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Note 4 - Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2026
Notes to Financial Statements |
Significant Accounting Policies [Text Block] |
| 4. | Summary of significant accounting policies
| a) | Basis of presentation
The unaudited condensed consolidated interim financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The unaudited condensed consolidated interim financial information as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in complete consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited condensed consolidated interim financial information should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, previously filed with the SEC (the “2025 Form 10-K”) on March 31, 2026. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s condensed consolidated financial position as of March 31, 2026, its condensed consolidated results of operations for the three months ended March 31, 2026 and 2025, and its condensed consolidated cash flows for the three months ended March 31, 2026 and 2025, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.
| b) | Principles of consolidation
The unaudited condensed consolidated interim financial statements include the accounts of all the subsidiaries and VIEs of the Company. All transactions and balances between the Company and its subsidiaries and VIEs have been eliminated upon consolidation.
| c) | Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company continually evaluates these estimates and assumptions based on the most recently available information, historical experience and various other assumptions that the Company believes to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
| d) | Foreign currency translation
The exchange rates used to translate amounts in RMB into US$ for the purposes of preparing the condensed consolidated financial statements are as follows:
|  | March 31, 2026 |  |  | December 31, 2025 |
Balance sheet items, except for equity accounts |  |  | 6.9194 |  |  |  | 7.0288 |
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
Items in the statements of operations and comprehensive loss |  |  | 6.9493 |  |  |  | 7.1429 |
No representation is made that the RMB amounts could have been, or could be converted into US$ at the above rates.
| e) | Current expected credit losses
The allowance for credit losses reflects the Company's current estimate of credit losses expected to be incurred over the life of the related financial assets. The allowance for credit losses is presented as a valuation account that is deducted from the amortized cost basis of financial asset(s) to present the net amount expected to be collected on the financial asset(s). The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses, including the aging and aging trends, customer/other parties’ creditworthiness and specific exposures related to particular customers/other parties. The Company also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect a customer/other party’s ability to pay in establishing and adjusting its allowance for credit losses. The Company assesses collectability by reviewing the financial assets on a collective basis where similar characteristics exist and on an individual basis when the Company identifies specific customers/other parties with known disputes or collectability issues. Accounts receivable and short-term loans to unrelated parties are written off after all collection efforts have ceased. The following tables summarized the movements of the Company’s credit losses for the three months ended March 31, 2026 and 2025, respectively:
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | US$(’000) |  |  | US$(’000) |
|  | (Unaudited) |  |  | (Unaudited) |
Credit loss for accounts receivable: |  |  |  |  |  |  |  |
Balance as of beginning of the period |  |  | 5,137 |  |  |  | 4,817 |
Provision for/(reverse of) credit loss during the period |  |  | (180 | ) |  |  | 11 |
Written off during the period |  |  | - |  |  |  | - |
Exchange translation adjustments |  |  | 79 |  |  |  | 6 |
Balance as of end of the period |  |  | 5,036 |  |  |  | 4,834 |
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | US$(’000) |  |  | US$(’000) |
|  | (Unaudited) |  |  | (Unaudited) |
Credit loss for other current assets: |  |  |  |  |  |  |  |
Balance as of beginning of the period |  |  | 1,989 |  |  |  | 1,513 |
Provision for credit loss during the period |  |  | (5 | ) |  |  | 376 |
Written off during the period |  |  | - |  |  |  | - |
Exchange translation adjustments |  |  | (1 | ) |  |  | - |
Balance as of end of the period |  |  | 1,983 |  |  |  | 1,889 |
| f) | Revenue recognition
The following table present the Company’s revenues disaggregated by products and services and timing of revenue recognition:
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | US$(’000) |  |  | US$(’000) |
|  | (Unaudited) |  |  | (Unaudited) |
Internet advertising and related services |  |  |  |  |  |  |  |
--distribution of the right to use search engine marketing service |  |  | - |  |  |  | 49 |
-- Internet advertising and related data service |  |  | 284 |  |  |  | 970 |
AI Service |  |  | 38 |  |  |  | - |
Blockchain-based SaaS services |  |  | - |  |  |  | 615 |
IP Services |  |  | 61 |  |  |  | 18 |
Total revenues |  | $ | 383 |  |  | $ | 1,652 |
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | US$(’000) |  |  | US$(’000) |
|  | (Unaudited) |  |  | (Unaudited) |
Revenue recognized over time |  |  | 61 |  |  |  | 67 |
Revenue recognized at a point in time |  |  | 322 |  |  |  | 1,585 |
Total revenues |  | $ | 383 |  |  | $ | 1,652 |
For the three months ended March 31, 2026 and 2025, there were no revenue recognized from performance obligations that were satisfied in prior periods.
| g) | Asset acquisition of Rahula Group
Acquisitions that do not meet the definition of a business under ASC 805 are accounted for as an asset acquisition, utilizing a cost accumulation model. Assets acquired and liabilities assumed are recognized at cost, which is the consideration the acquirer transfers to the seller, including direct transaction costs, on the acquisition date. The cost of the acquisition is then allocated to the assets acquired based on their relative fair values. Goodwill is not recognized in an asset acquisition. Direct transaction costs include those third-party costs that can be directly attributable to the asset acquisition and would not have been incurred absent the acquisition transaction. Acquisition of Rahula Digital Media (HK) Limited. 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. acquired the 10,000 shares of Rahula Digital Media (HK) Limited, a Hong Kong company (the "Rahula") that Vickie Chan, an individual (the “Seller”) owned, pursuant to that certain Share Sale and Purchase Agreement, dated March 3, 2025, entered into by and between the Purchaser and the Seller for a total consideration of US$0.6 million. Rahula owns 100% equity interest in Shenzhen Shangye Business Consulting Services Co., Ltd., a People’s Republic of China company (together as “Rahula Group”). Rahula Group is principally engaged in the development and monetization of intellectual property rights on agent management, marketing data management, targeted marketing and mass marketing systems and technologies. On November 24, 2025, we changed the corporate name of Rahula to Cnet Technology (HK) Limited. The Company determined this transaction represented an asset acquisition as substantially all of the value was in the intellectual property intangible assets of Rahula Group. The acquisition method of accounting includes the establishment of a net deferred tax asset or liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, “Business Combinations”, a difference between the book and tax bases of the assets arises. ASC 740, “Income Taxes,” requires the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability. As goodwill is not recognized in an asset acquisition, recognizing deferred tax assets or liabilities for temporary differences in an asset acquisition results in adjusting the carrying amount of the acquired assets and liabilities. On March 7, 2025, upon the Purchaser’s acquisition of the outstanding common stock of Rahula, the Rahula intangible asset balance recorded on the acquisition date and included in intangible assets was as follows:
|  | As of March 7, 2025 |
|  | US$(’000) |
|  | (Unaudited) |
Rahula Group intangible asset recorded on acquisition date: |  |  |  |
Intangible asset acquired (a) |  |  | 707 |
Deferred tax liability generated from the Rahula asset |  |  | (107 | )
Total consideration paid |  |  | 600 |
| (a) | This intangible asset balance will be amortized over the remaining useful life of 3 years as of the March 7, 2025 acquisition date.
| h) | Lease
As of March 31, 2026, operating lease right-of-use assets and total operating lease liabilities recognized was approximately US$0.04 million and US$0.04 million, respectively. Maturity of operating lease liabilities
|  | Operating leases |
|  | US$(’000) |
|  | (Unaudited) |
Nine months ending December 31, 2026 |  |  | 38 |
Total undiscounted lease payments |  |  | 38 |
Less: imputed interest |  |  | (1 | )
Total operating lease liabilities as of March 31, 2026 |  |  | 37 |
Including: |  |  |  |
Operating lease liabilities |  |  | 37 |
Operating lease liabilities-Non current |  |  | - |
|  |  | 37 |
Operating lease expenses:
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | US$(’000) |  |  | US$(’000) |
|  | (Unaudited) |  |  | (Unaudited) |
Long-term operating lease contracts |  |  | 12 |  |  |  | 12 |
Short-term operating lease contracts |  |  | - |  |  |  | 1 |
Total |  | $ | 12 |  |  | $ | 13 |
Supplemental information related to operating leases:
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | US$(’000) |  |  | US$(’000) |
|  | (Unaudited) |  |  | (Unaudited) |
Operating cash flows used for operating leases (US$’000) |  |  | 8 |  |  |  | 11 |
Right-of-use assets obtained in exchange for new lease liabilities (US$’000) |  |  | - |  |  |  | 87 |
Weighted-average remaining lease term (years) |  |  | 0.75 |  |  |  | 1.75 |
Weighted-average discount rate |  |  | 6 | % |  |  | 6 | %

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