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, 2023.
First Quarter 2023 Financial
Results
Revenues
For the first quarter of 2023, revenues
decreased by approximately $1.34 million, or 17.5%, to $6.32
million from $7.65 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 data services
business category, as a result of the peak infection of COVID-19 in
China during the first fiscal quarter of 2023, which affected
business of most of our small medium enterprises (“SMEs”)
clients.
Cost of revenues
Total cost of revenues decreased by
approximately $0.89 million, or 11.8%, to $6.63 million for the
first quarter of 2023 from $7.52 million for the same period last
year. The decrease in cost was primarily due to the decrease in
cost related to providing Internet advertising and related data
services on our ad portals, which was in line with the decrease in
the related revenues.
Gross profit (loss) and gross profit (loss)
margin
Gross loss was approximately $0.31 million for
the first quarter of 2023, compared to a gross profit of $0.13
million for the same period last year. Overall gross loss margin
rate was 5% for the first quarter of 2023, compared to a gross
profit margin of 2% for the same period last year.
Operating expenses
Sales and marketing expenses was approximately
$0.05 million for the first quarter of 2023, compared to $0.07
million for the same period last year. The decrease in sales and
marketing expenses was mainly attributable to the peak infection of
COVID-19 in China from November 2022 through February 2023, which
affected a significant number of our workforce employed in our
operations, and thus adversely affected our normal business
activities during the first fiscal quarter of 2023.
General and administrative expenses decreased by
approximately $0.62 million, or 39.8%, to $0.93 million for the
first quarter of 2023 from $1.55 million for the same period last
year. The decrease in general and administrative expenses was
mainly attributable to the decrease in amortization of
administrative assets of approximately $0.45 million and the
decrease in general administrative expenses of approximately $0.47
million, as a result of the cost reduction plan executed by
management and the adverse impact on our normal business activities
of the peak infection of COVID-19 during the first fiscal quarter
of 2023, which was partially offset by increase in allowance for
expected credit losses of approximately $0.30 million.
Research and development expenses was
approximately $0.02 million for the first quarter of 2023, compared
to $0.07 million for the same period last year. The decrease in
research and development expenses was primarily due to a reduction
in headcount in our research and development department.
Operating loss
Loss from operations was approximately $1.31
million for the first quarter of 2023, compared to $1.55 million
for the same period last year. Operating loss margin was 21% for
the first quarter of 2023, compared to 20% for the same period last
year.
Other income, net
Total other income, net was approximately $0.17
million for the first quarter of 2023, compared to $0.83 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 loss attributable to CNET and loss per
share
Net loss attributable to CNET was approximately
$1.14 million, or loss per share of $0.16, for the first quarter of
2023. This was compared to $0.72 million, or loss per share of
$0.10**, for the same period last year.
Financial Condition
As of March 31, 2023, the Company had cash and
cash equivalents of approximately $1.59 million, compared to $4.39
million as of December 31, 2022. Accounts receivable, net was
approximately $1.57 million as of March 31, 2023, compared to $1.75
million as of December 31, 2022. Working capital was approximately
$5.55 million as of March 31, 2023, compared to $6.61 million as of
December 31, 2022.
Net cash used in operating activities was
approximately $0.92 million for the first quarter of 2023, compared
to $0.89 million for the same period last year. Net cash used in
investing activities was approximately $1.88 million for the first
quarter of 2023, compared to $1.46 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
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 market demand, future capital
requirements, 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 31,2023 |
|
December 31,2022 |
|
|
|
(US $) |
|
(US $) |
|
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
1,592 |
|
$ |
4,391 |
Accounts receivable, net of allowance for credit loss of $4,070 and
$3,760, respectively |
|
|
|
1,567 |
|
|
1,745 |
Prepayment and deposit to suppliers |
|
|
|
4,390 |
|
|
4,567 |
Other current assets, net |
|
|
|
3,327 |
|
|
1,610 |
Total current assets |
|
|
|
10,876 |
|
|
12,313 |
|
|
|
|
|
|
Long-term investments |
|
|
|
1,604 |
|
|
1,596 |
Operating lease right-of-use
assets |
|
|
|
1,680 |
|
|
1,761 |
Property and equipment, net |
|
|
|
225 |
|
|
249 |
Intangible assets, net |
|
|
|
2,964 |
|
|
3,264 |
Long-term deposits and
prepayments |
|
|
|
69 |
|
|
69 |
Deferred tax assets, net |
|
|
|
413 |
|
|
406 |
Total Assets |
|
|
$ |
17,831 |
|
$ |
19,658 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable * |
|
|
$ |
218 |
|
$ |
205 |
Advances from customers * |
|
|
|
720 |
|
|
739 |
Accrued payroll and other accruals * |
|
|
|
266 |
|
|
438 |
Taxes payable * |
|
|
|
3,280 |
|
|
3,248 |
Operating lease liabilities * |
|
|
|
310 |
|
|
347 |
Lease payment liabilities related to short-term leases * |
|
|
|
103 |
|
|
101 |
Other current liabilities * |
|
|
|
341 |
|
|
437 |
Warrant liabilities |
|
|
|
84 |
|
|
185 |
Total current liabilities |
|
|
|
5,322 |
|
|
5,700 |
Long-term liabilities: |
|
|
|
|
|
|
Operating lease liabilities-Non current |
|
|
|
1,500 |
|
|
|
1,535 |
|
|
Long-term borrowing from a related party |
|
|
|
127 |
|
|
|
126 |
|
|
Total Liabilities |
|
|
|
6,949 |
|
|
|
7,361 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
ZW Data Action Technologies Inc.’s stockholders’ equity |
|
|
|
|
|
|
Common stock (US$0.001 par value; authorized 20,000,000 shares;
issued and outstanding 7,174,506 shares at March 31, 2023 and
December 31, 2022) |
|
|
|
7 |
|
|
7** |
|
Additional paid-in capital |
|
|
|
62,017 |
|
|
62,017** |
|
Statutory reserves |
|
|
|
2,598 |
|
|
|
2,598 |
|
|
Accumulated deficit |
|
|
|
(54,859 |
) |
|
|
(53,525 |
) |
|
Accumulated other comprehensive income |
|
|
|
1,119 |
|
|
|
1,200 |
|
|
Total stockholders’ equity |
|
|
|
10,882 |
|
|
|
12,297 |
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
|
$ |
17,831 |
|
|
$ |
19,658 |
|
|
* 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.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS (In thousands, except for number of shares and per
share data) |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
Revenues |
|
$ |
6,316 |
|
|
$ |
7,652 |
|
Cost of revenues |
|
|
6,630 |
|
|
|
7,518 |
|
Gross (loss)/profit |
|
|
(314 |
) |
|
|
134 |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing expenses |
|
|
48 |
|
|
|
69 |
|
General and administrative expenses |
|
|
932 |
|
|
|
1,548 |
|
Research and development expenses |
|
|
18 |
|
|
|
68 |
|
Total operating expenses |
|
|
998 |
|
|
|
1,685 |
|
|
|
|
|
|
Loss from
operations |
|
|
(1,312 |
) |
|
|
(1,551 |
) |
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
Interest income |
|
|
72 |
|
|
|
46 |
|
Other expenses, net |
|
|
(5 |
) |
|
|
(9 |
) |
Change in fair value of warrant liabilities |
|
|
101 |
|
|
|
795 |
|
Total other income |
|
|
168 |
|
|
|
832 |
|
|
|
|
|
|
Loss
before income tax benefit |
|
|
(1,144 |
) |
|
|
(719 |
) |
Income tax benefit |
|
|
1 |
|
|
|
2 |
|
Net
loss |
|
$ |
(1,143 |
) |
|
$ |
(717 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,143 |
) |
|
$ |
(717 |
) |
Foreign currency
translation loss |
|
|
(81 |
) |
|
|
(22 |
) |
Comprehensive
loss |
|
$ |
(1,224 |
) |
|
$ |
(739 |
) |
|
|
|
|
|
Loss per
share |
|
|
|
|
Loss per common
share |
|
|
|
|
|
|
|
|
|
Basic and
diluted** |
|
$ |
(0.16 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic and
diluted** |
|
|
7,174,506 |
|
|
|
7,079,962 |
|
ZW DATA ACTION TECHNOLOGIES INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
(US $) |
(US $) |
|
(Unaudited) |
(Unaudited) |
Cash flows from operating activities |
|
|
Net loss |
$ |
(1,143 |
) |
|
$ |
(717 |
) |
Adjustments to reconcile
net loss to net cash used in operating activities |
|
|
Depreciation and amortization |
|
322 |
|
|
|
554 |
|
Amortization of operating lease right-of-use assets |
|
106 |
|
|
|
60 |
|
Share-based compensation expenses |
|
35 |
|
|
|
56 |
|
Provision for allowance for credit losses |
|
301 |
|
|
|
- |
|
Deferred taxes |
|
(1 |
) |
|
|
(2 |
) |
Disposal of fixed assets |
|
3 |
|
|
|
- |
|
Change in fair value of warrant liabilities |
|
(101 |
) |
|
|
(795 |
) |
Other non-operating income |
|
(72 |
) |
|
|
(45 |
) |
Changes in operating
assets and liabilities |
|
|
Accounts receivable |
|
(56 |
) |
|
|
(159 |
) |
Prepayment and deposit to suppliers |
|
171 |
|
|
|
914 |
|
Other current assets |
|
(1 |
) |
|
|
13 |
|
Accounts payable |
|
10 |
|
|
|
(373 |
) |
Advances from customers |
|
(27 |
) |
|
|
(203 |
) |
Accrued payroll and other accruals |
|
(174 |
) |
|
|
(66 |
) |
Other current liabilities |
|
(184 |
) |
|
|
(36 |
) |
Taxes payable |
|
(8 |
) |
|
|
7 |
|
Lease payment liability related to short-term leases |
|
- |
|
|
|
(42 |
) |
Operating lease liabilities |
|
(97 |
) |
|
|
(56 |
) |
Net cash used in operating activities |
|
(916 |
) |
|
|
(890 |
) |
|
|
|
Cash flows from investing activities |
|
|
Repayment of short-term loans from ownership investee entities |
|
- |
|
|
|
13 |
|
Short-term loan to unrelated parties |
|
(2,000 |
) |
|
|
(2,500 |
) |
Repayment of short-term loans and interest income from unrelated
parties |
|
123 |
|
|
|
1,029 |
|
Net cash used in investing activities |
|
(1,877 |
) |
|
|
(1,458 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
Net cash provided by/(used in) financing
activities |
|
- |
|
|
|
- |
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
(6 |
) |
|
|
(1 |
) |
|
|
|
|
Net decrease in cash and cash equivalents |
|
(2,799 |
) |
|
|
(2,349 |
) |
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
4,391 |
|
|
|
7,173 |
|
Cash and cash equivalents at end of the period |
$ |
1,592 |
|
|
$ |
4,824 |
|
|
|
|
|
**Retrospectively restated for effect of the
1-for-5 reverse stock split effective on January 18, 2023.
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