Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2021 | |
Document Information [Line Items] | |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2021 |
Entity Registrant Name | CooTek(Cayman)Inc. |
Entity Central Index Key | 0001734262 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 35,667,074 | $ 24,669,133 |
Restricted cash | 3,293,189 | 3,264,145 |
Short-term investments | 50,036 | 50,028 |
Accounts receivable, net of allowance for doubtful accounts of US$1,161,955 and US$1,180,423 as of December 31, 2020 and June 30, 2021, respectively | 31,450,765 | 28,127,346 |
Prepaid expenses and other current assets | 8,965,912 | 12,073,226 |
Total current assets | 79,426,976 | 68,183,878 |
Long-term restricted cash | 21,700,000 | 21,689,436 |
Property and equipment, net | 4,100,477 | 5,393,742 |
Intangible assets, net | 325,631 | 396,495 |
Operating lease right-of-use assets | 1,818,213 | |
Long-term investments | 619,801 | 306,518 |
Other non-current assets | 1,210,757 | 932,311 |
TOTAL ASSETS | 87,501,855 | 96,902,380 |
Current liabilities (including amounts of the consolidated VIEs without recourse to the Company. See Note 2(b)): | ||
Accounts payable | 50,245,783 | 76,125,973 |
Short-term borrowings | 15,162,304 | 10,958,022 |
Accrued salary and benefits | 6,554,525 | 9,143,476 |
Operating lease liabilities, current | 1,321,794 | |
Accrued expenses and other current liabilities | 6,684,535 | 10,686,518 |
Convertible notes | 16,242,636 | |
Derivative liabilities | 1,577,128 | |
Deferred revenue | 3,085,999 | 3,331,511 |
Total current liabilities | 100,874,704 | 110,245,500 |
Other non-current liabilities | 391,370 | 459,435 |
Operating lease liabilities, non-current | 230,804 | |
TOTAL LIABILITIES | 101,496,878 | 110,704,935 |
Commitments and contingencies | ||
Shareholders' deficit: | ||
Treasury shares (44,511,050 and 63,248,150 shares as of December 31, 2020 and June 30, 2021, respectively) | (5,229,132) | (4,672,334) |
Additional paid-in capital | 206,158,746 | 193,918,852 |
Accumulated deficit | (213,099,385) | (200,965,075) |
Accumulated other comprehensive loss | (1,858,639) | (2,114,916) |
Total shareholders' deficit | (13,995,023) | (13,802,555) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | 87,501,855 | 96,902,380 |
Class A | ||
Shareholders' deficit: | ||
Ordinary shares | 30,925 | 28,456 |
Class B | ||
Shareholders' deficit: | ||
Ordinary shares | $ 2,462 | $ 2,462 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Allowance for doubtful accounts | $ 1,180,423 | $ 1,161,955 |
Treasury stock, shares | 63,248,150 | 44,511,050 |
Class A | ||
Ordinary shares, par value | $ 0.00001 | $ 0.00001 |
Ordinary shares, shares authorized | 13,750,000,000 | 13,750,000,000 |
Ordinary shares, shares issued | 3,092,501,391 | 2,845,646,241 |
Ordinary shares, shares outstanding | 3,029,253,241 | 2,801,135,191 |
Class B | ||
Ordinary shares, par value | $ 0.00001 | |
Ordinary shares, shares authorized | 250,000,000 | 250,000,000 |
Ordinary shares, shares issued | 246,224,465 | 246,224,465 |
Ordinary shares, shares outstanding | 246,224,465 | 246,224,465 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Net revenues | $ 164,768,953 | $ 233,408,923 |
Cost of revenue (including share-based compensation expense of US$123,596 and US$133,332 in the six months ended June 30, 2020 and 2021, respectively) | (17,666,891) | (10,272,307) |
Gross profit | 147,102,062 | 223,136,616 |
Operating expenses: | ||
General and administrative expenses (including share-based compensation expense of US$789,019 and US$855,522 in the six months ended June 30, 2020 and 2021, respectively) | (10,436,181) | (7,437,572) |
Research and development expenses (including share-based compensation expense of US$1,343,182 and US$1,101,542 in the six months ended June 30, 2020 and 2021, respectively) | (18,746,520) | (14,950,270) |
Sales and marketing expenses (including share-based compensation expense of US$109,460 and US$54,844 in the six months ended June 30, 2020 and 2021, respectively) | (130,523,018) | (208,434,709) |
Other operating income, net | 2,261,854 | 836,239 |
Total operating expenses | (157,443,865) | (229,986,312) |
Loss from operations | (10,341,803) | (6,849,696) |
Interest income (expense), net | (1,649,293) | 234,231 |
Foreign exchange losses, net | (224,533) | (474) |
Fair value change of derivatives | 85,227 | |
Loss before income taxes | (12,130,402) | (6,615,939) |
Income tax expense | (25) | (3,200) |
Share of loss in equity method investment | (3,883) | |
Net Loss | (12,134,310) | (6,619,139) |
Deemed dividend in relation to the convertible note (see Note 8) | (1,368,866) | |
Net Loss attributable to ordinary shareholders | $ (13,503,176) | $ (6,619,139) |
Net Loss per share: | ||
Basic and diluted (in dollars per share) | $ (0.004) | $ (0.002) |
Weighted average shares used in calculating net loss per ordinary share: | ||
Basic & Diluted (in shares) | 3,187,723,620 | 3,094,780,922 |
ADS | ||
Net Loss per share: | ||
Basic and diluted (in dollars per share) | $ (0.21) | $ (0.11) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | 6 Months Ended | |
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | |
Class A | ||
ADS ratio | 50 | 50 |
Cost of revenue | ||
Share-based compensation expense | $ 133,332 | $ 123,596 |
General and administrative expenses | ||
Share-based compensation expense | 855,522 | 789,019 |
Research and development expenses | ||
Share-based compensation expense | 1,101,542 | 1,343,182 |
Sales and marketing expenses | ||
Share-based compensation expense | $ 54,844 | $ 109,460 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | ||
Net Loss | $ (12,134,310) | $ (6,619,139) |
Other comprehensive income | ||
Foreign currency translation adjustments, net of tax of nil | 256,277 | 175,320 |
Comprehensive loss attributable to CooTek (Cayman) Inc. | (11,878,033) | (6,443,819) |
Deemed dividend in relation to convertible note (see Note 8) | (1,368,866) | |
Total comprehensive loss attributable to ordinary shares of Cootek (Cayman) Inc. | $ (13,246,899) | $ (6,443,819) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | ||
Foreign currency translation adjustments, tax | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Ordinary sharesClass A | Ordinary sharesClass B | Treasury Stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income (loss) | Class A | Class B | Total |
Beginning balance at Dec. 31, 2019 | $ 28,800 | $ 2,462 | $ (1,063,547) | $ 194,971,827 | $ (153,598,346) | $ (1,432,833) | $ 38,908,363 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 2,880,056,332 | 246,224,465 | 9,937,000 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||
Net income | (6,619,139) | (6,619,139) | |||||||
Foreign currency translation adjustments | 175,320 | 175,320 | |||||||
Share-based compensation expenses | 2,365,257 | 2,365,257 | |||||||
Cash settlement on vested share options and RSU's | (823,226) | (823,226) | |||||||
Repurchase of ordinary shares | $ (5,871,945) | (5,871,945) | |||||||
Repurchase of ordinary shares (in shares) | 47,099,300 | ||||||||
Exercise of share options | $ 78 | 235,821 | 235,899 | ||||||
Exercise of share options (in shares) | 7,760,550 | ||||||||
Issuance of ordinary shares upon vesting of restricted shares | $ 29 | (29) | |||||||
Issuance of ordinary shares upon vesting of restricted shares (in shares) | 2,878,650 | ||||||||
Ending balance at Jun. 30, 2020 | $ 28,907 | $ 2,462 | $ (6,935,492) | 196,749,650 | (160,217,485) | (1,257,513) | 28,370,529 | ||
Ending balance (in shares) at Jun. 30, 2020 | 2,890,695,532 | 246,224,465 | 57,036,300 | ||||||
Beginning balance at Dec. 31, 2019 | $ 28,800 | $ 2,462 | $ (1,063,547) | 194,971,827 | (153,598,346) | (1,432,833) | 38,908,363 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 2,880,056,332 | 246,224,465 | 9,937,000 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||
Net income | (47,400,000) | ||||||||
Ending balance at Dec. 31, 2020 | $ 28,456 | $ 2,462 | $ (4,672,334) | 193,918,852 | (200,965,075) | (2,114,916) | (13,802,555) | ||
Ending balance (in shares) at Dec. 31, 2020 | 2,845,646,241 | 246,224,465 | 44,511,050 | 2,801,135,191 | 246,224,465 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||
Net income | (12,134,310) | (12,134,310) | |||||||
Foreign currency translation adjustments | 256,277 | 256,277 | |||||||
Share-based compensation expenses | 2,145,240 | 2,145,240 | |||||||
Repurchase of ordinary shares | $ (1,322,195) | (1,322,195) | |||||||
Repurchase of ordinary shares (in shares) | 24,237,100 | ||||||||
Conversion of convertible notes | $ 2,430 | 11,860,953 | 11,863,383 | ||||||
Conversion of convertible notes (in shares) | 243,011,300 | ||||||||
Beneficial conversion feature on convertible notes | (1,368,866) | (1,368,866) | |||||||
Commitment fee paid to holders of convertible notes through issuance of treasury shares (see Note 8) | $ 765,397 | (436,247) | 329,150 | ||||||
Commitment fee paid to holders of convertible notes through issuance of treasury shares (see Note 8) (in shares) | (5,500,000) | ||||||||
Exercise of share options | $ 20 | 38,833 | 38,853 | ||||||
Exercise of share options (in shares) | 1,970,650 | ||||||||
Issuance of ordinary shares upon vesting of restricted shares | $ 19 | (19) | |||||||
Issuance of ordinary shares upon vesting of restricted shares (in shares) | 1,873,200 | ||||||||
Ending balance at Jun. 30, 2021 | $ 30,925 | $ 2,462 | $ (5,229,132) | $ 206,158,746 | $ (213,099,385) | $ (1,858,639) | $ (13,995,023) | ||
Ending balance (in shares) at Jun. 30, 2021 | 3,092,501,391 | 246,224,465 | 63,248,150 | 3,029,253,241 | 246,224,465 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net Loss | $ (12,134,310) | $ (6,619,139) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,844,170 | 1,540,415 |
Provision for allowance of doubtful accounts | 245,224 | 645,117 |
Share-based compensation expense | 2,145,240 | 2,365,257 |
Amortization of issuance cost and debt discounts related to convertible notes | 1,609,658 | |
Change in fair value of derivatives | (85,227) | |
Loss on disposal of property and equipment | (9,362) | (13,329) |
Share of loss in equity method investment | 3,883 | |
Noncash lease expense | 768,735 | |
Changes in assets and liabilities: | ||
Accounts receivable | (3,159,059) | (7,758,577) |
Prepaid expenses and other current assets | 3,130,888 | (2,212,436) |
Other non-current assets | (271,642) | (522,341) |
Accounts payable | (25,939,096) | 28,487,419 |
Accrued salary and benefits | (2,701,173) | 1,066,086 |
Accrued expenses and other current liabilities | (4,136,119) | 2,278,206 |
Operating lease liabilities | (1,031,554) | |
Deferred revenue | (721,749) | 1,139,348 |
Other non-current liabilities | (73,277) | (34,032) |
Net cash provided by (used in) operating activities | (40,514,770) | 20,361,994 |
Cash flows from investing activities: | ||
Purchases of property, equipment and intangible assets | (610,463) | (1,507,494) |
Purchases of short-term investments | (13,000,000) | |
Maturity of short-term investments | 21,188 | |
Purchases of long-term investments | (314,091) | (141,253) |
Net cash used in investing activities | (924,554) | (14,627,559) |
Cash flows from financing activities: | ||
Proceeds from short-term borrowings | 65,182,723 | 14,571,130 |
Repayment of short-term borrowings | (61,057,629) | (8,865,969) |
Proceeds from issuance of ordinary shares upon exercise of share options | 37,521 | 235,778 |
Proceeds from issuance of convertible notes, net of debt discounts and issuance cost of US$2.8 million | 27,175,000 | |
Cash paid to settle vested share options and restricted shares | (823,226) | |
Payments of share repurchases | (1,322,195) | (5,871,945) |
Net cash (used in) provided by financing activities | 30,015,420 | (754,232) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (11,423,904) | 4,980,203 |
Cash, cash equivalents, and restricted cash at beginning of period | 49,622,714 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 761,453 | (25,117) |
Cash, cash equivalents, and restricted cash at end of period | 38,960,263 | 64,921,117 |
Supplemental disclosure of cash flow information: | ||
Income taxes paid | 25 | 3,200 |
Interest paid | 262,215 | 249,187 |
Supplemental disclosure of noncash investing and financing activities: | ||
Purchases of property and equipment included in payables | 231,823 | $ 54,814 |
Conversion of convertible notes into ordinary shares | $ 10,494,517 |
CONDENSED CONSOLIDATED STATEM_7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Debt discounts and commitment fee paid to Investors | $ 2,800,000 | |
Reconciliation in amounts on unaudited condensed statements of consolidated balance sheets: | ||
Cash and cash equivalents | 35,667,074 | $ 64,860,916 |
Restricted cash | 3,293,189 | 60,201 |
Total cash, cash equivalents, and restricted cash | $ 38,960,263 | $ 64,921,117 |
Organization and Principal Acti
Organization and Principal Activities | 6 Months Ended |
Jun. 30, 2021 | |
Organization and Principal Activities | |
Organization and Principal Activities | 1. Organization and Principal Activities CooTek (Cayman) Inc. (the “Company”) was incorporated in the Cayman Islands on March 5, 2012. The Company, its subsidiaries, its consolidated Variable Interest Entities (“VIEs”) and VIEs’ subsidiaries (collectively referred to as the “Group”) are a fast-growing mobile internet company with a global vision, offering mobile applications including a portfolio of content-rich mobile applications. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies (a) Basis of Presentation The unaudited condensed consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting, and include all normal and recurring adjustments that management of the Group considers necessary for a fair presentation of its financial position and operating results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these financial statements should be read in conjunction with the Group’s annual consolidated financial statements and notes thereto, included in the Company’s 2020 Annual Report on Form 20-F filed with the SEC on April 26, 2021, referred to as the Company’s 2020 Annual Report. The Group has incurred net losses of US $47.4 million for the year ended December 31, 2020 and US $12.1 million for the six months ended June 30, 2021, respectively. The accumulated deficit amounted to US $213.1 million as of June 30, 2021. Net cash used in operating activities were US $40.5 million for six months ended June 30, 2021. As of June 30, 2021, the Group’s current liabilities exceed its current assets by US $21.4 million. The Group’s liquidity is dependent on its ability to enhance its operating cash flow position, obtain capital financing from equity interest investors and borrowings from commercial banks to funds its general operations including its marketing activities. The Group’s ability to continue as a going concern is dependent on the following factors: ● The successful implementation of a balanced growth strategy and an effective financial management which can contribute to the optimization of the operating cost and expense structure. To implement the plans, the Group will continue to improve the stickiness of its existing users by offering higher quality and diversified contents and user incentive program and optimize the new user acquisition strategy to efficiently control and reduce these user related costs. The Group will further strengthen the monetization capability by diversifying its revenue structure and improving the return on investment of its key products. ● Obtaining funds from outside sources of financing to generate positive financing cash flows. In August 2021, the Company completed its offering to a third party investor and issued 990,034 ADSs representing 49,501,700 of the Group’s ordinary shares with the net proceeds deducting underwriting discount and offering costs of US$ 1.4 million. Further, as of the date of this report, a standby equity distribution agreement with an outside investor to sell up to US$ 20.0 million of the Company’s ADS is also available for the Company to execute at the Company’s request. ● While there can be no assurance that the Group will be able to refinance its short-term bank borrowings as they become due, historically, the Group has renewed its short term credit facility upon the maturity of the loans and believes the Group will continue to be able to do so. Further, the convertible note payable and related derivative liabilities amounted to US$ 17.8 million as of June 30, 2021 can be settled in cash, ADSs through conversion of the note or a combination of both at the Company’s option. If the Group does not have, or is not able to obtain, sufficient funds, the Group may have to adjust its operation plan and reduce operating expenses devoted to maintain existing users and acquire new users. Management has concluded, after giving consideration to its plans as noted above, that the Group has sufficient cash and liquidity to fund its operations for one year from the date of the issuance of the unaudited condensed consolidated financial statements. Accordingly, the unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal courses of operations. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation The consolidated financial statements include the financial information of the Company, its wholly owned subsidiaries, its consolidated VIEs and VIEs’ subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Applicable PRC laws and regulations currently limit foreign ownership of companies that provide internet content distribution services and any other restrictions. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are not eligible to engage in provisions of internet content or online services. The Group therefore conducts its online business through the following major consolidated VIEs: ● Shanghai Chu Bao (CooTek) Information Technology Co., Ltd. (“Chu Bao”) ● Yingsun Information Technology (Ningbo) Co., Ltd. (“Yingsun”) * ● Shanghai Qiaohan Technology Co., Ltd. (“Qiaohan”) ● Molihong (Shenzhen) Internet Technology Co., Ltd. (“Molihong”) ● Shanghai Dengyong Information Technology Co., Ltd. (“Dengyong”) ● Shanghai Qinglin Network Technology Co., Ltd. (“Qinglin”) * The Group restructured its VIEs and Yingsun was directly controlled by one of subsidiaries of the Group since November 2020. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) The following consolidated financial statement balances and amounts of the Group’s VIEs were included in the accompanying unaudited condensed consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs. As of December 31, As of June 30, 2020 2021 US$ US$ ASSETS Cash and cash equivalents 7,105,349 9,974,475 Restricted cash 138,964 137,262 Accounts receivable, net 16,115,202 11,465,907 Prepaid expense and other assets 7,912,712 5,476,313 Long-term restricted cash 21,689,436 — Property and equipment, net 36,422 178,460 Intangible assets, net — 174 Operating lease right-of-use assets — 845,606 Long-term investments 306,518 619,801 Other non-current assets 224,235 168,220 Total Assets 53,528,838 28,866,218 LIABILITIES Accounts payable 43,099,067 26,256,751 Short-term bank borrowings 267,917 5,059,507 Accrued salary and benefits 694,225 1,196,802 Operating lease liabilities, current — 640,524 Accrued expenses and other current liabilities 4,228,532 3,154,297 Deferred revenue 620,688 740,332 Operating lease liabilities, non-current — 63,154 Total Liabilities 48,910,429 37,111,367 For the six months ended June 30, 2020 2021 US$ US$ Net revenues 222,094,810 59,215,128 Income from operations 20,820,074 33,276,801 Net income 21,049,088 33,309,155 Net cash provided by operating activities 36,430,919 22,842,292 Net cash used in investing activities (127,142) (469,818) Net cash provided by financing activities — 4,765,123 The VIEs’ assets are comprised of recognized and unrecognized revenue-producing assets. The recognized revenue producing assets mainly include purchased servers and software, which are presented in the account of “Property and equipment, net” and “Intangible assets, net”. The unrecognized revenue-producing assets mainly consist of the Internet Content Provider license (“ICP” license), trademarks, copyrights and registered patents, which are not recognized in the consolidated balance sheets. Revenues of VIEs included in the consolidated financial statements mainly include revenue of advertising services. The VIEs contributed 95% and 36% of the Group’s consolidated net revenues for the six months ended June 30, 2020 and 2021, respectively. As of December 31, 2020 and June 30, 2021, the VIEs accounted for an aggregate of 55% and 33% respectively, of the consolidated total assets, and 44% and 37% respectively, of the consolidated total liabilities. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Group may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIEs. The Group believes that there are no assets held in the VIEs that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. (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 at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements including but not limited to allowance for doubtful accounts, accruals for user incentive programs, valuation allowances of deferred tax assets, valuation of share-based compensation, and valuation of embedded derivative liabilities. Actual results may differ materially from those estimates. ( d) Fair Value Fair value reflects the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the assets or liabilities. The Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This guidance specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows: ● Level 1— Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. ● Level 2— Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. ● Level 3— Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. 2. Summary of Significant Accounting Policies (Continued) ( d) Fair Value (Continued) The fair value guidance describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. Financial instruments not reported at fair value include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable, other current liabilities, short-term bank borrowings, and convertible note payable (see Note 8). The embedded monthly redemption right of the convertible note was measured at fair value and the Group determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy because the absence of observable inputs used in Monte Carlo simulation. The significant inputs applied in Monte Carlo simulation include expected volatility, dividend yield and present value discount rate. The carrying amounts of other financial instruments as of December 31, 2020 and June 30, 2021 were considered representative of their fair values due to their short-term nature. Equity investments with readily determinable fair value are carried at fair value based on quoted market prices or estimated based on market conditions and risks existing at each balance sheet date. Equity investments without readily determinable fair value are measured at cost less impairment, and are adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. (e) Foreign Currency Translation The functional currency of the Group is the United States Dollar (“US$”). The functional currency of the subsidiaries and the VIEs in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$. Foreign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses have been included in the determination of net income. The Group has chosen the US$ as its reporting currency. Assets and liabilities have been translated using exchange rates prevailing on the balance sheet date. Equity accounts are translated at historical exchange rates. Income statement items have been translated using the average exchange rate for the year. Translation adjustments have been reported as cumulative translation adjustments and are shown as a component of other comprehensive loss in the consolidated statements of comprehensive loss and consolidated statements of changes in shareholders’ equity. (f) Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash on hand, demand deposits and floating rate financial instruments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. 2. Summary of Significant Accounting Policies (Continued) (f) Cash, Cash Equivalents and Restricted Cash (Continued) As of June 30, 2021, restricted cash were US $3.3 million, mainly consisting of amount of US $3.1 million held in the Group’s bank account as guarantee deposit for loan facility provided by the bank. Long term restricted cash of US $21.7 million frozen by local authorities on the alleged illegal acts of certain customers has been released upon the completion of investigations as of June 30, 2021. (g) Revenue Recognition Mobile Advertising The Group generates substantially all of its revenue through mobile advertising and recognizes the revenue according to ASC Topic 606. The Group provides advertising services to customers for promotion of their brands and products through its mobile applications, including a portfolio of content-rich mobile applications. The Group has two general pricing models for its advertising products: cost over a time period and cost for performance basis including per impression basis. For advertising contracts over a time period, the Group generally recognizes revenue ratably over time, because the customer simultaneously receives and consumes the benefits as the Group performs throughout a fixed contract term. For contracts that are charged on the cost for performance basis, the Group charges an agreed-upon fee to its customers determined based on the effectiveness of advertising links, which is typically measured by clicks, transactions, installations, user registrations, and other actions originating from the Group’s mobile applications. Revenue is recognized at a point in time when there is an effective click, transaction, installations, user registrations, and other actions originating from the Group’s mobile applications. For contracts that are charged on the cost per impression basis, the Group recognizes the revenue at a point in time when the impressions are delivered. Revenue for performance-based advertising services is recognized at a point in time when all the revenue recognition criteria are met. For certain of the Group’s advertising service arrangements, customers are required to pay a deposit before using Group’s services. Deposits received are recorded as deferred revenue on the consolidated balance sheets. Service fees due to the Group are deducted from the deposited amounts when performance criteria have been satisfied. Others The Group also generates other revenues through cloud call business, licensing of its portfolio products and VIP user subscription fee. The revenue is recognized when service is rendered. Sales Incentives The Group provides sales incentives to certain customers in the form of sales rebates which entitle them to receive reductions in the price. The Group accounts for these incentives granted to customers as variable consideration and records it as reduction of revenue. The amount of variable consideration is measured based on the most likely amount of incentives to be. For the six months ended June 30, 2020 and 2021, the rebates recorded by the Group were US $39,890,475 and US $8,271,721 , respectively. 2. Summary of Significant Accounting Policies (Continued) (g) Revenue Recognition (Continued) Disaggregation of Revenue In the following table, revenue is disaggregated by revenue streams and geographic location of customers’ headquarters. For the six months ended June 30, 2020 2021 US$ US$ Revenue: Advertising revenue 232,196,523 162,485,069 Other revenue 1,212,400 2,283,884 Total 233,408,923 164,768,953 For the six months ended June 30 2020 2021 US$ US$ PRC 229,056,601 146,244,089 USA 4,345,679 18,497,598 Others 6,643 27,266 Total 233,408,923 164,768,953 Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represents the amount to be collected from customers and the service has been delivered. Contract liabilities include payments received in advance of performance under the contract or for differences between the amount billed to a customer and the revenue recognized for the completed performance obligation which is presented as deferred revenue on the consolidated balance sheets. Due to the generally short-term duration of the Group’s contracts, the majority of the performance obligations are satisfied in one year. The movements of the Group’s accounts receivable and deferred revenue are as follows: Accounts Receivable Deferred Revenue US$ US$ Opening Balance at January 1, 2020 27,254,634 3,887,908 Increase, net 6,788,404 2,272,367 Ending Balance at June 30, 2020 34,043,038 6,160,275 Opening Balance at January 1, 2021 28,127,346 3,331,511 Increase (Decrease), net 3,323,419 (245,512) Ending Balance at June 30, 2021 31,450,765 3,085,999 The Group recognized revenue of US $3,631,753 and US $3,014,390 by the reducing the balance of deferred revenue in the six months ended June 30, 2020 and 2021, respectively, which were included in the balance of deferred revenue at the beginning of the each period. 2. Summary of Significant Accounting Policies (Continued) (h) Sales and Marketing Expenses Sales and marketing expenses primarily consist of advertising and promotion expenses, expenses incurred for the user incentive programs, salaries and benefits of sales and marketing personnel and fees paid to mobile device manufacturers to pre-install the Group’s smart input products. Advertising and promotion expenses which mainly include user acquisition costs that represent payment to the third parties for online user acquisition of the Group’s products via social media and demand-side platforms amounted to US $204,965,757 and US $100,148,612 for the six months ended June 30, 2020 and 2021, respectively. The Group launched the user incentive programs for its registered users in its various applications to enhance user engagements. (i) Concentration and Risks Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, accounts receivable and prepayments. The Group places its cash and cash equivalents and short-term investments with financial institutions with high-credit ratings and quality. The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. With respect to prepayments, the Group performs on-going credit evaluations of the financial condition of these suppliers and has noted no significant credit risk. Concentration of Customers The following customers accounted for 10% or more of revenue: For the six months ended June 30, 2020 2021 US$ % US$ % Company A * * 51,491,841 31.25 % Company B 57,697,809 24.72 % 47,918,394 29.08 % The following customers accounted for 10% or more of accounts receivable: As of December 31, As of June 30, 2020 2021 US$ % US$ % Company A 11,559,398 39.47 % 10,800,500 33.10 % Company B 7,498,563 25.60 % 8,984,343 27.53 % Concentration of Vendors The Group uses certain vendors to acquire users and those cost are recorded as sales and marketing expenses. Vendors accounted for 10% or more are listed as below: For the six months ended June 30, 2020 2021 US$ % US$ % Company C 28,470,964 13.66 % * * Company D * * 15,719,126 12.04 % Company E * * 14,692,089 11.26 % 2. Summary of Significant Accounting Policies (Continued) (i) Concentration and Risks (Continued) The following vendors accounted for 10% or more of accounts payable: As of December 31, As of June30, 2020 2021 US$ % US$ % Company E 16,072,255 21.11 % 7,915,959 15.75 % Company C 9,461,038 12.43 % * * Company F 7,604,056 10.00 % * * Company G * * 9,324,356 18.56 % Company D * * 6,778,899 13.49 % * Less than 10%. Business and Economic Risks The Group participates in the dynamic and competitive high technology industry and believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations and cash flows: changes in the overall demand for services and products; competitive pressures due to existing and new entrants; advances and new trends in new technologies and industry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; copyright regulations; brand maintenance and enhancement; and risks associated with the Group’s ability to attract and retain employees necessary to support its growth. The Group’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Foreign Currency Risk The RMB is not a freely convertible currency. The State Administration for Foreign Exchange in the PRC, under the authority of the Peoples Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents and restricted cash denominated in RMB amounted to RMB 280,266,558 (amounted to US$ 42,953,388 ) and RMB 218,843,110 (amounted to US$ 33,876,119 ) as of December 31, 2020 and June 30, 2021, respectively. (j) Leases The Group leases office space in different cities in PRC and USA under non-cancellable operating lease agreements that expire at various dates through October 2023. Before January 1, 2021, the Group applied the ASC 840, Leases , under which each lease is classified at the inception date as either a capital lease or an operating lease. All the Group’s leases were classified as operating lease under ASC 840. Effective January 1, 2021, the Group adopted ASU No. 2016-02 “ Leases 2. Summary of Significant Accounting Policies (Continued) (j) Leases (Continued) Under ASC 842, the Group determines whether an arrangement constitutes a lease and records lease liabilities and ROU assets on its consolidated balance sheets at the lease commencement. The Group measures the operating lease liabilities at the commencement date based on the present value of remaining lease payments over the lease term, which is computed using the Group’s incremental borrowing rate, an estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the lease term. The Group measures the operating lease ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing operating lease expense based on lease payments on a straight-line basis over the lease term after the lessor makes the underlying asset available to the Group. Some of the Group’s lease contracts include options to extend the leases for an additional period which has to be agreed with the lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group does not include renewal option periods in the lease term for which it is not reasonably certain to exercise. During the six months ended June 30, 2020 and 2021, the Group incurred operating lease costs amounting to US$ 710,590 and US$ 893,050 (excluding US$ 57,975 for short-term leases not capitalized as ROU assets), respectively. Cash payments against operating lease liabilities were US$ 830,591 for the six months ended June 30, 2021. As of June 30, 2021, Group’s operating leases had a weighted average remaining lease term of 1.1 years and a weighted average discount rate of 6.0%. Future lease payments under operating leases as of June 30, 2021 were as follows: As of June 30, 2021 US$ The remaining of 2021 795,955 2022 752,277 2023 62,374 Total lease payment 1,610,606 Less: imputed interest (58,008) Total lease liability balance 1,552,598 Less: Operating lease liabilities, current (1,321,794) Long-term operating lease liabilities 230,804 As of December 31, 2020, the future minimum lease payments under the Group’s non-cancelable operating lease agreements based on ASC 840 are as follows: As of December 31, 2020 US$ 2021 1,650,102 2022 947,794 2023 62,003 Total lease commitment 2,659,899 2. Summary of Significant Accounting Policies (Continued) (k) Convertible Notes, Beneficial Conversion Feature (“BCF”) and Redemption Feature The Group issued convertible notes in January and March of 2021. The Group has evaluated whether the conversion feature of the notes is considered an embedded derivative instrument subject to bifurcation in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities. Based on the Group’s evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as conversion option does not provide the holder of the notes with means to net settle the contracts. Convertible notes, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the value of the BCF is determined as the intrinsic value of the conversion feature is recorded as deduction to the carrying amount of the notes and credited to additional paid-in-capital. The value of the BCF is recorded in the financial statements as a debt discount from the face amount of the notes, which is then accreted to interest expense over the life of the related debt using the effective interest method. The Group presents the occurred debt issuance costs as a direct deduction from the convertible note rather than as an asset. Amortization of the costs is reported as interest expense. At the date of above conversion, the remaining amount has been fully amortized to interest expense. The convertible notes issued in March of 2021 also include a monthly redemption feature which trigger a mandatory monthly redemption of a portion of the principal amount plus an 8% redemption premium and accrued and unpaid interest to be redeem in cash, the shares of the Group or a combination of both at the option of the Group if certain conditions relating to trading prices of the Group’s shares are not met (“Monthly Redemption”). The Group has evaluated whether the Monthly Redemption feature is considered an embedded derivative instrument subject to bifurcation in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities. Based on the Group’s evaluation, the monthly redemption has an underlying based on the fair value of the Group’s shares. An underlying that is based on common stock is not considered to be clearly and closely related to a debt host instrument, therefore, the Monthly Redemption feature should be separately accounted for as a stand-alone derivative under ASC 815 since it is not clearly and closely related to the host contract. This derivative is presented at fair value with change in fair value recognized in earnings. For the convertible notes issued with this derivative, a portion of the note’s proceed is allocated to the derivative based on the fair value at the date of the issuance. The allocated fair value for the derivative is recorded as a debt discount from the face amount of the notes, which is then accredited to interest expense over the life of the related debt using the effective interest method. (l) Net loss per share Basic net loss per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year or the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue |
Accounts Receivable, net
Accounts Receivable, net | 6 Months Ended |
Jun. 30, 2021 | |
Accounts Receivable, net | |
Accounts receivable, net | 3. Accounts Receivable, net Accounts receivable, net, consisted of the following: As of December 31, As of June 30, 2020 2021 US$ US$ Accounts receivable 29,289,301 32,631,188 Allowance for doubtful accounts: Balance at beginning of the year/period (1,774,192) (1,161,955) Provision for allowance for doubtful accounts (359,252) (38,571) Write-off 964,474 20,471 Foreign exchange effect 7,015 (368) Balance at end of the year/period (1,161,955) (1,180,423) Accounts receivable, net 28,127,346 31,450,765 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2021 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the followings: As of December 31, As of June 30, 2020 2021 US$ US$ Value added tax recoverable 5,498,400 3,262,544 Other receivables 3,875,800 2,698,071 Advance to suppliers 882,793 2,009,847 Others 1,816,233 995,450 Prepaid expenses and other current assets 12,073,226 8,965,912 |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2021 | |
Property and Equipment, net | |
Property and Equipment, net | 5. Property and Equipment, net Property and equipment, net, consisted of the followings: As of December 31, As of June 30, 2020 2021 US$ US$ Electronic equipment 12,729,696 13,128,249 Office equipment and furniture 363,163 319,251 Motor vehicles 82,470 240,513 Leasehold improvements 1,714,381 1,730,934 Construction in progress 5,811 — Total 14,895,521 15,418,947 Less: Accumulated depreciation (9,501,779) (11,318,470) Property and equipment, net 5,393,742 4,100,477 For the six months ended June 30, 2020 and 2021 depreciation expenses were US $1,492,217 and US $1,769,428 , respectively. |
Short-term Borrowings
Short-term Borrowings | 6 Months Ended |
Jun. 30, 2021 | |
Short-term Borrowings | |
Short-term Borrowings | 6. Short-term Borrowings The Group’s short-term borrowings consisted of the following: As of December 31, As of June 30, 2020 2021 US$ US$ Bank borrowings 10,958,022 9,752,171 Others — 5,410,133 Short-term Borrowings 10,958,022 15,162,304 In July 2016, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw-down up to US $6.0 million by October, 2018. In June 2020, the Group renewed the bank credit facility under which the Group can borrow up to US $11.0 million collateralized by its accounts receivable by June 2021. The interest rate for this credit facility is the Loan Prime Rate (“LPR”) plus 1.30% . Cash amount of US $3.1 million has been deposited in the bank as guarantee in December 2020 as well. In 2020, the Group has aggregately drawn down the credit facility of US $28.8 million and repaid US $24.1 million, and the weighted average interest rate for borrowings drawn under such credit facility was 5.15% . In June 2021, the Group renewed the bank credit facility under which the Group can borrow up to US $10.0 million collateralized by its accounts receivable by June 2022, which contains maximum quarterly net loss and maximum monthly debt ratio as financial covenants. The interest rate for this credit facility is the LPR base interest rate plus 1.30% . During the six months ended June 30, 2021, the Group has aggregately drawn down the credit facility of US $59.7 million and repaid US $61.1 million with the weighted average interest rate of 5.15% . As of June 30, 2021, the Group has fully used this credit facility and the Group is in compliance of the financial covenants. In July 2018, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw-down up to US $4.0 million by July 2019. In June 2020, the Group renewed the bank credit facility under which the Group can borrow up to US $4.0 million collateralized by its accounts receivable by June 2021. The interest rate for this credit facility is Libor plus 3.5% , determined on the draw-down date. In 2020, the Group has aggregately drawn down the credit facility of US $4.0 million and repaid US $7.2 million, and the weighted average interest rate for borrowings drawn under such credit facility was 4.39% . As of December 31, 2020, the Group has fully repaid the loan under this agreement and there is no transaction under this agreement during the six months ended June 30, 2021. The credit facility has been terminated in June 2021. In March 2021, the Group entered into two short-term interest-free loan agreements with a local Hi-tech industrial park, under which the Group received a total of US $5.4 million and fully repaid the amount by the end of August 2021. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 7. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: As of December 31, As of June 30, 2020 2021 US$ US$ Other tax payables (Note 1) 4,386,517 2,018,564 Accruals for user incentive programs — 1,863,526 Accrued expenses (Note 2) 2,772,237 1,840,150 Accrued loss contingencies relating litigation and asserted claims 2,872,150 676,526 Others 655,614 285,769 Total 10,686,518 6,684,535 Note 1: Other tax payables as of June 30, 2021, mainly consisted of value-added tax payable of US$ 1.4 million and other taxes such as individual income tax and stamp duty tax. Note 2: Accrued expenses mainly consisted of accrued professional service fees and other miscellaneous expenses related to marketing and operation activities. |
Convertible notes and Standby E
Convertible notes and Standby Equity Distribution Agreement | 6 Months Ended |
Jun. 30, 2021 | |
Convertible notes and Standby Equity Distribution Agreement | |
Convertible notes and Standby Equity Distribution Agreement | 8. Convertible notes and Standby Equity Distribution Agreement January 2021 Notes On January 19, 2021, the Group issued a convertible note for a principle amount of US$10.0 million with a 3% discount, an annual interest rate of 5% and a maturity date of January 19, 2022. The Group received a cash proceed of US$8.9 million from this issuance. The note is convertible into the Group’s shares at the option of the holders based on a conversion prices determined to be the lower of (1) US$4.20 per ADS, or (2) 88% of the lowest daily volume weighted average trading price (“VWAP”) of the Group’s ADSs during the ten consecutive trading days immediately preceding the conversion date or other date of determination. The January 2021 Notes also include provision which require the Group to pay the note holders a commitment fee of 1,750,000 ordinary shares at the date of closing which is considered to be further discount on the note provided to the debt holders. The Group settle this commitment fee by issuing 1,750,000 ordinary shares out of treasury shares to the convertible note holders. The Group has recognized this commitment fees amounted to US$0.1 million determined based on the fair value of shares issued at the date of closing as a part of debt discount. The note has been fully converted to 196,665,850 ordinary shares with a conversion price of US$0.0508 per ordinary share during three-month period ended March 31, 2021. The Group recorded a beneficial conversion feature amounted to US$1.4 million representing the difference between the conversion price and the fair value per share as deemed dividend relating to this conversion as the conversion price is determined to be lower than fair value at the date of conversion. Loan discount of US$0.4 million and issuance costs of US$0.7 million relating to the January 2021 Notes are being amortized to interest expense using effective interest method. March 2021 Notes On March 19, 2021, the Group issued a convertible note for a principle amount of US$20.0 million with a 2% discount, an annual interest of 5% per year, and a fixed conversion price of US$5.0 per ADS. The maturity date of the March 2021 Notes is March 19, 2022. The Group received a cash proceed of US$18.2 million from this issuance. The March 2021 Notes also include provision which require the Group to pay the note holders a commitment fee of 3,750,000 ordinary shares at the date of closing which is considered to be further discount on the note provided to the debt holders. The Group settle this commitment fee by issuing 3,750,000 ordinary shares out of treasury shares to the convertible note holders. The Group has recognized this commitment fees amounted to US$0.2 million determined based on the fair value of shares issued at the date of closing as a part of debt discount. Beginning from June 1, 2021 and continuing on the first day of each calendar month thereafter through January 2022, a portion of the principal amount plus an 8% redemption premium and plus accrued and unpaid interest will be subject to redemption in cash, ADSs through conversion of the note or a combination of both at the Group’s option in the event that the daily VWAP on each of the five In accordance with ASC 815, the Group determined that the Monthly Redemption feature was an embedded financial instrument which required bifurcation from the host debt instrument. The Group performs a valuation with the assistance of a third party appraiser to evaluate fair value of the embedded derivative associated with this note at the date of issuance and subsequently at each reporting date. Initially, the Group recorded a derivative liability relating to the Monthly Redemption feature in the amount US$1,662,355 based on its fair value at the date of issuance. A portion of the note's proceed is allocated to the derivative based on the fair value at the date of the issuance. The allocated fair value for the derivative is recorded as a debt discount from the face amount of the notes, which is then accredited to interest expense over the life of the related debt using the effective interest method. This derivative liability is revalued at each reporting date and immediately prior to conversion with changes in fair value recorded to fair value change at derivative liabilities in the statement of operations. As of June 30, 2021, the fair value of the derivative liability is determined to be US$1,577,128 and the gain of US$85,227 representing the change in fair value has been recorded in earnings for the six-month period ended June 30, 2021. 8. Convertible notes and Standby Equity Distribution Agreement (Continued) Total discount of US$2 million and issuance costs of US$1.6 million relating to the March 2021 Notes are being amortized to interest expense using effective interest method. Monthly Redemption has been triggered in June, July and August 2021. In June, the Group redeemed the loan principle, redemption premium and unpaid interests total amounted to US$1.7 million through issuance of 46,345,450 ordinary shares with a conversion price of US$0.0358 per ordinary shares. In July and August of 2021, the Group redeemed the loan principal, redemption premium and unpaid interests amounted with a payment of US$4.2 million in cash and issuance of 33,113,400 ordinary shares with a conversion price of US$0.0299 per ordinary shares. 8. Convertible notes and Standby Equity Distribution Agreement (Continued) Standby Equity Distribution Agreement with YA II PN, Ltd. On January 22, 2021, the Company entered into a standby equity distribution agreement (the “SEDA”) with this investor pursuant to which the Company has an option to sell up to US$20.0 million of its ADSs solely at the Company’s request any time during the 36 months following the date of the SEDA at a price determined to be at 90% of the market price, which is defined as the lowest daily VWAP of the Company’s ADSs during the five consecutive trading days commencing on the trading day following the date the Company submits an advance notice to this investor. As at June 30, 2021 the outstanding equity financing available was US$20.0 million. |
Other operating income, net
Other operating income, net | 6 Months Ended |
Jun. 30, 2021 | |
Other operating income, net | |
Other operating income, net | 9. Other operating income, net For the six months ended June 30, 2020 2021 US$ US$ Government subsidies 1,019,411 2,015,207 Contingent losses (445,684) — Others 262,512 246,647 Total 836,239 2,261,854 |
Income Taxes Expense
Income Taxes Expense | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes Expense | |
Income Taxes Expense | 10 . Income Taxes Expense The current and deferred portion of income tax expenses included in the consolidated statements of operations are as follows: For the six months ended June 30, 2020 2021 US$ US$ Current tax expenses 3,200 25 Deferred tax benefits — — Total 3,200 25 The Group’s effective tax rates were nil for the six months ended June 30, 2020 and 2021, respectively. The Group recorded a full valuation allowance against deferred tax assets of all its consolidated entities because all entities were in a cumulative loss position as of December 31, 2020 and June 30, 2021. No unrecognized tax benefits and related interest and penalties |
Treasury Shares
Treasury Shares | 6 Months Ended |
Jun. 30, 2021 | |
Treasury Shares | |
Treasury Shares | 11. Treasury Shares Treasury shares represent shares repurchased by the Group that are no longer outstanding and are held by the Group. On May 18, 2020, the Company announced a share repurchase program (the “2020 Program”) whereby the Company is authorized to repurchase its class A ordinary shares in the form of ADSs with an aggregate value of up to US$20.0 million during the 12-month As of June 30, 2021, an aggregate of 5,500,000 ordinary shares had been paid as commitment fee paid to Investors for convertible notes through treasury shares, which led to the decrease of US$ 765,397 in treasury shares. As of June 30, 2021, 135,205,591 treasury shares have been cancelled. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation | |
Share-Based Compensation | 12. Share-Based Compensation Share Options The options have a contractual term of ten years. The vesting date starts on the grant date or the commencement date of a participant’s employment agreement. The options vest 20% or 25% on each of the four or five anniversary dates of the vesting date and upon continued employment. In the event of termination of a participant’s employment, the unvested options shall be terminated immediately. The participant’s right to exercise the vested options shall be terminated 2 or 3 months after the termination of the employment. The Group uses the binomial option pricing model and the following assumptions to estimate the fair value of the options at the date of granted: Six Months ended Year ended December 31 June 30 2020 2021 Average risk-free rate of interest 0.67% 1.47% Expected volatility 43.15%-43.38% 38.71%-41.64% Dividend yield 0% 0% Contractual term 10 years 10 years Fair value of the underlying shares on the date of option grants 0.05-0.13 0.03-0.05 The risk-free rate of interest is based on the US Treasury yield curve as of valuation date. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. On November 6, 2018, the Board of Directors approved an option modification to reduce the exercise price of certain options granted to employees. All other terms of the share options granted remain unchanged. The modification resulted in incremental compensation cost of US $285,661 at the modification date, which is subject to be adjusted based on the employment, US $28,894 and US $7,891 was recorded during the six months ended June 30, 2020 and 2021, respectively. The remaining US $16,284 will be amortized over the remaining vesting period of the modified options in the second half year of 2021. Due to the termination of employment of certain participants, the Group will not recognize the rest of unvested amount of the modified options related. A summary of the aggregate option activity and information regarding options outstanding as of June 30, 2021 is as follows: Weighted Number of average exercise options price US$ Outstanding on January 1, 2021 290,614,107 0.02 Granted 72,757,400 0.00 Forfeited (36,721,500) 0.00 Exercised (1,970,650) 0.02 Outstanding on June 30, 2021 324,679,357 0.02 Options exercisable on June 30, 2021 160,621,328 0.05 Vested or expected to vest as of June 30, 2021 324,679,357 0.02 The weighted average grant date fair values of options granted during the six months ended June 30, 2020 and 2021 were US $0.1 and US $0.03 , respectively. For the six months ended June 30, 2021, 1,970,650 of options were exercised with an aggregate intrinsic value of US $30,297 . For the six months ended June 30, 2020, 13,564,950 of options were exercised with an aggregate intrinsic value of US $1,437,435 . 12. Share-Based Compensation (Continued) Share Options (Continued) For the six months ended June 30, 2020 and 2021 excluding the incremental compensation cost resulted from the modification discussed above, the Group recognized share-based compensation expense of US$1,428,823 and US$1,255,165, respectively. As of June 30, 2021, there was US$9,440,523 in total unrecognized compensation cost related to non-vested share options, which is expected to be recognized over a weighted-average period of 3.02 years. Restricted Share Units In the six months ended June 30, 2021, the Group did not granted additional Restricted Share Units (“RSUs”). The RSUs have a contractual term of ten years and vest 25% on each anniversary over four years from the grant date. The vesting of these RSUs is conditioned on continued employment. Compensation expense based on fair value is amortized over the requisite service period of award using the straight line vesting attribution method. A summary of the RSUs activity for the nine months ended June 30, 2021 is as follows: Weighted average Number of grant date restricted shares fair value Unvested restricted shares outstanding at January 1, 2021 37,740,804 0.20 Granted — — Vested (1,793,200) 0.20 Forfeited (3,695,150) 0.20 Unvested restricted shares outstanding at June 30, 2021 32,252,454 0.20 Expected to vest at June 30, 2021 32,252,454 0.20 The share-based compensation expense related to RSUs of US$ 907,541 and US$ 882,184 were recognized by the Group for the six months ended June 30, 2020 and 2021, respectively. As of June 30, 2021, there was US$2,221,352 in unrecognized compensation costs, net of actual forfeitures, related to unvested restricted shares, which is expected to be recognized over a weighted-average period of 1.53 years. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Net Loss Per Share | |
Net Loss Per Share | 13. Net Loss Per Share Net loss per share was computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the six months ended June 30, 2020 and 2021: For the six months ended June 30, 2020 2021 US$ US$ Numerator: Net loss—basic and diluted (6,619,139) (12,134,310) Deemed dividend in relation to convertible notes — (1,368,866) Net loss attributable to ordinary shareholders (6,619,139) (13,503,176) Shares (Denominator): Weighted average number of ordinary shares outstanding Basic 3,094,780,922 3,187,723,620 Diluted 3,094,780,922 3,187,723,620 Net loss earnings per share—basic and diluted (0.002) (0.004) 13. Net Loss Per Share (Continued) As a result of the Group’s net loss for the six months ended June 30, 2020 and 2021, diluted net loss per share does not include the following instruments as their inclusion would be antidilutive: For the six months ended June 30, 2020 2021 Share options 261,092,616 324,679,357 Restricted shares units 29,108,747 32,252,454 Shares of convertible notes — 208,927,671 Total 290,201,363 565,859,482 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies Commitments The Group did not have other significant capital commitments or significant guarantees as of December 31, 2020 and June 30, 2021, respectively. Contingencies From time to time, the Group is a party to various legal actions arising in the ordinary course of business. The Group accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Group’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Group’s consolidated financial position, results of operations and cash flows. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Information | |
Segment Information | 15. Segment Information The Group has only one reportable segment since the Group does not distinguish revenues, costs and expenses between segments in its internal reporting, and reports costs and expenses by nature as a whole. The Group’s chief operating decision maker, who has been identified as the Chief Executive Officer, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole. The Group does not distinguish among markets or segments for the purpose of internal reports. Information about the Group’s non-current assets is presented based on the geographical location of the assets as follows: As of December 31, As of June 30, 2020 2021 US$ US$ PRC 26,560,143 6,406,133 USA 2,158,359 1,668,746 Total 28,718,502 8,074,879 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | (a) Basis of Presentation The unaudited condensed consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting, and include all normal and recurring adjustments that management of the Group considers necessary for a fair presentation of its financial position and operating results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these financial statements should be read in conjunction with the Group’s annual consolidated financial statements and notes thereto, included in the Company’s 2020 Annual Report on Form 20-F filed with the SEC on April 26, 2021, referred to as the Company’s 2020 Annual Report. The Group has incurred net losses of US $47.4 million for the year ended December 31, 2020 and US $12.1 million for the six months ended June 30, 2021, respectively. The accumulated deficit amounted to US $213.1 million as of June 30, 2021. Net cash used in operating activities were US $40.5 million for six months ended June 30, 2021. As of June 30, 2021, the Group’s current liabilities exceed its current assets by US $21.4 million. The Group’s liquidity is dependent on its ability to enhance its operating cash flow position, obtain capital financing from equity interest investors and borrowings from commercial banks to funds its general operations including its marketing activities. The Group’s ability to continue as a going concern is dependent on the following factors: ● The successful implementation of a balanced growth strategy and an effective financial management which can contribute to the optimization of the operating cost and expense structure. To implement the plans, the Group will continue to improve the stickiness of its existing users by offering higher quality and diversified contents and user incentive program and optimize the new user acquisition strategy to efficiently control and reduce these user related costs. The Group will further strengthen the monetization capability by diversifying its revenue structure and improving the return on investment of its key products. ● Obtaining funds from outside sources of financing to generate positive financing cash flows. In August 2021, the Company completed its offering to a third party investor and issued 990,034 ADSs representing 49,501,700 of the Group’s ordinary shares with the net proceeds deducting underwriting discount and offering costs of US$ 1.4 million. Further, as of the date of this report, a standby equity distribution agreement with an outside investor to sell up to US$ 20.0 million of the Company’s ADS is also available for the Company to execute at the Company’s request. ● While there can be no assurance that the Group will be able to refinance its short-term bank borrowings as they become due, historically, the Group has renewed its short term credit facility upon the maturity of the loans and believes the Group will continue to be able to do so. Further, the convertible note payable and related derivative liabilities amounted to US$ 17.8 million as of June 30, 2021 can be settled in cash, ADSs through conversion of the note or a combination of both at the Company’s option. If the Group does not have, or is not able to obtain, sufficient funds, the Group may have to adjust its operation plan and reduce operating expenses devoted to maintain existing users and acquire new users. Management has concluded, after giving consideration to its plans as noted above, that the Group has sufficient cash and liquidity to fund its operations for one year from the date of the issuance of the unaudited condensed consolidated financial statements. Accordingly, the unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal courses of operations. |
Principles of Consolidation | (b) Principles of Consolidation The consolidated financial statements include the financial information of the Company, its wholly owned subsidiaries, its consolidated VIEs and VIEs’ subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Applicable PRC laws and regulations currently limit foreign ownership of companies that provide internet content distribution services and any other restrictions. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are not eligible to engage in provisions of internet content or online services. The Group therefore conducts its online business through the following major consolidated VIEs: ● Shanghai Chu Bao (CooTek) Information Technology Co., Ltd. (“Chu Bao”) ● Yingsun Information Technology (Ningbo) Co., Ltd. (“Yingsun”) * ● Shanghai Qiaohan Technology Co., Ltd. (“Qiaohan”) ● Molihong (Shenzhen) Internet Technology Co., Ltd. (“Molihong”) ● Shanghai Dengyong Information Technology Co., Ltd. (“Dengyong”) ● Shanghai Qinglin Network Technology Co., Ltd. (“Qinglin”) * The Group restructured its VIEs and Yingsun was directly controlled by one of subsidiaries of the Group since November 2020. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) The following consolidated financial statement balances and amounts of the Group’s VIEs were included in the accompanying unaudited condensed consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs. As of December 31, As of June 30, 2020 2021 US$ US$ ASSETS Cash and cash equivalents 7,105,349 9,974,475 Restricted cash 138,964 137,262 Accounts receivable, net 16,115,202 11,465,907 Prepaid expense and other assets 7,912,712 5,476,313 Long-term restricted cash 21,689,436 — Property and equipment, net 36,422 178,460 Intangible assets, net — 174 Operating lease right-of-use assets — 845,606 Long-term investments 306,518 619,801 Other non-current assets 224,235 168,220 Total Assets 53,528,838 28,866,218 LIABILITIES Accounts payable 43,099,067 26,256,751 Short-term bank borrowings 267,917 5,059,507 Accrued salary and benefits 694,225 1,196,802 Operating lease liabilities, current — 640,524 Accrued expenses and other current liabilities 4,228,532 3,154,297 Deferred revenue 620,688 740,332 Operating lease liabilities, non-current — 63,154 Total Liabilities 48,910,429 37,111,367 For the six months ended June 30, 2020 2021 US$ US$ Net revenues 222,094,810 59,215,128 Income from operations 20,820,074 33,276,801 Net income 21,049,088 33,309,155 Net cash provided by operating activities 36,430,919 22,842,292 Net cash used in investing activities (127,142) (469,818) Net cash provided by financing activities — 4,765,123 The VIEs’ assets are comprised of recognized and unrecognized revenue-producing assets. The recognized revenue producing assets mainly include purchased servers and software, which are presented in the account of “Property and equipment, net” and “Intangible assets, net”. The unrecognized revenue-producing assets mainly consist of the Internet Content Provider license (“ICP” license), trademarks, copyrights and registered patents, which are not recognized in the consolidated balance sheets. Revenues of VIEs included in the consolidated financial statements mainly include revenue of advertising services. The VIEs contributed 95% and 36% of the Group’s consolidated net revenues for the six months ended June 30, 2020 and 2021, respectively. As of December 31, 2020 and June 30, 2021, the VIEs accounted for an aggregate of 55% and 33% respectively, of the consolidated total assets, and 44% and 37% respectively, of the consolidated total liabilities. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Group may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIEs. The Group believes that there are no assets held in the VIEs that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. |
Use of Estimates | (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 at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements including but not limited to allowance for doubtful accounts, accruals for user incentive programs, valuation allowances of deferred tax assets, valuation of share-based compensation, and valuation of embedded derivative liabilities. Actual results may differ materially from those estimates. |
Fair Value | ( d) Fair Value Fair value reflects the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the assets or liabilities. The Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This guidance specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows: ● Level 1— Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. ● Level 2— Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. ● Level 3— Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. 2. Summary of Significant Accounting Policies (Continued) ( d) Fair Value (Continued) The fair value guidance describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. Financial instruments not reported at fair value include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable, other current liabilities, short-term bank borrowings, and convertible note payable (see Note 8). The embedded monthly redemption right of the convertible note was measured at fair value and the Group determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy because the absence of observable inputs used in Monte Carlo simulation. The significant inputs applied in Monte Carlo simulation include expected volatility, dividend yield and present value discount rate. The carrying amounts of other financial instruments as of December 31, 2020 and June 30, 2021 were considered representative of their fair values due to their short-term nature. Equity investments with readily determinable fair value are carried at fair value based on quoted market prices or estimated based on market conditions and risks existing at each balance sheet date. Equity investments without readily determinable fair value are measured at cost less impairment, and are adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. |
Foreign Currency Translation | (e) Foreign Currency Translation The functional currency of the Group is the United States Dollar (“US$”). The functional currency of the subsidiaries and the VIEs in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$. Foreign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses have been included in the determination of net income. The Group has chosen the US$ as its reporting currency. Assets and liabilities have been translated using exchange rates prevailing on the balance sheet date. Equity accounts are translated at historical exchange rates. Income statement items have been translated using the average exchange rate for the year. Translation adjustments have been reported as cumulative translation adjustments and are shown as a component of other comprehensive loss in the consolidated statements of comprehensive loss and consolidated statements of changes in shareholders’ equity. |
Cash, Cash Equivalents and Restricted Cash | (f) Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash on hand, demand deposits and floating rate financial instruments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. 2. Summary of Significant Accounting Policies (Continued) (f) Cash, Cash Equivalents and Restricted Cash (Continued) As of June 30, 2021, restricted cash were US $3.3 million, mainly consisting of amount of US $3.1 million held in the Group’s bank account as guarantee deposit for loan facility provided by the bank. Long term restricted cash of US $21.7 million frozen by local authorities on the alleged illegal acts of certain customers has been released upon the completion of investigations as of June 30, 2021. |
Revenue Recognition | (g) Revenue Recognition Mobile Advertising The Group generates substantially all of its revenue through mobile advertising and recognizes the revenue according to ASC Topic 606. The Group provides advertising services to customers for promotion of their brands and products through its mobile applications, including a portfolio of content-rich mobile applications. The Group has two general pricing models for its advertising products: cost over a time period and cost for performance basis including per impression basis. For advertising contracts over a time period, the Group generally recognizes revenue ratably over time, because the customer simultaneously receives and consumes the benefits as the Group performs throughout a fixed contract term. For contracts that are charged on the cost for performance basis, the Group charges an agreed-upon fee to its customers determined based on the effectiveness of advertising links, which is typically measured by clicks, transactions, installations, user registrations, and other actions originating from the Group’s mobile applications. Revenue is recognized at a point in time when there is an effective click, transaction, installations, user registrations, and other actions originating from the Group’s mobile applications. For contracts that are charged on the cost per impression basis, the Group recognizes the revenue at a point in time when the impressions are delivered. Revenue for performance-based advertising services is recognized at a point in time when all the revenue recognition criteria are met. For certain of the Group’s advertising service arrangements, customers are required to pay a deposit before using Group’s services. Deposits received are recorded as deferred revenue on the consolidated balance sheets. Service fees due to the Group are deducted from the deposited amounts when performance criteria have been satisfied. Others The Group also generates other revenues through cloud call business, licensing of its portfolio products and VIP user subscription fee. The revenue is recognized when service is rendered. Sales Incentives The Group provides sales incentives to certain customers in the form of sales rebates which entitle them to receive reductions in the price. The Group accounts for these incentives granted to customers as variable consideration and records it as reduction of revenue. The amount of variable consideration is measured based on the most likely amount of incentives to be. For the six months ended June 30, 2020 and 2021, the rebates recorded by the Group were US $39,890,475 and US $8,271,721 , respectively. 2. Summary of Significant Accounting Policies (Continued) (g) Revenue Recognition (Continued) Disaggregation of Revenue In the following table, revenue is disaggregated by revenue streams and geographic location of customers’ headquarters. For the six months ended June 30, 2020 2021 US$ US$ Revenue: Advertising revenue 232,196,523 162,485,069 Other revenue 1,212,400 2,283,884 Total 233,408,923 164,768,953 For the six months ended June 30 2020 2021 US$ US$ PRC 229,056,601 146,244,089 USA 4,345,679 18,497,598 Others 6,643 27,266 Total 233,408,923 164,768,953 Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represents the amount to be collected from customers and the service has been delivered. Contract liabilities include payments received in advance of performance under the contract or for differences between the amount billed to a customer and the revenue recognized for the completed performance obligation which is presented as deferred revenue on the consolidated balance sheets. Due to the generally short-term duration of the Group’s contracts, the majority of the performance obligations are satisfied in one year. The movements of the Group’s accounts receivable and deferred revenue are as follows: Accounts Receivable Deferred Revenue US$ US$ Opening Balance at January 1, 2020 27,254,634 3,887,908 Increase, net 6,788,404 2,272,367 Ending Balance at June 30, 2020 34,043,038 6,160,275 Opening Balance at January 1, 2021 28,127,346 3,331,511 Increase (Decrease), net 3,323,419 (245,512) Ending Balance at June 30, 2021 31,450,765 3,085,999 The Group recognized revenue of US $3,631,753 and US $3,014,390 by the reducing the balance of deferred revenue in the six months ended June 30, 2020 and 2021, respectively, which were included in the balance of deferred revenue at the beginning of the each period. |
Sales and Marketing Expenses | (h) Sales and Marketing Expenses Sales and marketing expenses primarily consist of advertising and promotion expenses, expenses incurred for the user incentive programs, salaries and benefits of sales and marketing personnel and fees paid to mobile device manufacturers to pre-install the Group’s smart input products. Advertising and promotion expenses which mainly include user acquisition costs that represent payment to the third parties for online user acquisition of the Group’s products via social media and demand-side platforms amounted to US $204,965,757 and US $100,148,612 for the six months ended June 30, 2020 and 2021, respectively. The Group launched the user incentive programs for its registered users in its various applications to enhance user engagements. |
Concentration and Risks | (i) Concentration and Risks Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, accounts receivable and prepayments. The Group places its cash and cash equivalents and short-term investments with financial institutions with high-credit ratings and quality. The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. With respect to prepayments, the Group performs on-going credit evaluations of the financial condition of these suppliers and has noted no significant credit risk. Concentration of Customers The following customers accounted for 10% or more of revenue: For the six months ended June 30, 2020 2021 US$ % US$ % Company A * * 51,491,841 31.25 % Company B 57,697,809 24.72 % 47,918,394 29.08 % The following customers accounted for 10% or more of accounts receivable: As of December 31, As of June 30, 2020 2021 US$ % US$ % Company A 11,559,398 39.47 % 10,800,500 33.10 % Company B 7,498,563 25.60 % 8,984,343 27.53 % Concentration of Vendors The Group uses certain vendors to acquire users and those cost are recorded as sales and marketing expenses. Vendors accounted for 10% or more are listed as below: For the six months ended June 30, 2020 2021 US$ % US$ % Company C 28,470,964 13.66 % * * Company D * * 15,719,126 12.04 % Company E * * 14,692,089 11.26 % 2. Summary of Significant Accounting Policies (Continued) (i) Concentration and Risks (Continued) The following vendors accounted for 10% or more of accounts payable: As of December 31, As of June30, 2020 2021 US$ % US$ % Company E 16,072,255 21.11 % 7,915,959 15.75 % Company C 9,461,038 12.43 % * * Company F 7,604,056 10.00 % * * Company G * * 9,324,356 18.56 % Company D * * 6,778,899 13.49 % * Less than 10%. Business and Economic Risks The Group participates in the dynamic and competitive high technology industry and believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations and cash flows: changes in the overall demand for services and products; competitive pressures due to existing and new entrants; advances and new trends in new technologies and industry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; copyright regulations; brand maintenance and enhancement; and risks associated with the Group’s ability to attract and retain employees necessary to support its growth. The Group’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Foreign Currency Risk The RMB is not a freely convertible currency. The State Administration for Foreign Exchange in the PRC, under the authority of the Peoples Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents and restricted cash denominated in RMB amounted to RMB 280,266,558 (amounted to US$ 42,953,388 ) and RMB 218,843,110 (amounted to US$ 33,876,119 ) as of December 31, 2020 and June 30, 2021, respectively. |
Leases | (j) Leases The Group leases office space in different cities in PRC and USA under non-cancellable operating lease agreements that expire at various dates through October 2023. Before January 1, 2021, the Group applied the ASC 840, Leases , under which each lease is classified at the inception date as either a capital lease or an operating lease. All the Group’s leases were classified as operating lease under ASC 840. Effective January 1, 2021, the Group adopted ASU No. 2016-02 “ Leases 2. Summary of Significant Accounting Policies (Continued) (j) Leases (Continued) Under ASC 842, the Group determines whether an arrangement constitutes a lease and records lease liabilities and ROU assets on its consolidated balance sheets at the lease commencement. The Group measures the operating lease liabilities at the commencement date based on the present value of remaining lease payments over the lease term, which is computed using the Group’s incremental borrowing rate, an estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the lease term. The Group measures the operating lease ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing operating lease expense based on lease payments on a straight-line basis over the lease term after the lessor makes the underlying asset available to the Group. Some of the Group’s lease contracts include options to extend the leases for an additional period which has to be agreed with the lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group does not include renewal option periods in the lease term for which it is not reasonably certain to exercise. During the six months ended June 30, 2020 and 2021, the Group incurred operating lease costs amounting to US$ 710,590 and US$ 893,050 (excluding US$ 57,975 for short-term leases not capitalized as ROU assets), respectively. Cash payments against operating lease liabilities were US$ 830,591 for the six months ended June 30, 2021. As of June 30, 2021, Group’s operating leases had a weighted average remaining lease term of 1.1 years and a weighted average discount rate of 6.0%. Future lease payments under operating leases as of June 30, 2021 were as follows: As of June 30, 2021 US$ The remaining of 2021 795,955 2022 752,277 2023 62,374 Total lease payment 1,610,606 Less: imputed interest (58,008) Total lease liability balance 1,552,598 Less: Operating lease liabilities, current (1,321,794) Long-term operating lease liabilities 230,804 As of December 31, 2020, the future minimum lease payments under the Group’s non-cancelable operating lease agreements based on ASC 840 are as follows: As of December 31, 2020 US$ 2021 1,650,102 2022 947,794 2023 62,003 Total lease commitment 2,659,899 |
Convertible note payable | (k) Convertible Notes, Beneficial Conversion Feature (“BCF”) and Redemption Feature The Group issued convertible notes in January and March of 2021. The Group has evaluated whether the conversion feature of the notes is considered an embedded derivative instrument subject to bifurcation in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities. Based on the Group’s evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as conversion option does not provide the holder of the notes with means to net settle the contracts. Convertible notes, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the value of the BCF is determined as the intrinsic value of the conversion feature is recorded as deduction to the carrying amount of the notes and credited to additional paid-in-capital. The value of the BCF is recorded in the financial statements as a debt discount from the face amount of the notes, which is then accreted to interest expense over the life of the related debt using the effective interest method. The Group presents the occurred debt issuance costs as a direct deduction from the convertible note rather than as an asset. Amortization of the costs is reported as interest expense. At the date of above conversion, the remaining amount has been fully amortized to interest expense. The convertible notes issued in March of 2021 also include a monthly redemption feature which trigger a mandatory monthly redemption of a portion of the principal amount plus an 8% redemption premium and accrued and unpaid interest to be redeem in cash, the shares of the Group or a combination of both at the option of the Group if certain conditions relating to trading prices of the Group’s shares are not met (“Monthly Redemption”). The Group has evaluated whether the Monthly Redemption feature is considered an embedded derivative instrument subject to bifurcation in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities. Based on the Group’s evaluation, the monthly redemption has an underlying based on the fair value of the Group’s shares. An underlying that is based on common stock is not considered to be clearly and closely related to a debt host instrument, therefore, the Monthly Redemption feature should be separately accounted for as a stand-alone derivative under ASC 815 since it is not clearly and closely related to the host contract. This derivative is presented at fair value with change in fair value recognized in earnings. For the convertible notes issued with this derivative, a portion of the note’s proceed is allocated to the derivative based on the fair value at the date of the issuance. The allocated fair value for the derivative is recorded as a debt discount from the face amount of the notes, which is then accredited to interest expense over the life of the related debt using the effective interest method. |
Net loss per share | (l) Net loss per share Basic net loss per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year or the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consist of the ordinary shares issuable upon the conversion of the convertible notes (using the if-converted method) and ordinary shares issuable upon the exercise of share options and vest of nonvested restricted share units (using the treasury stock method). |
Recent Accounting Pronouncements | (o) Recent Accounting Pronouncements New accounting pronouncements recently adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and lease liability on their balance sheet for all leases with terms beyond twelve months. Effective January 1, 2021, the Group adopted the requirements of this ASU using the modified retrospective approach with comparative periods continuing to be reported under Topic 840. The Group elected the transition package of practical expedients permitted within the standard. As a result, the Group did not reassess initial direct costs, lease classification, or whether the contracts contain or are leases. Upon the adoption on January 1, 2021, the Group recognized operating lease right of use (“ROU”) assets of USD$ 2,563,151 with corresponding lease liabilities of USD$ 2,470,968 on the consolidated balance sheets. The consolidated financial statements for the six-month ended June 30, 2021 are presented under the new standard, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard. 2. Summary of Significant Accounting Policies (Continued) New accounting pronouncements not yet adopted In June 2016, the FASB issued ASU 2016-13, Credit Losses, Measurement of Credit Losses on Financial Instruments . This ASU provides more useful information about expected credit losses to financial statement users and changes how entities will measure credit losses on financial instruments and timing of when such losses should be recognized. This ASU is effective for annual and interim periods beginning after December 15, 2019 for the public business entities. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. In November 2019, the FASB issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission) and other non-SEC reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. Early adoption is permitted. The Group is currently assessing the impact the guidance will have on its consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of consolidated financial statement balances and amounts of the Group's VIEs | As of December 31, As of June 30, 2020 2021 US$ US$ ASSETS Cash and cash equivalents 7,105,349 9,974,475 Restricted cash 138,964 137,262 Accounts receivable, net 16,115,202 11,465,907 Prepaid expense and other assets 7,912,712 5,476,313 Long-term restricted cash 21,689,436 — Property and equipment, net 36,422 178,460 Intangible assets, net — 174 Operating lease right-of-use assets — 845,606 Long-term investments 306,518 619,801 Other non-current assets 224,235 168,220 Total Assets 53,528,838 28,866,218 LIABILITIES Accounts payable 43,099,067 26,256,751 Short-term bank borrowings 267,917 5,059,507 Accrued salary and benefits 694,225 1,196,802 Operating lease liabilities, current — 640,524 Accrued expenses and other current liabilities 4,228,532 3,154,297 Deferred revenue 620,688 740,332 Operating lease liabilities, non-current — 63,154 Total Liabilities 48,910,429 37,111,367 For the six months ended June 30, 2020 2021 US$ US$ Net revenues 222,094,810 59,215,128 Income from operations 20,820,074 33,276,801 Net income 21,049,088 33,309,155 Net cash provided by operating activities 36,430,919 22,842,292 Net cash used in investing activities (127,142) (469,818) Net cash provided by financing activities — 4,765,123 |
Schedule of revenue based on revenue streams | For the six months ended June 30, 2020 2021 US$ US$ Revenue: Advertising revenue 232,196,523 162,485,069 Other revenue 1,212,400 2,283,884 Total 233,408,923 164,768,953 |
Schedule of revenues generated by geographic location of customers' headquarters | For the six months ended June 30 2020 2021 US$ US$ PRC 229,056,601 146,244,089 USA 4,345,679 18,497,598 Others 6,643 27,266 Total 233,408,923 164,768,953 |
Schedule of movements in accounts receivable and deferred revenue | Accounts Receivable Deferred Revenue US$ US$ Opening Balance at January 1, 2020 27,254,634 3,887,908 Increase, net 6,788,404 2,272,367 Ending Balance at June 30, 2020 34,043,038 6,160,275 Opening Balance at January 1, 2021 28,127,346 3,331,511 Increase (Decrease), net 3,323,419 (245,512) Ending Balance at June 30, 2021 31,450,765 3,085,999 |
Schedule of concentration risk | Concentration of Customers The following customers accounted for 10% or more of revenue: For the six months ended June 30, 2020 2021 US$ % US$ % Company A * * 51,491,841 31.25 % Company B 57,697,809 24.72 % 47,918,394 29.08 % The following customers accounted for 10% or more of accounts receivable: As of December 31, As of June 30, 2020 2021 US$ % US$ % Company A 11,559,398 39.47 % 10,800,500 33.10 % Company B 7,498,563 25.60 % 8,984,343 27.53 % Concentration of Vendors The Group uses certain vendors to acquire users and those cost are recorded as sales and marketing expenses. Vendors accounted for 10% or more are listed as below: For the six months ended June 30, 2020 2021 US$ % US$ % Company C 28,470,964 13.66 % * * Company D * * 15,719,126 12.04 % Company E * * 14,692,089 11.26 % 2. Summary of Significant Accounting Policies (Continued) (i) Concentration and Risks (Continued) The following vendors accounted for 10% or more of accounts payable: As of December 31, As of June30, 2020 2021 US$ % US$ % Company E 16,072,255 21.11 % 7,915,959 15.75 % Company C 9,461,038 12.43 % * * Company F 7,604,056 10.00 % * * Company G * * 9,324,356 18.56 % Company D * * 6,778,899 13.49 % * Less than 10%. |
Schedule of maturities of lease liabilities | As of June 30, 2021 US$ The remaining of 2021 795,955 2022 752,277 2023 62,374 Total lease payment 1,610,606 Less: imputed interest (58,008) Total lease liability balance 1,552,598 Less: Operating lease liabilities, current (1,321,794) Long-term operating lease liabilities 230,804 |
Schedule of future minimum lease payments under non-cancelable operating lease agreements based on ASC 840 | As of December 31, 2020 US$ 2021 1,650,102 2022 947,794 2023 62,003 Total lease commitment 2,659,899 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounts Receivable, net | |
Schedule of accounts receivable, net | As of December 31, As of June 30, 2020 2021 US$ US$ Accounts receivable 29,289,301 32,631,188 Allowance for doubtful accounts: Balance at beginning of the year/period (1,774,192) (1,161,955) Provision for allowance for doubtful accounts (359,252) (38,571) Write-off 964,474 20,471 Foreign exchange effect 7,015 (368) Balance at end of the year/period (1,161,955) (1,180,423) Accounts receivable, net 28,127,346 31,450,765 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | As of December 31, As of June 30, 2020 2021 US$ US$ Value added tax recoverable 5,498,400 3,262,544 Other receivables 3,875,800 2,698,071 Advance to suppliers 882,793 2,009,847 Others 1,816,233 995,450 Prepaid expenses and other current assets 12,073,226 8,965,912 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property and Equipment, net | |
Schedule of property and equipment, net | As of December 31, As of June 30, 2020 2021 US$ US$ Electronic equipment 12,729,696 13,128,249 Office equipment and furniture 363,163 319,251 Motor vehicles 82,470 240,513 Leasehold improvements 1,714,381 1,730,934 Construction in progress 5,811 — Total 14,895,521 15,418,947 Less: Accumulated depreciation (9,501,779) (11,318,470) Property and equipment, net 5,393,742 4,100,477 |
Short-term Borrowings (Tables)
Short-term Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Short-term Borrowings | |
Schedule of bank borrowings | As of December 31, As of June 30, 2020 2021 US$ US$ Bank borrowings 10,958,022 9,752,171 Others — 5,410,133 Short-term Borrowings 10,958,022 15,162,304 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: As of December 31, As of June 30, 2020 2021 US$ US$ Other tax payables (Note 1) 4,386,517 2,018,564 Accruals for user incentive programs — 1,863,526 Accrued expenses (Note 2) 2,772,237 1,840,150 Accrued loss contingencies relating litigation and asserted claims 2,872,150 676,526 Others 655,614 285,769 Total 10,686,518 6,684,535 Note 1: Other tax payables as of June 30, 2021, mainly consisted of value-added tax payable of US$ 1.4 million and other taxes such as individual income tax and stamp duty tax. Note 2: Accrued expenses mainly consisted of accrued professional service fees and other miscellaneous expenses related to marketing and operation activities. |
Other operating income, net (Ta
Other operating income, net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Other operating income, net | |
Schedule of other operating income (loss), net | For the six months ended June 30, 2020 2021 US$ US$ Government subsidies 1,019,411 2,015,207 Contingent losses (445,684) — Others 262,512 246,647 Total 836,239 2,261,854 |
Income Taxes Expense (Tables)
Income Taxes Expense (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes Expense | |
Summary of current and deferred portion of income tax expenses | For the six months ended June 30, 2020 2021 US$ US$ Current tax expenses 3,200 25 Deferred tax benefits — — Total 3,200 25 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation | |
Schedule of assumptions used to estimate the fair value of options at the date of granted | Six Months ended Year ended December 31 June 30 2020 2021 Average risk-free rate of interest 0.67% 1.47% Expected volatility 43.15%-43.38% 38.71%-41.64% Dividend yield 0% 0% Contractual term 10 years 10 years Fair value of the underlying shares on the date of option grants 0.05-0.13 0.03-0.05 |
Summary of aggregate option activity and information regarding options outstanding | A summary of the aggregate option activity and information regarding options outstanding as of June 30, 2021 is as follows: Weighted Number of average exercise options price US$ Outstanding on January 1, 2021 290,614,107 0.02 Granted 72,757,400 0.00 Forfeited (36,721,500) 0.00 Exercised (1,970,650) 0.02 Outstanding on June 30, 2021 324,679,357 0.02 Options exercisable on June 30, 2021 160,621,328 0.05 Vested or expected to vest as of June 30, 2021 324,679,357 0.02 |
Summary of the RSU activity | A summary of the RSUs activity for the nine months ended June 30, 2021 is as follows: Weighted average Number of grant date restricted shares fair value Unvested restricted shares outstanding at January 1, 2021 37,740,804 0.20 Granted — — Vested (1,793,200) 0.20 Forfeited (3,695,150) 0.20 Unvested restricted shares outstanding at June 30, 2021 32,252,454 0.20 Expected to vest at June 30, 2021 32,252,454 0.20 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Net Loss Per Share | |
Schedule of computation of basic and diluted net loss per share | For the six months ended June 30, 2020 2021 US$ US$ Numerator: Net loss—basic and diluted (6,619,139) (12,134,310) Deemed dividend in relation to convertible notes — (1,368,866) Net loss attributable to ordinary shareholders (6,619,139) (13,503,176) Shares (Denominator): Weighted average number of ordinary shares outstanding Basic 3,094,780,922 3,187,723,620 Diluted 3,094,780,922 3,187,723,620 Net loss earnings per share—basic and diluted (0.002) (0.004) |
Schedule of instruments excluded from calculation of diluted net income (loss) per share | For the six months ended June 30, 2020 2021 Share options 261,092,616 324,679,357 Restricted shares units 29,108,747 32,252,454 Shares of convertible notes — 208,927,671 Total 290,201,363 565,859,482 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Information | |
Schedule of non-current assets based on geographical location of the assets | As of December 31, As of June 30, 2020 2021 US$ US$ PRC 26,560,143 6,406,133 USA 2,158,359 1,668,746 Total 28,718,502 8,074,879 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) | Aug. 16, 2021 | Jan. 22, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Net losses | $ (12,134,310) | $ (6,619,139) | $ (47,400,000) | ||
Accumulated deficit | (213,099,385) | $ (200,965,075) | |||
Net cash used in operating activities | (40,514,770) | $ 20,361,994 | |||
Current liabilities exceeding current assets | (21,400,000) | ||||
Standby equity distribution agreement | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Maximum value of stock available to execute | $ 20,000,000 | ||||
ADS | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Convertible note payable and related derivative liabilities | $ 17,800,000 | ||||
Subsequent event | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Number of shares issued during the period | 49,501,700 | ||||
Net proceeds deducting underwriting discount and offering costs | $ 1,400,000 | ||||
Maximum value of stock available to execute | $ 20,000,000 | ||||
Subsequent event | ADS | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Number of shares issued during the period | 990,034 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Consolidated financial statement balances and amounts of the Group's VIEs (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
ASSETS | |||
Cash and cash equivalents | $ 35,667,074 | $ 64,860,916 | $ 24,669,133 |
Restricted cash | 3,293,189 | 3,264,145 | |
Accounts receivable, net | 31,450,765 | 28,127,346 | |
Prepaid expense and other assets | 8,965,912 | 12,073,226 | |
Long-term restricted cash | 21,700,000 | 21,689,436 | |
Property and equipment, net | 4,100,477 | 5,393,742 | |
Intangible assets, net | 325,631 | 396,495 | |
Operating lease right-of-use assets | 1,818,213 | ||
Long-term Investments | 619,801 | 306,518 | |
Other non-current assets | 1,210,757 | 932,311 | |
TOTAL ASSETS | 87,501,855 | 96,902,380 | |
LIABILITIES | |||
Accounts payable | 50,245,783 | 76,125,973 | |
Short-term borrowings | 15,162,304 | 10,958,022 | |
Accrued salary and benefits | 6,554,525 | 9,143,476 | |
Operating lease liabilities, current | 1,321,794 | ||
Accrued expenses and other current liabilities | 6,684,535 | 10,686,518 | |
Deferred revenue | 3,085,999 | 3,331,511 | |
Operating lease liabilities, non-current | 230,804 | ||
TOTAL LIABILITIES | 101,496,878 | 110,704,935 | |
Net revenues | 164,768,953 | 233,408,923 | |
Income from operations | (10,341,803) | (6,849,696) | |
Net income | (12,134,310) | (6,619,139) | (47,400,000) |
Net cash provided by operating activities | (40,514,770) | 20,361,994 | |
Net cash used in investing activities | (924,554) | (14,627,559) | |
Net cash provided by financing activities | 30,015,420 | (754,232) | |
Assets held in VIEs that can be used only to settle obligations of VIEs | 0 | ||
VIEs | |||
ASSETS | |||
Cash and cash equivalents | 9,974,475 | 7,105,349 | |
Restricted cash | 137,262 | 138,964 | |
Accounts receivable, net | 11,465,907 | 16,115,202 | |
Prepaid expense and other assets | 5,476,313 | 7,912,712 | |
Long-term restricted cash | 21,689,436 | ||
Property and equipment, net | 178,460 | 36,422 | |
Intangible assets, net | 174 | ||
Operating lease right-of-use assets | 845,606 | ||
Long-term Investments | 619,801 | 306,518 | |
Other non-current assets | 168,220 | 224,235 | |
TOTAL ASSETS | 28,866,218 | 53,528,838 | |
LIABILITIES | |||
Accounts payable | 26,256,751 | 43,099,067 | |
Short-term borrowings | 5,059,507 | 267,917 | |
Accrued salary and benefits | 1,196,802 | 694,225 | |
Operating lease liabilities, current | 640,524 | ||
Accrued expenses and other current liabilities | 3,154,297 | 4,228,532 | |
Deferred revenue | 740,332 | 620,688 | |
Operating lease liabilities, non-current | 63,154 | ||
TOTAL LIABILITIES | 37,111,367 | $ 48,910,429 | |
Net revenues | 59,215,128 | 222,094,810 | |
Income from operations | 33,276,801 | 20,820,074 | |
Net income | 33,309,155 | 21,049,088 | |
Net cash provided by operating activities | 22,842,292 | 36,430,919 | |
Net cash used in investing activities | (469,818) | $ (127,142) | |
Net cash provided by financing activities | $ 4,765,123 | ||
Percentage of consolidated net revenues | 36.00% | 95.00% | |
Percentage of consolidated total assets | 33.00% | 55.00% | |
Percentage of consolidated total liabilities | 37.00% | 44.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Cash, Cash Equivalents and Restricted Cash | ||
Restricted cash - current portion | $ 3,293,189 | $ 3,264,145 |
Guarantee deposit for loan facility provided by the bank | 3,100,000 | |
Long-term restricted cash | $ 21,700,000 | $ 21,689,436 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Sales Incentives (Details) | 6 Months Ended | |
Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($) | |
Revenue Recognition | ||
Number of general pricing models | item | 2 | |
Sales rebates | $ | $ 8,271,721 | $ 39,890,475 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 164,768,953 | $ 233,408,923 |
PRC | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 146,244,089 | 229,056,601 |
USA | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 18,497,598 | 4,345,679 |
Others | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 27,266 | 6,643 |
Advertising revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 162,485,069 | 232,196,523 |
Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 2,283,884 | $ 1,212,400 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Accounts Receivable | ||
Beginning balance | $ 28,127,346 | $ 27,254,634 |
Increase/(decrease), net | 3,323,419 | 6,788,404 |
Ending balance | 31,450,765 | 34,043,038 |
Deferred Revenue | ||
Beginning balance | 3,331,511 | 3,887,908 |
(Decrease) Increase, net | (245,512) | 2,272,367 |
Ending balance | 3,085,999 | 6,160,275 |
Revenue recognized included in contract liability at beginning of quarter | $ 3,014,390 | $ 3,631,753 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Sales and Marketing Expenses (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Sales and marketing expenses | ||
Advertising expenses | $ 100,148,612 | $ 204,965,757 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Concentration and risks (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Concentration and risks | |||
Revenues | $ 164,768,953 | $ 233,408,923 | |
Accounts receivable, net | 31,450,765 | $ 28,127,346 | |
Sales and marketing expenses | 130,523,018 | 208,434,709 | |
Accounts payable | 50,245,783 | $ 76,125,973 | |
Customer concentration risk | Revenue | Company A | |||
Concentration and risks | |||
Revenues | $ 51,491,841 | ||
Concentration risk (as a percent) | 31.25% | ||
Customer concentration risk | Revenue | Company B | |||
Concentration and risks | |||
Revenues | $ 47,918,394 | $ 57,697,809 | |
Concentration risk (as a percent) | 29.08% | 24.72% | |
Customer concentration risk | Accounts receivables | Company A | |||
Concentration and risks | |||
Concentration risk (as a percent) | 33.10% | 39.47% | |
Accounts receivable, net | $ 10,800,500 | $ 11,559,398 | |
Customer concentration risk | Accounts receivables | Company B | |||
Concentration and risks | |||
Concentration risk (as a percent) | 27.53% | 25.60% | |
Accounts receivable, net | $ 8,984,343 | $ 7,498,563 | |
Vendor concentration risk | Sales and marketing expenses | Company E | |||
Concentration and risks | |||
Concentration risk (as a percent) | 11.26% | ||
Sales and marketing expenses | $ 14,692,089 | ||
Vendor concentration risk | Sales and marketing expenses | Company C | |||
Concentration and risks | |||
Concentration risk (as a percent) | 13.66% | ||
Sales and marketing expenses | $ 28,470,964 | ||
Vendor concentration risk | Sales and marketing expenses | Company D | |||
Concentration and risks | |||
Concentration risk (as a percent) | 12.04% | ||
Sales and marketing expenses | $ 15,719,126 | ||
Vendor concentration risk | Accounts payable | Company E | |||
Concentration and risks | |||
Concentration risk (as a percent) | 15.75% | 21.11% | |
Accounts payable | $ 7,915,959 | $ 16,072,255 | |
Vendor concentration risk | Accounts payable | Company C | |||
Concentration and risks | |||
Concentration risk (as a percent) | 12.43% | ||
Accounts payable | $ 9,461,038 | ||
Vendor concentration risk | Accounts payable | Company F | |||
Concentration and risks | |||
Concentration risk (as a percent) | 10.00% | ||
Accounts payable | $ 7,604,056 | ||
Vendor concentration risk | Accounts payable | Company G | |||
Concentration and risks | |||
Concentration risk (as a percent) | 18.56% | ||
Accounts payable | $ 9,324,356 | ||
Vendor concentration risk | Accounts payable | Company D | |||
Concentration and risks | |||
Concentration risk (as a percent) | 13.49% | ||
Accounts payable | $ 6,778,899 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Foreign Currency Risk (Details) | Jun. 30, 2021USD ($) | Jun. 30, 2021CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Jun. 30, 2020USD ($) | Dec. 31, 2018USD ($) |
Foreign Currency Risk [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 38,960,263 | $ 49,622,714 | $ 64,921,117 | $ 59,966,031 | ||
RMB | ||||||
Foreign Currency Risk [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 33,876,119 | ¥ 218,843,110 | $ 42,953,388 | ¥ 280,266,558 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Leases (Details) - USD ($) | Jan. 01, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 1,818,213 | ||
Lease liabilities | 1,552,598 | ||
Operating lease costs | 893,050 | $ 710,590 | |
Costs for short-term leases | $ 57,975 | ||
Weighted-average remaining lease term | 1 year 1 month 6 days | ||
Weighted-average discount rate (as a percent) | 6.00% | ||
Cash payments against operating lease liabilities | $ 830,591 | ||
ASU2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease, Practical Expedients, Package [true false] | true | ||
ASU2016-02 | Adjustment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 2,563,151 | ||
Lease liabilities | $ 2,470,968 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Leases - maturities of lease liabilities (Details) | Jun. 30, 2021USD ($) |
Leases | |
The remaining of 2021 | $ 795,955 |
2022 | 752,277 |
2023 | 62,374 |
Total lease payment | 1,610,606 |
Less: imputed interest | (58,008) |
Total lease liability balance | 1,552,598 |
Less: Operating lease liabilities, current | (1,321,794) |
Long-term operating lease liabilities | $ 230,804 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Leases - maturities of future minimum lease payments (Details) | Jun. 30, 2021USD ($) |
Future lease payments under operating leases | |
2021 | $ 1,650,102 |
2022 | 947,794 |
2023 | 62,003 |
Total lease commitment | $ 2,659,899 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Convertible Notes, Beneficial Conversion Feature ("BCF") and Redemption Feature (Details) | 1 Months Ended |
Mar. 31, 2021 | |
Short-term Debt [Line Items] | |
Debt redemption premium | 8.00% |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) | Jan. 01, 2021 | Jun. 30, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 1,818,213 | |
Lease liabilities | $ 1,552,598 | |
ASU2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease, Practical Expedients, Package [true false] | true | |
ASU2016-02 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 2,563,151 | |
Lease liabilities | $ 2,470,968 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Accounts Receivable, net | ||
Accounts receivable | $ 32,631,188 | $ 29,289,301 |
Allowance for doubtful accounts: | ||
Balance at beginning of the year | (1,161,955) | (1,774,192) |
Provision for allowance for doubtful accounts | (38,571) | (359,252) |
Write-off | 20,471 | 964,474 |
Foreign exchange effect | (368) | 7,015 |
Balance at end of the year | (1,180,423) | (1,161,955) |
Accounts receivable, net | $ 31,450,765 | $ 28,127,346 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Prepaid Expenses and Other Current Assets | ||
Value added tax recoverable | $ 3,262,544 | $ 5,498,400 |
Other receivables | 2,698,071 | 3,875,800 |
Advance to suppliers | 2,009,847 | 882,793 |
Others | 995,450 | 1,816,233 |
Prepaid expenses and other current assets | $ 8,965,912 | $ 12,073,226 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment, Net | ||
Total | $ 15,418,947 | $ 14,895,521 |
Less: Accumulated depreciation | (11,318,470) | (9,501,779) |
Property and equipment, net | 4,100,477 | 5,393,742 |
Depreciation expenses | 1,769,428 | 1,492,217 |
Electronic equipment | ||
Property, Plant and Equipment, Net | ||
Total | 13,128,249 | 12,729,696 |
Office equipment and furniture | ||
Property, Plant and Equipment, Net | ||
Total | 319,251 | 363,163 |
Motor vehicles | ||
Property, Plant and Equipment, Net | ||
Total | 240,513 | 82,470 |
Leasehold improvements | ||
Property, Plant and Equipment, Net | ||
Total | $ 1,730,934 | 1,714,381 |
Construction in Progress | ||
Property, Plant and Equipment, Net | ||
Total | $ 5,811 |
Short-term Borrowings (Details)
Short-term Borrowings (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2021USD ($) | Mar. 31, 2021USD ($)loan | Dec. 31, 2020USD ($) | Oct. 31, 2019 | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Jul. 31, 2018USD ($) | Jul. 31, 2016USD ($) | |
Credit facility | |||||||||
Bank borrowings | $ 9,752,171 | $ 10,958,022 | $ 9,752,171 | $ 10,958,022 | |||||
Others | 5,410,133 | 5,410,133 | |||||||
Short-term Borrowings | 15,162,304 | 10,958,022 | 15,162,304 | 10,958,022 | |||||
Cash deposited in the bank as guarantee | 3,100,000 | ||||||||
Proceeds from short-term borrowings | 65,182,723 | $ 14,571,130 | |||||||
Repaid of short-term borrowings received | 61,057,629 | 8,865,969 | |||||||
Credit facility, 2016 | |||||||||
Credit facility | |||||||||
Total credit available under this facility | $ 10,000,000 | 10,000,000 | 11,000,000 | $ 6,000,000 | |||||
Amount borrowed | 59,700,000 | 28,800,000 | |||||||
Amount repaid | $ 61,100,000 | 24,100,000 | |||||||
Weighted average interest rate of short-term borrowings (as a percent) | 5.15% | ||||||||
Cash deposited in the bank as guarantee | 3,100,000 | ||||||||
Credit facility, 2018 | |||||||||
Credit facility | |||||||||
Total credit available under this facility | $ 4,000,000 | $ 4,000,000 | 4,000,000 | $ 4,000,000 | |||||
Amount repaid | $ 7,200,000 | ||||||||
Weighted average interest rate of short-term borrowings (as a percent) | 4.39% | ||||||||
Credit facility, short-term borrowings | |||||||||
Credit facility | |||||||||
Number of short-term interest-free loan | loan | 2 | ||||||||
Proceeds from short-term borrowings | $ 5,400,000 | ||||||||
Loan Prime Rate | Credit facility, 2016 | |||||||||
Credit facility | |||||||||
Variable interest rate (as a percent) | 1.30% | 1.30% | |||||||
PBOC rate, one year | Credit facility, 2018 | |||||||||
Credit facility | |||||||||
Variable interest rate (as a percent) | 3.50% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Other tax payables | $ 2,018,564 | $ 4,386,517 |
Accruals for user incentive programs | 1,863,526 | |
Accrued expenses | 1,840,150 | 2,772,237 |
Accrued loss contingencies relating litigation and asserted claims | 676,526 | 2,872,150 |
Others | 285,769 | 655,614 |
Total | 6,684,535 | $ 10,686,518 |
Value-added tax payable | $ 1,400,000 |
Convertible notes and Standby_2
Convertible notes and Standby Equity Distribution Agreement (Details) | Aug. 16, 2021USD ($) | Mar. 19, 2021USD ($)$ / sharesshares | Jan. 22, 2021USD ($)D | Jan. 19, 2021USD ($)D$ / sharesshares | Jun. 30, 2021USD ($)$ / sharesshares | Mar. 31, 2021$ / shares | Aug. 31, 2021USD ($)$ / sharesshares | Mar. 31, 2021USD ($)$ / sharesshares | Jun. 30, 2021USD ($)$ / sharesshares |
Debt redemption premium | 8.00% | ||||||||
Shares for commitment fee of convertible notes | $ 329,150 | ||||||||
Net proceeds from issuance of convertible notes | 27,175,000 | ||||||||
Derivative liabilities | $ 1,577,128 | 1,577,128 | |||||||
Aggregate net gain | $ 85,227 | ||||||||
Subsequent event | |||||||||
Maximum value of stock available to execute | $ 20,000,000 | ||||||||
Treasury Stock | |||||||||
Shares for commitment fee of convertible notes (in shares) | shares | (5,500,000) | ||||||||
Shares for commitment fee of convertible notes | $ 765,397 | ||||||||
Additional paid-in capital | |||||||||
Shares for commitment fee of convertible notes | (436,247) | ||||||||
Standby equity distribution agreement | |||||||||
Consecutive trading days | D | 5 | ||||||||
Agreement term | 36 months | ||||||||
Maximum value of stock available to execute | $ 20,000,000 | ||||||||
Purchase price | 90.00% | ||||||||
Outstanding equity financing available | 20,000,000 | 20,000,000 | |||||||
January 2021 Notes | |||||||||
Principal amount | $ 10,000,000 | ||||||||
Discount percentage | 3.00% | ||||||||
Interest rate | 5.00% | ||||||||
Conversion price | $ / shares | $ 0.0508 | $ 0.0508 | |||||||
Shares for commitment fee of convertible notes (in shares) | shares | 1,750,000 | ||||||||
Shares for commitment fee of convertible notes | $ 100,000 | ||||||||
Loan discount | 400,000 | 400,000 | |||||||
Consecutive trading days | D | 10 | ||||||||
Net proceeds from issuance of convertible notes | $ 8,900,000 | ||||||||
Conversion of convertible note to ADSs | shares | 196,665,850 | ||||||||
Issuance costs | $ 700,000 | $ 700,000 | |||||||
January 2021 Notes | Additional paid-in capital | |||||||||
Beneficial conversion feature | $ 1,400,000 | ||||||||
January 2021 Notes | ADS | Maximum | |||||||||
Conversion price | $ / shares | $ 4.20 | ||||||||
Percentage of trading price | 88.00% | ||||||||
March 2021 Notes | |||||||||
Principal amount | $ 20,000,000 | ||||||||
Discount percentage | 2.00% | ||||||||
Interest rate | 5.00% | ||||||||
Debt redemption premium | 8.00% | ||||||||
Threshold consecutive trading days prior to redemption date | 5 days | ||||||||
Conversion price | $ / shares | $ 5 | $ 0.0358 | $ 0.0358 | ||||||
Shares for commitment fee of convertible notes (in shares) | shares | 3,750,000 | ||||||||
Shares for commitment fee of convertible notes | $ 200,000 | ||||||||
Loan discount | $ 2,000,000 | $ 2,000,000 | |||||||
Net proceeds from issuance of convertible notes | $ 18,200,000 | ||||||||
Conversion of convertible note to ADSs | shares | 46,345,450 | ||||||||
Issuance costs | $ 1,600,000 | 1,600,000 | |||||||
Percentage of redemption | 108.00% | ||||||||
Derivative liabilities | 1,577,128 | 1,577,128 | |||||||
Aggregate net gain | 85,227 | ||||||||
Debt amount redeemed | $ 1,662,355 | ||||||||
Debt instrument accrued interest | $ 1,700,000 | ||||||||
March 2021 Notes | Subsequent event | |||||||||
Conversion price | $ / shares | $ 0.0299 | ||||||||
Conversion of convertible note to ADSs | shares | 33,113,400 | ||||||||
Debt instrument accrued interest | $ 4,200,000 |
Other operating income, net (De
Other operating income, net (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Other operating income, net | ||
Government subsidies | $ 2,015,207 | $ 1,019,411 |
Contingent losses | (445,684) | |
Others | 246,647 | 262,512 |
Total | $ 2,261,854 | $ 836,239 |
Income Taxes Expense - Current
Income Taxes Expense - Current and deferred portion of income tax expenses (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Current and deferred portion of income tax expenses | ||
Current tax expenses | $ 25 | $ 3,200 |
Income tax expense | $ 25 | $ 3,200 |
Income Taxes Expense (Details)
Income Taxes Expense (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes Expense | ||
Effective tax rate (as a percent) | 0.00% | 0.00% |
Unrecognized tax benefits | $ 0 | |
Unrecognized tax benefits, interest and penalties | 0 | |
Income (Loss) before income taxes and equity in earnings of subsidiaries | $ (12,130,402) | $ (6,615,939) |
Treasury Shares (Details)
Treasury Shares (Details) - USD ($) | May 18, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Period which shares would be repurchased | 12 months | |||
Repurchase of ordinary shares | $ 1,322,195 | $ 5,871,945 | ||
Cancellation of treasury shares | 135,205,591 | 135,205,591 | ||
Shares for commitment fee of convertible notes | $ 329,150 | |||
Treasury Stock | ||||
Number of shares repurchased | 1,400,000 | |||
Repurchase of ordinary shares | $ 6,000,000 | |||
Shares for commitment fee of convertible notes (in shares) | 5,500,000 | |||
Shares for commitment fee of convertible notes | $ 765,397 | |||
Repurchase Plan, Group | ||||
Number of shares repurchased | 24,237,100 | 47,099,300 | ||
Repurchase of ordinary shares | $ 5,871,945 | |||
Maximum | ||||
Aggregate amount of authorized repurchase | $ 20,000,000 |
Share-Based Compensation - Shar
Share-Based Compensation - Share options (Details) | 6 Months Ended | |
Jun. 30, 2021USD ($)item$ / sharesshares | Jun. 30, 2020USD ($)$ / shares | |
Stock options | ||
Share-Based Compensation | ||
Granted (in dollars per share) | $ / shares | $ 0.03 | $ 0.1 |
Options granted (in shares) | shares | 72,757,400 | |
Share-based compensation expense | $ | $ 1,255,165 | $ 1,428,823 |
Stock options | 2012 Option Plan | ||
Share-Based Compensation | ||
Contractual term | 10 years | |
Stock options | 2012 Option Plan | Minimum | ||
Share-Based Compensation | ||
Annual vesting percentage | 20.00% | |
Vesting number of anniversaries | 4 | |
Participant right to exercise options cease period after termination of employment | 2 months | |
Stock options | 2012 Option Plan | Maximum | ||
Share-Based Compensation | ||
Annual vesting percentage | 25.00% | |
Vesting number of anniversaries | 5 | |
Participant right to exercise options cease period after termination of employment | 3 months | |
Restricted share units | ||
Share-Based Compensation | ||
Granted (in shares) | shares | 0 | |
Contractual term | 10 years | |
Annual vesting percentage | 25.00% | |
Vesting number of anniversaries | 4 | |
Share-based compensation expense | $ | $ 882,184 | $ 907,541 |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions to estimate the fair value of the options (Details) - USD ($) | Nov. 06, 2018 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2021 |
Share-Based Compensation | |||||
Average risk-free rate of interest | 1.47% | 0.67% | |||
Dividend yield (as a percent) | 0.00% | 0.00% | |||
Incremental compensation cost | $ 285,661 | $ 7,891 | $ 28,894 | $ 16,284 | |
Stock options | |||||
Share-Based Compensation | |||||
Expected volatility, minimum (as a percent) | 38.71% | 43.15% | |||
Expected volatility, maximum (as a percent) | 41.64% | 43.38% | |||
Contractual term | 10 years | 10 years | |||
Fair value of the underlying shares on the date of option grants, minimum (in dollars per share) | $ 0.03 | $ 0.05 | |||
Fair value of the underlying shares on the date of option grants, maximum (in dollars per share) | $ 0.05 | $ 0.13 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of aggregate option activity (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock options | ||
Number of options | ||
Outstanding at beginning of the year (in shares) | 290,614,107 | |
Granted (in shares) | 72,757,400 | |
Forfeited (in shares) | (36,721,500) | |
Exercised (in shares) | (1,970,650) | (13,564,950) |
Outstanding at end of the year (in shares) | 324,679,357 | |
Exercisable on end of the year (in shares) | 160,621,328 | |
Vested or expected to vest (in shares) | 324,679,357 | |
Weighted average exercise price | ||
Outstanding at beginning of the year (in dollars per share) | $ 0.02 | |
Granted (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0.02 | |
Outstanding at end of the year (in dollars per share) | 0.02 | |
Exercisable on end of the year (in dollars per share) | 0.05 | |
Vested or expected to vest (in dollars per share) | 0.02 | |
Weighted average grant date fair value | ||
Granted (in dollars per share) | $ 0.03 | $ 0.1 |
Aggregate intrinsic value | ||
Options exercised aggregate intrinsic value (in dollars) | $ 30,297 | $ 1,437,435 |
Unrecognized compensation cost related to non-vested stock options | $ 9,440,523 | |
Weighted-average recognition period for unrecognized compensation cost | 3 years 7 days | |
Share-based compensation expense | $ 1,255,165 | 1,428,823 |
Restricted share units | ||
Number of options | ||
Vested or expected to vest (in shares) | 32,252,454 | |
Weighted average exercise price | ||
Vested or expected to vest (in dollars per share) | $ 0.20 | |
Aggregate intrinsic value | ||
Weighted-average recognition period for unrecognized compensation cost | 1 year 6 months 10 days | |
Share-based compensation expense | $ 882,184 | $ 907,541 |
Share-Based Compensation - RSU
Share-Based Compensation - RSU Activity (Details) - Restricted share units | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | |
Number of restricted shares | |
Unvested restricted shares outstanding at beginning of the year (in shares) | 37,740,804 |
Granted (in shares) | 0 |
Vested (in shares) | (1,793,200) |
Forfeited (in shares) | (3,695,150) |
Unvested restricted shares outstanding at end of the year (in shares) | 32,252,454 |
Vested or expected to vest (in shares) | 32,252,454 |
Weighted average grant date fair value | |
Unvested restricted shares outstanding at beginning of the year (in dollars per share) | $ / shares | $ 0.20 |
Vested (in dollars per share) | $ / shares | 0.20 |
Forfeited (in dollars per share) | $ / shares | 0.20 |
Unvested restricted shares outstanding at end of the year (in dollars per share) | $ / shares | 0.20 |
Vested or expected to vest (in dollars per share) | $ / shares | $ 0.20 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ | $ 2,221,352 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of basic and diluted net loss per share (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Numerator: | |||
Net income (loss) | $ (12,134,310) | $ (6,619,139) | $ (47,400,000) |
Deemed dividend in relation to convertible note (see Note 8) | (1,368,866) | ||
Net income (loss) attributable to ordinary shareholders | $ (13,503,176) | $ (6,619,139) | |
Shares (Denominator): | |||
Weighted average number of ordinary shares outstanding, Basic (in shares) | 3,187,723,620 | 3,094,780,922 | |
Weighted average number of ordinary shares outstanding, Diluted (in shares) | 3,187,723,620 | 3,094,780,922 | |
Net income (loss) per share-basic and diluted | $ (0.004) | $ (0.002) |
Net Loss Per Share - Shares out
Net Loss Per Share - Shares outstanding were excluded from the calculation of diluted net loss per ordinary share (Details) - shares | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of anti-dilutive securities | 565,859,482 | 290,201,363 |
Share options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of anti-dilutive securities | 324,679,357 | 261,092,616 |
Restricted share units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of anti-dilutive securities | 32,252,454 | 29,108,747 |
Shares of convertible notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of anti-dilutive securities | 208,927,671 |
Segment Information (Details)
Segment Information (Details) | 6 Months Ended | |
Jun. 30, 2021USD ($)segment | Dec. 31, 2020USD ($) | |
Segment Information | ||
Number of reportable segments | segment | 1 | |
Non-current assets | $ 8,074,879 | $ 28,718,502 |
PRC | ||
Segment Information | ||
Non-current assets | 6,406,133 | 26,560,143 |
USA | ||
Segment Information | ||
Non-current assets | $ 1,668,746 | $ 2,158,359 |