Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2022 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-38665 |
Entity Registrant Name | CooTek(Cayman)Inc. |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | 11F, T2, No.16 |
Entity Address, Address Line Two | Lane 399, Xinlong Road |
Entity Address, Address Line Three | Minhang District |
Entity Address, City or Town | Shanghai |
Entity Address, Postal Zip Code | 201101 |
Entity Address, Country | CN |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0001734262 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
ICFR Auditor Attestation Flag | false |
Auditor Name | Shandong Haoxin Certified Public Accountants Co., Ltd. |
Auditor Firm ID | 5035 |
Auditor Location | Weifang, People’s Republic of China |
Business Contact | |
Document Information [Line Items] | |
Entity Address, Address Line One | 11F, T2, No.16 |
Entity Address, Address Line Two | Lane 399, Xinlong Road |
Entity Address, Address Line Three | Minhang District |
Entity Address, City or Town | Shanghai |
Entity Address, Postal Zip Code | 201101 |
Entity Address, Country | CN |
Contact Personnel Name | Karl Kan Zhang |
Contact Personnel Email Address | ir@cootek.com |
Country Region | 86 |
City Area Code | 021 |
Local Phone Number | 6485 6352 |
Common Stock [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 4,837,255,456 |
Common Class A [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 4,591,030,991 |
Common Class B [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 246,224,465 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 9,724,925 | $ 18,232,130 |
Restricted cash | 60,206 | 199,079 |
Short-term investments | 50,059 | 50,044 |
Accounts receivable, net of allowance for doubtful accounts of US$1,168,516 and US$159,414 as of December 31, 2021 and 2022, respectively | 4,949,244 | 21,483,102 |
Prepaid expenses and other current assets | 4,443,670 | 10,864,280 |
Total current assets | 19,228,104 | 50,828,635 |
Property and equipment, net | 912,633 | 3,088,209 |
Intangible assets, net | 89,532 | 248,966 |
Operating lease right-of-use assets | 782,719 | 1,171,285 |
Long-term investments | 276,600 | 313,691 |
Other non-current assets | 95,699 | 780,380 |
TOTAL ASSETS | 21,385,287 | 56,431,166 |
Current liabilities (including amounts of the consolidated VIEs without recourse to the Company. See Note 2(b)): | ||
Accounts payable | 8,171,310 | 27,760,127 |
Short-term borrowings | 861,500 | 9,097,040 |
Accrued salary and benefits | 4,007,449 | 4,602,304 |
Operating lease liabilities, current | 328,046 | 809,610 |
Accrued expenses and other current liabilities | 4,257,554 | 8,062,975 |
Convertible notes | 1,754,656 | 9,175,892 |
Derivative liabilities | 553,707 | |
Deferred revenue | 175,375 | 1,943,168 |
Total current liabilities | 19,555,890 | 62,004,823 |
Other non-current liabilities | 209,439 | 323,305 |
Operating lease liabilities, non-current | 489,122 | 103,157 |
TOTAL LIABILITIES | 20,254,451 | 62,431,285 |
Commitments and contingencies | ||
Shareholders' deficit: | ||
Additional paid-in capital | 217,540,733 | 210,718,835 |
Accumulated deficit | (214,327,424) | (214,842,438) |
Accumulated other comprehensive loss | (2,130,845) | (1,912,896) |
Total shareholders' deficit | 1,130,836 | (6,000,119) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | 21,385,287 | 56,431,166 |
Class A | ||
Shareholders' deficit: | ||
Ordinary shares | 45,910 | 33,918 |
Class B | ||
Shareholders' deficit: | ||
Ordinary shares | $ 2,462 | $ 2,462 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Allowance for doubtful accounts | $ 159,414 | $ 1,168,516 |
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 | 4,591,030,991 | 3,391,809,191 |
Ordinary shares, shares outstanding | 4,591,030,991 | 3,391,809,191 |
Class B | ||
Ordinary shares, par value | $ 0.00001 | $ 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 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Net revenues | $ 83,926,614 | $ 272,145,821 | $ 441,505,231 | |
Cost of revenues (including share-based compensation expense of US$276,085, US$142,404 and US$(22,682) in 2020, 2021 and 2022, respectively) | (13,070,923) | (32,825,888) | (24,128,462) | |
Gross profit | 70,855,691 | 239,319,933 | 417,376,769 | |
Operating expenses: | ||||
General and administrative expenses (including share-based compensation expense of US$1,814,335, US$1,754,275 and US$1,237,663 in 2020, 2021 and 2022, respectively) | (11,907,809) | (17,815,839) | (15,017,499) | |
Research and development expenses (including share-based compensation expense of US$3,034,240, US$1,716,316 and US$545,673 in 2020, 2021 and 2022, respectively) | (15,523,180) | (34,433,316) | (29,669,615) | |
Sales and marketing expenses (including share-based compensation expense of US$212,381, US$103,324 and US$59,974 in 2020, 2021 and 2022, respectively) | (44,378,533) | (200,235,468) | (418,261,754) | |
Other operating (loss) income, net | 2,441,559 | 4,453,462 | (2,274,507) | |
Total operating expenses | (69,367,963) | (248,031,161) | (465,223,375) | |
(Loss) income from operations | 1,487,728 | (8,711,228) | (47,846,606) | |
Interest income (expense), net | (1,362,001) | (5,689,947) | 395,629 | |
Impairment loss of investment | 0 | (248,140) | 0 | |
Foreign exchange (losses) gains, net | (93,145) | (219,642) | 91,335 | |
Fair value change of derivatives | 553,707 | 1,108,648 | ||
(Loss) income before income taxes | 586,289 | (13,760,309) | (47,359,642) | |
Income tax expenses | (9,058) | (51,970) | (7,087) | |
Share of loss in equity method investment | (62,217) | (65,084) | ||
Net (loss) income | 515,014 | (13,877,363) | (47,366,729) | |
Deemed dividend in relation to the convertible notes | (1,368,866) | |||
Net (loss) income attributable to ordinary shareholders | $ 515,014 | $ (15,246,229) | $ (47,366,729) | |
Net loss per ordinary share: | ||||
Basic (in dollars per share) | $ 0.0001 | $ (0.005) | $ (0.02) | |
Diluted (in dollars per share) | $ 0.0001 | $ (0.005) | $ (0.02) | |
Weighted average shares used in calculating net loss per ordinary share: | ||||
Basic (in shares) | 4,591,748,099 | 3,303,168,725 | 3,080,332,924 | |
Diluted (in shares) | 4,592,307,849 | 3,303,168,725 | 3,080,332,924 | |
ADS | ||||
Net loss per ordinary share: | ||||
Basic (in dollars per share) | [1] | $ 0.07 | $ (3) | $ (10) |
Diluted (in dollars per share) | [1] | $ 0.07 | $ (3) | $ (10) |
[1] Basic and diluted earnings per ADS for the years ended December 31, 2020 and 2021 have been retrospectively adjusted for the ADS ratio change that were effective on May 9, 2022. Refer to Note 2(a) for additional information. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Class A | |||
ADS ratio | 650 | 650 | 650 |
Cost of revenue | |||
Share-based compensation expense | $ (22,682) | $ 142,404 | $ 276,085 |
General and administrative expenses | |||
Share-based compensation expense | 1,237,663 | 1,754,275 | 1,814,335 |
Research and development expenses | |||
Share-based compensation expense | 545,673 | 1,716,316 | 3,034,240 |
Sales and marketing expenses | |||
Share-based compensation expense | $ 59,974 | $ 103,324 | $ 212,381 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Net (Loss) income | $ 515,014 | $ (13,877,363) | $ (47,366,729) |
Other comprehensive (loss) income | |||
Foreign currency translation adjustments, net of tax of nil | (217,949) | 202,020 | (682,083) |
Comprehensive (loss) income attributable to CooTek (Cayman) Inc. | 297,065 | (13,675,343) | (48,048,812) |
Deemed dividend in relation to convertible note (see Note 10) | (1,368,866) | ||
Total comprehensive (loss) income attributable to ordinary shares of CooTek (Cayman) Inc. | $ 297,065 | $ (15,044,209) | $ (48,048,812) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Foreign currency translation adjustments, tax | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock Class A | Common Stock Class B | Treasury Shares | Additional paid-in capital | Accumulated deficit | Accumulated Other Comprehensive (Loss) Income | 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 | |||||||
Beginning balance (in shares) at Dec. 31, 2019 | 9,937,000 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||
Net (Loss) income | (47,366,729) | (47,366,729) | |||||||
Issuance of ordinary shares upon vesting of restricted shares | $ 43 | (43) | |||||||
Issuance of ordinary shares upon vesting of restricted shares (in shares) | 4,278,100 | ||||||||
Repurchase of ordinary shares | $ (9,480,179) | (9,480,179) | |||||||
Repurchase of ordinary shares (in shares) | 83,854,891 | ||||||||
Cash settlement on vested share options and restricted shares | (823,226) | (823,226) | |||||||
Exercise of share options | $ 105 | 304,153 | $ 304,258 | ||||||
Exercise of share options (in shares) | 10,592,650 | 16,397,050 | |||||||
Share-based compensation | 5,337,041 | $ 5,337,041 | |||||||
Cancellation of treasury shares | $ (492) | $ 5,871,392 | (5,870,900) | ||||||
Cancellation of treasury shares (in shares) | (49,280,841) | (49,280,841) | (135,205,591) | ||||||
Foreign currency translation adjustments | (682,083) | $ (682,083) | |||||||
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 | |||||||
Ending balance (in shares) at Dec. 31, 2020 | 44,511,050 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||
Net (Loss) income | (13,877,363) | (13,877,363) | |||||||
Issuance of ordinary shares upon follow-on public offering, net of issuance cost | $ 495 | 1,199,505 | 1,200,000 | ||||||
Issuance of ordinary shares upon follow-on public offering, net of issuance cost (in shares) | 49,501,700 | ||||||||
Issuance of ordinary shares upon vesting of restricted shares | $ 51 | (51) | |||||||
Issuance of ordinary shares upon vesting of restricted shares (in shares) | 5,051,850 | ||||||||
Repurchase of ordinary shares | $ (1,322,195) | (1,322,195) | |||||||
Repurchase of ordinary shares (in shares) | 24,237,100 | ||||||||
Exercise of share options | $ 106 | 81,355 | $ 81,461 | ||||||
Exercise of share options (in shares) | 10,571,200 | 10,571,200 | |||||||
Conversion of convertible notes | $ 4,810 | $ 5,229,132 | 13,607,968 | $ 18,841,910 | |||||
Conversion of convertible notes (in shares) | 481,038,200 | (63,248,150) | |||||||
Share-based compensation | 3,716,319 | 3,716,319 | |||||||
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 | $ 765,397 | (436,247) | 329,150 | ||||||
Commitment fee paid to holders of convertible notes through issuance of treasury shares (in shares) | (5,500,000) | ||||||||
Foreign currency translation adjustments | 202,020 | 202,020 | |||||||
Ending balance at Dec. 31, 2021 | $ 33,918 | $ 2,462 | 210,718,835 | (214,842,438) | (1,912,896) | (6,000,119) | |||
Ending balance (in shares) at Dec. 31, 2021 | 3,391,809,191 | 246,224,465 | 3,391,809,191 | 246,224,465 | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||
Net (Loss) income | 515,014 | 515,014 | |||||||
Issuance of ordinary shares upon vesting of restricted shares | $ 11 | (11) | |||||||
Issuance of ordinary shares upon vesting of restricted shares (in shares) | 1,143,100 | ||||||||
Exercise of share options | $ 21 | 289 | $ 310 | ||||||
Exercise of share options (in shares) | 2,097,750 | 2,097,750 | |||||||
Conversion of convertible notes | $ 11,960 | 5,000,992 | $ 5,012,952 | ||||||
Conversion of convertible notes (in shares) | 1,195,980,950 | ||||||||
Share-based compensation | 1,820,628 | 1,820,628 | |||||||
Foreign currency translation adjustments | (217,949) | (217,949) | |||||||
Ending balance at Dec. 31, 2022 | $ 45,910 | $ 2,462 | $ 217,540,733 | $ (214,327,424) | $ (2,130,845) | $ 1,130,836 | |||
Ending balance (in shares) at Dec. 31, 2022 | 4,591,030,991 | 246,224,465 | 4,591,030,991 | 246,224,465 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss (income) | $ 515,014 | $ (13,877,363) | $ (47,366,729) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 1,803,031 | 3,772,121 | 3,769,273 |
Provision for allowance of doubtful accounts | 108,146 | 240,658 | 359,252 |
Impairment loss of investment | 0 | 248,140 | 0 |
Share-based compensation expense | 1,820,628 | 3,716,319 | 5,337,041 |
Amortization of issuance cost and debt discounts related to convertible notes | 1,337,672 | 5,647,358 | |
Change in fair value of derivatives | (553,707) | (1,108,648) | |
Gain on disposal of property and equipment | (199,442) | (33,817) | (18,702) |
Noncash lease expense | 1,193,216 | 1,580,933 | |
Share of loss in equity method investment | 62,217 | 65,084 | |
Changes in assets and liabilities: | |||
Accounts receivable | 15,841,979 | 6,993,094 | 524,312 |
Prepaid expenses and other current assets | 5,804,641 | 1,397,809 | (4,085,968) |
Other non-current assets | 636,892 | 177,780 | (652,747) |
Accounts payable | (17,484,903) | (48,466,953) | 33,692,043 |
Accrued salary and benefits | (9,525) | (4,807,311) | 2,802,408 |
Accrued expenses and other current liabilities | (6,629,926) | (2,178,255) | 3,622,072 |
Operating lease liabilities | (885,014) | (1,839,838) | |
Deferred revenue | (1,945,855) | (2,429,459) | 1,320,706 |
Other non-current liabilities | (113,866) | (141,341) | (154,719) |
Net cash used in operating activities | 1,301,198 | (51,043,689) | (851,758) |
Cash flows from investing activities: | |||
Purchases of property and equipment and intangible assets | (1,294) | (1,464,575) | (2,919,854) |
Proceeds from disposal of property and equipment | 569,447 | 133 | 59,321 |
Purchases of short-term investments | (13,000,000) | ||
Proceeds from maturity/sale of short-term investments | 13,522,756 | ||
Purchases of long-term investments | (57,433) | (314,091) | (306,518) |
Proceeds from maturity/sale of long-term investments | 11,139 | ||
Net cash used in investing activities | 521,859 | (1,778,533) | (2,644,295) |
Cash flows from financing activities: | |||
Proceeds from short-term borrowings | 6,255,905 | 83,146,674 | 32,517,816 |
Repayment of short-term borrowings | (14,126,509) | (85,229,391) | (31,018,904) |
Proceeds from issuance of ordinary shares upon exercise of options | 542 | 81,339 | 304,259 |
Proceeds from issuance of convertible notes, net of debt discounts and issuance cost of US$2.8 million | 27,175,000 | ||
Repayment of convertible notes | (3,745,955) | (4,181,918) | |
Proceeds from issuance of ordinary shares upon follow-on public offering | 1,390,000 | ||
Cash paid to settle vested share options and restricted shares | (823,226) | ||
Cash paid for issuance costs | (159,624) | ||
Payment of share repurchase | (1,322,195) | (9,480,179) | |
Net cash (used in) provided by financing activities | (11,616,017) | 20,899,885 | (8,500,234) |
Net decrease in cash, cash equivalents, and restricted cash | (9,792,960) | (31,922,337) | (11,996,287) |
Cash, cash equivalents, and restricted cash at beginning of year | 18,431,209 | 49,622,714 | 59,966,031 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1,146,882 | 730,832 | 1,652,970 |
Cash, cash equivalents, and restricted cash at end of year | 9,785,131 | 18,431,209 | 49,622,714 |
Supplemental disclosure of cash flow information: | |||
Income taxes paid | 3,159 | 51,970 | 7,087 |
Interest paid | 504,134 | 721,276 | 588,533 |
Cash paid for amounts included in the measurement of operating lease liabilities | 927,257 | 1,666,271 | |
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 759,530 | 199,474 | |
Supplemental disclosure of noncash investing and financing activities: | |||
Purchases of property and equipment included in payables | 54,814 | $ 231,823 | |
Conversion of convertible notes into ordinary shares | $ 5,012,952 | 17,473,045 | |
Deemed dividend from issuance of convertible notes | 1,368,866 | ||
Commitment fees on convertible notes through issuance of treasury shares | $ 329,150 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Amount of commitment fee paid to investors | $ 2,800,000 | ||
Reconciliation in amounts on consolidated balance sheets: | |||
Cash and cash equivalents | 9,724,925 | $ 18,232,130 | $ 24,669,133 |
Restricted cash | 60,206 | 199,079 | 24,953,581 |
Total cash, cash equivalents, and restricted cash | $ 9,785,131 | $ 18,431,209 | $ 49,622,714 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2022 | |
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. History of the Group and reorganization The Group’s history began in August 2008 with the commencement of operations of Shanghai Han Xiang (CooTek) Information Technology Co., Ltd (“Han Xiang”), a limited liability company incorporated in the People’s Republic of China (“PRC”) by certain individuals. In October 2010, three outside investors acquired an aggregate of 24.24% equity interest of Han Xiang. In 2012, Han Xiang and its shareholders undertook a reorganization which was conducted to establish a Cayman holding company for the existing business to obtain investment from outside investors and in preparation of an overseas initial public offering. The Group has recognized the net assets of Han Xiang on a historical cost with no change in basis in the consolidated financial statements upon the completion of the reorganization. The shareholders’ rights and obligations remained the same after the reorganization. On October 2, 2018 the Group completed its initial public offering (“IPO”) in the United States and issued 4,350,000 American depositary shares representing 217,500,000 of the Group’s ordinary shares. Net proceeds from the IPO after deducting underwriting discount and offering costs were US$45.1 million. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. (a) Basis of Presentation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Effective as of May 9, 2022, the Company changed the ratio of ADSs to its Class A ordinary shares from the current ADS Ratio of one ADS to 50 Class A ordinary share to a new ADS Ratio of one ADS to 650 Class A ordinary shares (the “ADS Ratio change”). The per ADS data as disclosed elsewhere in these consolidated financial statements and notes thereto are presented on a basis after taking into account the effects of the ADS Ratio change and have been retrospectively adjusted, where applicable. The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, including the renewal or rollover of its bank borrowings, to support its working capital requirements. The Group’s revenue declined from US$441.5 million in 2020 to US$272.1 million in 2021 and further to US$83.9 million in 2022. As of December 31, 2022, the Group’s current liabilities exceed its current assets by US$0.3 million, compared to US$11.2 million as of December 31,2021. The significant decline in the revenue and negative working capital that raise substantial doubt about its ability to continue as a going concern. The Group’s liquidity is dependent on its ability to enhance its operating cash flow, obtain capital financing from investors and borrowings from commercial banks to fund its general operations including its marketing activities. The Group’s ability to continue as a going concern is dependent on the following factors: 2. Summary of Significant Accounting Policies (Continued) (a) Basis of Presentation (Continued) ● 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 plans to continue to improve the stickiness of its existing users by offering higher quality and diversified contents and user incentive program. In order to optimize cost structure and improve operating efficiency, the Group will continue to implement various measures to control its costs and expenses, by reducing various discretional expenditures, including spending on user acquisition, labor costs and other operating expenses. The Group plans to further strengthen the monetization capability by diversifying its revenue structure and improving the return on investment of its key products. ● The Group will continue to seek external financing to improve its liquidity position to fund continuing operations, though there is no assurance that the Group will be successful in obtaining sufficient funding on terms acceptable to the Group. ● 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. 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 consolidated financial statements. Accordingly, the consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. (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”) ● 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”) 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) To provide the Group effective control over the VIEs and receive substantially all of the economic benefits of the VIEs, the Company’s wholly owned subsidiary, Shanghai ChuLe (CooTek) Information Technology Co., Ltd. (“Chu Le” or “WFOE”) entered into a series of contractual arrangements, described below, with The VIEs and their respective shareholders. Agreements that provide the Company effective control over the VIEs include: Voting Rights Proxy Agreements & Irrevocable Power of Attorney Pursuant to which each of the shareholders of VIEs has executed voting rights proxy agreements, appointing the WFOE, or any person designated by the WFOE, as their attorney-in-fact to (i) call and attend shareholders’ meetings of VIEs and execute relevant shareholders’ resolutions; (ii) exercise on their behalf all his rights as a shareholder of VIEs, including those rights under PRC laws and regulations and the articles of association of VIEs, such as voting, appointing, replacing or removing directors, (iii) submit all documents as required by governmental authorities on behalf of VIEs, and (iv) assign the shareholding rights of VIEs, including receiving dividends, disposing of equity interest and enjoying the rights and interests during and after liquidation. Exclusive Purchase Option Agreements Pursuant to which each the VIE shareholders unconditionally and irrevocably granted the WFOE or its designee exclusive options to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interests in the VIEs. The WFOE has the sole discretion to decide when to exercise the options, and whether to exercise the options in part or in full. Without the WFOE’s written consent, the VIE shareholders may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of VIEs’ assets or equity interests. Equity Pledge Agreements The VIE shareholders agreed to pledge their equity interests in VIEs to the WFOE to secure the performance of the VIEs’ obligations under the series of contractual agreements and any such agreements to be entered into in the future. Without prior written consent of the WFOE, the VIEs’ shareholders shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. If any economic interests were received by means of their equity interests in the VIEs, such interests belong to the WFOE. Agreements that transfer economic benefits of VIEs to the Group include: Exclusive Business Cooperation Agreements Under the exclusive services agreement, the Company and the WFOE have the exclusive right to provide comprehensive technical and business support services to the VIEs. In exchange, the VIEs pay monthly service fees to the WFOE in the amount equivalent to all of their net income as confirmed by the WFOE. The WFOE has the right to adjust the service fee rates at its sole discretion. The agreement can be early terminated by the WFOE by giving a 30-day prior notice, but not by the VIEs or VIE shareholders. Loan Agreements The WFOE entered into loan agreements with each shareholder of the VIEs. Pursuant to the terms of these loan agreements, the WFOE granted an interest-free loan to each shareholder of the VIEs for the explicit purpose of making a capital contribution to the VIEs. The term of the loans are 10 years and shall be renewed automatically every 3 years for an additional 3 years unless the WFOE terminates the agreement (which option is at the WFOE’s sole discretion) at which point the loans are payable on demand. The shareholders of the VIEs may not prepay all or any portion of the loans without the WFOE’s consent. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) Voting Rights Proxy Agreements & Irrevocable Powers of Attorney and Exclusive Purchase Option Agreements provide the Company effective control over the VIEs and its subsidiaries, while the Exclusive Business Cooperation Agreements and Equity Pledge Agreements secure the obligations of the shareholders of the VIEs under the relevant agreements. Because the Company, through the WFOE, has (i) the power to direct the activities of the VIEs that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from the VIEs, the Company is deemed the primary beneficiary of the VIEs. Accordingly, the Company has consolidated the VIEs’ financial results of operations, assets and liabilities in the Group’s consolidated financial statements. The aforementioned agreements are effective agreements between a parent and consolidated subsidiaries, neither of which is accounted for in the consolidated financial statements or are ultimately eliminated upon consolidation (i.e. service fees under the Exclusive Business Cooperation Agreement). The Group believes that the contractual arrangements with the VIEs are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: ● Revoke the business and operating licenses of the Company’s PRC subsidiaries and VIEs; ● Discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiaries and VIEs; ● Limit the Group’s business expansion in China by way of entering into contractual arrangements; ● Impose fines or other requirements with which the Company’s PRC subsidiaries and VIEs may not be able to comply; ● Require the Company or the Company’s PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations; or ● Restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China. 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 consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs. As of December 31, 2021 2022 US$ US$ ASSETS Cash and cash equivalents 4,263,844 2,087,760 Restricted cash 139,080 206 Accounts receivable, net 6,911,955 1,031,662 Prepaid expense and other assets 6,677,808 1,879,727 Long-term investments 313,691 276,600 Property and equipment, net 159,514 108,957 Operating lease right-of-use assets 485,196 212,517 Other non-current assets 174,957 21,280 Total Assets 19,126,045 5,618,709 LIABILITIES Accounts payable 13,149,951 3,300,720 Short-term bank borrowings 5,126,484 — Accrued salary and benefits 145,698 874,763 Accrued expenses and other current liabilities 4,033,675 2,353,038 Deferred revenue 459,887 104,711 Operating lease liabilities, current 300,894 84,813 Operating lease liabilities, non-current 37,097 136,857 Total Liabilities 23,253,686 6,854,902 For the years ended December 31, 2020 2021 2022 US$ US$ US$ Net revenues 355,516,582 101,383,320 31,296,937 Income (loss) from operations 1,310,310 (31,302,836) 17,304,119 Net (loss) income 1,805,819 (31,694,750) 17,177,101 Net cash provided by (used in) operating activities 17,304,417 (27,664,505) (13,423,567) Net cash (used in) provided by investing activities (344,681) (475,661) 43,397 Net cash (used in) provided by financing activities (163,132) 4,772,782 6,436,801 The VIEs’ assets are comprised of recognized and unrecognized revenue-producing assets. The recognized revenue producing assets mainly include purchased servers, which are presented in the account of “Property and equipment, 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 81%, 37% and 39% of the Group’s consolidated net revenues for years ended December 31, 2020, 2021 and 2022, respectively. As of December 31, 2021 and 2022, the VIEs accounted for an aggregate of 34% and 26% respectively, of the consolidated total assets, and 37% and 34% 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. Please refer to Note 20 for disclosure of restricted net assets. (c) Use of Estimates The preparation of financial statements in conformity with US 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. 2. (d) Fair Value (Continued) ● 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. 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. Beginning January 1, 2019, the Group’s equity investments without readily determinable fair values, which do not qualify for Net Asset Value (“NAV”) practical expedient and over which the Group does not have the ability to exercise significant influence through the investments in common stock or in substance common stock, are accounted for under the measurement alternative upon the adoption of Accounting Standards Update (“ASU”) 2016-01 Recognition and Measurement of Financial Assets and Liabilities (the “Measurement Alternative”). Under the Measurement Alternative, the carrying value is measured at cost, less any impairment, plus and minus changes resulting from observable price changes in orderly transactions for identical or similar investments. After management’s assessment of each of the long-term investments, management concluded that investments do not have readily determinable fair values, and elects the measurement alternative. The Company measures equity method investments at fair value on a nonrecurring basis when they are deemed to be impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include future performance projections, discount rate and other assumptions that are significant to the measurements of fair value. An impairment charge to these investments is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. During the years ended December 31, 2020, 2021 and 2022, the Group recognized nil, US$0.25 million and nil of impairment loss of equity method investments, respectively. Financial instruments not reported at fair value include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable, other current liabilities, short-term borrowings, and convertible note payable (see Note 10). The embedded monthly redemption right of the convertible note was measured at fair value and the Group determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy because the absence of observable inputs used in Monte Carlo simulation. The significant inputs applied in Monte Carlo simulation include expected volatility, dividend yield and present value discount rate. The carrying amounts of other financial instruments as of December 31, 2021 and December 31, 2022 were considered representative of their fair values due to their short-term nature. (e) Foreign Currency Translation The functional currency of the Company is the United States Dollar (“US$”). The functional currency of the VIEs and the VIEs’ subsidiaries in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$. Foreign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses are recorded in the statements of operations. 2. (e) Foreign Currency Translation The Group has chosen the US$ 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) income in the consolidated statements of comprehensive loss and consolidated statements of changes in shareholders’ equity (deficit). (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. (g) Short-term Investments Short-term investments primarily consist of the time deposits with maturities between three months and one year. The Group classifies the short-term investments as “held-to-maturity” securities and stated at amortized cost within Level 2. For investments classified as held-to-maturity securities, the Group evaluates whether a decline in fair value below the amortized cost basis is other-than-temporary in accordance with the Company’s policy and ASC 320. The other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the investment’s amortized cost basis over its fair value at the balance sheet date of the reporting period for which the assessment is made. No impairment losses in relation to its short-term investments were recorded for the years ended December 31, 2020, 2021 and 2022. (h) Accounts Receivable, net Accounts receivable, net represents those receivables derived from the ordinary course of business and are recorded net of allowance for doubtful accounts. The Group maintains an allowance for doubtful accounts that reflect its best estimate of probable losses inherent in the accounts receivables. In determining collectability of the accounts receivables, the Group considers many factors, such as: creditworthiness of customers, aging of the receivables, payment history of customers, financial condition of the customers and market trends, and specific facts and circumstances. The allowance for doubtful accounts is reduced by subsequent collections of the specific allowances or by any write-off of customer accounts that are deemed uncollectible. (i) Long-term Investments Investments represent equity-method investments and equity investments without readily determinable fair value. The Group accounts for equity investment in entities with significant influence but holds no controlling interest under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of operation. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of operation to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in impairment losses of investment when a decline in value is deemed to be other-than- temporary. 2. (e) Foreign Currency Translation Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. An impairment loss is recognized in the consolidated statements of operation equal to the amount by which the carrying value exceeds the fair value of the investment. The Group recognized nil, US$248,140 and nil of impairment loss to write down the long-term investments for the years ended December 31, 2020,2021 and 2022, respectively. (j) Property and Equipment, net Property and equipment is recorded at cost less accumulated depreciation and impairment. Depreciation expense of long-lived assets is recorded as either cost of revenue or operating expenses, as appropriate. Depreciation is computed using the straight-line method over the following estimated useful lives by major asset category: Electronic equipment 3 years Office equipment and furniture 3 - 5 years Motor vehicles 3 years Leasehold improvements Shorter of the lease term or expected useful life Repair and maintenance costs are charged directly to expense as incurred, whereas the cost of renewals and improvement that extend the useful lives of property and equipment are capitalized as additions to the related assets. (k) Intangible Assets Intangible assets mainly consist of externally purchased software and other intangible assets which are amortized over an estimated useful life of 3 (l) Impairment of Long-lived Assets Long-lived assets, including property and equipment and intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment review include, but are not limited to, significant under-performance relative to historical or planned operating results, significant changes in the manner of use or expected life of the assets or significant changes in business strategies. An impairment analysis is performed at the lowest level of identifiable cash flows for an asset or asset group based on valuation techniques such as discounted cash flow analysis. An impairment charge is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less than the carrying value of the asset net of other liabilities. The estimation of future cash flows requires significant management judgment and actual results may differ from estimated amounts. No impairment was recognized for the years ended December 31, 2020, 2021 and 2022. (m) Treasury Shares Treasury shares represents ordinary shares repurchased by the Company that are no longer outstanding and are held by the Group. Treasury shares are accounted for under the cost method. Under this method, repurchased ordinary shares were recorded as treasury shares at historical purchase price. At retirement, the ordinary shares account is charged only for the aggregate par value of the shares. The excess of the acquisition cost of treasury shares over the aggregate par value is allocated between additional paid-in capital (up to the amount credited to the additional paid-in capital upon original issuance of the shares) and retained earnings. 2. (n) Revenue Recognition Mobile Advertising The Group generates majority 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 pan-entertainment mobile applications, including online literature applications and mobile games. Online literature contributed approximately 37.4%, 38.3% and 46.7% of its advertising revenue in 2020, 2021 and 2022 respectively. Meanwhile, mobile games contributed approximately 37.5%, 53.2% and 50.3% of its advertising revenue in 2020, 2021 and 2022 respectively. 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 in-app purchase (IAP) from the users, licensing of online literature works and licensing of its portfolio products. The revenue is recognized over the lifetime of the purchased items for IAP, and at the point of time that the licensing performance delivered. 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 years ended December 31, 2020, 2021 and 2022, the rebates recorded by the Group were US$54,320,688, US$10,897,346 and nil, respectively. Disaggregation of Revenue In the following table, revenue is disaggregated by revenue streams and geographic location of customers’ headquarters. For the |
Accounts Receivable, net
Accounts Receivable, net | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable, net | |
Accounts receivable, net | 3. Accounts receivable, net, consisted of the following: As of December 31, 2020 2021 2022 US$ US$ US$ Accounts receivable 29,289,301 22,651,618 5,108,658 Allowance for doubtful accounts: Balance at beginning of the year (1,774,192) (1,161,955) (1,168,516) Additions charged to bad debt expense (359,252) (34,005) (91,369) Write-off 964,474 28,367 1,101,163 Foreign exchange effect 7,015 (923) (692) Balance at end of the year (1,161,955) (1,168,516) (159,414) Accounts receivable, net 28,127,346 21,483,102 4,949,244 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 4. Prepaid expenses and other current assets consisted of the followings: As of December 31, 2021 2022 US$ US$ Value added tax recoverable 5,294,393 2,478,357 Other receivables 2,790,875 1,729,071 Advance to suppliers 1,368,850 135,071 Others 1,410,162 101,171 Prepaid expenses and other current assets 10,864,280 4,443,670 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, net | |
Property and Equipment, net | 5 . Property and equipment, net, consisted of the followings: As of December 31, 2021 2022 US$ US$ Electronic equipment 13,572,581 11,869,445 Office equipment and furniture 325,449 288,278 Motor vehicles 242,605 229,065 Leasehold improvements 1,764,589 1,009,709 Total 15,905,224 13,396,497 Less: Accumulated depreciation (12,817,015) (12,483,864) Property and equipment, net 3,088,209 912,633 For the years ended December 31, 2020, 2021 and 2022, depreciation expenses were US$3,639,269, US$3,619,036 and US$1,657,216, respectively. |
Intangible Assets, net
Intangible Assets, net | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets, net | |
Intangible Assets, net | 6. Intangible Assets, net Intangible assets, net consist of the following: As of December 31, 2021 2022 US$ US$ Purchased software 591,920 548,921 Less: Accumulated amortization (342,954) (459,389) Intangible Assets, net 248,966 89,532 Amortization expense of intangible assets for the years ended December 31, 2020, 2021 and 2022 amounted to US$130,004, US$153,085 and US$145,815, respectively. Estimated amortization expenses of the existing intangible assets for each of the five years ending December 31, 2027 and thereafter is US$77,378, US$12,154, nil, nil and nil respectively. |
Long-term investments
Long-term investments | 12 Months Ended |
Dec. 31, 2022 | |
Long-term Investments. | |
Long-term investments | 7. Long-term Investments In April 2020, the Group partnered with an unrelated third party investor to form a privately-held investing company in limited partnership, of which the Group holds 4% equity interest. The business is to invest enterprises in high-tech industries. The Group measures its equity securities without a readily determinable fair value at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. In December, the Group reclaimed US$0.01 million from this investment. No impairment was recognized for the year ended December 31,2022. In April 2021, the Group acquired 13.33% equity interests in a privately-held company for cash consideration of US$0.3 million, which the Group plans to hold for long term investment purpose. The Group accounts for equity investment in entities with significant influence but does not own a majority equity interest or otherwise control under equity-method accounting. The Group records equity method adjustments in share of profits and losses and continually reviews equity method investments to determine whether a decline in fair value to below the carrying value is other-than-temporary. The Group recognized a share of loss in equity method investment of US$0.07 million and a full impairment of US$0.25 million on this investment for the year ended December 31, 2021. In January 2022, the Group acquired 17.6% equity interests in a privately-held company for cash consideration of US$0.06 million, which the Group plans to hold for long term investment purpose. The Group accounts for equity investment in entities with significant influence but does not own a majority equity interest or otherwise control under equity-method accounting. The Group records equity method adjustments in share of profits and losses and continually reviews equity method investments to determine whether a decline in fair value to below the carrying value is other-than-temporary. The Group recognized a share of loss in equity method investment of US$0.06 million for the year ended December 31,2022. |
Short-term Borrowings
Short-term Borrowings | 12 Months Ended |
Dec. 31, 2022 | |
Short-term Borrowings | |
Short-term Borrowings | 8. 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 as of December 31, 2020. 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 plus 1.30%. No guarantee has been deposited in the bank as of December 31, 2021. In 2021, the Group has aggregately drawn down the credit facility of US$74.7 million and repaid US$79.8 million with the weighted average interest rate of 5.15%. In 2022, the Group repaid US$5.9 million with the weighted average interest rate of 5.15%. As of December 31, 2022, the Group has fully repaid the loan under this agreement. In April 2022, the Group entered into a short-term interest-free loan agreement with a local Hi-tech industrial park, under which the Group received a total of US$5.5 million and fully repaid In July 2021, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw down up to US$1.6 million by July 2022, which contains maximum external investment and debt financing as financial covenants for its subsidiary. In December 2021, the Group entered into a loan agreement with another commercial bank under which the Group can draw down US$1.6 million once by December 31,2021, which contains minimum net income and minimum operating cash inflow for its subsidiary as financial covenants, and minimum annual active user for the Group as operating covenant. The interest rates for these two agreements are the LPR. The Group has drawn down US$1.6 million under each of the two agreements in December 2021 and fully repaid the amount by the end of December 2022. In September 2022, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw down up to US$0.9 million by February 2024. The interest rate for the agreement is the LPR minus 0.35%. In 2022, the Group has drawn down the credit facility of US$0.9 million and has made no repayment as of December 31,2022. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 9. Accrued expenses and other current liabilities consisted of the following: As of December 31, 2021 2022 US$ US$ Other tax payables (Note 1) 739,896 519,178 Accruals for user incentive programs 3,756,933 944,854 Accrued expenses (Note 2) 3,034,970 2,210,912 Accrued loss contingencies relating litigation and asserted claims 166,887 209,842 Others 364,289 372,768 Total 8,062,975 4,257,554 Note 1: Other tax payables mainly consisted of value-added tax payable of US$0.4 million and US$0.4 million as of December 31, 2021 and 2022, 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 | 12 Months Ended |
Dec. 31, 2022 | |
Convertible notes and Standby Equity Distribution Agreement | |
Convertible notes and Standby Equity Distribution Agreement | 10. Convertible notes and Standby Equity Distribution Agreement January 2021 Note 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, refer to as the “January 2021 Note”. 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$0.084 per ordinary share, or (2) 88% of the lowest daily volume weighted average trading price (“VWAP”) of the Group’s ordinary shares during the ten consecutive trading days immediately preceding the conversion date or other date of determination. The January 2021 Note 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 Note 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, a floor price of US$0.015 per ordinary share and a fixed conversion price of US$0.1 per ordinary share, refer to as the “March 2021 Note”. The maturity date of the March 2021 Note is March 19, 2022. The Group received a cash proceed of US$18.2 million from this issuance. The March 2021 Note 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 settled 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. During the time that any portion of this Note is outstanding, if any event of default such as cease to be listed for trading in NYSE for 10 consecutive trading days has occurred and is continuing, the full unpaid principal amount of this note, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the holder’s election, immediately due and payable in cash. Beginning from June 1, 2021 and continuing on the first day of each calendar month thereafter through January 2022 as set forth on the redemption schedule, 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 five 10. Convertible notes and Standby Equity Distribution Agreement (Continued) In accordance with ASC 815, the Group determined that the Monthly Redemption feature is an embedded financial instrument which requires 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 of US$1,662,355 relating to the Monthly Redemption feature 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 December 31, 2021 and 2022, the fair value of the derivative liability is determined to be US$553,707 and nil, and the gain of US$1,108,648 and US$553,707 representing the change in fair value has been recorded in earnings for the year ended December 31, 2021 and 2022. 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. On October 29, 2021, the Group agreed with the investor that the maturity date of the March 2021 Note was extended to August 31, 2022 from March 19, 2022. The redemption period was extended to August 2022 and the redemption amounts from September 2021 to August 2022 were amended as well. The fixed conversion price was changed from $0.1 per ordinary share to $0.06 per ordinary share, and the floor price was changed from $0.015 per ordinary shares to $0.01 per ordinary shares. The Group has evaluated the changes to the March 2021 Notes in accordance with ASC 470-50, Debt – Modifications and Extinguishments On January 10, February 28, and May 5, 2022, the Group entered into three letter agreements with the investor, pursuant to which the floor price was reduced to US$0.006, US$0.004 and US$0.002 per ordinary share, respectively. On May 11, 2022, the Group and investor modified the floor price to US$0.50 per ADS. On July 8 and October 11, 2022, the Group agreed with the investor that the maturity date of the March 2021 Note was extended to March 1, 2023 from August 31, 2022 and further to April 1, 2023 from March 1, 2023. The redemption period was extended to April 1, 2023 and the redemption premium and redemption amounts were amended as well. The Group has evaluated the changes to the March 2021 Notes in accordance with ASC 470-50, Debt – Modifications and Extinguishments As of December 31, 2021, the Group redeemed the loan principle, redemption premium and unpaid interests total amounted to US$7.4 million through issuance of 347,620,500 ordinary shares with a weighted average conversion price of US$0.0214 per ordinary shares and US$4.2 million through cash payments. During the year ended December 31, 2022, the Group redeemed the loan principle, redemption premium and unpaid interests total amounted to US$8.8 million through issuance of 1,195,980,950 ordinary shares with a weighted average conversion price of US$ $0.0042 per ordinary shares and US$3.7 million through cash payments. 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$20.0 million of its ADSs solely at the Company’s request any time during the 36 months following the date of the SEDA at a price determined to be at 90% of the market price, which is defined as the lowest daily VWAP of the Company’s ADSs during the five consecutive trading days commencing on the trading day following the date the Company submits an advance notice to this investor. The delisting from the principal market, which is the New York Stock Exchange, led to the factor that the Company was no longer able to sell the ADSs to the investor. There was no outstanding equity financing available as of December 31, 2022. |
Other Operating Income (Loss),
Other Operating Income (Loss), net | 12 Months Ended |
Dec. 31, 2022 | |
Other Operating Income (Loss), net | |
Other Operating Income (Loss), net | 11. For the year ended December 31, 2020 2021 2022 US$ US$ US$ Government subsidies 2,026,269 4,231,406 2,155,039 (Provision) reversal of contingent losses (2,776,293) 254,833 66,994 Compensation payments (1,587,473) — — Gain on disposal of property and equipment — — 199,442 Others 62,990 (32,777) 20,084 Total (2,274,507) 4,453,462 2,441,559 Other operating income, net for the year ended December 31, 2022, primarily consisted of government subsidies, gain on disposal of property and equipment and the reversals of accrued contingent losses for an intellectual property infringement lawsuit upon the settlement result in 2022. |
Income Taxes Expenses
Income Taxes Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes Expenses | |
Income Taxes Expenses | 12. For the years ended December 31, 2020, 2021 and 2022, income tax expenses were US$7,087, US$51,970 and US$9,058, respectively. Cayman Islands CooTek (Cayman) Inc. is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, CooTek (Cayman) Inc. is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands. USA The Group’s subsidiaries incorporated in U.S. are subject to U.S. federal corporate income tax at a rate of 21%, and also subject to state income tax in California. Hong Kong Under the current Hong Kong Inland Revenue Ordinance, the Group’s subsidiaries domiciled in Hong Kong has introduced a two-tiered profits tax rate regime which is applicable to any year of assessment commencing on or after April 1, 2018. The profits tax rate for the first HK$2 million of profits of corporations will be lowered to 8.25%, while profits above that amount will continue to be subject to the tax rate of 16.5%. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Group are not subject to any Hong Kong withholding tax. PRC Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), the Group’s subsidiaries and VIEs incorporated in the PRC are subject to statutory rate of 25% with the exception of Chu Le. Chu Le is a foreign-invested enterprise established in June, 2012 located in Shanghai, China. Chu Le obtained the High and New Technology Enterprise (“HNTE”) certificate in 2020, valid for a period of 3 years from 2020 to 2022. For the years ended December 31, 2021 and 2022, Chu Le was eligible for a preferential tax rate of 15%. 12. Income Taxes Expenses (Continued) (Loss) income before income taxes consists of: For the years ended December 31, 2020 2021 2022 US$ US$ US$ PRC (21,862,391) 15,109,493 6,671,262 HK (9,697,599) 8,228,582 3,227,007 US (9,297,488) (24,846,729) (3,480,824) Cayman (6,502,164) (12,251,655) (5,831,156) Total (47,359,642) (13,760,309) 586,289 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Group has no deferred tax liabilities. The Group’s deferred tax assets were as follows: As of December 31, 2020 2021 2022 US$ US$ US$ Deferred tax assets: Net operating loss carry-forward 22,456,244 30,042,281 24,035,082 Accrued expenses 1,082,761 331,770 745,627 Advertising fees 23,293,389 18,287,319 14,554,843 Deferred subsidies and revenue 507,414 — 3,139 Provision for doubtful accounts 204,936 197,592 351,434 Depreciation difference of property, plant and equipment 530,685 965,052 494,779 Impairment loss 82,505 161,993 145,900 Total deferred tax assets 48,157,934 49,986,007 40,330,804 Valuation allowance on deferred tax assets (48,157,934) (49,986,007) (40,330,804) Net deferred tax assets — — — As of December 31, 2022, the PRC companies had tax loss carry forwards amounted to US$44,522,234, of which US$741,592, US$2,796,457, US$1,165,853, US$9,963,598, US$14,804,100 and US$15,050,635 will expire in 2023, 2024, 2025,2026, 2027 and thereafter, respectively. As of December 31, 2022, the companies incorporated in Hong Kong and USA had tax loss carry forwards of US$28,479,048 and US$26,744,992, which can be offset taxable loss in the future without any time restriction. The Group operates its business through its subsidiaries and VIEs. The Group does not file consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs may not be used to offset other subsidiaries’ or VIEs’ earnings within the Group. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more likely than not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying businesses. Valuation allowances are established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry forward periods provided for in the tax law. The Group has provided a full valuation allowance for the deferred tax assets as of December 31, 2020, 2021 and 2022, as management is not able to conclude that the future realization of those net operating loss carry forwards and other deferred tax assets are more likely than not. 12. The changes in valuation allowance are as follows: For the years ended December 31, 2020 2021 2022 US$ US$ US$ Balance at the beginning of the year 33,663,357 48,157,934 49,986,007 Movement 14,496,600 1,834,481 (6,287,720) Tax loss carry forwards expired (2,023) (6,408) (3,367,483) Balance at the end of the year 48,157,934 49,986,007 40,330,804 Uncertainties exist with respect to how the current income tax law in the PRC applies to the Group’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC, will be considered residents for Chinese Income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting and properties, occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that the Group and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Group and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a statutory income tax rate of 25%. The Group is not subject to any other uncertain tax position. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB 0.1 million, equivalent to US$ 15,685 , is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years . There is no statute of limitations in the case of tax evasion. From inception to the calendar year of 2022, the Group is subject to examination of the PRC tax authorities. In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under the tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Group has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. Aggregate accumulated deficit of the Group’s subsidiaries and VIEs located in the PRC was approximately US$115,319,815, US$100,275,583 and US$93,610,221 as of December 31, 2020, 2021 and 2022, respectively. Aggregate accumulated deficit of the Group’s subsidiaries located in Hong Kong was approximately US$37,179,946, US$28,520,674 and US$23,511,725 as of December 31, 2020, 2021 and 2022, respectively. Accordingly, no deferred tax liability has been accrued for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to the Group as of December 31, 2020, 2021 and 2022. 12. Reconciliations of the differences between PRC statutory income tax rate and the Group’s effective income tax rate for the years ended December 31, 2020, 2021 and 2022 are as follows: For the years ended December 31, 2020 2021 2022 Statutory income tax rate 25 % 25 % 25 % Valuation allowance (25) % (5) % (370) % Additional tax deduction 4 % 11 % (236) % Effect of different tax rate of subsidiary operation in other jurisdiction (4) % (9) % 111 % Non-Deductible expense — (22) % 471 % Effective tax rate — — — |
Ordinary Shares
Ordinary Shares | 12 Months Ended |
Dec. 31, 2022 | |
Ordinary Shares | |
Ordinary Shares | 13. During the year ended December 31, 2022, the Group issued 1,195,980,950 Class A ordinary shares with a weighted average conversion price of US$0.0042 per share upon conversion of March 2021 convertible notes. Effective May 9, 2022, the Company changed the ratio of ADSs to its Class A ordinary shares (the “ADS Ratio”) from the current ADS Ratio of one (1) ADS to fifty (50) Class A ordinary shares to a new ADS Ratio of one (1) ADS to six hundred and fifty (650) Class A ordinary shares. |
Treasury Shares
Treasury Shares | 12 Months Ended |
Dec. 31, 2022 | |
Treasury Shares | |
Treasury Shares | 14. Treasury Shares Treasury shares represent shares repurchased by the Group that are no longer outstanding and are held by the Group. For the year ended December 31, 2020 and 2021, under the repurchase plan, the Group had repurchased an aggregate of 83,854,891 and 24,237,100 Class A ordinary shares on the open market for a total cash consideration of US$ 9,480,179 and US$ 1,322,195, respectively, which were accounted for as the cost of the treasury shares. The repurchase plan was terminated on May 17, 2021. As of December 31, 2020, 135,205,591 treasury shares have been cancelled. As of December 31, 2021, 68,748,150 treasury shares have been reissued for the conversion of convertible notes and commitment fee for the issuance of convertible notes to the convertible note holders. No additional shares were repurchased during 2022. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-based Compensation | |
Share-based Compensation | 15. In August 2012, the Group’s board of directors adopted the share incentive plan (“2012 Option Plan”). Under the 2012 Option Plan, the Group’s shareholders have authorized the issuance of up to 75,268,817 ordinary shares underlying all options (including incentive share options, or ISOs), restricted shares and restricted share units granted to a participant under the plan, or the awards. The 2012 Option Plan was amended in October 2012 to increase the maximum aggregate number of ordinary shares to 155,631,013 Shares. The 2012 Option Plan was amended in July 2014 to increase the maximum aggregate number of ordinary shares to 266,153,637 Shares. In August 2018, the Group’s board of directors adopted the 2018 Share Incentive Plan (“2018 Plan”). The maximum aggregate number of shares which may be issued under the 2018 Plan shall initially be 2.0% of the total number of shares issued and outstanding immediately following the completion of IPO, plus an annual increase on the first day of each of the first five (5) complete fiscal years after the completion of IPO and during the term of this plan commencing with the fiscal year beginning January 1, 2019, by an amount equal to 2.0% of the total number of shares issued and outstanding on the last day of the immediately preceding fiscal year (excluding issued shares reserved for future option exercise and restricted share unit vesting). 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. 15. Share-based Compensation (Continued) Share Options (Continued) 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. Year ended December 31 2021 2022 Average risk-free rate of interest 1.47% 1.88% Expected volatility 41.8% 41.6% Dividend yield 0% 0% Contractual term 10 years 10 years Fair value of the underlying shares on the date of option grants 0.009-0.0508 0.0071 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, of which US$52,216, US$8,623 and nil was recorded during the years ended December 31, 2020, 2021 and 2022, respectively. Due to the termination of employment, the Group will not recognize the rest of unvested amount of the modified options. The risk-free rate of interest is based on the US Treasury yield curve as of valuation date. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. A summary of the aggregate option activity and information regarding options outstanding as of December 31, 2022 is as follows: Weighted Weighted average average remaining Aggregate Weighted Number of exercise contractual intrinsic average grant options price term value date fair value US$ US$ US$ Outstanding on January 1, 2022 328,286,866 0.02 6.50 2,461,623 0.05 Granted 12,427,200 0.00 0.01 Forfeited (72,568,950) 0.00 0.04 Exercised (2,097,750) 0.00 0.10 Outstanding on December 31, 2022 266,047,366 0.03 4.93 9,554 0.04 Options exercisable on December 31, 2022 187,751,590 0.04 3.59 4,134 0.04 Vested or expected to vest as of December 31, 2022 266,047,366 0.03 4.93 9,554 0.04 The weighted average grant date fair values of options granted during the years ended December 31, 2021 and 2022 were US$0.03 and US$0.01, respectively. For the year ended December 31, 2020, 16,397,050 of options were exercised with an aggregate intrinsic value of US$460,369. For the year ended December 31, 2021, 10,571,200 of options were exercised with an aggregate intrinsic value of US$66,014. For the year ended December 31, 2022, 2,097,750 of options were exercised with an aggregate intrinsic value of US$145. 15. Share based Compensation (Continued) Share Options (Continued) For the years ended December 31, 2020, 2021 and 2022, excluding the incremental compensation cost resulted from the modification discussed above, the Group recognized share-based compensation expense of US$3,254,051, US$2,359,228 and US$1,354,233, respectively. As of December 31, 2022, there was US$2,436,451 in total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 1.73 years. Restricted Share Units In 2020, 2021 and 2022, the Group granted to certain employees 1,578,500, nil and 5,714,200 Restricted Share Units (“RSUs”). The RSUs have a contractual term of ten years and vest 25% on each anniversary over four years from the grant date. The vesting of these RSUs is conditioned on continued employment. Compensation expense based on fair value is amortized over the requisite service period of award using the straight line vesting attribution method. A summary of the RSUs activity for the year ended December 31, 2022 is as follows: Number of restricted Weighted average grant date shares fair value US$ Unvested restricted shares outstanding at January 1, 2022 23,653,423 0.21 Granted 5,714,200 0.01 Vested (1,143,100) 0.12 Forfeited (1,491,650) 0.17 Unvested restricted shares outstanding at December 31, 2022 26,732,873 0.17 Expected to vest at December 31, 2021 26,732,873 0.17 The share-based compensation expense related to RSUs of US$2,030,774, US$1,348,468 and US$466,395 were recognized by the Group for the years ended December 31, 2020, 2021 and 2022, respectively. As of December 31, 2022, there was US$141,016 unrecognized compensation costs, net of actual forfeitures, related to unvested restricted shares, which is expected to be recognized over a weighted-average period of 1.44 years. |
Net (loss) income per Ordinary
Net (loss) income per Ordinary Share | 12 Months Ended |
Dec. 31, 2022 | |
Net (loss) income per Ordinary Share | |
Net (loss) income per Ordinary Share | 16. Net (loss) income per ordinary share was computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the years ended December 31, 2020, 2021 and 2022: For the years ended December 31, 2020 2021 2022 US$ US$ US$ Numerator: Net (loss) income —basic and diluted (47,366,729) (13,877,363) 515,014 Deemed dividend in relation to the convertible note — (1,368,866) — Net (loss) income attributable to ordinary shareholders (47,366,729) (15,246,229) 515,014 Shares (Denominator): Weighted average number of ordinary shares outstanding Basic 3,080,332,924 3,303,168,725 4,591,748,099 Diluted 3,080,332,924 3,303,168,725 4,592,307,849 Net (loss) income per share—basic and diluted Basic (0.02) (0.005) 0.0001 Diluted (0.02) (0.005) 0.0001 As of December 31, 2020, 2021 and 2022, diluted net (loss) income per share does not include the following instruments as their inclusion would be antidilutive: For the years ended December 31, 2020 2021 2022 Share options 290,614,107 328,286,866 266,047,366 Restricted shares units 37,740,804 23,653,423 26,173,123 Shares of convertible notes — 182,060,731 30,113,147 Total 328,354,911 534,001,020 322,333,636 |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies | |
Commitments and contingencies | 17. Commitments The Group did not have other significant capital commitments or significant guarantees as of December 31, 2021 and 2022, respectively. Contingencies Management records and discloses legal contingencies in accordance with ASC Topic 450, Contingencies |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Segment Information | 18. 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 Chairman of the Board of Directors and Chief Technology 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, 2021 2022 US$ US$ PRC 4,877,143 2,122,560 USA 725,388 34,623 Total 5,602,531 2,157,183 |
Mainland China Contribution Pla
Mainland China Contribution Plan | 12 Months Ended |
Dec. 31, 2022 | |
Mainland China Contribution Plan | |
Mainland China Contribution Plan | 19. Mainland China Contribution Plan Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan, pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The PRC labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions for such employee benefits were US$3,626,897, US$8,863,323 and US$3,251,420 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Restricted Net Assets
Restricted Net Assets | 12 Months Ended |
Dec. 31, 2022 | |
Restricted Net Assets | |
Restricted Net Assets | 20. As a result of the PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Group. Amounts restricted include paid-in capital, additional paid-in capital and the statutory reserves of the Group’s PRC subsidiaries, affiliates and VIEs. As of December 31, 2022, the total of restricted net assets were US$90,992,700. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Event. | |
Subsequent Event | 21. Subsequent Event From January 1 to April 25, 2023, the Group redeemed the loan principle, redemption premium and unpaid interests of the March 2021 Note total amounted to US$1.8 million in the form of cash. The March 2021 Note has been fully redeemed as of the date of this annual report. |
SCHEDULE I-ADDITIONAL FINANCIAL
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2022 | |
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | |
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | SCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY COOTEK (CAYMAN) INC. CONDENSED BALANCE SHEETS As of December 31, 2021 2022 US$ US$ ASSETS Current assets: Cash and cash equivalents 442,771 629,925 Prepaid expenses and other current assets 463,093 3,362 Total current assets 905,864 633,287 Advances to subsidiaries and VIEs 10,559,139 26,525,876 TOTAL ASSETS 11,465,003 27,159,163 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities: Accrued expenses and other current liabilities 136,129 136,129 Convertible notes 9,175,892 1,754,656 Derivative liabilities 553,707 — Accrued salary and benefits — 421,975 Other current liabilities 478,683 448,816 Total current liabilities 10,344,411 2,761,576 Advances from subsidiaries and VIEs 6,797,406 23,094,839 Other non-current liabilities 323,305 171,912 TOTAL LIABILITIES 17,465,122 26,028,327 SHAREHOLDERS’ DEFICIT: Ordinary shares 36,380 48,372 Additional paid-in capital 210,718,835 217,540,733 Accumulated deficit (214,842,438) (214,327,424) Accumulated other comprehensive loss (1,912,896) (2,130,845) Total shareholders ’ (6,000,119) 1,130,836 TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/ EQUITY 11,465,003 27,159,163 SCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY COOTEK (CAYMAN) INC. CONDENSED STATEMENTS OF OPERATIONS For the years ended December 31, 2020 2021 2022 US$ US$ US$ Net revenues — — — Cost of revenues (276,085) (304,356) — Gross loss (276,085) (304,356) — Operating expenses: General and administrative expenses (2,607,390) (4,516,554) (4,073,068) Research and development expenses (3,034,240) (2,762,190) (1,088,077) Sales and marketing expenses (212,381) (103,324) (50,198) Other operating income, net 112,478 136,129 154,682 Total operating expenses (5,741,533) (7,245,939) (5,056,661) Loss from operations (6,017,618) (7,550,295) (5,056,661) Interest expenses, net — (5,527,327) (1,337,031) Fair value change of derivatives — 1,108,648 553,707 Foreign exchange gains (income) 3 — (4) Loss before income taxes and equity in earnings of subsidiaries (6,017,615) (11,968,974) (5,839,989) Net loss before equity in earnings of subsidiaries (6,017,615) (11,968,974) (5,839,989) Equity in (loss) income of subsidiaries and share of (loss) income from VIEs (41,349,114) (1,908,389) 6,355,003 Net (loss) income attributed to CooTek (Cayman) Inc. (47,366,729) (13,877,363) 515,014 SCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY COOTEK (CAYMAN) INC. CONDENSED STATEMENTS OF CASH FLOWS For the years ended December 31, 2020 2021 2022 US$ US$ US$ Operating activities: Net loss (47,366,729) (13,877,363) 515,014 Equity in loss (income) of subsidiaries, VIEs and VIEs’ subsidiaries 41,349,114 1,908,389 (6,355,003) Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 5,337,041 3,716,319 1,820,628 Amortization of issuance cost and debt discounts related to convertible notes — 5,647,339 1,337,671 Change in fair value of derivatives — (1,108,648) (553,707) Changes in assets and liabilities: Accrued expenses and other current liabilities (5,371) 288,562 (29,867) Other receivables, deposits and other assets 21,858 (432,374) 459,731 Accrued salary and benefits — — 421,975 Other non-current liabilities (112,489) (159,769) (151,393) Net cash used in operating activities (776,576) (4,017,545) (2,534,951) Investing activities: Advances to subsidiaries and VIEs (16,000,000) (37,795,461) (9,783,250) Repayment of advances to subsidiary 25,900,160 19,145,170 16,251,000 Net cash provided by (used in) investing activities 9,900,160 (18,650,291) 6,467,750 Financing activities: Cash paid for deferred issuance costs — (159,624) — Cash paid to settle vested options and restricted shares (823,226) — — Proceeds from issuance of ordinary shares upon exercise of options 304,259 81,339 311 Proceeds from issuance of convertible notes net of issuance cost and debt discounts paid to Investors of US$2.7 million — 27,175,000 — Repayment of convertible notes — (4,181,918) (3,745,956) Proceeds from issuance of ordinary shares upon follow-on public offering — 1,390,000 — Payment of share repurchase (9,480,179) (1,322,195) — Net cash (used in) provided by financing activities (9,999,146) 22,982,602 (3,745,645) Net (decrease) increase in cash, cash equivalents and restricted cash (875,562) 314,766 187,154 Cash, cash equivalents and restricted cash at beginning of year 1,003,567 128,005 442,771 Cash, cash equivalents and restricted cash at end of year 128,005 442,771 629,925 SCHEDULE I—COOTEK (CAYMAN) INC CONDENSED FINANCIAL STATEMENTS Notes to Schedule I 1.Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. 2.The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries and VIEs and VIEs’ subsidiaries. For the parent company, the Company records its investments in subsidiaries VIEs and VIEs subsidiaries under the equity method of accounting as prescribed in ASC 323, Investments—Equity Method and Joint Ventures. 3.Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The footnote disclosures provide certain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements. 4.As of December 31, 2021 and 2022, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | (a) Basis of Presentation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Effective as of May 9, 2022, the Company changed the ratio of ADSs to its Class A ordinary shares from the current ADS Ratio of one ADS to 50 Class A ordinary share to a new ADS Ratio of one ADS to 650 Class A ordinary shares (the “ADS Ratio change”). The per ADS data as disclosed elsewhere in these consolidated financial statements and notes thereto are presented on a basis after taking into account the effects of the ADS Ratio change and have been retrospectively adjusted, where applicable. The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, including the renewal or rollover of its bank borrowings, to support its working capital requirements. The Group’s revenue declined from US$441.5 million in 2020 to US$272.1 million in 2021 and further to US$83.9 million in 2022. As of December 31, 2022, the Group’s current liabilities exceed its current assets by US$0.3 million, compared to US$11.2 million as of December 31,2021. The significant decline in the revenue and negative working capital that raise substantial doubt about its ability to continue as a going concern. The Group’s liquidity is dependent on its ability to enhance its operating cash flow, obtain capital financing from investors and borrowings from commercial banks to fund its general operations including its marketing activities. The Group’s ability to continue as a going concern is dependent on the following factors: (a) Basis of Presentation (Continued) ● 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 plans to continue to improve the stickiness of its existing users by offering higher quality and diversified contents and user incentive program. In order to optimize cost structure and improve operating efficiency, the Group will continue to implement various measures to control its costs and expenses, by reducing various discretional expenditures, including spending on user acquisition, labor costs and other operating expenses. The Group plans to further strengthen the monetization capability by diversifying its revenue structure and improving the return on investment of its key products. ● The Group will continue to seek external financing to improve its liquidity position to fund continuing operations, though there is no assurance that the Group will be successful in obtaining sufficient funding on terms acceptable to the Group. ● 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. 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 consolidated financial statements. Accordingly, the consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. |
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”) ● 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”) 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) To provide the Group effective control over the VIEs and receive substantially all of the economic benefits of the VIEs, the Company’s wholly owned subsidiary, Shanghai ChuLe (CooTek) Information Technology Co., Ltd. (“Chu Le” or “WFOE”) entered into a series of contractual arrangements, described below, with The VIEs and their respective shareholders. Agreements that provide the Company effective control over the VIEs include: Voting Rights Proxy Agreements & Irrevocable Power of Attorney Pursuant to which each of the shareholders of VIEs has executed voting rights proxy agreements, appointing the WFOE, or any person designated by the WFOE, as their attorney-in-fact to (i) call and attend shareholders’ meetings of VIEs and execute relevant shareholders’ resolutions; (ii) exercise on their behalf all his rights as a shareholder of VIEs, including those rights under PRC laws and regulations and the articles of association of VIEs, such as voting, appointing, replacing or removing directors, (iii) submit all documents as required by governmental authorities on behalf of VIEs, and (iv) assign the shareholding rights of VIEs, including receiving dividends, disposing of equity interest and enjoying the rights and interests during and after liquidation. Exclusive Purchase Option Agreements Pursuant to which each the VIE shareholders unconditionally and irrevocably granted the WFOE or its designee exclusive options to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interests in the VIEs. The WFOE has the sole discretion to decide when to exercise the options, and whether to exercise the options in part or in full. Without the WFOE’s written consent, the VIE shareholders may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of VIEs’ assets or equity interests. Equity Pledge Agreements The VIE shareholders agreed to pledge their equity interests in VIEs to the WFOE to secure the performance of the VIEs’ obligations under the series of contractual agreements and any such agreements to be entered into in the future. Without prior written consent of the WFOE, the VIEs’ shareholders shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. If any economic interests were received by means of their equity interests in the VIEs, such interests belong to the WFOE. Agreements that transfer economic benefits of VIEs to the Group include: Exclusive Business Cooperation Agreements Under the exclusive services agreement, the Company and the WFOE have the exclusive right to provide comprehensive technical and business support services to the VIEs. In exchange, the VIEs pay monthly service fees to the WFOE in the amount equivalent to all of their net income as confirmed by the WFOE. The WFOE has the right to adjust the service fee rates at its sole discretion. The agreement can be early terminated by the WFOE by giving a 30-day prior notice, but not by the VIEs or VIE shareholders. Loan Agreements The WFOE entered into loan agreements with each shareholder of the VIEs. Pursuant to the terms of these loan agreements, the WFOE granted an interest-free loan to each shareholder of the VIEs for the explicit purpose of making a capital contribution to the VIEs. The term of the loans are 10 years and shall be renewed automatically every 3 years for an additional 3 years unless the WFOE terminates the agreement (which option is at the WFOE’s sole discretion) at which point the loans are payable on demand. The shareholders of the VIEs may not prepay all or any portion of the loans without the WFOE’s consent. 2. Summary of Significant Accounting Policies (Continued) (b) Principles of Consolidation (Continued) Voting Rights Proxy Agreements & Irrevocable Powers of Attorney and Exclusive Purchase Option Agreements provide the Company effective control over the VIEs and its subsidiaries, while the Exclusive Business Cooperation Agreements and Equity Pledge Agreements secure the obligations of the shareholders of the VIEs under the relevant agreements. Because the Company, through the WFOE, has (i) the power to direct the activities of the VIEs that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from the VIEs, the Company is deemed the primary beneficiary of the VIEs. Accordingly, the Company has consolidated the VIEs’ financial results of operations, assets and liabilities in the Group’s consolidated financial statements. The aforementioned agreements are effective agreements between a parent and consolidated subsidiaries, neither of which is accounted for in the consolidated financial statements or are ultimately eliminated upon consolidation (i.e. service fees under the Exclusive Business Cooperation Agreement). The Group believes that the contractual arrangements with the VIEs are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: ● Revoke the business and operating licenses of the Company’s PRC subsidiaries and VIEs; ● Discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiaries and VIEs; ● Limit the Group’s business expansion in China by way of entering into contractual arrangements; ● Impose fines or other requirements with which the Company’s PRC subsidiaries and VIEs may not be able to comply; ● Require the Company or the Company’s PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations; or ● Restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China. 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 consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs. As of December 31, 2021 2022 US$ US$ ASSETS Cash and cash equivalents 4,263,844 2,087,760 Restricted cash 139,080 206 Accounts receivable, net 6,911,955 1,031,662 Prepaid expense and other assets 6,677,808 1,879,727 Long-term investments 313,691 276,600 Property and equipment, net 159,514 108,957 Operating lease right-of-use assets 485,196 212,517 Other non-current assets 174,957 21,280 Total Assets 19,126,045 5,618,709 LIABILITIES Accounts payable 13,149,951 3,300,720 Short-term bank borrowings 5,126,484 — Accrued salary and benefits 145,698 874,763 Accrued expenses and other current liabilities 4,033,675 2,353,038 Deferred revenue 459,887 104,711 Operating lease liabilities, current 300,894 84,813 Operating lease liabilities, non-current 37,097 136,857 Total Liabilities 23,253,686 6,854,902 For the years ended December 31, 2020 2021 2022 US$ US$ US$ Net revenues 355,516,582 101,383,320 31,296,937 Income (loss) from operations 1,310,310 (31,302,836) 17,304,119 Net (loss) income 1,805,819 (31,694,750) 17,177,101 Net cash provided by (used in) operating activities 17,304,417 (27,664,505) (13,423,567) Net cash (used in) provided by investing activities (344,681) (475,661) 43,397 Net cash (used in) provided by financing activities (163,132) 4,772,782 6,436,801 The VIEs’ assets are comprised of recognized and unrecognized revenue-producing assets. The recognized revenue producing assets mainly include purchased servers, which are presented in the account of “Property and equipment, 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 81%, 37% and 39% of the Group’s consolidated net revenues for years ended December 31, 2020, 2021 and 2022, respectively. As of December 31, 2021 and 2022, the VIEs accounted for an aggregate of 34% and 26% respectively, of the consolidated total assets, and 37% and 34% 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. Please refer to Note 20 for disclosure of restricted net assets. |
Use of Estimates | (c) Use of Estimates The preparation of financial statements in conformity with US 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. 2. (d) Fair Value (Continued) ● 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. 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. Beginning January 1, 2019, the Group’s equity investments without readily determinable fair values, which do not qualify for Net Asset Value (“NAV”) practical expedient and over which the Group does not have the ability to exercise significant influence through the investments in common stock or in substance common stock, are accounted for under the measurement alternative upon the adoption of Accounting Standards Update (“ASU”) 2016-01 Recognition and Measurement of Financial Assets and Liabilities (the “Measurement Alternative”). Under the Measurement Alternative, the carrying value is measured at cost, less any impairment, plus and minus changes resulting from observable price changes in orderly transactions for identical or similar investments. After management’s assessment of each of the long-term investments, management concluded that investments do not have readily determinable fair values, and elects the measurement alternative. The Company measures equity method investments at fair value on a nonrecurring basis when they are deemed to be impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include future performance projections, discount rate and other assumptions that are significant to the measurements of fair value. An impairment charge to these investments is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. During the years ended December 31, 2020, 2021 and 2022, the Group recognized nil, US$0.25 million and nil of impairment loss of equity method investments, respectively. Financial instruments not reported at fair value include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable, other current liabilities, short-term borrowings, and convertible note payable (see Note 10). The embedded monthly redemption right of the convertible note was measured at fair value and the Group determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy because the absence of observable inputs used in Monte Carlo simulation. The significant inputs applied in Monte Carlo simulation include expected volatility, dividend yield and present value discount rate. The carrying amounts of other financial instruments as of December 31, 2021 and December 31, 2022 were considered representative of their fair values due to their short-term nature. |
Foreign Currency Translation | (e) Foreign Currency Translation The functional currency of the Company is the United States Dollar (“US$”). The functional currency of the VIEs and the VIEs’ subsidiaries in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$. Foreign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses are recorded in the statements of operations. 2. (e) Foreign Currency Translation The Group has chosen the US$ 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) income in the consolidated statements of comprehensive loss and consolidated statements of changes in shareholders’ equity (deficit). |
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. |
Short-term Investments | (g) Short-term Investments Short-term investments primarily consist of the time deposits with maturities between three months and one year. The Group classifies the short-term investments as “held-to-maturity” securities and stated at amortized cost within Level 2. For investments classified as held-to-maturity securities, the Group evaluates whether a decline in fair value below the amortized cost basis is other-than-temporary in accordance with the Company’s policy and ASC 320. The other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the investment’s amortized cost basis over its fair value at the balance sheet date of the reporting period for which the assessment is made. No impairment losses in relation to its short-term investments were recorded for the years ended December 31, 2020, 2021 and 2022. |
Accounts Receivable, net | (h) Accounts Receivable, net Accounts receivable, net represents those receivables derived from the ordinary course of business and are recorded net of allowance for doubtful accounts. The Group maintains an allowance for doubtful accounts that reflect its best estimate of probable losses inherent in the accounts receivables. In determining collectability of the accounts receivables, the Group considers many factors, such as: creditworthiness of customers, aging of the receivables, payment history of customers, financial condition of the customers and market trends, and specific facts and circumstances. The allowance for doubtful accounts is reduced by subsequent collections of the specific allowances or by any write-off of customer accounts that are deemed uncollectible. |
Long-term Investments | (i) Long-term Investments Investments represent equity-method investments and equity investments without readily determinable fair value. The Group accounts for equity investment in entities with significant influence but holds no controlling interest under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of operation. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of operation to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in impairment losses of investment when a decline in value is deemed to be other-than- temporary. 2. (e) Foreign Currency Translation Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. An impairment loss is recognized in the consolidated statements of operation equal to the amount by which the carrying value exceeds the fair value of the investment. The Group recognized nil, US$248,140 and nil of impairment loss to write down the long-term investments for the years ended December 31, 2020,2021 and 2022, respectively. |
Property and Equipment, net | (j) Property and Equipment, net Property and equipment is recorded at cost less accumulated depreciation and impairment. Depreciation expense of long-lived assets is recorded as either cost of revenue or operating expenses, as appropriate. Depreciation is computed using the straight-line method over the following estimated useful lives by major asset category: Electronic equipment 3 years Office equipment and furniture 3 - 5 years Motor vehicles 3 years Leasehold improvements Shorter of the lease term or expected useful life Repair and maintenance costs are charged directly to expense as incurred, whereas the cost of renewals and improvement that extend the useful lives of property and equipment are capitalized as additions to the related assets. |
Intangible Assets | (k) Intangible Assets Intangible assets mainly consist of externally purchased software and other intangible assets which are amortized over an estimated useful life of 3 |
Impairment of Long-lived Assets | (l) Impairment of Long-lived Assets Long-lived assets, including property and equipment and intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment review include, but are not limited to, significant under-performance relative to historical or planned operating results, significant changes in the manner of use or expected life of the assets or significant changes in business strategies. An impairment analysis is performed at the lowest level of identifiable cash flows for an asset or asset group based on valuation techniques such as discounted cash flow analysis. An impairment charge is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less than the carrying value of the asset net of other liabilities. The estimation of future cash flows requires significant management judgment and actual results may differ from estimated amounts. No impairment was recognized for the years ended December 31, 2020, 2021 and 2022. |
Treasury Shares | (m) Treasury Shares Treasury shares represents ordinary shares repurchased by the Company that are no longer outstanding and are held by the Group. Treasury shares are accounted for under the cost method. Under this method, repurchased ordinary shares were recorded as treasury shares at historical purchase price. At retirement, the ordinary shares account is charged only for the aggregate par value of the shares. The excess of the acquisition cost of treasury shares over the aggregate par value is allocated between additional paid-in capital (up to the amount credited to the additional paid-in capital upon original issuance of the shares) and retained earnings. |
Revenue Recognition | 2. (n) Revenue Recognition Mobile Advertising The Group generates majority 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 pan-entertainment mobile applications, including online literature applications and mobile games. Online literature contributed approximately 37.4%, 38.3% and 46.7% of its advertising revenue in 2020, 2021 and 2022 respectively. Meanwhile, mobile games contributed approximately 37.5%, 53.2% and 50.3% of its advertising revenue in 2020, 2021 and 2022 respectively. 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 in-app purchase (IAP) from the users, licensing of online literature works and licensing of its portfolio products. The revenue is recognized over the lifetime of the purchased items for IAP, and at the point of time that the licensing performance delivered. 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 years ended December 31, 2020, 2021 and 2022, the rebates recorded by the Group were US$54,320,688, US$10,897,346 and nil, respectively. Disaggregation of Revenue In the following table, revenue is disaggregated by revenue streams and geographic location of customers’ headquarters. For the years ended December 31, 2020 2021 2022 US$ US$ US$ Revenue: Advertising revenue 438,384,470 267,266,716 76,545,411 Other revenue 3,120,761 4,879,105 7,381,203 Total 441,505,231 272,145,821 83,926,614 2. (n) Revenue Recognition (Continued) For the years ended December 31, 2020 2021 2022 US$ US$ US$ PRC 413,141,394 232,300,929 48,480,865 USA 22,192,632 30,023,116 25,598,517 Others 6,171,205 9,821,776 9,847,232 Total 441,505,231 272,145,821 83,926,614 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 for which 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, 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 as of January 1, 2021 28,127,346 3,331,511 Decrease, net (6,644,244) (1,388,343) Ending Balance as of December 31, 2021 21,483,102 1,943,168 Decrease, net (16,533,858) (1,767,793) Ending Balance as of December 31, 2022 4,949,244 175,375 Revenue amounted US$3,301,256 and US$1,857,881 were recognized in the years ended December 31, 2021 and 2022, respectively, which were included in the balance of deferred revenue at the beginning of each year. Transaction Price Allocated to the Remaining Performance Obligations Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material. Practical Expedients and Exemptions The Group elects not to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less (ii) contracts for which the Group recognizes revenues at the amount to which it has the right to invoice for services performed and (iii) contracts with variable consideration related to wholly unsatisfied performance obligations. |
Cost of Revenue | (o) Cost of Revenue Cost of revenues consists of direct costs primarily relating to generating advertising revenue, which includes bandwidth costs and cloud service costs, content costs paid to signed authors and third-party content providers for the publishing and licensing of relevant online literature works, third-party outsourcing fees for checking online literature works and producing audio and video, depreciation expenses and service fees for internet data center, and salary and benefits expenses of operation and maintenance department. |
Research and Development Expenses | (p) Research and Development Expenses Research and development expenses primarily consist of (1) salary and benefits expenses incurred in the research and development of new products and new functionality, and (2) general expenses and depreciation expenses associated with the research and development activities. Expenditures incurred during the research phase are expensed as incurred and no research and development expenses were capitalized as of December 31, 2020, 2021 and 2022. |
Sales and Marketing Expenses | (q) 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$408,131,372, US$145,992,236 and US$41,174,550 for the years ended December 31, 2020, 2021 and 2022, respectively.The Group launched the user incentive programs for its registered users in its various applications to enhance user engagements. |
Leases | (r) 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 December 2025. 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 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. The Group incurred operating lease costs amounting to US$1,680,814 and US$1,129,612 (excluding US$64,559 and US$131,079 for short-term leases not capitalized as ROU assets for the year ended December 31, 2021 and 2022) for the years ended December 31 2021 and 2022, respectively. Cash payments against operating lease liabilities were US$927,257 for the year ended December 31,2022. 2. Summary of Significant Accounting Policies (Continued) (r) Leases (Continued) As of December 31, 2022, Group’s operating leases had a weighted average remaining lease term of 2.5 years and a weighted average discount rate of 6.0%. Future lease payments under operating leases as of December 31, 2022 were as follows: As of December 31, 2022 US$ 2023 365,586 2024 340,541 2025 170,270 Total lease payment 876,397 Less: imputed interest (59,229) Total lease liability balance 817,168 Less: Operating lease liabilities, current (328,046) Long-term operating lease liabilities 489,122 As of December 31, 2022, 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, 2022 US$ 2023 393,014 2024 340,541 2025 170,270 Total lease commitment 903,825 |
Convertible Notes, Beneficial Conversion Feature ("BCF") and Redemption Feature | (s) Convertible Notes, Beneficial Conversion Feature (“BCF”) and Redemption Feature The Group issued convertible notes in January and March 2021. The Group has evaluated whether the conversion feature of the notes is considered an embedded derivative instrument subject to bifurcation in accordance with Topic 815, Derivatives and Hedging 2. Summary of Significant Accounting Policies (Continued) (s) Convertible Notes, Beneficial Conversion Feature (“BCF”) and Redemption Feature (Continued) The convertible notes issued in March 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 standalone derivative under ASC 815. This derivative is presented at fair value with change in fair value recognized in earnings. For the convertible note 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. |
Income Taxes | (t) Income Taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Group follows the asset and liability method of accounting for income taxes. In accordance with the provisions of ASC 740, Income Taxes Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statements carrying amounts and tax bases of assets and liabilities by applying enacted statutory tax rates that will be in effect in the period in which the temporary differences are expected to reverse. The Group considers positive and negative evidence when determining whether some portion or all of the deferred tax assets will not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, historical results of operations, and tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The actual benefits that are ultimately realized may differ from estimates. As each audit is concluded, adjustments, if any, are recorded in the financial statements in the period in which the audit is concluded. Additionally, in future periods, changes in facts, circumstances and new information may require us to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur. As of December 31, 2020,2021 and 2022, the Group did not have any significant unrecognized uncertain tax positions. |
Employee Contribution Plan | (u) Employee Contribution Plan Pursuant to the relevant labor rules and regulations in the PRC, the Group participates in defined contribution retirement schemes (the “Schemes”) organized by the relevant local government authorities for its eligible employees whereby the Group is required to make contributions to the Schemes at certain percentages of the deemed salary rate announced annually by the local government authorities. Contributions to the defined contribution plan are expensed as incurred. The Group has no other material obligation for payment of pension benefits except for the annual contributions described above. |
Share-based Compensation | (v) Share-based Compensation Fair value recognition provisions according to ASC718, Compensation—Stock Compensation: Overall, is applied to share-based compensation, which requires the Group to recognize expense for the fair value of its share-based compensation awards. Compensation expense adjusted for forfeiture effect on a straight-line basis over the requisite service period, with a corresponding impact reflected in additional paid-in capital. Employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required, or b) using grade vesting method, net of actual forfeitures, over the requisite service, which is the vesting period. The Group determines fair value of share options as of the grant date using binomial option pricing model and the fair value of restricted share units as of the grant date based on the fair market value of the underlying ordinary shares. The expected term represents the period that share-based awards are expected to be outstanding, giving consideration to the contractual terms of the share-based awards, vesting schedules and expectations of future employee exercise behavior. 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 accounts for forfeitures of the share-based awards when they occur. Previously recognized compensation cost for the awards is reversed in the period that the award is forfeited. Amortization of share-based compensation is presented in the same line item in the consolidated statements of operations as the cash compensation of those employees receiving the award. |
Comprehensive Loss | (w) Comprehensive Loss Comprehensive Loss includes all changes in equity except those resulting from investments by owners and distributions to owners. For the years presented, the Group’s total comprehensive loss includes net loss and foreign currency translation adjustments. |
Loss per share | (x) (Loss) income per Share Basic (loss) income per share are computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. 2. Summary of Significant Accounting Policies (Continued) (x) Loss per Share (Continued) Diluted (loss) income 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 consists of the ordinary shares issuable upon the conversion of the convertible notes (using the if-converted method), ordinary shares issuable upon the exercise of share options and vest of non-vested restricted share units (using the treasury stock method). |
Concentration and risks | (y) Concentration and risks Concentration of Customers 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. The following customers accounted for 10% or more of revenue: For the years ended December 31, 2020 2021 2022 US$ % US$ % US$ % Company A 115,829,770 26.24 % 75,896,207 27.89 % 20,179,468 24.04 % Company B 58,667,031 13.29 % 68,943,513 25.33 % 8,940,784 10.65 % Company C * * * * 12,980,235 15.47 % * Less than 10%. The following customers accounted for 10% or more of accounts receivable: As of December 31, 2021 2022 US$ % US$ % Company A 7,233,559 31.93 % * * Company B 2,299,038 10.15 % * * Company C 2,298,864 10.15 % 604,129 12.21 % Company D * * 505,376 10.21 % * Less than 10%. 2. (y) Concentration and risks (Continued) 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 years ended December 31, 2020 2021 2022 US$ % US$ % US$ % Company C * * * * 18,184,318 40.98 % Company E 52,426,534 12.53 % * * * * Company F * * 24,058,293 12.02 % 7,365,582 16.60 % Company G * * 22,034,256 11.00 % * * * Less than 10%. The following vendors accounted for 10% or more of accounts payable: As of December 31, 2021 2022 US$ % US$ % Company C 5,560,854 20.03 % 2,381,107 29.14 % Company F 4,913,194 17.70 % * * Company G 4,041,705 14.56 % 1,562,950 19.13 % * 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 RMB87,782,986 (amounted to US$13,768,368) and RMB44,614,204 (amounted to US$6,405,853) as of December 31, 2021 and 2022, respectively. |
Recent Accounting Pronouncements | (z) Recent Accounting Pronouncements New accounting pronouncements recently adopted In December 2022, the FASB issued an update (“ASU 2022-06”) Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The objective of the guidance in Topic 848 is to provide temporary relief during the transition period. The Board included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (FCA) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set for December 31, 2022 to 12 months after the expected cessation date of all currencies and tenors of LIBOR. The Company adopted this standard on January 1, 2022. There was no material impact to the Company’s financial position or results of operations upon adoption. 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 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. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which provides guidance on the acquirer’s accounting for acquired revenue contracts with customers in a business combination. The amendments require an acquirer to recognize and measures contract assets and contract liabilities acquired in a business combination at the acquisition date in accordance with ASC 606 as if it had originated the contracts. This guidance also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The new guidance is required to be applied prospectively to business combinations occurring on or after the date of adoption. This guidance is effective for the Group for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Group does not expect that the adoption of this guidance will have a material impact on our consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for the Group for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Group does not expect that the adoption of this guidance will have a material impact on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of consolidated financial statement balances and amounts of the Group's VIEs | As of December 31, 2021 2022 US$ US$ ASSETS Cash and cash equivalents 4,263,844 2,087,760 Restricted cash 139,080 206 Accounts receivable, net 6,911,955 1,031,662 Prepaid expense and other assets 6,677,808 1,879,727 Long-term investments 313,691 276,600 Property and equipment, net 159,514 108,957 Operating lease right-of-use assets 485,196 212,517 Other non-current assets 174,957 21,280 Total Assets 19,126,045 5,618,709 LIABILITIES Accounts payable 13,149,951 3,300,720 Short-term bank borrowings 5,126,484 — Accrued salary and benefits 145,698 874,763 Accrued expenses and other current liabilities 4,033,675 2,353,038 Deferred revenue 459,887 104,711 Operating lease liabilities, current 300,894 84,813 Operating lease liabilities, non-current 37,097 136,857 Total Liabilities 23,253,686 6,854,902 For the years ended December 31, 2020 2021 2022 US$ US$ US$ Net revenues 355,516,582 101,383,320 31,296,937 Income (loss) from operations 1,310,310 (31,302,836) 17,304,119 Net (loss) income 1,805,819 (31,694,750) 17,177,101 Net cash provided by (used in) operating activities 17,304,417 (27,664,505) (13,423,567) Net cash (used in) provided by investing activities (344,681) (475,661) 43,397 Net cash (used in) provided by financing activities (163,132) 4,772,782 6,436,801 |
Schedule of estimated useful lives by major asset category | Electronic equipment 3 years Office equipment and furniture 3 - 5 years Motor vehicles 3 years Leasehold improvements Shorter of the lease term or expected useful life |
Schedule of revenue based on revenue streams | For the years ended December 31, 2020 2021 2022 US$ US$ US$ Revenue: Advertising revenue 438,384,470 267,266,716 76,545,411 Other revenue 3,120,761 4,879,105 7,381,203 Total 441,505,231 272,145,821 83,926,614 |
Schedule of revenues generated by geographic location of customers' headquarters | For the years ended December 31, 2020 2021 2022 US$ US$ US$ PRC 413,141,394 232,300,929 48,480,865 USA 22,192,632 30,023,116 25,598,517 Others 6,171,205 9,821,776 9,847,232 Total 441,505,231 272,145,821 83,926,614 |
Schedule of movements in accounts receivable and deferred revenue | Accounts Receivable Deferred Revenue US$ US$ Opening Balance as of January 1, 2021 28,127,346 3,331,511 Decrease, net (6,644,244) (1,388,343) Ending Balance as of December 31, 2021 21,483,102 1,943,168 Decrease, net (16,533,858) (1,767,793) Ending Balance as of December 31, 2022 4,949,244 175,375 |
Schedule of maturities of lease liabilities | As of December 31, 2022 US$ 2023 365,586 2024 340,541 2025 170,270 Total lease payment 876,397 Less: imputed interest (59,229) Total lease liability balance 817,168 Less: Operating lease liabilities, current (328,046) Long-term operating lease liabilities 489,122 |
Schedule of future minimum lease payments under non-cancelable operating lease agreements based on ASC 840 | As of December 31, 2022 US$ 2023 393,014 2024 340,541 2025 170,270 Total lease commitment 903,825 |
Schedule of concentration risk | The following customers accounted for 10% or more of revenue: For the years ended December 31, 2020 2021 2022 US$ % US$ % US$ % Company A 115,829,770 26.24 % 75,896,207 27.89 % 20,179,468 24.04 % Company B 58,667,031 13.29 % 68,943,513 25.33 % 8,940,784 10.65 % Company C * * * * 12,980,235 15.47 % * Less than 10%. The following customers accounted for 10% or more of accounts receivable: As of December 31, 2021 2022 US$ % US$ % Company A 7,233,559 31.93 % * * Company B 2,299,038 10.15 % * * Company C 2,298,864 10.15 % 604,129 12.21 % Company D * * 505,376 10.21 % * Less than 10%. 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 years ended December 31, 2020 2021 2022 US$ % US$ % US$ % Company C * * * * 18,184,318 40.98 % Company E 52,426,534 12.53 % * * * * Company F * * 24,058,293 12.02 % 7,365,582 16.60 % Company G * * 22,034,256 11.00 % * * * Less than 10%. The following vendors accounted for 10% or more of accounts payable: As of December 31, 2021 2022 US$ % US$ % Company C 5,560,854 20.03 % 2,381,107 29.14 % Company F 4,913,194 17.70 % * * Company G 4,041,705 14.56 % 1,562,950 19.13 % * Less than 10%. |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable, net | |
Schedule of accounts receivable, net | As of December 31, 2020 2021 2022 US$ US$ US$ Accounts receivable 29,289,301 22,651,618 5,108,658 Allowance for doubtful accounts: Balance at beginning of the year (1,774,192) (1,161,955) (1,168,516) Additions charged to bad debt expense (359,252) (34,005) (91,369) Write-off 964,474 28,367 1,101,163 Foreign exchange effect 7,015 (923) (692) Balance at end of the year (1,161,955) (1,168,516) (159,414) Accounts receivable, net 28,127,346 21,483,102 4,949,244 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | As of December 31, 2021 2022 US$ US$ Value added tax recoverable 5,294,393 2,478,357 Other receivables 2,790,875 1,729,071 Advance to suppliers 1,368,850 135,071 Others 1,410,162 101,171 Prepaid expenses and other current assets 10,864,280 4,443,670 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, net | |
Schedule of property and equipment, net | As of December 31, 2021 2022 US$ US$ Electronic equipment 13,572,581 11,869,445 Office equipment and furniture 325,449 288,278 Motor vehicles 242,605 229,065 Leasehold improvements 1,764,589 1,009,709 Total 15,905,224 13,396,497 Less: Accumulated depreciation (12,817,015) (12,483,864) Property and equipment, net 3,088,209 912,633 |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets, net | |
Schedule of intangible assets, net | As of December 31, 2021 2022 US$ US$ Purchased software 591,920 548,921 Less: Accumulated amortization (342,954) (459,389) Intangible Assets, net 248,966 89,532 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2021 2022 US$ US$ Other tax payables (Note 1) 739,896 519,178 Accruals for user incentive programs 3,756,933 944,854 Accrued expenses (Note 2) 3,034,970 2,210,912 Accrued loss contingencies relating litigation and asserted claims 166,887 209,842 Others 364,289 372,768 Total 8,062,975 4,257,554 |
Other Operating Income (Loss)_2
Other Operating Income (Loss), net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Operating Income (Loss), net | |
Schedule of other operating income (loss), net | For the year ended December 31, 2020 2021 2022 US$ US$ US$ Government subsidies 2,026,269 4,231,406 2,155,039 (Provision) reversal of contingent losses (2,776,293) 254,833 66,994 Compensation payments (1,587,473) — — Gain on disposal of property and equipment — — 199,442 Others 62,990 (32,777) 20,084 Total (2,274,507) 4,453,462 2,441,559 |
Income Taxes Expense (Tables)
Income Taxes Expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes Expenses | |
Schedule of (loss) income before income taxes | For the years ended December 31, 2020 2021 2022 US$ US$ US$ PRC (21,862,391) 15,109,493 6,671,262 HK (9,697,599) 8,228,582 3,227,007 US (9,297,488) (24,846,729) (3,480,824) Cayman (6,502,164) (12,251,655) (5,831,156) Total (47,359,642) (13,760,309) 586,289 |
Schedule of group's deferred tax assets | As of December 31, 2020 2021 2022 US$ US$ US$ Deferred tax assets: Net operating loss carry-forward 22,456,244 30,042,281 24,035,082 Accrued expenses 1,082,761 331,770 745,627 Advertising fees 23,293,389 18,287,319 14,554,843 Deferred subsidies and revenue 507,414 — 3,139 Provision for doubtful accounts 204,936 197,592 351,434 Depreciation difference of property, plant and equipment 530,685 965,052 494,779 Impairment loss 82,505 161,993 145,900 Total deferred tax assets 48,157,934 49,986,007 40,330,804 Valuation allowance on deferred tax assets (48,157,934) (49,986,007) (40,330,804) Net deferred tax assets — — — |
Schedule of changes in valuation allowance | For the years ended December 31, 2020 2021 2022 US$ US$ US$ Balance at the beginning of the year 33,663,357 48,157,934 49,986,007 Movement 14,496,600 1,834,481 (6,287,720) Tax loss carry forwards expired (2,023) (6,408) (3,367,483) Balance at the end of the year 48,157,934 49,986,007 40,330,804 |
Schedule of reconciliations of differences between PRC statutory income tax rate and the Group's effective income tax rate | For the years ended December 31, 2020 2021 2022 Statutory income tax rate 25 % 25 % 25 % Valuation allowance (25) % (5) % (370) % Additional tax deduction 4 % 11 % (236) % Effect of different tax rate of subsidiary operation in other jurisdiction (4) % (9) % 111 % Non-Deductible expense — (22) % 471 % Effective tax rate — — — |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-based Compensation | |
Schedule of assumptions used to estimate the fair value of options at the date of granted | Year ended December 31 2021 2022 Average risk-free rate of interest 1.47% 1.88% Expected volatility 41.8% 41.6% Dividend yield 0% 0% Contractual term 10 years 10 years Fair value of the underlying shares on the date of option grants 0.009-0.0508 0.0071 |
Schedule of aggregate option activity and information regarding options outstanding | Weighted Weighted average average remaining Aggregate Weighted Number of exercise contractual intrinsic average grant options price term value date fair value US$ US$ US$ Outstanding on January 1, 2022 328,286,866 0.02 6.50 2,461,623 0.05 Granted 12,427,200 0.00 0.01 Forfeited (72,568,950) 0.00 0.04 Exercised (2,097,750) 0.00 0.10 Outstanding on December 31, 2022 266,047,366 0.03 4.93 9,554 0.04 Options exercisable on December 31, 2022 187,751,590 0.04 3.59 4,134 0.04 Vested or expected to vest as of December 31, 2022 266,047,366 0.03 4.93 9,554 0.04 |
Schedule of the RSU activity | Number of restricted Weighted average grant date shares fair value US$ Unvested restricted shares outstanding at January 1, 2022 23,653,423 0.21 Granted 5,714,200 0.01 Vested (1,143,100) 0.12 Forfeited (1,491,650) 0.17 Unvested restricted shares outstanding at December 31, 2022 26,732,873 0.17 Expected to vest at December 31, 2021 26,732,873 0.17 |
Net (loss) income per Ordinar_2
Net (loss) income per Ordinary Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Net (loss) income per Ordinary Share | |
Schedule of computation of basic and diluted net (loss) income per share | For the years ended December 31, 2020 2021 2022 US$ US$ US$ Numerator: Net (loss) income —basic and diluted (47,366,729) (13,877,363) 515,014 Deemed dividend in relation to the convertible note — (1,368,866) — Net (loss) income attributable to ordinary shareholders (47,366,729) (15,246,229) 515,014 Shares (Denominator): Weighted average number of ordinary shares outstanding Basic 3,080,332,924 3,303,168,725 4,591,748,099 Diluted 3,080,332,924 3,303,168,725 4,592,307,849 Net (loss) income per share—basic and diluted Basic (0.02) (0.005) 0.0001 Diluted (0.02) (0.005) 0.0001 |
Schedule of instruments excluded from calculation of diluted net (loss) income per share | For the years ended December 31, 2020 2021 2022 Share options 290,614,107 328,286,866 266,047,366 Restricted shares units 37,740,804 23,653,423 26,173,123 Shares of convertible notes — 182,060,731 30,113,147 Total 328,354,911 534,001,020 322,333,636 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Schedule of non-current assets based on geographical location of the assets | As of December 31, 2021 2022 US$ US$ PRC 4,877,143 2,122,560 USA 725,388 34,623 Total 5,602,531 2,157,183 |
SCHEDULE I - ADDITIONAL FINANCI
SCHEDULE I - ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | |
Condensed Balance Sheets | As of December 31, 2021 2022 US$ US$ ASSETS Current assets: Cash and cash equivalents 442,771 629,925 Prepaid expenses and other current assets 463,093 3,362 Total current assets 905,864 633,287 Advances to subsidiaries and VIEs 10,559,139 26,525,876 TOTAL ASSETS 11,465,003 27,159,163 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities: Accrued expenses and other current liabilities 136,129 136,129 Convertible notes 9,175,892 1,754,656 Derivative liabilities 553,707 — Accrued salary and benefits — 421,975 Other current liabilities 478,683 448,816 Total current liabilities 10,344,411 2,761,576 Advances from subsidiaries and VIEs 6,797,406 23,094,839 Other non-current liabilities 323,305 171,912 TOTAL LIABILITIES 17,465,122 26,028,327 SHAREHOLDERS’ DEFICIT: Ordinary shares 36,380 48,372 Additional paid-in capital 210,718,835 217,540,733 Accumulated deficit (214,842,438) (214,327,424) Accumulated other comprehensive loss (1,912,896) (2,130,845) Total shareholders ’ (6,000,119) 1,130,836 TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/ EQUITY 11,465,003 27,159,163 |
Condensed Statement of operations | For the years ended December 31, 2020 2021 2022 US$ US$ US$ Net revenues — — — Cost of revenues (276,085) (304,356) — Gross loss (276,085) (304,356) — Operating expenses: General and administrative expenses (2,607,390) (4,516,554) (4,073,068) Research and development expenses (3,034,240) (2,762,190) (1,088,077) Sales and marketing expenses (212,381) (103,324) (50,198) Other operating income, net 112,478 136,129 154,682 Total operating expenses (5,741,533) (7,245,939) (5,056,661) Loss from operations (6,017,618) (7,550,295) (5,056,661) Interest expenses, net — (5,527,327) (1,337,031) Fair value change of derivatives — 1,108,648 553,707 Foreign exchange gains (income) 3 — (4) Loss before income taxes and equity in earnings of subsidiaries (6,017,615) (11,968,974) (5,839,989) Net loss before equity in earnings of subsidiaries (6,017,615) (11,968,974) (5,839,989) Equity in (loss) income of subsidiaries and share of (loss) income from VIEs (41,349,114) (1,908,389) 6,355,003 Net (loss) income attributed to CooTek (Cayman) Inc. (47,366,729) (13,877,363) 515,014 |
Condensed Statement of Cash Flows | For the years ended December 31, 2020 2021 2022 US$ US$ US$ Operating activities: Net loss (47,366,729) (13,877,363) 515,014 Equity in loss (income) of subsidiaries, VIEs and VIEs’ subsidiaries 41,349,114 1,908,389 (6,355,003) Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 5,337,041 3,716,319 1,820,628 Amortization of issuance cost and debt discounts related to convertible notes — 5,647,339 1,337,671 Change in fair value of derivatives — (1,108,648) (553,707) Changes in assets and liabilities: Accrued expenses and other current liabilities (5,371) 288,562 (29,867) Other receivables, deposits and other assets 21,858 (432,374) 459,731 Accrued salary and benefits — — 421,975 Other non-current liabilities (112,489) (159,769) (151,393) Net cash used in operating activities (776,576) (4,017,545) (2,534,951) Investing activities: Advances to subsidiaries and VIEs (16,000,000) (37,795,461) (9,783,250) Repayment of advances to subsidiary 25,900,160 19,145,170 16,251,000 Net cash provided by (used in) investing activities 9,900,160 (18,650,291) 6,467,750 Financing activities: Cash paid for deferred issuance costs — (159,624) — Cash paid to settle vested options and restricted shares (823,226) — — Proceeds from issuance of ordinary shares upon exercise of options 304,259 81,339 311 Proceeds from issuance of convertible notes net of issuance cost and debt discounts paid to Investors of US$2.7 million — 27,175,000 — Repayment of convertible notes — (4,181,918) (3,745,956) Proceeds from issuance of ordinary shares upon follow-on public offering — 1,390,000 — Payment of share repurchase (9,480,179) (1,322,195) — Net cash (used in) provided by financing activities (9,999,146) 22,982,602 (3,745,645) Net (decrease) increase in cash, cash equivalents and restricted cash (875,562) 314,766 187,154 Cash, cash equivalents and restricted cash at beginning of year 1,003,567 128,005 442,771 Cash, cash equivalents and restricted cash at end of year 128,005 442,771 629,925 |
Organization and Principal Ac_2
Organization and Principal Activities (Details) $ in Millions | Oct. 02, 2018 USD ($) shares | Oct. 31, 2010 item |
Organization and Principal Activities | ||
Proceeds from initial public offering | $ | $ 45.1 | |
IPO | Common Stock | ||
Organization and Principal Activities | ||
Number of shares issued during the period | 217,500,000 | |
IPO | ADS | ||
Organization and Principal Activities | ||
Number of shares issued during the period | 4,350,000 | |
Han Xiang | ||
Organization and Principal Activities | ||
Number of investors | item | 3 | |
Three investors | Han Xiang | ||
Organization and Principal Activities | ||
Percentage of interest acquired by outside investors | 24.24% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) | 12 Months Ended | |||
Jan. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Collaborative arrangements and non-collaborative arrangement transactions | ||||
Net (Loss) income | $ 515,014 | $ (13,877,363) | $ (47,366,729) | |
Accumulated deficit | (214,327,424) | (214,842,438) | ||
Net cash used in operating activities | 1,301,198 | (51,043,689) | (851,758) | |
Net revenues | 83,926,614 | 272,145,821 | $ 441,505,231 | |
If delisting from NYSE occurs | ||||
Collaborative arrangements and non-collaborative arrangement transactions | ||||
Cash redemption outstanding convertible notes | $ 300,000 | |||
Repayment of bank borrowings | $ 11,200,000 | |||
Standby equity distribution agreement | ||||
Collaborative arrangements and non-collaborative arrangement transactions | ||||
Maximum value of stock available to execute | $ 20,000,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Exclusive Business Cooperation Agreements and Loan Agreements (Details) - Chu Le of WFOE [Member] | 12 Months Ended |
Dec. 31, 2022 | |
Exclusive business cooperation agreements and loan agreements | |
Renewed period of loans | 3 years |
Exclusive Business Cooperation Agreements With Vies [Member] | |
Exclusive business cooperation agreements and loan agreements | |
Notice period for termination of agreement | 30 days |
Loan Agreements With Shareholders Of Vies [Member] | |
Exclusive business cooperation agreements and loan agreements | |
Maturity period (in years) | 10 years |
Renewal period of loans | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Consolidated financial statement balances and amounts of the Group's VIEs (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
ASSETS | |||
Cash and cash equivalents | $ 9,724,925 | $ 18,232,130 | $ 24,669,133 |
Restricted cash | 60,206 | 199,079 | |
Accounts receivable, net | 4,949,244 | 21,483,102 | 28,127,346 |
Prepaid expense and other assets | 4,443,670 | 10,864,280 | |
Long-term investments | 276,600 | 313,691 | |
Property and equipment, net | 912,633 | 3,088,209 | |
Operating lease right-of-use assets | 782,719 | 1,171,285 | |
Other non-current assets | 95,699 | 780,380 | |
Short-term Investments. | 50,059 | 50,044 | |
Intangible assets, net | 89,532 | 248,966 | |
TOTAL ASSETS | 21,385,287 | 56,431,166 | |
LIABILITIES | |||
Accounts payable | 8,171,310 | 27,760,127 | |
Short-term bank borrowings | 861,500 | 9,097,040 | |
Accrued salary and benefits | 4,007,449 | 4,602,304 | |
Accrued expenses and other current liabilities | 4,257,554 | 8,062,975 | |
Deferred revenue | 175,375 | 1,943,168 | |
Operating lease liabilities, current | 328,046 | 809,610 | |
Operating lease liabilities, non-current | 489,122 | 103,157 | |
TOTAL LIABILITIES | 20,254,451 | 62,431,285 | |
Net revenues | 83,926,614 | 272,145,821 | 441,505,231 |
Income (loss) from operations | 1,487,728 | (8,711,228) | (47,846,606) |
Net (Loss) income | 515,014 | (13,877,363) | (47,366,729) |
Net cash provided by (used in) operating activities | 1,301,198 | (51,043,689) | (851,758) |
Net cash (used in) provided by investing activities | 521,859 | (1,778,533) | (2,644,295) |
Net cash (used in) provided by financing activities | (11,616,017) | 20,899,885 | (8,500,234) |
Assets held in VIEs that can be used only to settle obligations of VIEs | 0 | ||
Variable Interest Entity, Primary Beneficiary [Member] | |||
ASSETS | |||
Cash and cash equivalents | 2,087,760 | 4,263,844 | |
Restricted cash | 206 | 139,080 | |
Accounts receivable, net | 1,031,662 | 6,911,955 | |
Prepaid expense and other assets | 1,879,727 | 6,677,808 | |
Long-term investments | 276,600 | 313,691 | |
Property and equipment, net | 108,957 | 159,514 | |
Operating lease right-of-use assets | 212,517 | 485,196 | |
Other non-current assets | 21,280 | 174,957 | |
TOTAL ASSETS | 5,618,709 | 19,126,045 | |
LIABILITIES | |||
Accounts payable | 3,300,720 | 13,149,951 | |
Short-term bank borrowings | 5,126,484 | ||
Accrued salary and benefits | 874,763 | 145,698 | |
Accrued expenses and other current liabilities | 2,353,038 | 4,033,675 | |
Deferred revenue | 104,711 | 459,887 | |
Operating lease liabilities, current | 84,813 | 300,894 | |
Operating lease liabilities, non-current | 136,857 | 37,097 | |
TOTAL LIABILITIES | 6,854,902 | 23,253,686 | |
Net revenues | 31,296,937 | 101,383,320 | 355,516,582 |
Income (loss) from operations | 17,304,119 | (31,302,836) | 1,310,310 |
Net (Loss) income | 17,177,101 | (31,694,750) | 1,805,819 |
Net cash provided by (used in) operating activities | (13,423,567) | (27,664,505) | 17,304,417 |
Net cash (used in) provided by investing activities | 43,397 | (475,661) | (344,681) |
Net cash (used in) provided by financing activities | $ 6,436,801 | $ 4,772,782 | $ (163,132) |
Percentage of consolidated net revenues | 39% | 37% | 81% |
Percentage of consolidated total assets | 26% | 34% | |
Percentage of consolidated total liabilities | 34% | 37% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |||
Impairment loss of equity method investments | $ 0 | $ 250,000 | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||
Restricted cash - current portion | $ 60,206 | $ 199,079 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Short-term Investments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |||
Impairment losses | $ 0 | $ 248,140 | $ 0 |
Short-term Investments | |||
Summary of Significant Accounting Policies | |||
Impairment losses | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Long-term Investments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |||
Impairment losses | $ 0 | $ 248,140 | $ 0 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Property and Equipment, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Electronic equipment | |
Property, Plant and Equipment, Net | |
Estimated useful life | 3 years |
Office equipment and furniture | Minimum [Member] | |
Property, Plant and Equipment, Net | |
Estimated useful life | 3 years |
Office equipment and furniture | Maximum [Member] | |
Property, Plant and Equipment, Net | |
Estimated useful life | 5 years |
Motor vehicles | |
Property, Plant and Equipment, Net | |
Estimated useful life | 3 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Intangible assets (Details) - Purchased Software | 12 Months Ended |
Dec. 31, 2022 | |
Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful life | 3 years |
Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful life | 10 years |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Impairment of Long-lived Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Sales Incentives (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Recognition | |||
Sales rebates | $ 0 | $ 10,897,346 | $ 54,320,688 |
Online literature | Revenue | Product | |||
Revenue Recognition | |||
Concentration risk (as a percent) | 46.70% | 38.30% | 37.40% |
Mobile games | Revenue | Product | |||
Revenue Recognition | |||
Concentration risk (as a percent) | 50.30% | 53.20% | 37.50% |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue | |||
Net revenues | $ 83,926,614 | $ 272,145,821 | $ 441,505,231 |
PRC | |||
Disaggregation of Revenue | |||
Net revenues | 48,480,865 | 232,300,929 | 413,141,394 |
UNITED STATES | |||
Disaggregation of Revenue | |||
Net revenues | 25,598,517 | 30,023,116 | 22,192,632 |
Others | |||
Disaggregation of Revenue | |||
Net revenues | 9,847,232 | 9,821,776 | 6,171,205 |
Advertising revenue | |||
Disaggregation of Revenue | |||
Net revenues | 76,545,411 | 267,266,716 | 438,384,470 |
Other revenue | |||
Disaggregation of Revenue | |||
Net revenues | $ 7,381,203 | $ 4,879,105 | $ 3,120,761 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts Receivable | ||
Beginning balance | $ 21,483,102 | $ 28,127,346 |
Increase/(decrease), net | (16,533,858) | (6,644,244) |
Ending balance | 4,949,244 | 21,483,102 |
Deferred Revenue | ||
Beginning balance | 1,943,168 | 3,331,511 |
(Decrease) Increase, net | (1,767,793) | (1,388,343) |
Ending balance | 175,375 | 1,943,168 |
Revenue recognized, included in the balance of deferred revenue | $ 1,857,881 | $ 3,301,256 |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Research and Development Expenses (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies | |||
Research and development expenses capitalized | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Sales and Marketing Expenses (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |||
Advertising and promotion expenses | $ 41,174,550 | $ 145,992,236 | $ 408,131,372 |
Summary of Significant Accou_19
Summary of Significant Accounting Policies - Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 782,719 | $ 1,171,285 |
Lease liabilities | 817,168 | |
Operating lease costs | 1,129,612 | 1,680,814 |
Costs for short-term leases | 131,079 | 64,559 |
Cash payments against operating lease liabilities | $ 927,257 | |
Weighted-average remaining lease term | 2 years 6 months | |
Weighted-average discount rate (as a percent) | 6% | |
ASU2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease liabilities | 2,470,968 | |
ASU2016-02 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 2,563,151 |
Summary of Significant Accou_20
Summary of Significant Accounting Policies - Leases - maturities of lease liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases | ||
2023 | $ 365,586 | |
2024 | 340,541 | |
2025 | 170,270 | |
Total lease payment | 876,397 | |
Less: imputed interest | (59,229) | |
Total lease liability balance | 817,168 | |
Less: Operating lease liabilities, current | (328,046) | $ (809,610) |
Long-term operating lease liabilities | $ 489,122 | $ 103,157 |
Summary of Significant Accou_21
Summary of Significant Accounting Policies - Leases - maturities of future minimum lease payments (Details) | Dec. 31, 2022 USD ($) |
Future lease payments under operating leases | |
2023 | $ 393,014 |
2024 | 340,541 |
2025 | 170,270 |
Total lease commitment | $ 903,825 |
Summary of Significant Accou_22
Summary of Significant Accounting Policies - Convertible Notes, Beneficial Conversion Feature ("BCF") and Redemption Feature (Details) | 1 Months Ended |
Mar. 31, 2021 | |
Convertible note | |
Convertible Notes, Beneficial Conversion Feature ("BCF") and Redemption Feature | |
Debt redemption premium | 8% |
Summary of Significant Accou_23
Summary of Significant Accounting Policies - Concentration and risks (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Concentration and risks | |||
Net revenues | $ 83,926,614 | $ 272,145,821 | $ 441,505,231 |
Accounts receivable, net | 4,949,244 | 21,483,102 | 28,127,346 |
Sales and marketing expenses | 44,378,533 | 200,235,468 | 418,261,754 |
Accounts payable | 8,171,310 | 27,760,127 | |
Customer concentration risk | Revenue | Company A | |||
Concentration and risks | |||
Net revenues | $ 20,179,468 | $ 75,896,207 | $ 115,829,770 |
Concentration risk (as a percent) | 24.04% | 27.89% | 26.24% |
Customer concentration risk | Revenue | Company B | |||
Concentration and risks | |||
Net revenues | $ 8,940,784 | $ 68,943,513 | $ 58,667,031 |
Concentration risk (as a percent) | 10.65% | 25.33% | 13.29% |
Customer concentration risk | Revenue | Company C | |||
Concentration and risks | |||
Net revenues | $ 12,980,235 | ||
Concentration risk (as a percent) | 15.47% | ||
Customer concentration risk | Accounts receivable | Company A | |||
Concentration and risks | |||
Concentration risk (as a percent) | 31.93% | ||
Accounts receivable, net | $ 7,233,559 | ||
Customer concentration risk | Accounts receivable | Company B | |||
Concentration and risks | |||
Concentration risk (as a percent) | 10.15% | ||
Accounts receivable, net | $ 2,299,038 | ||
Customer concentration risk | Accounts receivable | Company C | |||
Concentration and risks | |||
Concentration risk (as a percent) | 12.21% | 10.15% | |
Accounts receivable, net | $ 604,129 | $ 2,298,864 | |
Customer concentration risk | Accounts receivable | Company D | |||
Concentration and risks | |||
Concentration risk (as a percent) | 10.21% | ||
Accounts receivable, net | $ 505,376 | ||
Vendor concentration risk | Sales and marketing expenses | Company C | |||
Concentration and risks | |||
Concentration risk (as a percent) | 40.98% | ||
Sales and marketing expenses | $ 18,184,318 | ||
Vendor concentration risk | Sales and marketing expenses | Company E | |||
Concentration and risks | |||
Concentration risk (as a percent) | 12.53% | ||
Sales and marketing expenses | $ 52,426,534 | ||
Vendor concentration risk | Sales and marketing expenses | Company F | |||
Concentration and risks | |||
Concentration risk (as a percent) | 16.60% | 12.02% | |
Sales and marketing expenses | $ 7,365,582 | $ 24,058,293 | |
Vendor concentration risk | Sales and marketing expenses | Company G | |||
Concentration and risks | |||
Concentration risk (as a percent) | 11% | ||
Sales and marketing expenses | $ 22,034,256 | ||
Vendor concentration risk | Accounts payable | Company C | |||
Concentration and risks | |||
Concentration risk (as a percent) | 29.14% | 20.03% | |
Accounts payable | $ 2,381,107 | $ 5,560,854 | |
Vendor concentration risk | Accounts payable | Company F | |||
Concentration and risks | |||
Concentration risk (as a percent) | 17.70% | ||
Accounts payable | $ 4,913,194 | ||
Vendor concentration risk | Accounts payable | Company G | |||
Concentration and risks | |||
Concentration risk (as a percent) | 19.13% | 14.56% | |
Accounts payable | $ 1,562,950 | $ 4,041,705 |
Summary of Significant Accou_24
Summary of Significant Accounting Policies - Foreign Currency Risk (Details) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) |
Foreign Currency Risk | ||||||
The Group's cash and cash equivalents and restricted cash | $ 9,785,131 | $ 18,431,209 | $ 49,622,714 | $ 59,966,031 | ||
RMB | ||||||
Foreign Currency Risk | ||||||
The Group's cash and cash equivalents and restricted cash | $ 6,405,853 | ¥ 44,614,204 | $ 13,768,368 | ¥ 87,782,986 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable, net | |||
Accounts receivable | $ 5,108,658 | $ 22,651,618 | $ 29,289,301 |
Allowance for doubtful accounts: | |||
Balance at beginning of the year | (1,168,516) | (1,161,955) | (1,774,192) |
Additions charged to bad debt expense | (91,369) | (34,005) | (359,252) |
Write-off | 1,101,163 | 28,367 | 964,474 |
Foreign exchange effect | (692) | (923) | 7,015 |
Balance at end of the year | (159,414) | (1,168,516) | (1,161,955) |
Accounts receivable, net | $ 4,949,244 | $ 21,483,102 | $ 28,127,346 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Prepaid Expenses and Other Current Assets | ||
Value added tax recoverable | $ 2,478,357 | $ 5,294,393 |
Other receivables | 1,729,071 | 2,790,875 |
Advance to suppliers | 135,071 | 1,368,850 |
Others | 101,171 | 1,410,162 |
Prepaid expenses and other current assets | $ 4,443,670 | $ 10,864,280 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment, Net | |||
Total | $ 13,396,497 | $ 15,905,224 | |
Less: Accumulated depreciation | (12,483,864) | (12,817,015) | |
Property and equipment, net | 912,633 | 3,088,209 | |
Depreciation expenses | 1,657,216 | 3,619,036 | $ 3,639,269 |
Electronic equipment | |||
Property, Plant and Equipment, Net | |||
Total | 11,869,445 | 13,572,581 | |
Office equipment and furniture | |||
Property, Plant and Equipment, Net | |||
Total | 288,278 | 325,449 | |
Motor vehicles | |||
Property, Plant and Equipment, Net | |||
Total | 229,065 | 242,605 | |
Leasehold improvements | |||
Property, Plant and Equipment, Net | |||
Total | $ 1,009,709 | $ 1,764,589 |
Intangible Assets, net (Details
Intangible Assets, net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets, net | |||
Less: Accumulated amortization | $ (459,389) | $ (342,954) | |
Intangible assets, net | 89,532 | 248,966 | |
Amortization of intangible assets | 145,815 | 153,085 | $ 130,004 |
Estimated amortization expenses of the existing intangible assets for each of the five years | |||
Estimated amortization of intangible assets, year one | 77,378 | ||
Estimated amortization of intangible assets, year two | 12,154 | ||
Estimated amortization of intangible assets, year three | 0 | ||
Estimated amortization of intangible assets, year four | 0 | ||
Estimated amortization of intangible assets, year five | 0 | ||
Purchased software | |||
Intangible Assets, net | |||
Intangible assets, gross | $ 548,921 | $ 591,920 |
Long-term Investments (Details)
Long-term Investments (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2022 | Apr. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 30, 2020 | |
Long-term Investments. | ||||||
Equity interests in a privately hold company | 17.60% | 13.33% | 4% | |||
Cash consideration paid under the cost method investment | $ 60,000 | $ 300,000 | $ 57,433 | $ 314,091 | $ 306,518 | |
Amount acquired | 10,000 | |||||
No impairment loss | 0 | |||||
Impairment loss on investment | 0 | 250,000 | $ 0 | |||
Investment loss | $ 62,217 | $ 65,084 |
Short-term Borrowings (Details)
Short-term Borrowings (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2022 | Apr. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2020 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 31, 2021 | Jun. 30, 2021 | Jul. 31, 2016 | |
Short-term Borrowings | |||||||||||
Proceeds from short-term borrowings | $ 6,255,905 | $ 83,146,674 | $ 32,517,816 | ||||||||
Repaid of short-term borrowings received | 14,126,509 | 85,229,391 | 31,018,904 | ||||||||
Short term borrowings with Hi-tech industrial park | |||||||||||
Short-term Borrowings | |||||||||||
Proceeds from short-term borrowings | $ 5,500,000 | ||||||||||
Repaid of short-term borrowings received | $ 5,500,000 | ||||||||||
Line of credit 2016 | |||||||||||
Short-term Borrowings | |||||||||||
Total credit available under this facility | $ 11,000,000 | $ 10,000,000 | $ 6,000,000 | ||||||||
Amount borrowed | 74,700,000 | 28,800,000 | |||||||||
Amount repaid | $ 5,900,000 | $ 79,800,000 | $ 24,100,000 | ||||||||
Weighted average interest rate of short-term borrowings (as a percent) | 5.15% | 5.15% | 5.15% | ||||||||
Cash deposited in the bank as guarantee | $ 0 | $ 3,100,000 | |||||||||
Credit facility, 2021 | |||||||||||
Short-term Borrowings | |||||||||||
Total credit available under this facility | $ 1,600,000 | $ 1,600,000 | $ 1,600,000 | ||||||||
Amount borrowed | $ 1,600,000 | ||||||||||
Credit facility, 2022 | |||||||||||
Short-term Borrowings | |||||||||||
Total credit available under this facility | $ 900,000 | ||||||||||
Amount borrowed | $ 900,000 | ||||||||||
Amount repaid | $ 0 | ||||||||||
LPR | Line of credit 2016 | |||||||||||
Short-term Borrowings | |||||||||||
Variable interest rate (as a percent) | 1.30% | 1.30% | |||||||||
LPR | Credit facility, 2022 | |||||||||||
Short-term Borrowings | |||||||||||
Variable interest rate (as a percent) | 0.35% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Other tax payables (Note 1) | $ 519,178 | $ 739,896 |
Accruals for user incentive programs | 944,854 | 3,756,933 |
Accrued expenses (Note 2) | 2,210,912 | 3,034,970 |
Accrued loss contingencies relating litigation and asserted claims | 209,842 | 166,887 |
Others | 372,768 | 364,289 |
Total | 4,257,554 | 8,062,975 |
Value-added tax payable | $ 400,000 | $ 400,000 |
Convertible notes and Standby_2
Convertible notes and Standby Equity Distribution Agreement (Details) | 3 Months Ended | 12 Months Ended | ||||||||||
Mar. 19, 2021 USD ($) $ / shares shares | Jan. 22, 2021 USD ($) D | Jan. 19, 2021 USD ($) $ / shares shares | Mar. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | May 11, 2022 $ / shares | May 05, 2022 agreement $ / shares | Feb. 28, 2022 agreement $ / shares | Jan. 10, 2022 agreement $ / shares | Oct. 29, 2021 $ / shares | Oct. 28, 2021 $ / shares | |
Principal amount | $ 10,000,000 | |||||||||||
Conversion price | $ / shares | $ 0.06 | |||||||||||
Commitment fees on convertible notes through issuance of treasury shares | $ 329,150 | |||||||||||
Derivative liabilities | 553,707 | |||||||||||
Aggregate net gain | $ 553,707 | 1,108,648 | ||||||||||
Floor price | $ / shares | $ 0.01 | $ 0.015 | ||||||||||
Outstanding equity financing available | 0 | |||||||||||
Additional paid-in capital | ||||||||||||
Commitment fees on convertible notes through issuance of treasury shares | $ (436,247) | |||||||||||
Standby equity distribution agreement | ||||||||||||
Consecutive trading days | D | 5 | |||||||||||
Maximum value of stock available to execute | $ 20,000,000 | |||||||||||
Agreement term | 36 months | |||||||||||
Purchase price | 90% | |||||||||||
January 2021 Notes | ||||||||||||
Discount percentage | 3% | |||||||||||
Interest rate | 5% | |||||||||||
Net proceeds from issuance of convertible notes | $ 8,900,000 | |||||||||||
Conversion price | $ / shares | $ 0.0508 | |||||||||||
Consecutive trading days | 10 | |||||||||||
Shares for commitment fee of convertible notes (in shares) | shares | 1,750,000 | |||||||||||
Commitment fees on convertible notes through issuance of treasury shares | $ 100,000 | |||||||||||
Conversion of convertible notes to ordinary shares (in shares) | shares | 196,665,850 | |||||||||||
Loan discount | 400,000 | |||||||||||
Issuance costs | $ 700,000 | |||||||||||
January 2021 Notes | Additional paid-in capital | ||||||||||||
Beneficial conversion feature | $ 1,400,000 | |||||||||||
January 2021 Notes | Maximum | ||||||||||||
Conversion price | $ / shares | $ 0.084 | |||||||||||
Percentage of trading price | 88% | |||||||||||
March 2021 Notes | ||||||||||||
Principal amount | $ 20,000,000 | |||||||||||
Discount percentage | 2% | |||||||||||
Interest rate | 5% | |||||||||||
Net proceeds from issuance of convertible notes | $ 18,200,000 | |||||||||||
Conversion price | $ / shares | $ 0.1 | $ 0.0042 | $ 21.4000 | |||||||||
Shares for commitment fee of convertible notes (in shares) | shares | 3,750,000 | |||||||||||
Commitment fees on convertible notes through issuance of treasury shares | $ 200,000 | |||||||||||
Conversion of convertible notes to ordinary shares (in shares) | shares | 1,195,980,950 | 347,620,500 | ||||||||||
Loan discount | $ 2,000,000 | |||||||||||
Issuance costs | 1,600,000 | |||||||||||
Debt redemption premium | 8% | |||||||||||
Threshold consecutive trading days prior to redemption date | 5 days | |||||||||||
Percentage of redemption | 108% | |||||||||||
Interest rate | 15% | |||||||||||
Debt amount redeemed | 1,662,355 | |||||||||||
Derivative liabilities | 0 | $ 553,707 | ||||||||||
Aggregate net gain | 553,707 | 1,108,648 | ||||||||||
Floor price | $ / shares | $ 0.015 | $ 0.002 | $ 0.004 | $ 0.006 | ||||||||
Number of letter agreement with investor | agreement | 3 | 3 | 3 | |||||||||
Debt instrument accrued interest | 8,800,000 | 7,400,000 | ||||||||||
Cash payments | $ 3,700,000 | $ 4,200,000 | ||||||||||
March 2021 Notes | ADS | ||||||||||||
Floor price | $ / shares | $ 0.50 |
Other Operating Income (Loss)_3
Other Operating Income (Loss), net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Operating Income (Loss), net | |||
Government subsidies | $ 2,155,039 | $ 4,231,406 | $ 2,026,269 |
(Provision) reversal of contingent losses | 66,994 | 254,833 | (2,776,293) |
Compensation payments | (1,587,473) | ||
Others | 20,084 | 62,990 | |
Gain on disposal of property and equipment | 199,442 | 33,817 | 18,702 |
Others | (32,777) | ||
Total | $ 2,441,559 | $ 4,453,462 | $ (2,274,507) |
Income Taxes Expense - Current
Income Taxes Expense - Current and deferred portion of income tax expenses (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current and deferred portion of income tax expenses | |||
Income tax expense | $ 9,058 | $ 51,970 | $ 7,087 |
Income Taxes Expense (Details)
Income Taxes Expense (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 HKD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Income Taxes Expense | ||||
Statutory income tax rate (in percent) | 25% | 25% | 25% | 25% |
Deferred tax liabilities | $ 0 | |||
(Loss) income before income taxes | $ 586,289 | $ (13,760,309) | $ (47,359,642) | |
Hong Kong | ||||
Income Taxes Expense | ||||
Maximum profits, tier one income tax rate | $ 2 | |||
Income tax rate, tier one | 8.25% | 8.25% | ||
Income tax rate, tier two | 16.50% | 16.50% | ||
(Loss) income before income taxes | $ 3,227,007 | 8,228,582 | (9,697,599) | |
PRC | ||||
Income Taxes Expense | ||||
Statutory income tax rate (in percent) | 25% | 25% | ||
(Loss) income before income taxes | $ 6,671,262 | $ 15,109,493 | (21,862,391) | |
PRC | Chu Le of WFOE | High and New Technology Enterprises | ||||
Income Taxes Expense | ||||
Preferential income tax rate (in percent) | 15% | 15% | 15% | |
Cayman | ||||
Income Taxes Expense | ||||
(Loss) income before income taxes | $ (5,831,156) | $ (12,251,655) | (6,502,164) | |
U.S. | ||||
Income Taxes Expense | ||||
Statutory income tax rate (in percent) | 21% | 21% | ||
(Loss) income before income taxes | $ (3,480,824) | $ (24,846,729) | $ (9,297,488) |
Income Taxes Expenses - Deferre
Income Taxes Expenses - Deferred tax liabilities and assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||||
Net operating loss carry-forward | $ 24,035,082 | $ 30,042,281 | $ 22,456,244 | |
Accrued expenses | 745,627 | 331,770 | 1,082,761 | |
Advertising fees | 14,554,843 | 18,287,319 | 23,293,389 | |
Deferred subsidies and revenue | 3,139 | 507,414 | ||
Provision for doubtful accounts | 351,434 | 197,592 | 204,936 | |
Depreciation difference of property, plant and equipment | 494,779 | 965,052 | 530,685 | |
Impairment loss | 145,900 | 161,993 | 82,505 | |
Total deferred tax assets | 40,330,804 | 49,986,007 | 48,157,934 | |
Valuation allowance on deferred tax assets | $ (40,330,804) | $ (49,986,007) | $ (48,157,934) | $ (33,663,357) |
Income Taxes Expenses - Tax los
Income Taxes Expenses - Tax loss carry forwards (Details) | Dec. 31, 2022 USD ($) |
PRC | |
Tax loss carry forwards | |
Tax loss carry forwards | $ 44,522,234 |
2023 | 741,592 |
2024 | 2,796,457 |
2025 | 1,165,853 |
2026 | 9,963,598 |
2027 | 14,804,100 |
Thereafter | 15,050,635 |
Hong Kong | |
Tax loss carry forwards | |
Tax loss carry forwards | 28,479,048 |
USA | |
Tax loss carry forwards | |
Tax loss carry forwards | $ 26,744,992 |
Income Taxes Expenses - Changes
Income Taxes Expenses - Changes in valuation allowance (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes Expenses | |||
Balance at the beginning of the year | $ 49,986,007 | $ 48,157,934 | $ 33,663,357 |
Movement | (6,287,720) | 1,834,481 | 14,496,600 |
Tax loss carry forwards expired | (3,367,483) | (6,408) | (2,023) |
Balance at the end of the year | $ 40,330,804 | $ 49,986,007 | $ 48,157,934 |
Income Taxes Expenses - Uncerta
Income Taxes Expenses - Uncertainties on application of income tax law in PRC (Details) ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 CNY (¥) | |
Income Taxes Expense | ||||
Statutory income tax rate (in percent) | 25% | 25% | 25% | |
Aggregate accumulated deficit | $ (214,327,424) | $ (214,842,438) | ||
Deferred tax liability for the PRC dividend withholding taxes | $ 0 | 0 | $ 0 | |
PRC | ||||
Income Taxes Expense | ||||
Statutory income tax rate (in percent) | 25% | |||
Statute of limitations period for underpayment of taxes due to computational errors | 3 years | |||
Extended period of statute of limitations under special circumstances | 5 years | |||
Minimum underpayment of tax liability for special circumstance | $ 15,685 | ¥ 0.1 | ||
Statute of limitations period for related party transactions | 10 years | |||
Withholding tax rate on dividends (as a percent) | 10% | |||
Withholding tax rate on dividends if investors qualifies as beneficial owner with holdings above the threshold percentage (as a percent) | 5% | |||
Threshold beneficial owner percentage determining withholding income tax rate (as a percent) | 25% | |||
Withholding tax rate on dividends if investors qualifies as beneficial owner with holdings below the threshold percentage (as a percent) | 10% | |||
PRC | Subsidiaries and VIEs | ||||
Income Taxes Expense | ||||
Aggregate accumulated deficit | $ 93,610,221 | 100,275,583 | 115,319,815 | |
Hong Kong | Subsidiaries | ||||
Income Taxes Expense | ||||
Aggregate accumulated deficit | $ 23,511,725 | $ 28,520,674 | $ 37,179,946 |
Income Taxes Expenses - Reconci
Income Taxes Expenses - Reconciliation of effective income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliations of effective income tax rate | |||
Statutory income tax rate | 25% | 25% | 25% |
Valuation allowance | (370.00%) | (5.00%) | (25.00%) |
Additional tax deduction | (236.00%) | 11% | 4% |
Effect of different tax rate of subsidiary operation in other jurisdiction | 111% | (9.00%) | (4.00%) |
Non-Deductible expense | 471% | (22.00%) |
Ordinary Shares (Details)
Ordinary Shares (Details) | 12 Months Ended | |||||
Dec. 31, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | May 09, 2022 | Oct. 29, 2021 $ / shares | Mar. 19, 2021 $ / shares | Dec. 31, 2020 | |
Ordinary Shares | ||||||
Conversion price | $ 0.06 | |||||
March 1 convertible notes | ||||||
Ordinary Shares | ||||||
Conversion of convertible notes to ordinary shares (in shares) | shares | 1,195,980,950 | 347,620,500 | ||||
Conversion price | $ 0.0042 | $ 21.4000 | $ 0.1 | |||
Class A ordinary shares | ||||||
Ordinary Shares | ||||||
Current ADS ratio | 50 | |||||
ADS ratio | 650 | 650 | 650 | |||
Class A ordinary shares | March 1 convertible notes | ||||||
Ordinary Shares | ||||||
Conversion of convertible notes to ordinary shares (in shares) | shares | 1,195,980,950 | |||||
Conversion price | $ 0.0042 |
Treasury Shares (Details)
Treasury Shares (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Treasury Shares | |||
Repurchase of ordinary shares | $ 1,322,195 | $ 9,480,179 | |
Cancellation of treasury shares | 135,205,591 | ||
Treasury stock reissued | 68,748,150 | ||
Repurchase Plan, Group | |||
Treasury Shares | |||
Number of shares repurchased | 0 | 83,854,891 | |
Repurchase Plan, Group | Class A ordinary shares | |||
Treasury Shares | |||
Number of shares repurchased | 24,237,100 |
Share-Based Compensation - Shar
Share-Based Compensation - Share options (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) shares | |
Share-Based Compensation | |||
Incremental compensation cost recorded during the year | $ | $ 0 | $ 8,623 | $ 52,216 |
Stock options | |||
Share-Based Compensation | |||
Granted (in dollars per share) | $ / shares | $ 0.01 | $ 0.03 | |
Options granted (in shares) | shares | 12,427,200 | ||
Share-based compensation expense | $ | $ 1,354,233 | $ 2,359,228 | $ 3,254,051 |
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% | ||
Vesting number of anniversaries | item | 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% | ||
Vesting number of anniversaries | item | 5 | ||
Participant right to exercise options cease period after termination of employment | 3 months | ||
RSUs | |||
Share-Based Compensation | |||
Granted (in shares) | shares | 5,714,200 | 0 | 1,578,500 |
Contractual term | 10 years | ||
Vesting number of anniversaries | item | 4 | ||
Share-based compensation expense | $ | $ 466,395 | $ 1,348,468 | $ 2,030,774 |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions to estimate the fair value of the options (Details) - USD ($) | 12 Months Ended | ||
Nov. 06, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation | |||
Average risk-free rate of interest | 1.47% | ||
Fair value of the underlying shares on the date of option granted (in dollars per share) | $ 0.0071 | ||
Incremental compensation cost | $ 285,661 | ||
Stock options | |||
Share-Based Compensation | |||
Average risk-free rate of interest | 1.88% | ||
Expected volatility | 41.60% | ||
Expected volatility, minimum (as a percent) | 41.80% | ||
Dividend yield (as a percent) | 0% | 0% | |
Contractual term | 10 years | 10 years | |
Fair value of the underlying shares on the date of option grants, minimum (in dollars per share) | $ 0.009 | ||
Fair value of the underlying shares on the date of option grants, maximum (in dollars per share) | $ 0.0508 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of aggregate option activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of options | |||
Exercised (in shares) | (2,097,750) | (10,571,200) | (16,397,050) |
Aggregate intrinsic value | |||
Options exercised aggregate intrinsic value (in dollars) | $ 145 | $ 66,014 | $ 460,369 |
Stock options | |||
Number of options | |||
Outstanding at beginning of the year (in shares) | 328,286,866 | ||
Granted (in shares) | 12,427,200 | ||
Forfeited (in shares) | (72,568,950) | ||
Exercised (in shares) | (2,097,750) | ||
Outstanding at end of the year (in shares) | 266,047,366 | 328,286,866 | |
Exercisable on end of the year (in shares) | 187,751,590 | ||
Vested or expected to vest (in shares) | 266,047,366 | ||
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 | ||
Outstanding at end of the year (in dollars per share) | 0.03 | $ 0.02 | |
Exercisable on end of the year (in dollars per share) | 0.04 | ||
Vested or expected to vest (in dollars per share) | $ 0.03 | ||
Weighted average remaining contractual term | |||
Outstanding at end of the year (in years) | 4 years 11 months 4 days | 6 years 6 months | |
Exercisable on end of the year (in years) | 3 years 7 months 2 days | ||
Vested or expected to vest (in years) | 4 years 11 months 4 days | ||
Weighted average grant date fair value | |||
Outstanding at beginning of the year (in dollars per share) | $ 0.05 | ||
Granted (in dollars per share) | 0.01 | $ 0.03 | |
Forfeited (in dollars per share) | 0.04 | ||
Exercised (in dollars per share) | 0.10 | ||
Outstanding at end of the year (in dollars per share) | 0.04 | $ 0.05 | |
Options exercisable (in dollars per share) | 0.04 | ||
Vested or expected to vest (in dollars per share) | $ 0.04 | ||
Aggregate intrinsic value | |||
Outstanding at end of the year (in dollars) | $ 9,554 | $ 2,461,623 | |
Exercisable on end of the year (in dollars) | 4,134 | ||
Vested or expected to vest (in dollars) | 9,554 | ||
Unrecognized compensation cost related to non-vested stock options | $ 2,436,451 | ||
Weighted-average recognition period for unrecognized compensation cost | 1 year 8 months 23 days | ||
Share-based compensation expense | $ 1,354,233 | 2,359,228 | 3,254,051 |
RSUs | |||
Number of options | |||
Vested or expected to vest (in shares) | 26,732,873 | ||
Weighted average exercise price | |||
Vested or expected to vest (in dollars per share) | $ 0.17 | ||
Aggregate intrinsic value | |||
Unrecognized compensation cost related to non-vested stock options | $ 141,016 | ||
Weighted-average recognition period for unrecognized compensation cost | 1 year 5 months 8 days | ||
Share-based compensation expense | $ 466,395 | $ 1,348,468 | $ 2,030,774 |
Share-Based Compensation - RSU
Share-Based Compensation - RSU Activity (Details) - RSUs - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of restricted shares | |||
Unvested restricted shares outstanding at beginning of the year (in shares) | 23,653,423 | ||
Granted (in shares) | 5,714,200 | 0 | 1,578,500 |
Vested (in shares) | (1,143,100) | ||
Forfeited (in shares) | (1,491,650) | ||
Unvested restricted shares outstanding at end of the year (in shares) | 26,732,873 | 23,653,423 | |
Vested or expected to vest (in shares) | 26,732,873 | ||
Weighted average grant date fair value | |||
Unvested restricted shares outstanding at beginning of the year (in dollars per share) | $ 0.21 | ||
Granted (in dollars per share) | 0.01 | ||
Vested (in dollars per share) | 0.12 | ||
Forfeited (in dollars per share) | 0.17 | ||
Unvested restricted shares outstanding at end of the year (in dollars per share) | 0.17 | $ 0.21 | |
Vested or expected to vest (in dollars per share) | $ 0.17 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 25% |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary (Details) - shares | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2018 | Dec. 31, 2022 | Jul. 31, 2014 | Oct. 31, 2012 | Aug. 31, 2012 | |
Share Based Payment Arrangement Option [Member] | |||||
Share-Based Compensation | |||||
Stock option vested (in shares) | 266,047,366 | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Share-Based Compensation | |||||
Stock option vested (in shares) | 26,732,873 | ||||
Restricted share units , vested (in shares) | 1,143,100 | ||||
2012 Option Plan | |||||
Share-Based Compensation | |||||
Number of shares authorized | 266,153,637 | 155,631,013 | 75,268,817 | ||
2018 Plan | |||||
Share-Based Compensation | |||||
Maximum number of shares issued (in percent) | 2% | ||||
Number of years considered for annual increase | 5 years |
Net (loss) income per Ordinar_3
Net (loss) income per Ordinary Share - Computation of basic and diluted net loss per share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net (loss) income -basic and diluted | $ 515,014 | $ (13,877,363) | $ (47,366,729) |
Deemed dividend in relation to the convertible notes | (1,368,866) | ||
Net (loss) income attributable to ordinary shareholders | $ 515,014 | $ (15,246,229) | $ (47,366,729) |
Shares (Denominator): | |||
Weighted average number of ordinary shares outstanding, Basic (in shares) | 4,591,748,099 | 3,303,168,725 | 3,080,332,924 |
Weighted average number of ordinary shares outstanding, Diluted (in shares) | 4,592,307,849 | 3,303,168,725 | 3,080,332,924 |
Net (loss) income per share, basic (in dollars per share) | $ 0.0001 | $ (0.005) | $ (0.02) |
Net (loss) income per share, diluted (in dollars per share) | $ 0.0001 | $ (0.005) | $ (0.02) |
Net (loss) income per Ordinar_4
Net (loss) income per Ordinary Share - Shares outstanding were excluded from the calculation of diluted net loss per ordinary share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Loss per Ordinary Share | |||
Number of anti-dilutive securities | 322,333,636 | 534,001,020 | 328,354,911 |
Share options | |||
Net Loss per Ordinary Share | |||
Number of anti-dilutive securities | 266,047,366 | 328,286,866 | 290,614,107 |
Restricted shares units | |||
Net Loss per Ordinary Share | |||
Number of anti-dilutive securities | 26,173,123 | 23,653,423 | 37,740,804 |
Shares of convertible notes | |||
Net Loss per Ordinary Share | |||
Number of anti-dilutive securities | 30,113,147 | 182,060,731 |
Segment Information (Details)
Segment Information (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | |
Segment Information | ||
Number of reportable segments | segment | 1 | |
Non-current assets | $ 2,157,183 | $ 5,602,531 |
PRC | ||
Segment Information | ||
Non-current assets | 2,122,560 | 4,877,143 |
USA | ||
Segment Information | ||
Non-current assets | $ 34,623 | $ 725,388 |
Mainland China Contribution P_2
Mainland China Contribution Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Mainland China Contribution Plan | |||
Company contributions to defined contribution plan | $ 3,251,420 | $ 8,863,323 | $ 3,626,897 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) | Dec. 31, 2022 USD ($) |
Restricted Net Assets | |
Total restricted net assets | $ 90,992,700 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | 4 Months Ended | 12 Months Ended | |
Apr. 25, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Subsequent Event | |||
Redeem the loan principle, redemption premium and unpaid interests | $ 3,745,955 | $ 4,181,918 | |
March 2021 Notes | |||
Subsequent Event | |||
Debt amount redeemed | $ 1,662,355 | ||
Subsequent event | March 2021 Notes | |||
Subsequent Event | |||
Redeem the loan principle, redemption premium and unpaid interests | $ 1,800,000 |
SCHEDULE I - ADDITIONAL FINAN_2
SCHEDULE I - ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED BALANCE SHEETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||||
Cash and cash equivalents | $ 9,724,925 | $ 18,232,130 | $ 24,669,133 | |
Prepaid expenses and other current assets | 4,443,670 | 10,864,280 | ||
Total current assets | 19,228,104 | 50,828,635 | ||
TOTAL ASSETS | 21,385,287 | 56,431,166 | ||
Current liabilities (including amounts of the consolidated VIEs without recourse to the Company. See Note 2(b)): | ||||
Accrued expenses and other current liabilities | 4,257,554 | 8,062,975 | ||
Derivative liabilities | 553,707 | |||
Accrued salary and benefits | 4,007,449 | 4,602,304 | ||
Other current liabilities | 372,768 | 364,289 | ||
Total current liabilities | 19,555,890 | 62,004,823 | ||
Other non-current liabilities | 209,439 | 323,305 | ||
TOTAL LIABILITIES | 20,254,451 | 62,431,285 | ||
Shareholders' deficit: | ||||
Additional paid-in capital | 217,540,733 | 210,718,835 | ||
Accumulated deficit | (214,327,424) | (214,842,438) | ||
Accumulated other comprehensive loss | (2,130,845) | (1,912,896) | ||
Total shareholders' deficit | 1,130,836 | (6,000,119) | $ (13,802,555) | $ 38,908,363 |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | 21,385,287 | 56,431,166 | ||
Parent company | Reportable legal entities | ||||
Current assets: | ||||
Cash and cash equivalents | 629,925 | 442,771 | ||
Prepaid expenses and other current assets | 3,362 | 463,093 | ||
Total current assets | 633,287 | 905,864 | ||
Advances to subsidiaries and VIEs | 26,525,876 | 10,559,139 | ||
TOTAL ASSETS | 27,159,163 | 11,465,003 | ||
Current liabilities (including amounts of the consolidated VIEs without recourse to the Company. See Note 2(b)): | ||||
Accrued expenses and other current liabilities | 136,129 | 136,129 | ||
Convertible notes | 1,754,656 | 9,175,892 | ||
Derivative liabilities | 553,707 | |||
Accrued salary and benefits | 421,975 | |||
Other current liabilities | 448,816 | 478,683 | ||
Total current liabilities | 2,761,576 | 10,344,411 | ||
Other non-current liabilities | 171,912 | 323,305 | ||
TOTAL LIABILITIES | 26,028,327 | 17,465,122 | ||
Shareholders' deficit: | ||||
Ordinary shares | 48,372 | 36,380 | ||
Additional paid-in capital | 217,540,733 | 210,718,835 | ||
Accumulated deficit | (214,327,424) | (214,842,438) | ||
Accumulated other comprehensive loss | (2,130,845) | (1,912,896) | ||
Total shareholders' deficit | 1,130,836 | (6,000,119) | ||
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 27,159,163 | $ 11,465,003 |
SCHEDULE I - ADDITIONAL FINAN_3
SCHEDULE I - ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF OPERATIONS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
STATEMENTS OF OPERATIONS | |||
Net revenues | $ 83,926,614 | $ 272,145,821 | $ 441,505,231 |
Cost of revenues | (13,070,923) | (32,825,888) | (24,128,462) |
Gross profit | 70,855,691 | 239,319,933 | 417,376,769 |
Operating expenses: | |||
General and administrative expenses | (11,907,809) | (17,815,839) | (15,017,499) |
Research and development expenses | (15,523,180) | (34,433,316) | (29,669,615) |
Sales and marketing expenses | (44,378,533) | (200,235,468) | (418,261,754) |
Other operating income, net | 2,441,559 | 4,453,462 | (2,274,507) |
Total operating expenses | (69,367,963) | (248,031,161) | (465,223,375) |
(Loss) income from operations | 1,487,728 | (8,711,228) | (47,846,606) |
Foreign exchange gains (income) | (93,145) | (219,642) | 91,335 |
Loss before income taxes and equity in earnings of subsidiaries | 586,289 | (13,760,309) | (47,359,642) |
Net (loss) income | 515,014 | (13,877,363) | (47,366,729) |
Parent company | Reportable legal entities | |||
STATEMENTS OF OPERATIONS | |||
Cost of revenues | (304,356) | (276,085) | |
Gross profit | (304,356) | (276,085) | |
Operating expenses: | |||
General and administrative expenses | (4,073,068) | (4,516,554) | (2,607,390) |
Research and development expenses | (1,088,077) | (2,762,190) | (3,034,240) |
Sales and marketing expenses | (50,198) | (103,324) | (212,381) |
Other operating income, net | 154,682 | 136,129 | 112,478 |
Total operating expenses | (5,056,661) | (7,245,939) | (5,741,533) |
(Loss) income from operations | (5,056,661) | (7,550,295) | (6,017,618) |
Interest expenses, net | (1,337,031) | (5,527,327) | |
Fair value change of derivatives | 553,707 | 1,108,648 | |
Foreign exchange gains (income) | (4) | 3 | |
Loss before income taxes and equity in earnings of subsidiaries | (5,839,989) | (11,968,974) | (6,017,615) |
Net loss before equity in earnings of subsidiaries | (5,839,989) | (11,968,974) | (6,017,615) |
Equity in (loss) income of subsidiaries, VIEs and VIEs' subsidiaries | 6,355,003 | (1,908,389) | (41,349,114) |
Net (loss) income | $ 515,014 | $ (13,877,363) | $ (47,366,729) |
SCHEDULE I - ADDITIONAL FINAN_4
SCHEDULE I - ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF CASH FLOWS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss (income) | $ 515,014 | $ (13,877,363) | $ (47,366,729) |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: | |||
Share-based compensation expense | 1,820,628 | 3,716,319 | 5,337,041 |
Change in fair value of derivatives | (553,707) | (1,108,648) | |
Changes in assets and liabilities | |||
Accounts receivable | 15,841,979 | 6,993,094 | 524,312 |
Accrued expenses and other current liabilities | (6,629,926) | (2,178,255) | 3,622,072 |
Accrued salary and benefits | 4,007,449 | 4,602,304 | |
Other non-current liabilities | (113,866) | (141,341) | (154,719) |
Net cash used in operating activities | 1,301,198 | (51,043,689) | (851,758) |
Investing activities: | |||
Net cash provided by (used in) investing activities | 521,859 | (1,778,533) | (2,644,295) |
Financing activities: | |||
Cash paid to settle vested options and restricted shares | 823,226 | ||
Proceeds from issuance of ordinary shares upon exercise of options | 542 | 81,339 | 304,259 |
Proceeds from issuance of convertible notes net of issuance cost and debt discounts paid to Investors of US$2.7 million | 27,175,000 | ||
Repayment of convertible notes | (3,745,955) | (4,181,918) | |
Proceeds from issuance of ordinary shares upon follow-on public offering | 1,390,000 | ||
Payment of share repurchase | (1,322,195) | (9,480,179) | |
Net cash (used in) provided by financing activities | (11,616,017) | 20,899,885 | (8,500,234) |
Net decrease in cash, cash equivalents, and restricted cash | (9,792,960) | (31,922,337) | (11,996,287) |
Cash, cash equivalents, and restricted cash at beginning of year | 18,431,209 | 49,622,714 | 59,966,031 |
Cash, cash equivalents, and restricted cash at end of year | 9,785,131 | 18,431,209 | 49,622,714 |
Parent company | Reportable legal entities | |||
Cash flows from operating activities: | |||
Net loss (income) | 515,014 | (13,877,363) | (47,366,729) |
Equity in loss (income) of subsidiaries, VIEs and VIEs' subsidiaries | (6,355,003) | 1,908,389 | 41,349,114 |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: | |||
Share-based compensation expense | 1,820,628 | 3,716,319 | 5,337,041 |
Amortization of issuance cost and debt discounts related to convertible notes | 1,337,671 | 5,647,339 | |
Change in fair value of derivatives | (553,707) | (1,108,648) | |
Changes in assets and liabilities | |||
Accrued expenses and other current liabilities | (29,867) | 288,562 | (5,371) |
Other receivables, deposits and other assets | 459,731 | (432,374) | 21,858 |
Accrued salary and benefits | 421,975 | ||
Other non-current liabilities | (151,393) | (159,769) | (112,489) |
Net cash used in operating activities | (2,534,951) | (4,017,545) | (776,576) |
Investing activities: | |||
Advances to subsidiaries and VIEs | (9,783,250) | (37,795,461) | (16,000,000) |
Repayment of advances to subsidiary | 16,251,000 | 19,145,170 | 25,900,160 |
Net cash provided by (used in) investing activities | 6,467,750 | (18,650,291) | 9,900,160 |
Financing activities: | |||
Cash paid for deferred issuance costs | (159,624) | ||
Cash paid to settle vested options and restricted shares | 823,226 | ||
Proceeds from issuance of ordinary shares upon exercise of options | 311 | 81,339 | 304,259 |
Proceeds from issuance of convertible notes net of issuance cost and debt discounts paid to Investors of US$2.7 million | 27,175,000 | ||
Repayment of convertible notes | (3,745,956) | (4,181,918) | |
Proceeds from issuance of ordinary shares upon follow-on public offering | 1,390,000 | ||
Payment of share repurchase | (1,322,195) | (9,480,179) | |
Net cash (used in) provided by financing activities | (3,745,645) | 22,982,602 | (9,999,146) |
Net decrease in cash, cash equivalents, and restricted cash | 187,154 | 314,766 | (875,562) |
Cash, cash equivalents, and restricted cash at beginning of year | 442,771 | 128,005 | 1,003,567 |
Cash, cash equivalents, and restricted cash at end of year | $ 629,925 | $ 442,771 | $ 128,005 |
SCHEDULE I - ADDITIONAL FINAN_5
SCHEDULE I - ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF CASH FLOWS (Parenthetical) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
CASH FLOWS | |
Amount of commitment fee paid to investors | $ 2.8 |
Parent company | Reportable legal entities | |
CASH FLOWS | |
Amount of commitment fee paid to investors | $ 2.7 |