quarter of 2022
from $9.11 million for the same period last year. The decrease in
cost of revenues was primary attributable to the decrease in costs
associated with distribution of the right to use search engine
marketing service we purchased from key search engines and cost
related to providing Internet advertising services at our ad
portals, which was in line with the decrease in the related
revenues.
Gross profit (loss) and gross profit (loss)
margin
Gross profit was $0.13 million for the first
quarter of 2022, compared to a gross loss of $0.72 million for the
same period last year, which was primarily attributable to the
increase of gross margin rate of our main stream of service
revenues, i.e. the distribution of the right to use search engine
marketing services. Overall gross profit margin rate was 1.8% for
the first quarter of 2022, compared to a gross loss margin of 8.5%
for the same period last year.
Operating expenses
Sales and marketing expenses increased by $0.04
million, or 146.4%, to $0.07 million for the first quarter of 2022
from $0.03 million for the same period last year. The increase in
sales and marketing expenses was mainly attributable to the
increase in staff salaries, staff benefits and other general office
expenses of our sales department in Guangzhou, as a result of the
business development of our Guangzhou office since the fourth
fiscal quarter of 2021.
General and administrative expenses increased by
$0.55 million, or 55.4%, to $1.55 million for the first quarter of
2022 from $1.00 million for the same period last year. The increase
in general and administrative expenses was mainly attributable to
an increase in amortization of administrative assets.
Research and development expenses were $0.07
million for both the first quarter of 2022 and the same period last
year. Research and development expenses remained stable between the
periods.
Operating loss
Loss from operations was $1.55 million for the
first quarter of 2022, compared to $1.82 million for the same
period last year. Operating loss margin was 20.3% for the first
quarter of 2022, compared to 21.6% for the same period last
year.
Other income, net
Total other income decreased to $0.83 million
for the first quarter of 2022 from $2.48 million for the same
period last year. The decrease was primarily attributable to the
decrease in gain from change in fair value of warrant liabilities.
Net income (loss) attributable to CNET and
earnings (loss) per share
Net loss attributable to CNET was $0.72 million,
or loss per share of $0.02, for the first quarter of 2022. This was
compared to a net income attributable to CNET of $0.69 million, or
earnings per share of $0.02, for the same period last year.
Financial Condition
As of March 31, 2022, the Company had cash and
cash equivalents of $4.82 million, compared to $7.17 million as of
December 31, 2021. Accounts receivable, net was $3.61 million as of
March 31, 2022, compared to $3.44 million as of December 31, 2021.
Working capital was $10.92 million as of March 31, 2022, compared
to $11.10 million as of December 31, 2021.
Net cash used in operating activities was $0.89
million for the first quarter of 2022, compared to $3.71 million
for the same period last year. Net cash used in investing
activities was $1.46 million for the first quarter of 2022,
compared to $1.87 million for the same period last year.
About ZW Data Action Technologies
Inc.
Established in 2003 and headquartered in
Beijing, China, ZW Data Action Technologies Inc. (the “Company”)
offers online advertising, precision marketing, data analytics and
other value-added services for enterprise clients. Leveraging its
fully integrated services platform, proprietary database, and
cutting-edge algorithms, the Company delivers customized,
result-driven business solutions for small and medium-sized
enterprise clients in China. The Company also develops blockchain
and artificial intelligence enabled web/mobile applications and
software solutions for clients. More information about the Company
can be found at: http://www.zdat.com/.
Safe Harbor Statement
This release contains certain "forward-looking statements"
relating to the business of ZW Data Action Technologies Inc., which
can be identified by the use of forward-looking terminology such as
"believes," "expects," "anticipates," "estimates" or similar
expressions. Such forward-looking statements involve known and
unknown risks and uncertainties, including business uncertainties
relating to government regulation of our industry, market demand,
reliance on key personnel, future capital requirements, competition
in general and other factors that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our
filings with the Securities and Exchange Commission. These
forward-looking statements are based on ZW Data Action Technologies
Inc.’s current expectations and beliefs concerning future
developments and their potential effects on the Company. There can
be no assurance that future developments affecting ZW Data Action
Technologies Inc. will be those anticipated by ZW Data Action
Technologies Inc. These forward-looking statements involve a number
of risks, uncertainties (some of which are beyond the control of
the Company) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by such forward-looking statements. ZW Data Action
Technologies Inc. undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
under applicable securities laws.
For more information, please contact:
Sherry
Zheng Weitian Group
LLCEmail: shunyu.zheng@weitian-ir.comPhone: +1 718-213-7386
ZW DATA ACTION TECHNOLOGIES
INC.CONSOLIDATED BALANCE SHEETS(In
thousands, except for number of shares and per share data)
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
|
|
(US $) |
|
(US $) |
|
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents * |
|
|
$ |
4,824 |
|
$ |
7,173 |
Accounts receivable, net of allowance for doubtful accounts of
$2,245 and $2,236, respectively * |
|
|
|
3,611 |
|
|
3,439 |
Prepayment and deposit to suppliers * |
|
|
|
6,613 |
|
|
7,559 |
Due from related parties * |
|
|
|
78 |
|
|
90 |
Other current assets * |
|
|
|
3,173 |
|
|
1,657 |
Total current assets |
|
|
|
18,299 |
|
|
19,918 |
|
|
|
|
|
|
Long-term investments * |
|
|
|
2,285 |
|
|
2,280 |
Operating lease right-of-use
assets * |
|
|
|
1,968 |
|
|
2,019 |
Property and equipment, net
* |
|
|
|
351 |
|
|
375 |
Intangible assets, net |
|
|
|
6,989 |
|
|
7,523 |
Long-term deposits and
prepayments |
|
|
|
76 |
|
|
75 |
Deferred tax assets, net * |
|
|
|
445 |
|
|
441 |
Total Assets |
|
|
$ |
30,413 |
|
$ |
32,631 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable * |
|
|
$ |
751 |
|
$ |
1,119 |
Advances from customers * |
|
|
|
1,047 |
|
|
1,245 |
Accrued payroll and other accruals * |
|
|
|
323 |
|
|
389 |
Taxes payable * |
|
|
|
3,555 |
|
|
3,534 |
Operating lease liabilities * |
|
|
|
210 |
|
|
202 |
Lease payment liabilities related to short-term leases * |
|
|
|
111 |
|
|
152 |
Other current liabilities * |
|
|
|
138 |
|
|
141 |
Warrant liabilities |
|
|
|
1,244 |
|
|
2,039 |
Total current liabilities |
|
|
|
7,379 |
|
|
8,821 |
Long-term liabilities: |
|
|
|
|
|
Operating lease liabilities-Non current |
|
|
|
1,853 |
|
|
|
1,907 |
|
Long-term borrowing from a related party |
|
|
|
138 |
|
|
|
137 |
|
Total Liabilities |
|
|
|
9,370 |
|
|
|
10,865 |
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
ZW Data Action Technologies Inc.’s stockholders’ equity |
|
|
|
|
|
Common stock (US$0.001 par value; authorized 100,000,000 shares;
issued and outstanding 35,427,677 shares and 35,332,677 shares at
March 31, 2022 and December 31, 2021, respectively) |
|
|
|
35 |
|
|
|
35 |
|
Additional paid-in capital |
|
|
|
61,801 |
|
|
|
61,785 |
|
Statutory reserves |
|
|
|
2,598 |
|
|
|
2,598 |
|
Accumulated deficit |
|
|
|
(44,451 |
) |
|
|
(43,734 |
) |
Accumulated other comprehensive income |
|
|
|
1,060 |
|
|
|
1,082 |
|
Total ZW Data Action Technologies Inc.’s stockholders’ equity |
|
|
|
21,043 |
|
|
|
21,766 |
|
|
|
|
|
|
|
Total equity |
|
|
|
21,043 |
|
|
|
21,766 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
|
$ |
30,413 |
|
|
$ |
32,631 |
|
*All of the VIEs' assets can be used to settle obligations of
their primary beneficiary. 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.CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS(In thousands, except for number of
shares and per share data)
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2022 |
|
2021 |
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
Revenues |
|
|
|
|
From unrelated parties |
|
$ |
7,652 |
|
|
$ |
8,396 |
|
From related parities |
|
|
- |
|
|
|
- |
|
Total revenues |
|
|
7,652 |
|
|
|
8,396 |
|
Cost of revenues |
|
|
7,518 |
|
|
|
9,113 |
|
Gross profit/(loss) |
|
|
134 |
|
|
|
(717 |
) |
|
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing expenses |
|
|
69 |
|
|
|
28 |
|
General and administrative expenses |
|
|
1,548 |
|
|
|
996 |
|
Research and development expenses |
|
|
68 |
|
|
|
74 |
|
Total operating expenses |
|
|
1,685 |
|
|
|
1,098 |
|
|
|
|
|
|
Loss from
operations |
|
|
(1,551 |
) |
|
|
(1,815 |
) |
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
Interest income |
|
|
46 |
|
|
|
1 |
|
Other expenses, net |
|
|
(9 |
) |
|
|
(24 |
) |
Change in fair value of warrant liabilities |
|
|
795 |
|
|
|
2,507 |
|
Total other income |
|
|
832 |
|
|
|
2,484 |
|
|
|
|
|
|
(Loss)/income before income tax benefit and noncontrolling
interests |
|
|
(719 |
) |
|
|
669 |
|
Income tax benefit |
|
|
2 |
|
|
|
18 |
|
Net
(loss)/income |
|
|
(717 |
) |
|
|
687 |
|
Net income attributable to noncontrolling interests |
|
|
- |
|
|
|
(2 |
) |
Net
(loss)/income attributable to ZW Data Action Technologies
Inc. |
|
$ |
(717 |
) |
|
$ |
685 |
|
|
|
|
|
|
|
|
Net (loss)/income |
|
$ |
(717 |
) |
|
$ |
687 |
|
Foreign currency translation loss |
|
|
(22 |
) |
|
|
(19 |
) |
Comprehensive (loss)/income |
|
|
(739 |
) |
|
|
668 |
|
Comprehensive income attributable to noncontrolling interests |
|
|
- |
|
|
|
(2 |
) |
Comprehensive
(loss)/income attributable to ZW Data Action Technologies
Inc. |
|
$ |
(739 |
) |
|
$ |
666 |
|
|
|
|
|
|
(Loss)/earnings per share |
|
|
|
|
(Loss)/earnings per common share |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
35,354,954 |
|
|
|
28,505,181 |
|
ZW DATA ACTION TECHNOLOGIES
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
|
|
|
|
|
Three Months Ended March 31, |
|
2022 |
|
2021 |
|
(US $) |
|
(US $) |
|
(Unaudited) |
|
(Unaudited) |
Cash flows from operating activities |
|
|
|
Net (loss)/income |
$ |
(717 |
) |
|
$ |
687 |
|
Adjustments to reconcile
net (loss)/income to net cash used in operating
activities |
|
|
|
Depreciation and amortization |
|
554 |
|
|
|
112 |
|
Amortization of operating lease right-of-use assets |
|
60 |
|
|
|
36 |
|
Share-based compensation expenses |
|
56 |
|
|
|
100 |
|
Deferred taxes |
|
(2 |
) |
|
|
(18 |
) |
Change in fair value of warrant liabilities |
|
(795 |
) |
|
|
(2,507 |
) |
Other non-operating income |
|
(45 |
) |
|
|
- |
|
Changes in operating
assets and liabilities |
|
|
|
Accounts receivable |
|
(159 |
) |
|
|
700 |
|
Prepayment and deposit to suppliers |
|
914 |
|
|
|
(2,630 |
) |
Other current assets |
|
13 |
|
|
|
7 |
|
Long-term deposits and prepayments |
|
- |
|
|
|
(794 |
) |
Accounts payable |
|
(373 |
) |
|
|
628 |
|
Advances from customers |
|
(203 |
) |
|
|
169 |
|
Accrued payroll and other accruals |
|
(66 |
) |
|
|
(188 |
) |
Other current liabilities |
|
(36 |
) |
|
|
25 |
|
Taxes payable |
|
7 |
|
|
|
(18 |
) |
Lease payment liability related to short-term leases |
|
(42 |
) |
|
|
(1 |
) |
Operating lease liabilities |
|
(56 |
) |
|
|
(14 |
) |
Net cash used in operating activities |
|
(890 |
) |
|
|
(3,706 |
) |
|
|
|
|
Cash flows from investing activities |
|
|
|
Cash effect of deconsolidation of VIEs’ subsidiaries |
|
- |
|
|
|
(8 |
) |
Investments and advances to ownership investee entities |
|
- |
|
|
|
(385 |
) |
Repayment from ownership investee entities |
|
13 |
|
|
|
- |
|
Short-term loan to unrelated parties |
|
(2,500 |
) |
|
|
(312 |
) |
Repayment of short-term loan from unrelated parties |
|
1,029 |
|
|
|
- |
|
Payment for purchase of software technologies |
|
- |
|
|
|
(1,160 |
) |
Net cash used in investing activities |
|
(1,458 |
) |
|
|
(1,865 |
) |
Cash flows from financing activities |
|
|
|
Proceeds from issuance of common stock and warrant (net of cash
offering cost of US$1,600) |
|
- |
|
|
|
17,111 |
|
Net cash provided by financing activities |
|
- |
|
|
|
17,111 |
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
(1 |
) |
|
|
(52 |
) |
|
|
|
|
Net (decrease)/increase in cash and cash
equivalents |
|
(2,349 |
) |
|
|
11,488 |
|
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
7,173 |
|
|
|
4,297 |
|
Cash and cash equivalents at end of the period |
$ |
4,824 |
|
|
$ |
15,785 |
|
|
|
|
|
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