NEW YORK, Sept. 24, 2024 /PRNewswire/ -- SOS Limited ("SOS" or the "Company") (NYSE:SOS) today reported its semi-annual financial results for the six-months ended June 30, 2024.
Results of operations
Revenue
As of June 30, 2024, SOS focuses on three product and service lines including Commodities Trading, Hosting Service and Others. Commodities Trading contributes 91.7% of the total revenue, 7.8% from Hosting Services and 0.5% from Others, (i.e. legacy data mining which was disposed of in November 2022).
Six months ended | ||||||||
Revenue by Products and Services | US$ | Percentage | ||||||
Commodities Trading | 55,466 | 91.7 | % | |||||
Hosting Services | 4,719 | 7.8 | % | |||||
Others | 329 | 0.5 | % | |||||
Total revenue -net | $ | 60,514 | 100 | % | ||||
Six months ended | ||||||||
Revenue by Products and Services | US$ | Percentage | ||||||
Commodity Trading | 37,815 | 90.5 | % | |||||
Cryptocurrency Mining | 350 | 0.8 | % | |||||
Hosting Services | 1,225 | 2.9 | % | |||||
Others | 2,416 | 5.8 | % | |||||
Total revenue -net | $ | 41,806 | 100 | % | ||||
Net revenue was $60.5 million, up 47.1% from $41.8 million period-on-period. An increase in revenue is primarily due to higher sales of natural rubber, one of the key industrial materials, as the Chinese economy has continued to recover over the past six months. The ongoing recovery of the Chinese economy over the past six months has fueled increased demand for rubber products. However, no revenue from cryptocurrency mining was generated in this period in 2024, as we temporarily halted our cryptocurrency mining operations to focus on upgrading the mining site. The Company began the work in January 2024 and it is expected to be completed and be back online in October 2024.
Unaudited Condensed Consolidated Statements of Comprehensive Loss (US$ thousands, except share data and per share data, or otherwise notes) | ||||||||
Six months ended | ||||||||
30-Jun- | 30-Jun- | |||||||
US$ | US$ | |||||||
Revenue | 41,835 | 60,531 | ||||||
Business taxes and surcharges | (29) | (17) | ||||||
Net revenue | 41,806 | 60,514 | ||||||
Operating costs | (41,716) | (58,083) | ||||||
Gross profit | 90 | 2,431 | ||||||
Gross profit ratio | 0.2 | % | 4.0 | % | ||||
Revenue and Service by Products | ||||||||||||||||
Six months ended | Six months ended | |||||||||||||||
Revenue by Products and Services | US$ | Percentage | US$ | Percentage | ||||||||||||
Commodity Trading | 37,815 | 90.5 | % | 55,466 | 91.7 | % | ||||||||||
Cryptocurrency Mining | 350 | 0.8 | % | - | - | % | ||||||||||
Hosting Services | 1,225 | 2.9 | % | 4,719 | 7.8 | % | ||||||||||
Others | 2,416 | 5.8 | % | 329 | 0.5 | % | ||||||||||
Total | 41,806 | 100 | % | 60,514 | 100 | % | ||||||||||
Operating Costs and Expenses
Operating costs were $58.1 million, up 39.3% period-on-period from $41.7 million in the first half of 2023 which is consistent with our revenue increase. Operating costs comprised of depreciation & amortization of hardware & software, electricity power and depreciation from property equipment for cryptocurrency mining as well as costs of goods sold & warehouse rental 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 $2.2 million from $1.1 million for the same period last year mainly attributable to the promotion activities.
General and Administrative Expenses
General and administrative expenses were $14.5 million, 54.3% up period-on-period from $9.4 million in the first half of 2023. The increase was mainly attributable to the depreciation expenses of $4 million for the newly established subsidiary. Share-based compensation has decreased from $2.1 million to $0.8 million, This happens because share-based compensation is often tied to the fair value of the company's shares at the grant date or as they vest. When the share price declines, the value of the compensation, and therefore the associated expense, decreases as well.
Operating Loss
GAAP net loss was $10.9 million, compared to a net loss of $10.7 million in the first half of 2023, representing an increase of 0.02%. We had a gross margin of 4.0%, a significant increase from the previous year's 0.2%. The company has more leverage when negotiating the purchase price of natural rubber compared to the sesame. This stronger bargaining power allows them to negotiate lower prices for rubber, which, in turn, can lead to a higher gross profit margin for natural rubber relative to sesame.
Income Tax
The Company obtained the tax return $4.0k of corporate income tax for the current period as compared to $0.6 million last year of the same period.
GAAP net loss attributable to ordinary shareholders was $10.9 million, as compared to a net loss of $10.7 million in the prior year period.
GAAP Basic EPS was $(0.0299) per share, as compared to $(0.0031) per share in the prior year period.
Cash Flow
Unaudited Condensed Consolidated Statement of Cash Flow (US$ thousands, except share data and per share data, or otherwise noted) | ||||||||
Six | Six | |||||||
30-Jun-23 | 30-Jun-24 | |||||||
Unaudited | Unaudited | |||||||
US$ | US$ | |||||||
Cash Flow from Operating Activities: | ||||||||
Net loss | (10,697) | (10,902) | ||||||
Less: Net income from discontinued operation | - | 1 | ||||||
Net loss from continuing operation | (10,697) | (10,903) | ||||||
Adjustments: | ||||||||
Depreciation and amortization | 106 | 8,765 | ||||||
Share-based compensation | 2,053 | 807 | ||||||
Amortization of right of use assets | 268 | 281 | ||||||
Accretion of finance leases | 19 | 6 | ||||||
Impairment of cryptocurrencies | 81 | - | ||||||
Operating cash flows before movements in working capital | (8,170) | (1,044) | ||||||
Changes in working capital: | ||||||||
Inventory | 1,224 | (155) | ||||||
Accounts receivable | 56 | 297 | ||||||
Other receivables | (12,320) | (115,566) | ||||||
Amount due from related parties | 23,916 | 29,739 | ||||||
Intangible assets | (350) | - | ||||||
Accrued liabilities | (3,510) | 25,642 | ||||||
Accounts payable | 1,089 | (24,016) | ||||||
Tax payable | 211 | 400 | ||||||
Other payables | (3,857) | 32,588 | ||||||
Amount due to related parties | (1) | (999) | ||||||
Lease liabilities | (269) | (282) | ||||||
Net cash used in operating activities from continuing operations | (1,981) | (53,396) | ||||||
Net cash used in in generating from discontinued operating activities | - | 1 | ||||||
Net cash used in operating activities | (1,981) | (53,395) | ||||||
Cash flows from financing activities: | ||||||||
Repayment of principle portion of lease liabilities | (288) | (288) | ||||||
Proceeds from share issuance, net of issuance costs | - | 24,836 | ||||||
Net cash generated from/(Used in) financing activities | (288) | 24,548 | ||||||
Net decrease in cash and cash equivalents | (2,269) | (28,847) | ||||||
Cash and cash equivalents at beginning of the period | 259,492 | 279,177 | ||||||
Effect of exchange rates on cash and cash equivalents | (7,339) | (3,603) | ||||||
Cash and cash equivalents at end of the period | 249,884 | 246,727 | ||||||
Supplemental cash flow information | ||||||||
Cash paid for income tax | 646 | - | ||||||
Cash Flow Used in Operating Activities
As of June 30, 2024, the Company had cash and cash equivalents of $246.7 million, compared to $249.9 million in the prior year period, a decrease of $3.2 million. The Company believes that its cash resources are more than adequate to fund operations and growth initiatives.
Cash Flow Generated from Investing Activities
The Company experienced little investing activities for this period.
Cash Flow Used in Financing Activities
The Company raised funds of $7.8 million by F1 in March 2024 and 16.99 million by private placement in June 2024; total funds raised amounted to S$24.79 million for the period ended June 30, 2024.
About SOS Limited
SOS is an emerging blockchain-based and big data-driven marketing solution provider. SOS is also engaged in blockchain and cryptocurrency operations, which currently include cryptocurrency mining and may expand into cryptocurrency security and insurance in the future. Since April 2021, we launched commodity trading via our subsidiary SOS International Trading Co. Ltd and Weigou International Trading Co Ltd. Major trading commodity includes mineral resin, soy bean, wheat, sesame, liquid sulfur, petrol coke and latex 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 mining activities;
- shortages in, or rises in the prices of mining machines may adversely affect the Company's business;
- 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.
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SOURCE SOS Limited