SOS Limited Reports 2022 Interim Financial Results


Cryptocurrency mining and hosting services being rolled out in the  U.S.

Revenue declines due to global economy slow down

Cash balance increased  from $185.5 million to $247.4 million

NEW YORK, Sept. 28, 2022 /PRNewswire/ — SOS Limited (“SOS” or the “Company”) (NYSE: SOS) today repot 2022 Interim financial results from operation

Interim financial results from operation

Six months ended June 30, 2022 compared to June 30, 2021

Revenue

Net revenue was $132.7 million, down 28.1% period-on-period. The decrease in revenues was negatively impacted by the continuing lock-down during the period; within China, the central government’s control measures severely restricted business activities causing a material slowdown in revenues and growth especially in our data mining.  Our commodity business was also negatively affected  by the global slowdown.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(US$ thousands, except share data and per share data, or otherwise notes)

Six months ended

30-Jun-21

30-Jun-22

$”000″

$”000″

Revenue

184,489

132,710

Business taxes and surcharges

(11)

(45)

Net revenue

184,478

132,665

Operating costs

(167,238)

(120,294)

Gross profit

17,240

12,371

Gross profit ratio

9.3

%

9.3

%

As of June 30, 2022, SOS focuses on four product and service lines, including data marketing, cryptocurrency mining, hosting service and commodity trading. Data marketing represents 36.1% of the total revenue, 0.2% from cryptocurrency mining, 0.1% from hosting service and 63.6% from commodity trading respectively.

Revenue and service by products

Revenue by products and service

Six months ended
June 30, 2022

Six months ended
June 30, 2021

Product and service

$ “000”

Percentage

$ “000”

Percentage

Commodity trading

84,348

63.6

%

155,170

84.1

%

Cryptocurrency mining

305

0.2

%

15,126

8.2

%

Hosting serice

102

0.1

%

Data marketing

47,910

36.1

%

14,193

7.7

%

Total

132,665

100

%

184,489

100

%

Data Marketing Includes the following four sub-category
Revenue streams:

Insurance marketing

47,830

36.0

%

13,338

7.2

%

Telecom call center

76

0.1

%

324

0.2

%

Bank call center

4

0.0

%

278

0.2

%

SaaS

0.0

%

253

0.1

%

Total

47,910

36.1

%

14,193

7.7

%

We started to generate cryptocurrency revenue from the end of February 2021. We were allocated 132.1 units of BTC and 1,853.1 units of ETH in Q2 2021 from our mining pools as compared to 42.2 units of BTC and 916.9 units of ETH in Q1, 2021. During the first half of 2022, we are still re-locating and building our cryptocurrency mining facilities to and in Wisconsin USA. We recorded 179.32 units of ETH output and generated no BTC revenue for the six month ended June 30, 2022, which shows our plan to move our cryptocurrency mining business to U.S. is behind schedule as we are picking up mining capacity over time.

United States generally accepted accounting principles for cryptocurrency mining are complex, emerging and uncertain. Cryptocurrencies may not be recognized as cash or cash equivalents, and mining activities may not qualify for revenue recognition. Cryptocurrencies have no inherent value, are not legal tender recognized by any governmental entity, and might not be able to be converted into fiat currencies. Investors are advised not to place undue reliance on mining results alone, without considering other financial and non-financial metrics.

Operating Costs and Expenses

Operating costs were $120.3 million, 28.1% down period-on-period from $167.2 million in the first half of 2021 which is consistent with our revenue decline. Operating costs comprised data acquisition costs for our insurance marketing business, land line telephone expenses for call centers, maintenance expense and hardware depreciation for cryptocurrency mining well as costs of goods sold for commodity trading.

Selling expenses

Selling expenses mainly relate to our commodity business and include freight-out expenses, custom clearing agency fee, warehouse rental expense, promotional expense, sales commission and payroll expenses to sales team. Selling expenses increased to $3.1 million from $0.03 million from the same period of last year. The increase is largely accounted for by warehouse, freight-out expense and agency fees of commodity business as we directly import goods from outside China instead of purely purchasing commodity products from local vendors in prior period.

General and administrative expenses

General and administrative expenses were $10.1 million, 48.1% down period-on-period from $19.4 million in the first half of 2021. The decrease in general and administrative expenses was mainly associated with share-based compensation expenses and professional fees which decreased 19.3% and 685% respectively.  Senior management continues to be compensated primarily via share-based compensation.

Operating loss

GAAP net loss was $14.3 million, compared to a net loss of $20.4 million in the first half of 2021, representing a decrease of 29.8%. The decrease is primarily due to the spread of pandemic again in mainland China during the period, but was offset somewhat by a decline in the cost of goods and G&A expenses. Consequently, overall gross margin is in line with last year of 9.3%. We believe our stable gross margin demonstrates our ability to manage costs even in a difficult economic environment.

Income tax

The Company’s Chinese subsidiaries paid US$1.1 million of corporate income tax for the period ended June 30, 2022.

GAAP net loss attributable to ordinary shareholders was $14.3 million, as compared to a net loss of $20.4 million in the prior year period.

GAAP Basic EPS was $(0.0046) per share, as compared to $(0.04) per share in the prior year period.

Balance Sheet and Cash Flow

Cash flow generated from operating activities

As of June 30, 2022, the Company had cash and cash equivalents of $247.4 million, compared to $185.5 million in the prior year period, an increase of $61.9 million. The net increase in cash and cash equivalents was mainly generated from operating activities. The Company believes that its cash resources are more than adequate to fund operations and growth initiatives.

Unaudited Condensed Consolidated Statement of Cash Flow

(US$ thousands, except share data and per share data, or otherwise noted)

Six months
ended

Six months
ended

30-Jun-21

30-Jun-22

Unaudited

Unaudited

$

$

     Cash flows from operating activities:

       Net loss

(20,411)

(14,334)

  Adjustments:

        Depreciation and amortization

5,509

2,700

        Share-based compensation

17,927

14,472

     Allowance for doubtful accounts-accounts receivable

189

     Allowance for doubtful accounts-other receivable

800

     Inventory

(102,566)

11,217

        Accounts receivable

20,391

     Other receivables

(196,620)

(138,389)

     Amount due from related parties

(10,183)

(10,622)

     Intangible assets

(12,221)

(837)

        Accrued liabilities

24

(3,085)

     Accounts payable

(13,118)

5,400

        Tax payable

(6,024)

(2,323)

     Other payables

(8,338)

7,415

     Amount due to related parties

2,406

1,390

     Contract liability

4,450

192

     Lease liabilities

1,107

     Net cash used in operating activities

(339,165)

(104,317)

  Cash flows from investing activities:

        Purchase of property, equipment and software

(34,205)

     Proceeds from disposal of property, equipment and software

1,597

     Disposition of assets-P2P

3,500

  Net cash (used in)/generated from investing activities

(30,705)

1,597

  Cash flows from financing activities

     Proceeds from share issuance, net of issuance costs

551,824

18,483

  Net cash generated from financing activities

551,824

18,483

  Effect of exchange rates on cash and cash equivalents

2,887

(6,443)

  Net increase/(decrease) in cash and cash equivalents

184,841

(90,680)

  Cash and cash equivalents at beginning of the period

610

338,026

  Cash and cash equivalents at end of the period

185,451

247,346

  Supplemental cash flow information

  Cash paid for income tax

1,061

Cash flow used in investing activities

The Company, through its subsidiary, SOS Information Technology New York Inc. and China SOS Ltd., purchased BTC and ETH mining equipment for an aggregate cost of approximately $34.2 million for the six months ended June 30, 2021. The Company disposed of some office equipment in China and realized proceeds of $1.6 million for the period ended June 30, 2022.

Financing activities

The Company received net proceeds of US$18.5 million from registered direct offering for the period ended June 30, 2022 as compared to the same period of last year, the Company received aggregate net proceeds of US$551.8 million   

About SOS Limited

SOS provides big data-driven marketing solutions and is also engaged in blockchain and cryptocurrency operations and commodity trading. The core infrastructure of SOS’ marketing data solutions to insurance and emergency rescue services is built on big data, blockchain-based technology, cloud computing, AI, satellite, and 5G network, etc. For more information, please visit: http://www.sosyun.com/.

Forward-Looking Statements

Certain statements in this press release may…



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