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 constitute
"forward-looking statements" within the meaning of the federal
securities laws, including, but not limited to, our expectations
for future financial performance, business strategies or
expectations for our business. These statements constitute
projections, forecasts and forward-looking statements, and are not
guarantees of performance. SOS cautions that forward-looking
statements are subject to numerous assumptions, risks and
uncertainties, which change over time. Words such as "may," "can,"
"should," "will," "estimate," "plan," "project," "forecast,"
"intend," "expect," "anticipate," "believe," "seek," "target,"
"look" or similar expressions may identify forward-looking
statements. Specifically, forward-looking statements may include
statements relating to the Company's:
- ability to execute its business plan;
- changes in the market for SOS' products and services; and
- expansion plans and opportunities.
These forward-looking statements are based on information
available as of the date of this press release and our management's
current expectations, forecasts and assumptions, and involve a
number of judgments, risks and uncertainties that may cause actual
results or performance to be materially different from those
expressed or implied by these forward-looking statements.
These risks and uncertainties include, but not are limited to,
the risk factors described by SOS in its filings with the
Securities and Exchange Commission ("SEC"). These risk factors and
those identified elsewhere in this press release, among others,
could cause actual results to differ materially from historical
performance and include, but are not limited to:
- US government's policies and regulatory oversight of crypto
currency mining operation and our other operations;
- SOS's cryptocurrency mining, commodity trading and marketing
solutions businesses are still under development, with many
uncertainties in integration of these various business
segments;
- Failure to manage the newly launched commodities trading
business effectively;
- Loss of key customers in the commodity trading business;
- failure to access a large quantity of power at reasonable costs
could significantly increase SOS operating expenses and adversely
affect our demand for SOS's crypto mining and hosting
activities;
- shortages in, or rises in the prices of mining machines may
adversely affect the Company's business;
- claims and/or regulatory actions against us related to
cybersecurity review in China may
result in our being subject to fines, constraints on or
modification of our marketing data solution business, damage to our
reputation, and material adverse impact on our financial condition,
results of operations and prospects.
- any significant or prolonged failure in the data warehouse
facilities and data mining facilities that SOS operates or services
it provides, including events beyond its control, would lead to
significant costs and disruptions and would reduce the
attractiveness of its facilities, harm its business reputation and
have a material adverse effect on its results of operation;
- security breaches or alleged security breaches of our data
warehouses could disrupt SOS operations and have a material adverse
effect on its business, financial condition and results of
operation; and
- other risks and uncertainties indicated in SOS's SEC reports or
documents filed or to be filed with the SEC by SOS.
Accordingly, forward-looking statements should not be relied
upon as representing our views as of any subsequent date, and you
should not place undue reliance on these forward-looking statements
in deciding whether to invest in our securities. We do not
undertake any obligation to update forward-looking statements to
reflect events or circumstances after the date they were made,
whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
View original
content:https://www.prnewswire.com/news-releases/sos-limited-reports-2022-interim-financial-results-301635014.html
SOURCE SOS Ltd.