ZW Data Action Technologies (CNET) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We are susceptible to general economic conditions, natural catastrophic events and public health crises, and a potential downturn in advertising and marketing spending by advertisers could adversely affect our operating results in the near future
2. 02We may be subject to, and may expend significant resources in defending against, government actions and civil suits based on the content and services we provide through our Internet advertising and data service platforms
3. 03We operate in the advertising and data service industry, which is particularly sensitive to changes in economic conditions and advertising trends
4. 04a decline in advertising and marketing spending in general
5. 05We face significant competition, and if we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be adversely affected
6. 06Key employees are essential to growing our business
7. 07We may need additional capital and we may not be able to obtain it at acceptable terms, or at all, which could adversely affect our liquidity and financial position
8. 08Our failure to protect our intellectual property rights could have a negative impact on our business
9. 09We may be subject to intellectual property infringement claims or other allegations, which may materially and adversely affect our business, financial condition and prospects
10. 10We rely on computer software and hardware systems in managing our operations, the failure of which could adversely affect our business, financial condition and results of operations
11. 11Any failure or interruptions in the internet infrastructure, bandwidth providers, data center providers, other third parties or our own systems for providing our solutions to customers could negatively impact our business
12. 12Privacy and data security concerns, laws, or other regulations could expose us to liability or impair our operations27% rewritten
13. 13The occurrence of security breaches and cyber-attacks could negatively impact our business
14. 14Our blockchain business is at an early stage and the PRC laws and regulations may have a potential effect

Risks Relating to Regulation of Our Business and to Our Structure

1. 15requiring us or Rise King WFOE and/or PRC Operating Entities to restructure the relevant ownership structure or operations
2. 16We rely on contractual arrangements with the PRC Operating Entities and their shareholders for our China operations, which may not be as effective in providing operational control as direct ownership
3. 17Condensed Consolidating Schedules54% rewritten
4. 18Prepayment and deposit to suppliers99% rewritten
5. 19Prepayment for acquisitionNew
6. 20Operating lease liabilitiesNew
7. 21Long-term borrowing from a related party98% rewritten
8. 22Long-term deposits and prepayments
9. 23Lease payment liabilities related to short-term leases24% rewritten
10. 24Operating lease liabilities-Non currentNew
11. 25Net income attributable to noncontrolling interests84% rewritten
12. 26Cash and cash equivalents, at beginning of the year85% rewritten
13. 27Our operations and assets in China are subject to significant political and economic uncertainties
14. 28The PRC government ’ s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our listed securities
15. 29The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value
16. 30PRC regulations relating to mergers and acquisitions of domestic enterprises by foreign investors may increase the administrative burden we face and create regulatory uncertainties
17. 31The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing
18. 32Substantial uncertainties exist with respect to the interpretation and implementation of cybersecurity related regulations and cybersecurity review as well as any impact these may have on our business operations
19. 33On November 7, 2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which imposes more stringent requirements on operators of “critical information infrastructure,” especially in data storage and cross-border data transfer
20. 34We may be adversely affected by the complexity, uncertainties and changes in PRC licensing and regulation of internet businesses
21. 35Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert Chinese Renminbi into foreign currencies and, if Chinese Renminbi were to decline in value, reducing our revenue in U.S. dollar terms25% rewritten
22. 36We may have limited legal recourse under PRC laws if disputes arise under our contracts with third parties
23. 37We must comply with the Foreign Corrupt Practices Act
24. 38Changes in foreign exchange regulations in the PRC may affect our ability to pay dividends in foreign currency or conduct other foreign exchange business
25. 39Any limitation on the ability of our PRC subsidiaries and VIEs to make payments to us, or the tax implications of making payments to us, could have a material adverse effect on our ability to conduct our business or our financial condition62% rewritten
26. 40If we become directly subject to the scrutiny involving U.S. listed Chinese companies, we may have to expend significant resources to investigate and/or defend the matter, which could harm our business operations, stock price and reputation
27. 41The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and results of operations
28. 42You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against us and our management
29. 43It may be difficult for overseas regulators to conduct investigation or collect evidence within China44% rewritten
30. 44PRC enterprise income tax law could adversely affect our business and our net income
31. 45Under the EIT Law, we may be classified as a “ resident enterprise ” of China. Such classification will likely result in unfavorable tax consequences to us and holders of our securities29% rewritten

Risks Related to our Securities

1. 46Our Common Stock is traded on the Nasdaq Stock Market LLC (“Nasdaq”), a national securities exchange79% rewritten
2. 47Insiders have substantial control over us, and they could delay or prevent a change in our corporate control even if our other stockholders wanted it to occur
3. 48There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities49% rewritten
4. 49The market price of our Common Stock may be volatile
5. 50We may need additional capital and may sell additional securities or other equity securities or incur indebtedness, which could result in additional dilution to our shareholders or increase our debt service obligations
6. 51We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock
7. 52Techniques employed by manipulative short sellers in Chinese small cap stocks may drive down the market price of our common stock
8. 53Geopolitical conflicts involving Iran, military actions in the Middle East, and the war in Ukraine may adversely affect global economic conditions and cause significant volatility in the trading price of our common stockNew