10q10k10q10k.net

What changed in ZW Data Action Technologies Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of ZW Data Action Technologies Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+203 added−216 removedSource: 10-K (2026-03-31) vs 10-K (2025-04-15)

Top changes in ZW Data Action Technologies Inc.'s 2025 10-K

203 paragraphs added · 216 removed · 150 edited across 3 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

67 edited+26 added−37 removed264 unchanged
Biggest changeAs of December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Assets Cash and cash equivalents - 788 24 - 812 Accounts receivable, net - 1,580 34 - 1,614 Prepayment and deposit to suppliers 346 3,232 1,189 (259 ) 4,508 Due from group companies 38,087 11,557 448 (50,092 ) - Other current assets - 2,237 2 - 2,239 Long-term investments - 397 - - 397 Operating lease right-of-use assets - - - - - Property and equipment, net - 31 85 - 116 Intangible assets, net - - - - - Long-term deposits and prepayments - - - - - Deferred tax assets, net - - - - - Total Assets $ 38,433 $ 19,822 $ 1,782 $ (50,351 ) $ 9,686 Liabilities and Equity Accounts payable - - 93 - 93 Advance from investors 1,075 - - - 1,075 Advances from customers - - 748 (259 ) 489 Accrued payroll and other accruals 485 58 14 - 557 Taxes payable - 632 2,520 - 3,152 Operating lease liabilities - - - - - Lease payment liabilities related to short-term leases - - - - - Due to group companies 232 34,535 15,325 (50,092 ) - Other current liabilities 75 23 382 - 480 Warrant liabilities - - - - - Operating lease liabilities-Non current - - - - - Long-term borrowing from a related party - 122 - - 122 Total Liabilities 1,867 35,370 19,082 (50,351 ) 5,968 Total stockholders ’ equity 36,566 (15,548 ) (17,300 ) - 3,718 Total Liabilities and Equity $ 38,433 $ 19,822 $ 1,782 $ (50,351 ) $ 9,686 26 As of December 31, 2023 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Assets Cash and cash equivalents - 450 367 - 817 Accounts receivable, net - - 844 - 844 Prepayment and deposit to suppliers - 2,763 2,005 (263 ) 4,505 Due from group companies 37,610 11,669 409 (49,688 ) - Other current assets - 2,791 3 - 2,794 Long-term investments - 794 - - 794 Operating lease right-of-use assets - 22 - - 22 Property and equipment, net - 76 139 - 215 Intangible assets, net - 841 - - 841 Long-term deposits and prepayments - - - - - Deferred tax assets, net - - 401 - 401 Total Assets $ 37,610 $ 19,406 $ 4,168 $ (49,951 ) $ 11,233 Liabilities and Equity Accounts payable - - 201 - 201 Advances from customers - - 1,106 (263 ) 843 Accrued payroll and other accruals 283 30 37 - 350 Taxes payable - 639 2,555 - 3,194 Operating lease liabilities - 24 - - 24 Lease payment liabilities related to short-term leases - - 99 - 99 Due to group companies 233 34,018 15,437 (49,688 ) - Other current liabilities 75 23 46 - 144 Warrant liabilities - - - - - Operating lease liabilities-Non current - - - - - Long-term borrowing from a related party - 124 - - 124 Total Liabilities 591 34,858 19,481 (49,951 ) 4,979 Total stockholders ’ equity 37,019 (15,452 ) (15,313 ) - 6,254 Total Liabilities and Equity $ 37,610 $ 19,406 $ 4,168 $ (49,951 ) $ 11,233 27 For the year ended December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Revenues - 5,530 9,909 - 15,439 Cost of revenues - 5,151 9,842 - 14,993 Total operating expenses 1,483 662 2,058 - 4,203 Loss from operations (1,483 ) (283 ) (1,991 ) - (3,757 ) Other income/(expenses) - 298 89 - 387 Income/(loss) before income tax benefit and noncontrolling interests (1,483 ) 15 (1,902 ) - (3,370 ) Income tax benefit/(expense) - - (399 ) - (399 ) Net income/(loss) (1,483 ) 15 (2,301 ) - (3,769 ) Net income attributable to noncontrolling interests - - 8 - 8 Net income/(loss) attributable to ZW Data Action Technologies Inc.
Biggest changeAs of December 31, 2025 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Assets Cash and cash equivalents - 958 12 - 970 Accounts receivable, net - 545 - - 545 Prepayment and deposit to suppliers - 4,403 1,073 (265 ) 5,211 Due from group companies 38,855 11,692 458 (51,005 ) - Other current assets - 828 2 - 830 Long-term investments - 1,117 - - 1,117 Operating lease right-of-use assets - 48 - - 48 Property and equipment, net - 76 66 - 142 Intangible assets, net - 515 - - 515 Prepayment for acquisition - 300 - - 300 Total Assets $ 38,855 $ 20,482 $ 1,611 $ (51,270 ) $ 9,678 Liabilities and Equity Accounts payable - 74 95 - 169 Advances from customers - 61 726 (265 ) 522 Accrued payroll and other accruals 380 111 26 - 517 Taxes payable - 671 2,578 - 3,249 Operating lease liabilities - 49 - - 49 Due to group companies 232 35,313 15,460 (51,005 ) - Other current liabilities 75 44 447 - 566 Deferred Tax Liability - 78 - - 78 Long-term borrowing from a related party - 125 - - 125 Total Liabilities 687 36,526 19,332 (51,270 ) 5,275 Total stockholders ’ equity 38,168 (16,044 ) (17,721 ) - 4,403 Total Liabilities and Equity $ 38,855 $ 20,482 $ 1,611 $ (51,270 ) $ 9,678 26 As of December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Assets Cash and cash equivalents - 788 24 - 812 Accounts receivable, net - 1,580 34 - 1,614 Prepayment and deposit to suppliers 346 3,232 1,189 (259 ) 4,508 Due from group companies 38,087 11,557 448 (50,092 ) - Other current assets - 2,237 2 - 2,239 Long-term investments - 397 - - 397 Operating lease right-of-use assets - - - - - Property and equipment, net - 31 85 - 116 Intangible assets, net - - - - - Long-term deposits and prepayments - - - - - Deferred tax assets, net - - - - - Total Assets $ 38,433 $ 19,822 $ 1,782 $ (50,351 ) $ 9,686 Liabilities and Equity Accounts payable - - 93 - 93 Advance from investors 1,075 - - - 1,075 Advances from customers - - 748 (259 ) 489 Accrued payroll and other accruals 485 58 14 - 557 Taxes payable - 632 2,520 - 3,152 Operating lease liabilities - - - - - Lease payment liabilities related to short-term leases - - - - - Due to group companies 232 34,535 15,325 (50,092 ) - Other current liabilities 75 23 382 - 480 Warrant liabilities - - - - - Operating lease liabilities-Non current - - - - - Long-term borrowing from a related party - 122 - - 122 Total Liabilities 1,867 35,370 19,082 (50,351 ) 5,968 Total stockholders ’ equity 36,566 (15,548 ) (17,300 ) - 3,718 Total Liabilities and Equity $ 38,433 $ 19,822 $ 1,782 $ (50,351 ) $ 9,686 For the year ended December 31, 2025 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Revenues - 4,564 50 - 4,614 Cost of revenues - 4,216 45 - 4,261 Total operating expenses 1,063 1,216 27 - 2,306 Loss from operations (1,063 ) (868 ) (22 ) - (1,953 ) Other income/(expenses) - 188 (5 ) - 183 Income/(loss) before income tax benefit and noncontrolling interests (1,063 ) (680 ) (27 ) - (1,770 ) Income tax benefit/(expense) - (1 ) - - (1 ) Net loss (1,063 ) (681 ) (27 ) - (1,771 ) Net income attributable to noncontrolling interests - - 1 - 1 Net loss attributable to ZW Data Action Technologies Inc.
If we become directly subject to the scrutiny involving U.S. listed Chinese companies, we may have to expend significant resources to investigate and/or defend the matter, which could harm our business operations, stock price and reputation.
If we become directly subject to the scrutiny involving U.S. listed Chinese companies, we may have to expend significant resources to investigate and/or defend the matter, which could harm our business operations, stock price and reputation.
U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny by investors, financial commentators and regulatory agencies. Much of the scrutiny has centered around financial and accounting irregularities and mistakes, a lack of effective internal controls over financial reporting and, in many cases, allegations of fraud.
U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny by investors, financial commentators and regulatory agencies. Much of the scrutiny has centered around financial and accounting irregularities and mistakes, a lack of effective internal controls over financial reporting and, in many cases, allegations of fraud.
As a result of the scrutiny, the publicly traded stock of many U.S. listed China-based companies that have been the subject of such scrutiny has sharply decreased in value. Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions that are conducting internal and/or external investigations into the allegations.
As a result of the scrutiny, the publicly traded stock of many U.S. listed China-based companies that have been the subject of such scrutiny has sharply decreased in value. Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions that are conducting internal and/or external investigations into the allegations.
If we become the subject of any such scrutiny, whether any allegations are true or not, we may have to expend significant resources to investigate such allegations and/or defend our company.
If we become the subject of any such scrutiny, whether any allegations are true or not, we may have to expend significant resources to investigate such allegations and/or defend our company.
If Nasdaq delists our Common Stock from trading on its exchange, we could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our Common Stock; 44 ● a limited amount of news and analyst coverage for our company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
If Nasdaq delists our Common Stock from trading on its exchange, we could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our Common Stock; ● a limited amount of news and analyst coverage for our company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected. In December 2020, the NDRC and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021.
Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected. 30 In December 2020, the NDRC and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021.
We cannot assure you that relevant governmental authorities will not interpret or implement these and other laws or regulations in ways that may negatively affect us. 35 We may be adversely affected by the complexity, uncertainties and changes in PRC licensing and regulation of internet businesses.
We cannot assure you that relevant governmental authorities will not interpret or implement these and other laws or regulations in ways that may negatively affect us. We may be adversely affected by the complexity, uncertainties and changes in PRC licensing and regulation of internet businesses.
Because a significant amount of our future revenue may be in the form of Chinese Renminbi, our inability to obtain the requisite approvals or any future restrictions on currency exchanges could limit our ability to utilize revenue generated in Chinese Renminbi to fund our business activities outside of China, or to repay foreign currency obligations, including our debt obligations, which would have a material adverse effect on our financial condition and results of operations. 36 We may have limited legal recourse under PRC laws if disputes arise under our contracts with third parties.
Because a significant amount of our future revenue may be in the form of Chinese Renminbi, our inability to obtain the requisite approvals or any future restrictions on currency exchanges could limit our ability to utilize revenue generated in Chinese Renminbi to fund our business activities outside of China, or to repay foreign currency obligations, including our debt obligations, which would have a material adverse effect on our financial condition and results of operations. 35 We may have limited legal recourse under PRC laws if disputes arise under our contracts with third parties.
Any limitation on the ability of the PRC Operating Entities to pay dividends to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business. 25 Condensed Consolidating Schedules The following tables presented the condensed consolidating schedules that depicted the financial position, cash flows and results of operations for our company, our consolidated subsidiaries, consolidated VIE, and any eliminating adjustments as of December 31, 2024 and 2023, and for the years ended December 31, 2024 and 2023, respectively.
Any limitation on the ability of the PRC Operating Entities to pay dividends to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business. 25 Condensed Consolidating Schedules The following tables presented the condensed consolidating schedules that depicted the financial position, cash flows and results of operations for our company, our consolidated subsidiaries, consolidated VIE, and any eliminating adjustments as of December 31, 2025 and 2024, and for the years ended December 31, 2025 and 2024, respectively.
Paid in capital of the PRC subsidiaries and VIEs included in our consolidated net assets are also not distributable for dividend purposes. 37 In accordance with the PRC regulations on Enterprises with Foreign Investment, a WFOE established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts.
Paid in capital of the PRC subsidiaries and VIEs included in our consolidated net assets are also not distributable for dividend purposes. 36 In accordance with the PRC regulations on Enterprises with Foreign Investment, a WFOE established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts.
This included sending a team of PCAOB staff to conduct on-site inspections and investigations in Hong Kong over a nine-week period from September to November 2022. 39 On December 15, 2022, the PCAOB issued its 2022 HFCAA Determination Report to notify the SEC of its determination that the PCAOB was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong completely in 2022.
This included sending a team of PCAOB staff to conduct on-site inspections and investigations in Hong Kong over a nine-week period from September to November 2022. 38 On December 15, 2022, the PCAOB issued its 2022 HFCAA Determination Report to notify the SEC of its determination that the PCAOB was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong completely in 2022.
As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon some of our directors and senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws.
In addition, some of our directors and executive officers reside within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon some of our directors and senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws.
If it is determined in the future that any additional approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the Measures for Cybersecurity Review and the Draft Measures for Internet Data Security, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected.
If it is determined in the future that any additional approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the Measures for Cybersecurity Review, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected.
The PRC Cyber Security Law, effective on June 1, 2017, stipulates that a network operator must adopt technical measures and other necessary measures in accordance with applicable laws and regulations as well as compulsory national and industrial standards to safeguard the safety and stability of network operations, effectively respond to network security incidents, prevent illegal and criminal activities, maintain the integrity, confidentiality and availability of network data.
The PRC Cyber Security Law, effective on June 1, 2017 and subsequently amended on October 28, 2025, stipulates that a network operator must adopt technical measures and other necessary measures in accordance with applicable laws and regulations as well as compulsory national and industrial standards to safeguard the safety and stability of network operations, effectively respond to network security incidents, prevent illegal and criminal activities, maintain the integrity, confidentiality and availability of network data.
Insiders have substantial control over us, and they could delay or prevent a change in our corporate control even if our other stockholders wanted it to occur. Our executive officers, directors, and principal stockholders hold approximately 13.6% of our outstanding Common Stock.
Insiders have substantial control over us, and they could delay or prevent a change in our corporate control even if our other stockholders wanted it to occur. Our executive officers, directors, and principal stockholders hold approximately 12.3% of our outstanding Common Stock.
We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 22 As a public company, we have significant additional requirements for enhanced financial reporting and internal controls.
We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future and any return on investment may be limited to the value of our stock.
We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future and any return on investment may be limited to the value of our stock. We plan to retain any future earning to finance growth.
It may be difficult for you to evaluate its performance and prospects. 23 Risks Relating to Regulation of Our Business and to Our Structure If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmental restrictions on foreign investment in industries in which we operate, or if these regulations or their interpretation change in the future, we could be subject to severe penalties.
Risks Relating to Regulation of Our Business and to Our Structure If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmental restrictions on foreign investment in industries in which we operate, or if these regulations or their interpretation change in the future, we could be subject to severe penalties.
If our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment under the PRC laws and regulations, or furthermore we will fail to complete any actions to be taken by companies with respect to existing contractual arrangements as mandated by future laws, administrative regulations or provisions prescribed by the State Council in a timely manner, or at all, the relevant PRC regulatory authorities, including the SAMR and the MIIT, which regulates ICP and advertising companies, would have broad discretion in dealing with such violations, including: ● revoking the business and operating licenses of Rise King WFOE and/or the PRC Operating Entities; ● discontinuing or restricting the operations of Rise King WFOE and/or the PRC Operating Entities; ● imposing conditions or requirements with which we, Rise King WFOE and/or our PRC Operating Entities may not be able to comply; or ● requiring us or Rise King WFOE and/or PRC Operating Entities to restructure the relevant ownership structure or operations.
If our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment under the PRC laws and regulations, or furthermore we will fail to complete any actions to be taken by companies with respect to existing contractual arrangements as mandated by future laws, administrative regulations or provisions prescribed by the State Council in a timely manner, or at all, the relevant PRC regulatory authorities, including the SAMR and the MIIT, which regulates ICP and advertising companies, would have broad discretion in dealing with such violations, including: ● revoking the business and operating licenses of Rise King WFOE and/or the PRC Operating Entities; ● discontinuing or restricting the operations of Rise King WFOE and/or the PRC Operating Entities; ● imposing conditions or requirements with which we, Rise King WFOE and/or our PRC Operating Entities may not be able to comply; or ● requiring us or Rise King WFOE and/or PRC Operating Entities to restructure the relevant ownership structure or operations. 24 The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business and would have a material adverse impact on our cash flows, financial position and operating performance.
On March 12, 2021, the SAMR published several administrative penalty cases about concentration of business operators that violated PRC Anti-Monopoly Law in the internet sector. 33 On October 23, 2021, the Standing Committee of the National People’s Congress issued a discussion draft of the amended Anti-Monopoly Law, which proposes to increase the fines for illegal concentration of business operators to “no more than ten percent of its last year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition.” The draft also proposes for the relevant authority to investigate transaction where there is evidence that the concentration has or may have the effect of eliminating or restricting competition, even if such concentration does not reach the filing threshold.
On October 23, 2021, the Standing Committee of the National People’s Congress issued a discussion draft of the amended Anti-Monopoly Law, which proposes to increase the fines for illegal concentration of business operators to “no more than ten percent of its last year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition.” The draft also proposes for the relevant authority to investigate transaction where there is evidence that the concentration has or may have the effect of eliminating or restricting competition, even if such concentration does not reach the filing threshold.
Such investigations or allegations will be costly and time-consuming and distract our management from our business plan and could result in our reputation being harmed and our stock price could decline as a result of such allegations, regardless of the truthfulness of the allegations. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 46
Such investigations or allegations will be costly and time-consuming and distract our management from our business plan and could result in our reputation being harmed and our stock price could decline as a result of such allegations, regardless of the truthfulness of the allegations.
Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: ● investors’ perception of, and demand for, securities of alternative advertising media companies; ● conditions of the U.S. and other capital markets in which we may seek to raise funds; ● our future results of operations, financial condition and cash flow; ● PRC governmental regulation of foreign investment in advertising service companies in China; 19 ● economic, political and other conditions in China; and ● PRC governmental policies relating to foreign currency borrowings.
The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. 19 Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: ● investors’ perception of, and demand for, securities of alternative advertising media companies; ● conditions of the U.S. and other capital markets in which we may seek to raise funds; ● our future results of operations, financial condition and cash flow; ● PRC governmental regulation of foreign investment in advertising service companies in China; ● economic, political and other conditions in China; and ● PRC governmental policies relating to foreign currency borrowings.
In addition, during the past two fiscal years our Common Stock has had a trading range with a low price of $1.55 per share and a high price of $11.38 per share. The market price of our Common Stock may be volatile.
In addition, during the past two fiscal years our Common Stock has had a trading range with a low price of $1.18 per share and a high price of $4.40 per share. 43 The market price of our Common Stock may be volatile.
In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection available to you and us.
Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection available to you and us.
We have been advised by our PRC counsel, as long as we do not issue any virtual currency coins, we only need to record filing as required by the Cyberspace Administration of China's Regulations on the Management of Blockchain Information Services that went into effect on February 15, 2019.
Based on our understanding of the current PRC law and regulations, we believe that as long as we do not issue any virtual currency coins, we only need to record filing as required by the Cyberspace Administration of China's Regulations on the Management of Blockchain Information Services that went into effect on February 15, 2019.
We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting.
As a public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting.
The Nasdaq rules provided the Company a compliance period of 180 calendar days from the Notice, or until April 29, 2024, to regain compliance with Rule 5550(a)(2).
The Nasdaq rules provided the Company a compliance period of 180 calendar days from the Notice, or until September 22, 2026, to regain compliance with Rule 5550(a)(2).
We rely on contractual arrangements with our PRC Operating Entities and their shareholders to operate our ICP and advertising business. These contractual arrangements may not be as effective in providing us with control over the PRC Operating Entities as direct ownership.
We rely on contractual arrangements with the PRC Operating Entities and their shareholders for our China operations, which may not be as effective in providing operational control as direct ownership. We rely on contractual arrangements with our PRC Operating Entities and their shareholders to operate our ICP and advertising business.
As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations, which could have a material adverse effect on our results of operations and financial condition. We may have difficulty establishing adequate management, legal and financial controls in the PRC.
As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations, which could have a material adverse effect on our results of operations and financial condition.
Network operators in China are subject to numerous laws and regulations, and have the obligations to, among others, (i) establish internal security management systems that meet the requirements of the classified protection system for cybersecurity, (ii) implement technical measures to monitor and record network operation status and cybersecurity incidents, (iii) implement data security measures such as data classification, backups and encryption, and (iv) submit for cybersecurity review under certain circumstances.
As a result, it may be difficult to determine what actions or omissions may be deemed to be in violations of applicable laws and regulations in certain circumstances. 33 Network operators in China are subject to numerous laws and regulations, and have the obligations to, among others, (i) establish internal security management systems that meet the requirements of the classified protection system for cybersecurity, (ii) implement technical measures to monitor and record network operation status and cybersecurity incidents, (iii) implement data security measures such as data classification, backups and encryption, and (iv) submit for cybersecurity review under certain circumstances.
Such uncertainties may restrict our ability to implement our acquisition strategy and adversely affect our business and prospects. 31 The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.
The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.
On November 1, 2023, we received a notice (the “November Notice”) from Nasdaq indicating that its common stock, failed to comply with the $1.00 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”) based upon the closing bid price of the Common Stock for the 30 consecutive business days prior to the date of the November Notice.
On March 26, 2026, we received a notice (the “Notice”) from Nasdaq indicating that our common stock, failed to comply with the $1.00 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”) based upon the closing bid price of the common stock for the previous 30 consecutive business days.
The adoption of additional laws or regulations may decrease the growth of the internet or other online services, which could in turn decrease the demand for our products and services and increase our cost of doing business. We derive a substantial portion of our sales from China. We derive a substantially portion of our sales from China.
The adoption of additional laws or regulations may decrease the growth of the internet or other online services, which could in turn decrease the demand for our products and services and increase our cost of doing business.
There can be no assurance that we will continue being able to comply with Nasdaq’s rules or will otherwise be in compliance with other Nasdaq continued listing criteria.
There can be no assurance that we will be able to regain compliance with the Bid Price Requirement or will otherwise continue being able to be in compliance with other Nasdaq continued listing criteria.
Any failure or perceived failure by us to comply with the Anti-Monopoly Guidelines for Internet Platforms Economy Sector and other PRC anti-monopoly laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our listed securities. 32 Any failure or perceived failure by us to comply with the Anti-Monopoly Guidelines for Internet Platforms Economy Sector and other PRC anti-monopoly laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. 41 PRC enterprise income tax law could adversely affect our business and our net income.
The inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. 40 PRC enterprise income tax law could adversely affect our business and our net income.
In a Q&A released on the CSRC’s official website, the respondent CSRC official stated that the domestic companies which have listed their securities in the overseas market as of March 31, 2023 will be regarded as the existing overseas listed companies, which will not be required to file with the CSRC until they conduct any new offerings subject to the filing requirements under the Filing Rules.
The Filing Rules also sets forth certain regulatory red lines for overseas offerings and listings by domestic enterprises and additional reporting obligations for listed companies in the case of material changes. 31 In a Q&A released on the CSRC’s official website, the respondent CSRC official stated that the domestic companies which have listed their securities in the overseas market as of March 31, 2023 will be regarded as the existing overseas listed companies, which will not be required to file with the CSRC until they conduct any new offerings subject to the filing requirements under the Filing Rules.
Given the continuing changing of the regulation regime and the government policy of this area in the PRC, an overall limited industry experiences in developing and operating a blockchain-powered platform, and our lack of operating history to serve as a blockchain-based SaaS services provider, our ability to generate substantial revenue from the blockchain-powered platform upon its launch remains unproven.
If our practice is deemed to have violated any PRC law or regulations, our blockchain related business would be materially and adversely affected. 23 Given the continuing changing of the regulation regime and the government policy of this area in the PRC, an overall limited industry experiences in developing and operating a blockchain-powered platform, and our lack of operating history to serve as a blockchain-based SaaS services provider, our ability to generate substantial revenue from the blockchain-powered platform upon its launch remains unproven.
The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations.
To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations.
If we are unable to maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.
These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach our information technology systems. 22 If we are unable to maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.
On November 7, 2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which imposes more stringent requirements on operators of “critical information infrastructure,” especially in data storage and cross-border data transfer. 34 On December 28, 2021, the CAC, the NDRC, the MIIT, and several other administrations jointly published the Measures for Cybersecurity Review, effective on February 15, 2022, which provides that certain operators of critical information infrastructure purchasing network products and services or network platform operators carrying out data processing activities, which affect or may affect national security, must apply with the Cybersecurity Review Office for a cybersecurity review.
On December 28, 2021, the CAC, the NDRC, the MIIT, and several other administrations jointly published the Measures for Cybersecurity Review, effective on February 15, 2022, which provides that certain operators of critical information infrastructure purchasing network products and services or network platform operators carrying out data processing activities, which affect or may affect national security, must apply with the Cybersecurity Review Office for a cybersecurity review.
We plan to retain any future earning to finance growth. 45 Techniques employed by manipulative short sellers in Chinese small cap stocks may drive down the market price of our common stock.
Techniques employed by manipulative short sellers in Chinese small cap stocks may drive down the market price of our common stock.
Since the Draft Measures for Internet Data Security is in the process of being formulated, and the Opinions, the Filing Rules and the Measures for Cybersecurity Review are relevantly new and remain unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities, it remains uncertain whether we can obtain the specific regulatory approvals from, and complete the required filings with the CSRC, CAC or any other PRC government authorities for our future securities offering in a timely basis or at all.
In addition, a network platform operator holding over one million users’ personal information shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. 29 Since the Opinions, the Filing Rules and the Measures for Cybersecurity Review are relevantly new and remain unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities, it remains uncertain whether we can obtain the specific regulatory approvals from, and complete the required filings with the CSRC, CAC or any other PRC government authorities for our future securities offering in a timely basis or at all.
These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to the certification requirements imposed by the Securities and Exchange Commission in Regulation AC (Regulation Analyst Certification) and, accordingly, the opinions they express may be based on distortions of actual facts or, in some cases, fabrications of facts.
Issuers with business operations based in China and who have limited trading volumes and are susceptible to higher volatility levels than U.S. domestic large-cap stocks, can be particularly vulnerable to such short attacks. 44 These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to the certification requirements imposed by the Securities and Exchange Commission in Regulation AC (Regulation Analyst Certification) and, accordingly, the opinions they express may be based on distortions of actual facts or, in some cases, fabrications of facts.
We may have difficulty establishing adequate management, legal and financial controls in the PRC. You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against us and our management.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against us and our management. We conduct a substantial portion of our operations in China and a substantial portion of our assets are located in China.
(664 ) (4,063 ) (1,247 ) - (5,974 ) 28 For the year ended December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Net cash (used in)/provided by operating activities (598 ) (1,070 ) (390 ) - (2,058 ) Net cash provided by/(used in) investing activities (477 ) 916 (2 ) 458 895 Net cash (used in)/provided by financing activities 1,075 477 51 (458 ) 1,145 Effect of exchange rate fluctuation - 15 (2 ) - 13 Net (decrease)/increase in cash and cash equivalents - 338 (343 ) (5 ) Cash and cash equivalents, at beginning of the year - 450 367 - 817 Cash and cash equivalents, at end of the year $ - $ 788 $ 24 - $ 812 For the year ended December 31, 2023 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Net cash (used in)/provided by operating activities (787 ) (603 ) (622 ) - (2,012 ) Net cash provided by/(used in) investing activities 787 (1,956 ) (135 ) (233 ) (1,537 ) Net cash (used in)/provided by financing activities - (787 ) 554 233 - Effect of exchange rate fluctuation - (17 ) (8 ) - (25 ) Net (decrease)/increase in cash and cash equivalents - (3,363 ) (211 ) (3,574 ) Cash and cash equivalents, at beginning of the year - 3,813 578 - 4,391 Cash and cash equivalents, at end of the year $ - $ 450 $ 367 - $ 817 29 Risks Associated With Doing Business In China There are substantial risks associated with doing business in China, as set forth in the following risk factors.
(1,483 ) 15 (2,293 ) - (3,761 ) For the year ended December 31, 2025 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Net cash (used in)/provided by operating activities (829 ) (173 ) 73 - (929 ) Net cash provided by/(used in) investing activities (404 ) (59 ) - 319 (144 ) Net cash (used in)/provided by financing activities 1,233 404 (85 ) (319 ) 1,233 Effect of exchange rate fluctuation - (2 ) - - (2 ) Net (decrease)/increase in cash and cash equivalents - 170 (12 ) 158 Cash and cash equivalents, at beginning of the year - 788 24 - 812 Cash and cash equivalents, at end of the year $ - $ 958 $ 12 - $ 970 28 For the year ended December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Net cash (used in)/provided by operating activities (598 ) (1,070 ) (390 ) - (2,058 ) Net cash provided by/(used in) investing activities (477 ) 916 (2 ) 458 895 Net cash (used in)/provided by financing activities 1,075 477 51 (458 ) 1,145 Effect of exchange rate fluctuation - 15 (2 ) - 13 Net (decrease)/increase in cash and cash equivalents - 338 (343 ) (5 ) Cash and cash equivalents, at beginning of the year - 450 367 - 817 Cash and cash equivalents, at end of the year $ - $ 788 $ 24 - $ 812 Risks Associated with Doing Business in China There are substantial risks associated with doing business in China, as set forth in the following risk factors.
However, the inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China mainland and Hong Kong that have been subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
However, the inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China mainland and Hong Kong that have been subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. 37 Our common stock may be delisted and prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended by the Accelerating Holding Foreign Companies Accountable Act, if the PCAOB is unable to inspect or investigate completely auditors located in China mainland and Hong Kong.
Any failure to obtain such approval or clearance from the regulatory authorities could materially constrain our liquidity and have a material adverse impact on our business operations and financial results, especially if we need additional capital or financing.
Any failure to obtain such approval or clearance from the regulatory authorities could materially constrain our liquidity and have a material adverse impact on our business operations and financial results, especially if we need additional capital or financing. 34 The interpretation and application of these cybersecurity laws, regulations and standards are still uncertain and evolving, especially the Draft Measures for Internet Data Security.
As of April 11, 2025, the closing trade price of our Common Stock was $1.48 per share. As of April 15, 2025, we had approximately 607 shareholders of record of our Common Stock, not including shares held in street name.
As of March 30, 2026, the closing trade price of our Common Stock was $0.68 per share. As of March 31, 2026, we had approximately 616 shareholders of record of our Common Stock, not including shares held in street name.
According to the Second Notice from Nasdaq, the Staff’s determination was based on (i) the Company meeting the continued listing requirement for market value of its publicly held shares and all other Nasdaq initial listing standards, with the exception of the minimum bid price requirement, and (ii) the Company’s written notice to Nasdaq of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
To qualify, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
Such investigations or allegations will be costly and time-consuming and distract our management from our business plan and could result in our reputation being harmed and our stock price could decline as a result of such allegations, regardless of the truthfulness of the allegations. Future inflation in China may inhibit our activity to conduct business in China.
Such investigations or allegations will be costly and time-consuming and distract our management from our business plan and could result in our reputation being harmed and our stock price could decline as a result of such allegations, regardless of the truthfulness of the allegations. 39 The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and results of operations.
However, as the Filing Rules were recently promulgated, there remain substantial uncertainties as to their interpretation, application, and enforcement and how they will affect our operations and our future financing. 32 On February 24, 2023, the CSRC, jointly with other relevant governmental authorities, promulgated the revised Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance and Listing by Domestic Enterprises (the “Confidentiality and Archives Management Provisions”), which took effect on March 31, 2023.
On February 24, 2023, the CSRC, jointly with other relevant governmental authorities, promulgated the revised Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance and Listing by Domestic Enterprises (the “Confidentiality and Archives Management Provisions”), which took effect on March 31, 2023.
The non-U.S. activities of our non-U.S. subsidiaries and VIEs may be subject to U.S. taxation. We conduct a substantial portion of our business through our operating subsidiaries and VIEs in China and are subject to income tax in the PRC. ZW Data Action Technologies Inc. is a Nevada corporation and is subject to income tax in the United States.
Finally, a 10% withholding tax will be imposed on dividends we pay to our non-PRC shareholders. 41 The non-U.S. activities of our non-U.S. subsidiaries and VIEs may be subject to U.S. taxation. We conduct a substantial portion of our business through our operating subsidiaries and VIEs in China and are subject to income tax in the PRC.
The Tax Cuts and Jobs Act (the “U.S. Tax Reform”) was signed into law on December 22, 2017, which significantly modified the U.S.
ZW Data Action Technologies Inc. is a Nevada corporation and is subject to income tax in the United States. The Tax Cuts and Jobs Act (the “U.S. Tax Reform”) was signed into law on December 22, 2017, which significantly modified the U.S.
Any future restrictions on currency exchanges may limit our ability to use retained earnings generated in Renminbi to make dividends or other payments in U.S. dollars or fund possible business activities outside China. 38 The Public Company Accounting Oversight Board (the “ PCAOB ” ) had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor has deprived our investors with the benefits of such inspections.
The Public Company Accounting Oversight Board (the “ PCAOB ” ) had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor has deprived our investors with the benefits of such inspections.
In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline.
In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business.
On July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which became effective on September 1, 2022.
However, the Measures for Network Data Security remain unclear on how it will be interpreted and implemented by the relevant PRC governmental authorities. 21 On July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which became effective on September 1, 2022.
If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.
If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility.
In addition, any cross-border data transfer activities conducted in violation of the Measures for the Security Assessment of Cross-border Data Transfer before the effectiveness of such measures are required to be rectified within six months of the effectiveness date thereof. 21 We are making efforts to comply with the applicable laws, regulations and standards, but there can be no assurance that our measures will be effective and sufficient under these PRC laws.
In addition, any cross-border data transfer activities conducted in violation of the Measures for the Security Assessment of Cross-border Data Transfer before the effectiveness of such measures are required to be rectified within six months of the effectiveness date thereof.
The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China.
In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China.
Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general.
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.
Our Common Stock is traded on the Nasdaq Stock Market LLC (“Nasdaq”), a national securities exchange. 43 On April 17, 2024, we received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that due to our failure (the “Initial Delinquent Filing”) to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”), with the Securities and Exchange Commission (the “SEC”), we are not in compliance with Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule 5250(c)(1) Rule”), which requires the timely filing of all required periodic reports with the SEC.
Our Common Stock is traded on the Nasdaq Stock Market LLC (“Nasdaq”), a national securities exchange. 42 In the past, we received notices from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that due to our failure to timely file our Annual Report on Form 10-K and our Quarterly Report on Form 10-Q, we were not in compliance with Nasdaq’s continued listing requirements.
The cybersecurity legal regime in China is relatively new and evolving rapidly, and their interpretation and enforcement involve significant uncertainties. As a result, it may be difficult to determine what actions or omissions may be deemed to be in violations of applicable laws and regulations in certain circumstances.
The cybersecurity legal regime in China is relatively new and evolving rapidly, and their interpretation and enforcement involve significant uncertainties.
If we are required to comply with these requirements and fail to do so on a timely basis, if at all, our business operation, financial conditions and business prospect may be adversely and materially affected. In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us.
In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us.
(1,483 ) 15 (2,293 ) - (3,761 ) For the year ended December 31, 2023 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Revenues - 219 30,437 (71 ) 30,585 Cost of revenues - 1,005 30,087 (71 ) 31,021 Total operating expenses 849 3,390 1,361 (24 ) 5,576 Loss from operations (849 ) (4,176 ) (1,011 ) 24 (6,012 ) Other income/(expenses) 185 113 (238 ) (24 ) 36 Income/(loss) before income tax benefit and noncontrolling interests (664 ) (4,063 ) (1,249 ) - (5,976 ) Income tax benefit - - 2 - 2 Net income/(loss) (664 ) (4,063 ) (1,247 ) - (5,974 ) Net income attributable to noncontrolling interests - - - - - Net income/(loss) attributable to ZW Data Action Technologies Inc.
(1,063 ) (681 ) (26 ) - (1,770 ) 27 For the year ended December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIE Elimination Consolidation US$ US$ US$ US$ US$ Revenues - 5,530 9,909 - 15,439 Cost of revenues - 5,151 9,842 - 14,993 Total operating expenses 1,483 662 2,058 - 4,203 Loss from operations (1,483 ) (283 ) (1,991 ) - (3,757 ) Other income/(expenses) - 298 89 - 387 Income/(loss) before income tax benefit and noncontrolling interests (1,483 ) 15 (1,902 ) - (3,370 ) Income tax benefit/(expense) - - (399 ) - (399 ) Net income/(loss) (1,483 ) 15 (2,301 ) - (3,769 ) Net income attributable to noncontrolling interests - - 8 - 8 Net income/(loss) attributable to ZW Data Action Technologies Inc.
These short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base. Issuers with business operations based in China and who have limited trading volumes and are susceptible to higher volatility levels than U.S. domestic large-cap stocks, can be particularly vulnerable to such short attacks.
These short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base.
Removed
On November 14, 2021, the Cyberspace Administration of China published a discussion draft of Management Measures for Internet Data Security, or the Draft Measures for Internet Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity review: (i) merger, reorganization or separation of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests affects or may affect national security; (ii) listing abroad of data processors processing over one million users’ personal information; (iii) listing in Hong Kong which affects or may affect national security; (iv) other data processing activities that affect or may affect national security.
Added
On September 24, 2024, the CAC published the Measures on Network Data Security Management (the “Measures for Network Data Security”), which provides that network data processors conduct network data processing activities that affects or may possibly affect national security must conduct national security review in accordance with relevant laws and regulations.
Removed
The Draft Measures for Internet Data Security also provided that operators of large Internet platforms that set up headquarters, operation centers or R&D centers overseas shall report to the national cyberspace administration and competent authorities. The CAC solicited comments on this draft, but there is no timetable as to when it will be enacted.
Added
In addition, network data processors processing personal information of over 10 million individuals shall fulfill certain requirements for processing important data and require network data processors to take certain precautionary measures, such as identifying important data and conducting annual risk assessment.
Removed
These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach our information technology systems.
Added
Furthermore, the Measures for Network Data Security allow network data processors to provide personal information overseas only if it is strictly necessary for fulfilling statutory obligations. The Measures for Network Data Security also establish certain obligations of online platform service providers, including offering users an option to turn off personalized recommendations.
Removed
If our practice is deemed to have violated any PRC law or regulations, our blockchain related business would be materially and adversely affected.
Added
We are making efforts to comply with the applicable laws, regulations and standards, but there can be no assurance that our measures will be effective and sufficient under these PRC laws.
Removed
The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business and would have a material adverse impact on our cash flows, financial position and operating performance. 24 We rely on contractual arrangements with the PRC Operating Entities and their shareholders for our China operations, which may not be as effective in providing operational control as direct ownership.
Added
It may be difficult for you to evaluate its performance and prospects.
Removed
In addition, a network platform operator holding over one million users’ personal information shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange.
Added
These contractual arrangements may not be as effective in providing us with control over the PRC Operating Entities as direct ownership.
Removed
On November 14, 2021, the CAC released the draft Administrative Measures for Internet Data Security (the “Draft Measures for Internet Data Security”), for public comments, which requires, among others, that a prior cybersecurity review should be required for listing abroad of data processors which process over one million users’ personal information, and the listing of data processors in Hong Kong which affects or may affect national security.

… 50 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

83 edited+26 added−22 removed93 unchanged
Biggest change(6) offset by the use from operations from changes in operating assets and liabilities, such as: - accounts payable decreased by approximately US$0.001 million, primarily due to settlement of the amount due to a major internet Ad resource provider as of December 31, 2022 during the year; - Other current liabilities and accruals in aggregate decreased by approximately US$0.26 million; - operating lease liabilities and lease liabilities related to short-term leases decreased by approximately US$0.34 million in the aggregate, due to payment for our office lease costs during the year; and - taxes payable decreased by approximately US$0.004 million.
Biggest change(2) the receipt of cash from operations from changes in operating assets and liabilities, such as: - accounts receivable decreased by approximately US$0.85 million; - accounts payable increased by approximately US$0.07 million; - advances from customers increased by approximately US$0.02 million; - other current assets decreased by approximately US$0.001 million; and - taxes payable increased by approximately US$0.03 million. 59 (3) offset by the use from operations from changes in operating assets and liabilities, such as: - prepayment and deposit to suppliers increased by approximately US$1.02 million primarily due to the increase in deposits and prepayments made for the purchase of advertising and marketing resources; - accrued payroll, other accruals and other current liabilities decreased by approximately US$0.17 million; and - operating lease liabilities decreased by approximately US$0.05 million in the aggregate, due to payment for our office lease costs during the year.
If we ever determine to pay a dividend, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency from China for the payment of such dividends from the profits of our PRC subsidiaries and VIEs. 48 Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12.
If we ever determine to pay a dividend, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency from China for the payment of such dividends from the profits of our PRC subsidiaries and VIEs. Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12.
This could affect our ability to obtain foreign currency through debt or equity financing for our PRC subsidiaries. 59 To date, the VIEs have settled to our Rise King WFOE the amount owed under the VIE agreements of RMB15.25 million (approximately US$2.27 million) in the aggregate.
This could affect our ability to obtain foreign currency through debt or equity financing for our PRC subsidiaries. To date, the VIEs have settled to our Rise King WFOE the amount owed under the VIE agreements of RMB15.25 million (approximately US$2.27 million) in the aggregate.
We considered the policies discussed below to be critical to an understanding of our financial statements. 51 Foreign currency translation and transactions We conduct substantially all of our operations through our PRC operating subsidiaries and VIEs, PRC is the primary economic environment in which we operate.
We considered the policies discussed below to be critical to an understanding of our financial statements. Foreign currency translation and transactions We conduct substantially all of our operations through our PRC operating subsidiaries and VIEs, PRC is the primary economic environment in which we operate.
Our policies and procedures are also designed to oversee and identify material cybersecurity risks related to third-party vendors and service providers. As part of our approach to cyber risk management, we regularly perform internal audits of internal processes and controls relating to cybersecurity.
Our policies and procedures are also designed to oversee and identify material cybersecurity risks related to third-party vendors and service providers. 45 As part of our approach to cyber risk management, we regularly perform internal audits of internal processes and controls relating to cybersecurity.
The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statement presentation and disclosures. A.
The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statement presentation and disclosures. 51 A.
Any fractional shares of Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest full share. No cash or other consideration was paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split.
No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest full share. No cash or other consideration was paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split.
(3) offset by the use from operations from changes in operating assets and liabilities, such as: - accounts payable decreased by approximately US$0.11 million, primarily due to settlement of the amount due to a major internet Ad resource provider as of December 31, 2023 during the year; - accounts receivable increased by US$1.67 million; - advances from customers decreased by US$0.28 million due to decreases in advances from customers during the year; - operating lease liabilities and lease liabilities related to short-term leases decreased by approximately US$0.02 million in the aggregate, due to payment for our office lease costs during the year; and - other current assets increased by US$0.003 million.
(6) offset by the use from operations from changes in operating assets and liabilities, such as: - accounts payable decreased by approximately US$0.11 million, primarily due to settlement of the amount due to a major internet Ad resource provider as of December 31, 2023 during the year; - accounts receivable increased by US$1.67 million; - advances from customers decreased by US$0.28 million due to decreases in advances from customers during the year; - operating lease liabilities and lease liabilities related to short-term leases decreased by approximately US$0.02 million in the aggregate, due to payment for our office lease costs during the year; and - other current assets increased by US$0.003 million.
(2) the receipt of cash from operations from changes in operating assets and liabilities, such as: - prepayment and deposit to suppliers decreased by approximately US$0.62 million, primarily due to utilization of the prepayment made to suppliers as of December 31, 2023 through Ad resource and other services received from suppliers during fiscal 2024; - other current liabilities and accruals increased by US$0.70 million; and - taxes payable increased by US$0.002 million.
(5) the receipt of cash from operations from changes in operating assets and liabilities, such as: - prepayment and deposit to suppliers decreased by approximately US$0.62 million, primarily due to utilization of the prepayment made to suppliers as of December 31, 2023 through Ad resource and other services received from suppliers during fiscal 2024; - other current liabilities and accruals increased by US$0.70 million; and - taxes payable increased by US$0.002 million.
The Company's ability to continue as a going concern is dependent upon its uncertain ability to increase gross profit margin and reduce operating loss from its core business and/or obtain additional equity and/or debt financing. The accompanying financial statements as of December 31, 2024 do not include any adjustments that might result from the outcome of these uncertainties.
The Company's ability to continue as a going concern is dependent upon its uncertain ability to increase gross profit margin and reduce operating loss from its core business and/or obtain additional equity and/or debt financing. The accompanying financial statements as of December 31, 2025 do not include any adjustments that might result from the outcome of these uncertainties.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the fourth quarter of our fiscal year ended December 31, 2024, neither we nor any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our Common Stock, the only class of our equity securities registered pursuant to Section 12 of the Exchange Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the fourth quarter of our fiscal year ended December 31, 2025, neither we nor any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our Common Stock, the only class of our equity securities registered pursuant to Section 12 of the Exchange Act.
Impairment on long-term investments: For the year ended December 31, 2024, we recognized an approximately US$0.002 million impairment loss on long-term investments, which was related to the following: 1) our cash investments in our unconsolidated investee entities whose business activities had become dormant as of the end of fiscal 2024.
For the year ended December 31, 2024, we recognized approximately US$0.002 million in impairment on long-term investments which was related to the following: 1) our cash investments in our unconsolidated investee entities whose business activities had become dormant as of the end of fiscal 2024.
Cash Flow Analysis for the Years Ended December 31, 2024 and 2023 Cash and cash equivalents represent cash on hand and deposits held at call with banks. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
Cash Flow Analysis for the Years Ended December 31, 2025 and 2024 Cash and cash equivalents represent cash on hand and deposits held at call with banks. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
The consolidated financial statements as of December 31, 2024 have been prepared under the assumption that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time.
The consolidated financial statements as of December 31, 2025 have been prepared under the assumption that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 The following table sets forth a summary, for the periods indicated, of our consolidated results of operations. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 The following table sets forth a summary, for the periods indicated, of our consolidated results of operations. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.
The exchange rates used to translate amounts in Renminbi (“RMB”), the functional currency of the PRC, into our reporting currency, the United States Dollar (“U.S. dollar” or “US$”) for the purposes of preparing our consolidated financial statements are as follows: As of December 31, 2024 2023 Balance sheet items, except for equity accounts 7.1884 7.0827 Year Ended December 31, 2024 2023 Items in the statements of operations and comprehensive loss 7.1217 7.0467 Impairment of long-lived assets In accordance with ASC 360-10-35, long-lived assets, which include tangible long-lived assets and intangible long-lived assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The exchange rates used to translate amounts in Renminbi (“RMB”), the functional currency of the PRC, into our reporting currency, the United States Dollar (“U.S. dollar” or “US$”) for the purposes of preparing our consolidated financial statements are as follows: As of December 31, 2025 2024 Balance sheet items, except for equity accounts 7.0288 7.1884 Year Ended December 31, 2025 2024 Items in the statements of operations and comprehensive loss 7.1429 7.1217 Impairment of long-lived assets In accordance with ASC 360-10-35, long-lived assets, which include tangible long-lived assets and intangible long-lived assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” for the aggregate information regarding our equity compensation plans in effect on December 31, 2024.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” for the aggregate information regarding our equity compensation plans in effect on December 31, 2025.
In the long term, beyond the next 12 months, we plan to further broaden the application scenarios of our blockchain-based SaaS services to be offered to the customers, continue expanding our core Internet advertising and marketing business through acquisitions, and develop Internet advertising and marketing channels that target overseas Internet users.
In the long term, beyond the next 12 months, we plan to further broaden the application scenarios of our blockchain-based SaaS services to be offered to the customers, continue expanding our core Internet advertising and marketing business through acquisitions, and develop Internet advertising and marketing channels that target Internet users outside of mainland China.
Net cash provided by/(used in) investing activities: For the year ended December 31, 2024, our cash provided by investing activities included the following transactions: (1) we received an aggregate of US$0.90 million repayments of short-term loan principal and interest, of which US$0.49 million was related to repayment of loan principals and US$0.41 million in repayment of loan interest; (2) investment and advances to ownership investee entities of US$0.002 million; (3) proceeds from the disposal of long term investments in of US$0.15 million; (4) made payments for leasehold improvements and the purchase of vehicles, furniture and office equipment for US$0.003 million and (5) made deposits for other investing contracts of US$0.15 million.
In the aggregate, these transactions resulted in a net cash outflow used in investing activities of approximately US$0.14 million for the year ended December 31, 2025. 60 For the year ended December 31, 2024, our cash provided by investing activities included the following transactions: (1) we received an aggregate of US$0.90 million repayments of short-term loan principal and interest, of which US$0.49 million was related to repayment of loan principals and US$0.41 million in repayment of loan interest; (2) investment and advances to ownership investee entities of US$0.002 million; (3) proceeds from the disposal of long term investments in of US$0.15 million; (4) made payments for leasehold improvements and the purchase of vehicles, furniture and office equipment for US$0.003 million and (5) made deposits for other investing contracts of US$0.15 million.
In accordance with these PRC laws and regulations, our PRC subsidiaries, the consolidated VIEs and their subsidiaries are restricted in their ability to transfer a portion of their net assets to us. As of December 31, 2024 and 2023, net assets restricted in the aggregate, were approximately US$13.23 million and US$13.41 million, respectively.
In accordance with these PRC laws and regulations, our PRC subsidiaries, the consolidated VIEs and their subsidiaries are restricted in their ability to transfer a portion of their net assets to us. As of December 31, 2025 and 2024, net assets restricted in the aggregate, were approximately US$13.11 million and US$13.23 million, respectively.
Due to certain aspects of our business nature, the fluctuation of our sales and marketing expenses usually does not have a direct linear relationship with the fluctuation of our net revenues. 56 ● General and administrative expenses: Our general and administrative expenses were approximately US$4.0 million and US$4.06 million for the years ended December 31, 2024 and 2023, respectively.
Due to certain aspects of our business nature, the fluctuation of our sales and marketing expenses usually does not have a direct linear relationship with the fluctuation of our net revenues. ● General and administrative expenses: Our general and administrative expenses were approximately US$2.31 million and US$4.0 million for the years ended December 31, 2025 and 2024 respectively.
Net cash provided by financing activities: For the year ended December 31, 2024, our cash provided by financing activities included the following transactions: (1) we received advances from investors of approximately US$1.08 million and (2) capital contribution from noncontrolling interest of approximately US$0.07 million.
This resulted in net cash inflow provided by financing activities of approximately US$1.23 million for the year ended December 31, 2025. For the year ended December 31, 2024, our cash provided by financing activities included the following transactions: (1) we received advances from investors of approximately US$1.08 million and (2) capital contribution from noncontrolling interest of approximately US$0.07 million.
We offer a variety channels of advertising and marketing services through this system, which primarily include distribution of the right to use search engine marketing services we purchased from key search engines, influencer marketing services, provision of online advertising placements services on our web portals, provision of ecommerce O2O advertising and marketing services as well as provision of other related value-added data and technical services to maximize market exposure and effectiveness for our clients.
We offer a variety channels of advertising and marketing services through this system, which primarily include distribution of the right to use search engine marketing services we purchased from key search engines, influencer marketing services, digital advertising and marketing services as well as provision of other related value-added data and technical services to maximize market exposure and effectiveness for our clients.
Our costs also include the cost of operating our influencer marketing services which includes the fees for collaborating with various influencer agencies. For the year ended December 31, 2024 and 2023, our total cost of revenues for Internet advertising and data service was approximately US$4.31 million and US$0.37 million, respectively.
Our costs also include the cost of operating our influencer marketing services which includes the fees for collaborating with various influencer agencies. For the year ended December 31, 2025 and 2024, our total cost of revenues for Internet advertising and marketing service was approximately US$3.47 million and US$4.31 million, respectively.
In aggregate, these transactions resulted in net cash inflow of provided by financing activities of approximately US$1.15 million for the year ended December 31, 2024. For the year ended December 31, 2023, no cash was provided by or used in financing activities.
In aggregate, these transactions resulted in net cash inflow of provided by financing activities of approximately US$1.15 million for the year ended December 31, 2024.
Loss before income tax (benefit)/expense and noncontrolling interest: As a result of the foregoing, our loss before income tax (benefit)/expense and noncontrolling interest was approximately US$3.37 million and US$5.98 million for the years ended December 31, 2024 and 2023, respectively.
Loss before income tax (benefit)/expense and noncontrolling interest: As a result of the foregoing, our loss before income tax (benefit)/expense and noncontrolling interest was approximately US$1.77 million and US$3.37 million for the years ended December 31, 2025 and 2024, respectively.
The gross margin rate of this business category for the years ended December 31, 2024 and 2023 was 9.8% and 17.1%, respectively. ● Costs for distribution of the right to use search engine marketing service was direct search engine resource consumed for the right to use search engine marketing service that we purchased from key search engines and distributed to our customers.
The gross margin rate of this business category for the years ended December 31, 2025 and 2024 was 6% and 3%, respectively. ● Costs for distribution of the right to use search engine marketing service was direct search engine resource consumed for the right to use search engine marketing service that we purchased from key search engines and distributed to our customers.
ITEM 5 MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock has been listed on the Nasdaq Capital Market under the symbol “CNET” since October 29, 2013.
ITEM 4 MINE SAFETY DISCLOSURES Not applicable . PART II. ITEM 5 MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock has been listed on the Nasdaq Capital Market under the symbol “CNET” since October 29, 2013.
On December 16, 2021, the PCAOB issued a HFCAA Determination Report (the “2021 PCAOB Determinations”) to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong because of positions taken by the Chinese authorities, and our auditor was subject to this determination.
On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law. 48 On December 16, 2021, the PCAOB issued a HFCAA Determination Report (the “2021 PCAOB Determinations”) to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong because of positions taken by the Chinese authorities, and our auditor was subject to this determination.
Holders As of April 15, 2025, there were 607 record holders of our Common Stock. Dividends We have never paid any dividends on our Common Stock and we plan to retain earnings, if any, for use in the development and growth of our business.
Holders As of March 31, 2026, there were 616 record holders of our Common Stock. Dividends We have never paid any dividends on our Common Stock and we plan to retain earnings, if any, for use in the development and growth of our business.
Revenues related to our influencer marketing services are recognized based on when the marketing service is completed and accepted by our clients. For NFT generation service provided through our BIF platform, revenues are recognized based on a fixed price per NFT generation, when a NFT is generated, delivered and accepted by customers (“point in time”).
For NFT generation service provided through our BIF platform, revenues are recognized based on a fixed price per NFT generation, when a NFT is generated, delivered and accepted by customers (“point in time”).
Net loss attributable to ZW Data Action Technologies Inc.: Net loss attributable to ZW Data Action Technologies Inc. was approximately US$3.76 million and US$5.97 million for the years ended December 31, 2024 and 2023, respectively. 57 B.
Net loss attributable to ZW Data Action Technologies Inc.: Net loss attributable to ZW Data Action Technologies Inc. was approximately US$1.77 million and US$3.76 million for the years ended December 31, 2025 and 2024, respectively. B.
For the year ended December 31, 2024, our total cost of revenues for distribution of the right to use search engine marketing service increased to US$9.84 million, compared with US$29.81 million for last year.
For the year ended December 31, 2025, our total cost of revenues for distribution of the right to use search engine marketing service decreased to US$0.05 million, compared with US$9.84 million for last year.
As of December 31, 2024, we had cash and cash equivalents of approximately US$0.81 million.
As of December 31, 2025, we had cash and cash equivalents of approximately US$0.97 million.
Our liquidity needs include (i) net cash used in operating activities that consists of (a) cash required to fund the initial build-out, continued expansion of our network and new services and (b) our working capital needs, which include deposits and advance payments to search engine resources and other advertising resources providers, payment of our operating expenses and financing of our accounts receivable; and (ii) net cash used in investing activities that consist of the investment to expand technologies related to our existing and future business activities, investment to enhance the functionality of our current advertising portals for providing advertising, marketing and data services and to secure the safety of our general network, and investment to establish joint ventures with strategic partners for the development of new technologies and services.
Our liquidity needs include (i) net cash used in operating activities that consists of (a) cash required to fund the expansion of our digital marketing and new services and (b) our working capital needs, which include deposits and advance payments to advertising resources providers, payment of our operating expenses and financing of our accounts receivable; and (ii) net cash used in investing activities that consist of the investment to expand technologies related to our existing and future business activities and investment to establish joint ventures with strategic partners for the development of new technologies and services.
As a result of a share exchange transaction we consummated with China Net BVI in June 2009, we are now a holding company, which through certain contractual arrangements with operating companies in the PRC, is primarily engaged in providing Internet advertising, precision marketing, blockchain-based SaaS services and e-commerce online to offline (“O2O”) advertising and marketing and the related data and technical services to SMEs in the PRC.
As a result of a share exchange transaction we consummated with China Net BVI in June 2009, we are now a holding company, which through certain contractual arrangements with operating companies in the PRC and our operating subsidiaries outside of mainland China, is primarily engaged in providing Internet advertising, precision marketing, influencer marketing services as well as the related data and technical services to SMEs.
The Public Company Accounting Oversight Board (the “ PCAOB ” ) had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor has deprived our investors with the benefits of such inspections.
Readers are cautioned not to place undue reliance on these forward-looking statements. 47 The Public Company Accounting Oversight Board (the “ PCAOB ” ) had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor has deprived our investors with the benefits of such inspections.
For the distribution of the right to use the third-party’s search engine marketing service, we recognize the revenues on a gross basis, because we determine that we are a principal in the transaction, who controls the service before it is transferred to the customers. Lease We lease office spaces from unrelated parties during our normal course of business.
For all of our business segments, we recognize revenue on a gross basis, because we determine that we are a principal in the transaction, who controls the service before it is transferred to the customers. Lease We lease office spaces from unrelated parties during our normal course of business.
LIQUIDITY AND CAPITAL RESOURCES Cash Transfer within Our Organization and the Related Restrictions We are a Nevada holding company with operations primarily conducted in China through our PRC subsidiaries, VIEs and VIEs’ subsidiaries. The intercompany flow of funds within our organization is effected through capital contributions and intercompany loans.
LIQUIDITY AND CAPITAL RESOURCES Cash Transfer within Our Organization and the Related Restrictions We are a Nevada holding company with operations primarily conducted through our subsidiaries outside of mainland China, with limited operations in mainland China conducted through our PRC subsidiaries, VIEs and VIEs’ subsidiaries.
Our cost of revenues primarily consists of search engine marketing resources purchased from key search engines, influencer agency costs, cost of outdoor advertising resources, amortization of software platform development cost and other direct costs associated with providing our services.
Our cost of revenues primarily consists of search engine marketing resources purchased from key search engines, influencer agency costs, cost of marketing services, amortization of intellectual property cost, amortization of software platform development cost, costs relating to enhancing our blockchain-based SaaS services and other direct costs associated with providing our services.
Off-Balance Sheet Arrangements None. 63 D. Disclosure of Contractual Obligations In August 2022, we obtained a 9.9% equity interest in Hunan Yong Fu Xiang Health Management Co., Ltd (“Yong Fu Xiang”), through subscription of a RMB6.73 million (approximately US$0.97 million) registered capital of the entity in cash, which amount was committed to be paid up before December 31, 2065.
Disclosure of Contractual Obligations In August 2022, we obtained a 9.9% equity interest in Hunan Yong Fu Xiang Health Management Co., Ltd (“Yong Fu Xiang”), through subscription of a RMB6.73 million (approximately US$0.97 million) registered capital of the entity in cash, which amount was committed to be paid up before December 31, 2065. 62 In June 2023, we obtained a 9.9% equity interest in Wuhan Ju Liang, through subscription of a RMB0.99 million (approximately US$0.14 million) registered capital of the entity in cash, which amount was committed to be paid up before August 1, 2052.
Instead, we recognized the lease payments of these short-term leases in our consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. 52 As the implicit rates of our leases cannot be readily determined, in accordance with ASC Topic 842-20-30-3, we then use our incremental borrowing rate as the discount rate to determine the present value of our lease payments for each of our lease contracts with a duration of over twelve months.
As the implicit rates of our leases cannot be readily determined, in accordance with ASC Topic 842-20-30-3, we then use our incremental borrowing rate as the discount rate to determine the present value of our lease payments for each of our lease contracts with a duration of over twelve months.
For the year ended December 31, 2024, our consolidated VIEs transferred US$0.02 million to our consolidated subsidiaries as repayment of loans. For the year ended December 31, 2023, our consolidated subsidiaries transferred US$0.55 million cash to the consolidated VIEs in form of loans, respectively.
For the year ended December 31, 2024, we transferred US$0.48 million in cash to our operating subsidiaries For the year ended December 31, 2025, our consolidated VIEs transferred US$0.09 million to our consolidated subsidiaries as repayment of loans. For the year ended December 31, 2024, our consolidated VIEs transferred US$0.02 million to our consolidated subsidiaries as repayment of loans.
Looking forward in 2025, we will be positioning our client focus outside of the PRC with an emphasis on higher margin internet advertising services and the blockchain and digital asset business.
Looking forward in 2026, we will continue to position our client focus outside of mainland China with an emphasis on higher margin internet advertising services and the blockchain and digital asset business.
The following table sets forth our cost of revenues, disaggregated by type of services, by amount and gross profit ratio for the periods indicated, with inter-company transactions eliminated: Year Ended December 31, 2024 2023 (Amounts expressed in thousands of US dollars, except percentages) Revenue Cost GP ratio Revenue Cost GP ratio -Internet advertising and related data service $ 4,780 4,310 9.8 % $ 450 373 17.1 % -Distribution of the right to use search engine marketing service 9,909 9,842 0.7 % 30,060 29,807 0.8 % Internet advertising and related services 14,689 14,152 3.7 % 30,510 30,180 1.1 % Blockchain-based SaaS services 750 841 -12.1 % 75 841 -1,021.3 % Total $ 15,439 $ 14,993 2.9 % $ 30,585 $ 31,021 -1.4 % Cost of revenues: our total cost of revenues decreased to approximately US$14.99 million for the year ended December 31, 2024, compared with US$31.02 million for the year ended December 31, 2023.
The following table sets forth our cost of revenues, disaggregated by type of services, by amount and gross profit ratio for the periods indicated, with inter-company transactions eliminated: Year Ended December 31, 2025 2024 (Amounts expressed in thousands of US dollars, except percentages) Revenue Cost GP ratio Revenue Cost GP ratio -Internet advertising and related marketing service $ 3,688 3,465 6.0 % $ 4,780 4,310 3.0 % -Distribution of the right to use search engine marketing service 50 45 10 % 9,909 9,842 0.4 % Internet advertising and related services 3,738 3,510 6.1 % 14,689 14,152 3.5 % IP Services 260 191 26.5 % - - - Blockchain-based SaaS services 616 560 9.1 % 750 841 -0.6 % Total $ 4,614 $ 4,261 7.7 % $ 15,439 $ 14,993 2.9 % Cost of revenues: our total cost of revenues decreased to approximately US$4.26 million for the year ended December 31, 2025, compared with US$15.0 million for the year ended December 31, 2024.
We do not own any real property. Item Address 1 8/F. 29 Des Voeux Road Central, Central, Hong Kong 2 8/F. Sanshan Science and Technology Innovation Center, 12 Sanshan Port Road, Guicheng Street, Nanhai District, Foshan City, China The property listed in Item 1 above is our principal executive office and is used by all of our business segments.
We do not own any real property. Item Address 1 8/F. 29 Des Voeux Road Central, Central, Hong Kong The property listed in Item 1 above is our principal executive office and is used by all of our business segments.
We currently do not have any plan to make any distribution of earnings/issue any dividends directly or indirectly to our Nevada holding company or pay any cash dividends on our common stock in the foreseeable future because we currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
To date, none of our subsidiaries has made any distribution of earnings or issued any dividends to their respective shareholder in or outside of China, or to the Nevada holding company, and the Nevada holding company has never declared or paid any cash dividends to U.S. investors. 58 We currently do not have any plan to make any distribution of earnings/issue any dividends directly or indirectly to our Nevada holding company or pay any cash dividends on our common stock in the foreseeable future because we currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
Year Ended December 31, 2024 2023 US$ US$ Revenues $ 15,439 $ 30,585 Cost of revenues 14,993 31,021 Gross (loss)/profit 446 (436 ) Operating expenses Sales and marketing expenses 207 267 General and administrative expenses 3,996 4,061 Research and development expenses - 17 Impairment on intangible assets - 1,231 Total operating expenses 4,203 5,576 Loss from operations (3,757 ) (6,012 ) Other income (expenses) Change in fair value of warrant liabilities - 185 Interest income 298 298 Impairment on long-term investments (2 ) (433 ) Gain on disposal of subsidiaries 23 10 Other income/(expense,) net 68 (24 ) Total other income 387 36 Loss before income tax benefit/(expense) and noncontrolling interests (3,370 ) (5,976 ) Income tax benefit/(expense) (399 ) 2 Net loss (3,769 ) (5,974 ) Net loss attributable to noncontrolling interests 8 - Net loss attributable to ZW Data Action Technologies Inc. $ (3,761 ) $ (5,974 ) Loss per share Loss per common share Basic and diluted $ (1.86 ) $ (3.11 ) Weighted average number of common shares outstanding: Basic and diluted 2,021,492 1,923,801 53 REVENUES The following tables set forth a breakdown of our total revenues, disaggregated by type of services for the periods indicated, with inter-company transactions eliminated: Year Ended December 31, 2024 2023 Revenue type (Amounts expressed in thousands of US dollars, except percentages) -Internet advertising and related data service $ 4,780 31.0 % $ 450 1.5 % -Distribution of the right to use search engine marketing service 9,909 64.2 % 30,060 98.3 % Internet advertising and related services 14,689 95.2 % 30,510 99.8 % Blockchain-based SaaS services 750 4.8 % 75 0.2 % Total $ 15,439 100 % $ 30,585 100 % Total Revenues : Our total revenues decreased to approximately US$15.44 million for the year ended December 31, 2024 from approximately US$30.59 million for the year ended December 31, 2023, which was primarily due to the winding down of our distribution of the right to use search engine marketing service in the PRC but increases in higher margin internet advertising and related services such as influencer marketing.
Year Ended December 31, 2025 2024 US$ US$ Revenues $ 4,614 $ 15,439 Cost of revenues 4,261 14,993 Gross profit 353 446 Operating expenses Sales and marketing expenses - 207 General and administrative expenses 2,306 3,996 Total operating expenses 2,306 4,203 Loss from operations (1,953 ) (3,757 ) Other income (expenses) Interest income 189 298 Impairment on long-term investments - (2 ) Gain on disposal of subsidiaries - 23 Other expense, net (6 ) 68 Total other income 183 387 Loss before income tax benefit/(expense) and noncontrolling interests (1,770 ) (3,370 ) Income tax benefit/(expense) (1 ) (399 ) Net loss (1,771 ) (3,769 ) Net income attributable to noncontrolling interests 1 8 Net loss attributable to ZW Data Action Technologies Inc. $ (1,770 ) $ (3,761 ) Loss per share Loss per common share Basic and diluted $ (0.67 ) $ (1.86 ) Weighted average number of common shares outstanding: Basic and diluted 2,655,963 2,021,492 52 REVENUES The following tables set forth a breakdown of our total revenues, disaggregated by type of services for the periods indicated, with inter-company transactions eliminated: Year Ended December 31, 2025 2024 Revenue type (Amounts expressed in thousands of US dollars, except percentages) -Internet advertising and related marketing service $ 3,688 79.9 % $ 4,780 31.0 % -Distribution of the right to use search engine marketing service 50 1.1 % 9,909 64.2 % Internet advertising and related services 3,738 81 % 14,689 95.2 % IP Services 260 5.6 % - - Blockchain-based SaaS services 616 13.4 % 750 4.8 % Total $ 4,614 100 % $ 15,439 100 % Total Revenues : Our total revenues decreased to approximately US$4.61 million for the year ended December 31, 2025 from approximately US$15.44 million for the year ended December 31, 2024, which was primarily due to the winding down of our distribution of the right to use search engine marketing service in the PRC but increases in higher margin internet advertising and related marketing services such as influencer marketing and other digital marketing services outside of mainland China.
Operating Expenses Our operating expenses consist of sales and marketing expenses, general and administrative expenses, research and development expenses and impairment on intangible assets. The following tables set forth our operating expenses, divided into their major categories by amount and as a percentage of our total revenues for the periods indicated.
The following tables set forth our operating expenses, divided into their major categories by amount and as a percentage of our total revenues for the periods indicated.
Should the PRC authorities obstruct the PCAOB’s access to inspect or investigate completely in any way and at any point, the PCAOB will act immediately to consider the need to issue new determinations consistent with the HFCAA. 50 We cannot assure you that our auditor will not be determined as a register public accounting firm that the PCAOB is unable to inspect or investigate completely for two consecutive years because of positions taken by the Chinese authorities and/or any other causes in the future.
We cannot assure you that our auditor will not be determined as a register public accounting firm that the PCAOB is unable to inspect or investigate completely for two consecutive years because of positions taken by the Chinese authorities and/or any other causes in the future.
Interest income: For the year ended December 31, 2024, we recognized an approximately US$0.3 million interest income, which was primarily related to the interest we earned from the short-term loans we provided to unrelated parties during the year.
Interest income: For the year ended December 31, 2025, we recognized an approximately US$0.19 million interest income, which was primarily related to the interest we earned from the short-term loans we provided to unrelated parties during the year. Impairment on long-term investments: For the year ended December 31, 2025, we did not recognize any impairment loss on long-term investments.
Year Ended December 31, 2024 2023 (Amounts expressed in thousands of US dollars, except percentages) Amount Percentage of total revenue Amount Percentage of total revenue Total Revenues $ 15,439 100 % $ 30,585 100 % Gross (loss)/profit 446 2.9 % (436 ) -1 % Sales and marketing expenses 207 1.3 % 267 0.9 % General and administrative expenses 3,996 25.9 % 4,061 13.3 % Research and development expenses - - 17 0.1 % Impairment on intangible assets - - 1,231 4 % Total operating expenses 4,203 27.2 % 5,576 18.2 % Operating Expenses: Our operating expenses were approximately US$4.20 million and US$5.58 million for the years ended December 31, 2024 and 2023, respectively. ● Sales and marketing expenses: For the year ended December 31, 2024, our sales and marketing expenses was approximately US$0.21 million, compared to approximately US$0.27 million in the previous year.
Year Ended December 31, 2025 2024 (Amounts expressed in thousands of US dollars, except percentages) Amount Percentage of total revenue Amount Percentage of total revenue Total Revenues $ 4,614 100 % $ 15,439 100 % Gross profit 353 7.7 % 446 2.9 % Sales and marketing expenses - - 207 1.3 % General and administrative expenses 2,306 50 % 3,996 25.9 % Total operating expenses 2,306 50 % 4,203 27.2 % Operating Expenses: Our operating expenses were approximately US$2.31 million and US$4.20 million for the years ended December 31, 2025 and 2024, respectively. ● Sales and marketing expenses: For the year ended December 31, 2025, our sales and marketing expenses was approximately nil, compared to approximately US$0.21 million in the previous year.
In the aggregate, these transactions resulted in a net cash inflow provided by investing activities of approximately US$0.90 million for the year ended December 31, 2024.
In the aggregate, these transactions resulted in a net cash inflow provided by investing activities of approximately US$0.90 million for the year ended December 31, 2024. Net cash provided by financing activities: For the year ended December 31, 2025, our cash provided by financing activities included proceeds from private investment in public equity (“PIPE”) transactions of approximately US$1.23 million.
We derive the majority of our revenues from distribution of the right to use the search engine marketing (“SEM”) services, sale of advertising space on our internet ad portals, and provision of the related data and technical services, all of which management considers as one aggregate business operation and relies upon the consolidated results of all operations in this business unit to make decisions about allocating resources and evaluating performance.
We derive the majority of our revenues from our internet advertising and related marketing services which includes our influencer marketing and digital marketing services outside of mainland China, all of which management considers as one aggregate business operation and relies upon the consolidated results of all operations in this business unit to make decisions about allocating resources and evaluating performance.
As a result, the number of shares of the Company’s authorized Common Stock was reduced from 50,000,000 shares to 12,500,000 shares and the issued and outstanding number of shares of the Common Stock was correspondingly decreased. The Reverse Stock Split has no effect on the par value of the Company’s Common Stock or authorized shares of preferred stock.
The Reverse Stock Split became effective on September 30, 2024 (the “Effective Date”). As a result, the number of shares of the Company’s authorized Common Stock was reduced from 50,000,000 shares to 12,500,000 shares and the issued and outstanding number of shares of the Common Stock was correspondingly decreased.
The following table provides detailed information about our net cash flow for the periods indicated: Year Ended December 31, 2024 2023 Amounts in thousands of US dollars Net cash used in operating activities $ (2,058 ) $ (2,012 ) Net cash provided by/(used in) investing activities 895 (1,537 ) Net cash provided by financing activities 1,145 - Effect of exchange rate changes 13 (25 ) Net (decrease)/increase in cash and cash equivalents $ (5 ) $ (3,574 ) 60 Net cash used in operating activities: For the year ended December 31, 2024, our net cash used in operating activities of approximately US$2.06 million were primarily attributable to: (1) net loss excluding approximately US$0.94 million of non-cash expenses of depreciation and amortizations; approximately US$0.02 million of amortization of operating lease right-of-use assets, approximately US$0.68 million of share-based compensation; approximately US$0.003 million in loss on disposal of fixed assets; approximately US$0.002 million in impairment on long-term investments; approximately US$0.85 million of allowance for doubtful accounts; approximately US$0.40 million of deferred tax expense; approximately US$0.02 million in gain on disposal of subsidiaries; and approximately US$0.40 million of non-operating income, yielded the non-cash, non-operating items excluded net loss of approximately US$1.30 million.
The following table provides detailed information about our net cash flow for the periods indicated: Year Ended December 31, 2025 2024 Amounts in thousands of US dollars Net cash used in operating activities $ (929 ) $ (2,058 ) Net cash provided by/(used in) investing activities (144 ) 895 Net cash provided by financing activities 1,233 1,145 Effect of exchange rate changes (2 ) 13 Net (decrease)/increase in cash and cash equivalents $ 158 $ (5 ) Net cash used in operating activities: For the year ended December 31, 2025, our net cash used in operating activities of approximately US$0.93 million were primarily attributable to: (1) net loss excluding approximately US$0.23 million of non-cash expenses of depreciation and amortizations; approximately US$0.05 million of amortization of operating lease right-of-use assets, approximately US$0.35 million of share-based compensation; approximately US$0.69 million of allowance for doubtful accounts; approximately US$0.03 million of deferred tax benefit; and approximately US$0.19 million of non-operating income, yielded the non-cash, non-operating items excluded net loss of approximately US$0.67 million.
However, the inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China mainland and Hong Kong that have been subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. 49 Our common stock may be delisted and prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended by the Accelerating Holding Foreign Companies Accountable Act, if the PCAOB is unable to inspect or investigate completely auditors located in China mainland and Hong Kong.
However, the inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China mainland and Hong Kong that have been subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
Gross margin rate of this service for the year ended December 31, 2024 was 0.7%, compared with 0.8% last year. ● For the year ended December 31, 2024 and 2023, cost of our blockchain-based SaaS services was approximately US$0.84 million and US$0.84 million, respectively.
Gross margin rate of this business category was 26.5% for the year ended December 31, 2025. 54 ● For the year ended December 31, 2025 and 2024, cost of our blockchain-based SaaS services was approximately US$0.56 million and US$0.84 million, respectively.
For the year ended December 31, 2023, our net cash used in operating activities of approximately US$2.01 million were primarily attributable to: (4) net loss excluding approximately US$1.29 million of non-cash expenses of depreciation and amortizations; approximately US$0.36 million of amortization of operating lease right-of-use assets, approximately US$0.11 million of share-based compensation; approximately US$0.006 million in loss on disposal of fixed assets; approximately US$1.23 million in impairment on intangible assets; approximately US$0.19 million of gain from change in fair value of warrant liabilities; approximately US$1.03 million of allowance for doubtful accounts; approximately US$0.43 million of impairment on long-term investments; approximately US$0.002 million of deferred tax benefit; approximately US$0.14 million in effects of termination of an operating lease contract; approximately US$0.01 million in gain on disposal of subsidiaries; and approximately US$0.30 million of non-operating income, yielded the non-cash, non-operating items excluded net loss of approximately US$2.15 million.
For the year ended December 31, 2024, our net cash used in operating activities of approximately US$2.06 million were primarily attributable to: (4) net loss excluding approximately US$0.94 million of non-cash expenses of depreciation and amortizations; approximately US$0.02 million of amortization of operating lease right-of-use assets, approximately US$0.68 million of share-based compensation; approximately US$0.003 million in loss on disposal of fixed assets; approximately US$0.002 million in impairment on long-term investments; approximately US$0.85 million of allowance for doubtful accounts; approximately US$0.40 million of deferred tax expense; approximately US$0.02 million in gain on disposal of subsidiaries; and approximately US$0.40 million of non-operating income, yielded the non-cash, non-operating items excluded net loss of approximately US$1.30 million.
In evaluating our business, you should carefully consider the information set forth under the heading “ Risk Factors ” and elsewhere in this Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements.
In evaluating our business, you should carefully consider the information set forth under the heading “ Risk Factors ” and elsewhere in this Form 10-K.
When the Reverse Stock Split became effective, each four shares of issued and outstanding Common Stock were converted into one newly issued and outstanding share of Common Stock. No fractional shares were issued in connection with the Reverse Stock Split.
The Reverse Stock Split has no effect on the par value of the Company’s Common Stock or authorized shares of preferred stock. When the Reverse Stock Split became effective, each four shares of issued and outstanding Common Stock were converted into one newly issued and outstanding share of Common Stock.
For the year ended December 31, 2023, the changes in our general and administrative expenses were primarily due to the following factors: (1) an increase in share based compensation of approximately US$0.58 million, offset by (2) a decrease of approximately US$0.46 million in general departmental expenses and (3) a decrease of allowance for doubtful of accounts of approximately US$0.18 million. ● Research and development expenses: Our research and development expenses were approximately nil and US$0.02 million for the years ended December 31, 2024 and 2023, respectively.
For the year ended December 31, 2025, the changes in our general and administrative expenses were primarily due to the following factors: (1) a decrease in share based compensation of approximately US$0.34 million, offset by (2) a decrease of approximately US$1.32 million in general departmental expenses and (3) a decrease of allowance for doubtful of accounts of approximately US$0.16 million. 55 Loss from operations: As a result of the foregoing, we incurred a net loss from operations of approximately US$1.95 million and US$3.76 million for the years ended December 31, 2025 and 2024, respectively.
The decrease was mainly due to the winding down of our distribution of the right to use search engine marketing service in the PRC, following sustained low to negative margins in this business segment for the past several years. ● For the year ended December 31, 2024, we generated an approximately US$0.75 million revenues from our Blockchain-based SaaS Services, compared with approximately US$0.08 million for the year ended December 31, 2023. 54 Cost of Revenues Our cost of revenues consisted of advertising resources costs directly related to the offering of our Internet advertising, precision marketing services and software platform amortization cost related to our blockchain-based SaaS services.
The decrease was mainly due to the winding down of our distribution of the right to use search engine marketing service in the PRC, following sustained low to negative margins in this business segment for the past several years. ● Revenue generated from our IP services for the year ended December 31, 2025 was approximately US$0.26 million, compared with nil for the year ended December 31, 2024.
Under the PRC Enterprise Income Tax (“EIT”) Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise to its immediate holding company outside China are subject to a 10% withholding tax.
Furthermore, if these entities incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. 57 Under the PRC Enterprise Income Tax (“EIT”) Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise to its immediate holding company outside China are subject to a 10% withholding tax.
Income tax (benefit)/expense: For the year ended December 31, 2024, we recognized a deferred income tax expense of approximately US$0.40 million.
Income tax (benefit)/expense: For the year ended December 31, 2025 and 2024, we recognized a deferred income tax expense of approximately US$0.001 million and US$0.40 million, respectively. Net loss: As a result of the foregoing, for the years ended December 31, 2025 and 2024, we incurred a net loss of approximately US$1.77 million and US$3.77 million, respectively.
Below table summarized the above cash transfers within our organization included in the cash flows statements of our Condensed Consolidating Schedules for the years ended December 31, 2024 and 2023, respectively, on page 28 under Risk Factors-Risks Relating to Regulation of Our Business and to Our Structure contained in Item 1A of this Annual Report: For the year ended December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIEs Total US$’000 US$’000 US$’000 US$’000 Net cash transferred from/(to) companies within the organization presented as cash provided by/(used in) investing activities (477 ) 19 (458 ) Net cash transferred (to)/from companies within the organization presented as cash (used in)/provided by financing activities 477 (19 ) 458 For the year ended December 31, 2023 The Company Consolidated Subsidiaries Consolidated VIEs Total US$’000 US$’000 US$’000 US$’000 Net cash transferred from/(to) companies within the organization presented as cash provided by/(used in) investing activities 787 (554 ) 233 Net cash transferred (to)/from companies within the organization presented as cash (used in)/provided by financing activities (787 ) 554 (233 ) 58 As we conduct our operations primarily in China through our PRC subsidiaries, VIEs and their subsidiaries, and we intend to transfer most of our cash raised from the U.S. stock market to these operating entities to support their operations and expansions, our ability to pay dividends to U.S. investors may depend on receiving distributions from our PRC subsidiaries and settlement of the amounts owed under the VIE agreements from the consolidated VIEs.
Other than the cash transfers above, no other assets were transferred within our organization for the years ended December 31, 2025 and 2024. 56 Below table summarized the above cash transfers within our organization included in the cash flows statements of our Condensed Consolidating Schedules for the years ended December 31, 2025 and 2024, respectively, on page 28 under Risk Factors-Risks Relating to Regulation of Our Business and to Our Structure contained in Item 1A of this Annual Report: For the year ended December 31, 2025 The Company Consolidated Subsidiaries Consolidated VIEs Total US$’000 US$’000 US$’000 US$’000 Net cash transferred from/(to) companies within the organization presented as cash provided by/(used in) investing activities (404 ) 85 (319 ) Net cash transferred (to)/from companies within the organization presented as cash (used in)/provided by financing activities 404 (85 ) 319 For the year ended December 31, 2024 The Company Consolidated Subsidiaries Consolidated VIEs Total US$’000 US$’000 US$’000 US$’000 Net cash transferred from/(to) companies within the organization presented as cash provided by/(used in) investing activities (477 ) 19 (458 ) Net cash transferred (to)/from companies within the organization presented as cash (used in)/provided by financing activities 477 (19 ) 458 While we currently have limited operations in mainland China conducted through our PRC subsidiaries, VIEs and VIEs’ subsidiaries, we may continue to provide limited funding to these entities.
In addition, for the next 12 months from the date hereof, we anticipate to generate additional cash inflows and/or improve our liquidity through the following: (1) our short-term working capital loans provided to unrelated parties will mature within the next 12 months that we anticipate collecting these loan principals and the related interest income within the next 12 months; (2) if at any time we anticipate insufficiency of our working capital, we can apply for revolving credit facility from commercial banks in the PRC to supplement our short-term liquidity deficit.
In addition, for the next 12 months from the date hereof, we anticipate to generate additional cash inflows and/or improve our liquidity through the following: (1) our short-term working capital loans provided to unrelated parties will mature within the next 12 months that we anticipate collecting these loan principals and the related interest income within the next 12 months; (2) equity financing; (3) we plan to reduce our operating costs through optimizing the personnel structure among different offices and reduce our office leasing spaces, if needed.
Revenue recognition In accordance with ASC Topic 606 “Revenue from Contracts with Customers”, our revenues are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expected to be entitled to in exchange for those goods or services.
Revenue recognition In accordance with ASC Topic 606 “Revenue from Contracts with Customers”, our revenues are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expected to be entitled to in exchange for those goods or services. 50 For the distribution of the right to use search engine marketing service, the blockchain platform subscription service and our IP licensing service we recognize revenues over time when we consider the services have been delivered to our customers, with the related benefits being simultaneously received and consumed by our customers.
Through our PRC operating subsidiaries and VIEs, we primarily operate a one-stop services for our clients on our Omni-channel advertising, precision marketing and data analysis management system.
As part of an ongoing strategic shift, the Company’s operations are now primarily conducted outside mainland China. 49 Through our operating subsidiaries and VIEs, we primarily operate a one-stop services for our clients on our Omni-channel advertising, precision marketing and data analysis management system.
We do not have written policies regarding intercompany cash transfer within our organization. In accordance with our current internal cash management practices, all intercompany cash transfer within our organization requires prior approval by our financial director and our chief financial officer/or our chief executive officer before execution.
In accordance with our current internal cash management practices, all intercompany cash transfer within our organization requires prior approval by our financial director and our chief financial officer/or our chief executive officer before execution. For the year ended December 31, 2025, we transferred US$0.40 million in cash to our operating subsidiaries.
Prior to that time, from March 4, 2010 through September 13, 2010, our Common Stock was listed on the NYSE AMEX under the trading symbol “CNET.” Prior to that time, our Common Stock was quoted on the OTC Bulletin Board (“OTCBB”) under the trading symbol “EMZG”, until August 14, 2009, when our ticker symbol was change to “CHNT”.
Prior to that time, from March 4, 2010 through September 13, 2010, our Common Stock was listed on the NYSE AMEX under the trading symbol “CNET.” Prior to that time, our Common Stock was quoted on the OTC Bulletin Board (“OTCBB”) under the trading symbol “EMZG”, until August 14, 2009, when our ticker symbol was changed to “CHNT”. 46 The Board of Directors of the Company approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (the “Common Stock”) at a ratio of 1-for-4 (the “Reverse Stock Split”).
As an accounting policy, we elected not to recognize right-of-use asset and related lease liability to these short-term leases.
As an accounting policy, we elected not to recognize right-of-use asset and related lease liability to these short-term leases. Instead, we recognized the lease payments of these short-term leases in our consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term.
Future Liquidity, Material Cash Requirements and Capital Resources Our future short-term liquidity needs within 12 months from the date hereof primarily include deposits and advance payments required for the purchase of online marketing resources to be distributed to our customers and payments for our operating expenses, which mainly consist of office rentals and employee salary and benefit. 62 In addition, in order to further develop our core business, i.e., our Internet advertising and related data service business, broaden and diversify the online marketing channels for customers, reinforce our industry competitive advantage, we are actively seeking to acquire businesses and build teams with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation.
In addition, in order to further develop our core business, i.e., our Internet advertising and marketing service business, broaden and diversify the online marketing channels for customers, reinforce our industry competitive advantage, we are actively seeking to acquire or invest in businesses and build teams with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation.
The decrease in our total cost of revenues for the year ended December 31, 2024 was primarily due to the decrease in costs associated with the distribution of the right to use search engine marketing service we purchased from key search engines, which was in line with the decrease in the related revenues as discussed in the revenues section above. ● Costs for Internet advertising and data service primarily consist of cost of internet traffic flow and technical services we purchased from other portals and technical suppliers for obtaining effective sales lead generation to promote business opportunity advertisements placed on our own ad portals.
The decrease in our total cost of revenues for the year ended December 31, 2025 was primarily due to the decrease in costs associated with the distribution of the right to use search engine marketing service we purchased from key search engines, which was in line with the decrease in the related revenues as discussed in the revenues section above. ● Costs for internet advertising and marketing service primarily consist of fees paid to service providers who support delivering media planning, creative development, and digital ad management services to our Hong Kong and overseas clients.
We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business. ITEM 4 MINE SAFETY DISCLOSURES Not applicable . PART II.
ITEM 3 LEGAL PROCEEDINGS We are currently not a party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against us in all material aspects. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
On March 7, 2025, ChinaNet Investment Holding Limited (the “Purchaser”), a British Virgin Islands company and an indirect wholly-owned subsidiary of ZW Data Action Technologies Inc.
We may also pursue acquisitions or investments in businesses that expand our blockchain-based SaaS services, including technologies and platforms related to the tokenization of real-world assets. On March 7, 2025, ChinaNet Investment Holding Limited (the “Purchaser”), a British Virgin Islands company and an indirect wholly-owned subsidiary of ZW Data Action Technologies Inc.
We believe that our existing facilities and equipment are well maintained and in good operating condition and are sufficient to meet our needs for the foreseeable future. 47 ITEM 3 LEGAL PROCEEDINGS We are currently not a party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings against us in all material aspects.
We believe that our existing facilities and equipment are well maintained and in good operating condition and are sufficient to meet our needs for the foreseeable future.
Gross margin rate of this service for the year ended December 31, 2023 was -12.1% compared to -1,021% last year. This increase in gross margin was related to the improved sales of our blockchain-based SaaS service in 2024 in conjunction with the amortized development cost of our blockchain-based SaaS service.
Gross margin rate of this service for the year ended December 31, 2025 was 9.1% compared to -0.6% last year. Costs for our blockchain-based SaaS services consist of the amortized cost of our self-developed BIF platform and costs relating to the sale of mobile applications with blockchain-based functionalities.
The increase is primarily resulted from the Company’s shifting of its focus towards business segments that offer higher margins which includes influencer marketing. ● Revenue generated from distribution of the right to use search engine marketing service for the year ended December 31, 2024 was approximately US$9.91 million, compared with approximately US$30.06 million for the year ended December 31, 2023.
The decrease was primarily due to a decline in customer demand and lower marketing spending. ● Revenue generated from distribution of the right to use search engine marketing service for the year ended December 31, 2025 was approximately US$0.05 million, compared with approximately US$9.91 million for the year ended December 31, 2024.
We will also be looking to acquire and build teams with businesses with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation. ● Internet advertising revenues for the year ended December 31, 2024 was approximately US$4.78 million, compared with approximately US$0.45 million for the year ended December 31, 2023.
We will also be looking to acquire and build teams with businesses with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation. In addition, the Company will expand its capabilities to include AI-enabled applications and deployment solutions, with a focus on enhancing existing service offerings.

… 51 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

0 edited+1 added−7 removed1 unchanged
Removed
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE a) Dismissal of Independent Registered Public Accounting Firm. On July 26, 2023, the Audit Committee of the Board of Directors of the Company approved the dismissal of Centurion ZD CPA & Co. (“Centurion”) as independent registered public accounting firm of the Company, effective immediately.
Added
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Removed
Centurion’s reports on the Company’s consolidated financial statements for the fiscal years ended December 31, 2022 and 2021 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
Removed
During the two most recent fiscal years ended December 31, 2022 and 2021, and the subsequent interim period through July 26, 2023, there were no disagreements with Centurion on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Centurion, would have caused Centurion to make reference to the subject matter of the disagreements in connection with its reports on the Company’s consolidated financial statements for such years.
Removed
Also during this time, there were no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K. The Company provided Centurion with a copy of the above disclosures and requested that Centurion furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made above.
Removed
A copy of Centurion’s letter dated July 26, 2023 was attached as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on July 26, 2023. (b) Appointment of New Independent Registered Public Accounting Firm. On July 26, 2023, the Company engaged ARK Pro CPA & Co.
Removed
(“ARK”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023, effective immediately.
Removed
During the fiscal years ended December 31, 2022 and 2021 and through July 26, 2023, neither the Company nor anyone on its behalf consulted with ARK regarding (i) the application of accounting principles to any specified transaction, either completed or proposed or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company that ARK concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement,” as defined in Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event,” as defined in Item 304(a)(1)(v) of Regulation S-K. 64

Other CNET 10-K year-over-year comparisons