SOS Limited Reports 2021 Full Year Financial Results

Rhea-AI Summary

SOS Limited (SOS) reported a remarkable 612% revenue increase to $357.8 million for the fiscal year ending December 31, 2021. Gross profit rose 62.1% to $21.1 million. The substantial growth was attributed to the expansion into crypto-mining and commodity trading, with commodity trading revenue at $275.4 million, accounting for 77% of total sales. However, the GAAP net loss reached $43.9 million, amid rising operating costs of $336.8 million and a declining gross margin.

The company has shifted its mining operations from China to the U.S., launching a facility in Wisconsin.

Positive

• Revenue increased by 612% to $357.8 million.
• Gross profit grew by 62.1% to $21.1 million.
• Commodity trading generated $275.4 million in revenue, 77% of total sales.
• Cash and cash equivalents reached $338 million, up from $3.7 million.

Negative

• GAAP net loss was $43.9 million, compared to a profit of $4.9 million in the previous year.
• Operating costs surged to $336.8 million from $37.3 million.
• Gross margin decreased to 6% from 26% the prior year.

Revenue Jumps 612% to $357.8 million

Gross Profit Improves 62.1% to $21.1 million

Mining Operations Begin Transitioning to the U.S.

QINGDAO,China, May 2, 2022 /PRNewswire/ -- SOS Limited ("SOS" or the "Company") (NYSE: SOS) today reported its full year financial results for the twelve-months ended December 31, 2021.

Revenue was $357.8 million, 612% over the twelve-months ended December 31, 2020. Gross Profit increased to $21.1 million from $13.0 million, over the same period.

Results from Operations

Revenue 

Net revenue was $357.8 million, up 612% over the prior period. The robust growth of revenue demonstrated the strong and effective execution of the Company's strategy, mainly due to rapid market expansion and the addition of crypto-mining and commodity trading operations. Growth was driven by taking advantage of our block-chain expertise.

Audited condensed consolidated Statements of comprehensive of loss
(US$ thousands, except share data and per share data, or otherwise noted)
	Twelve months ended
	31-Dec-20		31-Dec-21
	$		$
Revenue	50,317		358,042
Business taxes and surcharges	(28)		(221)
Net revenue	50,289		357,821
Operating costs	(37,295)		(336,752)
Gross profit	12,994		21,070
Gross profit ratio	25.8%		5.9%

 

As of December 31, 2021, SOS focused on six product lines including insurance marketing, telecom call centers, bank call center, SaaS services, cryptocurrency mining and commodity trading.

 

Revenue by products	FY2021		FY2020
Product lines	$"000"	Percentage	$"000"	Percentage
Commodity trading	275,363	77.0%	-	0.0%
Insurance marketing	65,880	18.4%	49,234	97.9%
Cryptocurrency mining	15,427	4.3%	-	0.0%
Telecom call center	338	0.1%	920	1.8%
Bank call center	-	0.0%	76	0.2%
SaaS	813	0.2%	58	0.1%
Total net revenue	357,821	100.0%	50,289	100.0%

 

Our traditional business of insurance marketing increased 34% to $65.9 million year over year, as a result of rapid market expansion from regional to national customer base in China. We added commodity trading to our product mix during the year. We buy and sell commodity products such as sesame, sulfur, asphalt and circuit modular units. Our trading business recorded revenue of $275.4 million, which represents 77.0% of total sales. We booked revenue of $15.4 million from our cryptocurrency mining business from a partial year of operation. We started generating revenue from our mining pools in February 2021 and mined 174.28 units of BTC and 2,770.09 units of ETH by the end of the second quarter. In July 2021, due to the Chinese government's ban on certain types of cryptocurrency mining activities, we shut down our mining operations in China and began transitioning our crypto mining operations to the U.S. The Company launched its U.S. mining operations in Wisconsin this April.

Operating Costs

Operating costs increased to $336.8 million for the period ended December 31, 2021, compared to operating costs of $37.3 million for the period ended December 31, 2020. The increase in operating costs and expenses was driven primarily from the growth in our commodity trading inventory and data acquisition costs for our insurance marketing businesses and a share-based compensation plan. We also saw an increase from depreciation on cryptocurrency mining equipment, consulting and legal fees. 

General and Administrative Expenses

General and administrative expenses were $62.4 million for the period ended December 31, 2021, representing an increase of approximately 21.5 times compared to general and administrative expenses of $2.9 million for the period ended December 31, 2020. The increase in general and administrative expenses was mainly associated with employee and management's share-based compensation expenses of $33.5 million, professional and consultancy fee of $17.1 million, wages & salary expenses of $5.3 million, $1.2 million of bad debt expense and significant increases in legal expenses related to class action lawsuit against the Company and its management. 

GAAP Operating Loss and EPS

Our net loss for the period ended December 31, 2021 was $43.9 million according to GAAP, compared to profit of $4.9 million for the period ended December 31, 2020.  The loss resulted from increased expenses related to increased operating expenses, legal and consulting fees and share-based compensation expenses. Gross margin dropped to 6% in FY 2021 from 26% in the prior year driven by the significant growth in the lower margin commodity trading business, increased operating expenses and the interruption of crypto-mining operations.

GAAP EPS Basic was $(0.020) per share for the period ended December 31, 2021, as compared to $0.0135 per share for the period ended December 31, 2020.

GAAP EPS Diluted was $(0.018) per share for the period ended December 31, 2021, as compared to $0.0090 per share for the period ended December 31, 2020.

Income Tax

The company incurred $0.74 million in corporate income tax for the current period.

Balance Sheet and Cash Flow

As of December 31, 2021, the Company had cash and cash equivalents of $338.0 million, compared to $3.7 million for the period ended December 31, 2020.  The net increase in cash flow was mainly due to its financing activity through registered direct offerings. The Company believes that its cash resources are adequate to fund its current operations and short-term growth initiatives. The Company, through its subsidiary, SOS International Trading Co., Ltd. purchased commodity for trading inventory of $96.1 million.

Cash Flow Used For Investment Activities

The Company, through its subsidiaries, SOS Information Technology New York Inc. and China SOS Ltd., acquired BTC and ETH mining equipment for an aggregate cost of approximately $31 0 million

Financing Activities

The Company received aggregate net proceeds of US$585.8 million from registered direct offerings during the year. 

Audited condensed consolidated statement of cash flow
(US$ thousands, except share data and per share data, or otherwise noted)
			31-Dec-20		31-Dec-21
Cash flows from operating activities:			US$"000"		US$"000"
Net (loss)			4,404		(49,251)
Adjustments:
Depreciation and amortization			2		5,203
Share-based compensation			506		33,537
Depreciation of ROU					843
Accretion of finance leases					152
Allowance for doubtful accounts-accounts receivable			1		963
Allowance for doubtful accounts-Other receivable			158		269
Impairment of cryptocurrencies					925
Loss on acquisition			5,679		-
Income from disposal of discountined operations			(63)
Inventory			-		(96,071)
Changes in operating assets and liabilities:
Accounts receivables			(2,065)		(15,894)
Ohter receivables			(36,019)		(125,861)
Amount due from related parties			(2,871)		(4,146)
crptocurrencies			-		(14,502)
Accrued liabilities			-		19,815
Accounts payable			(11,940)		28,409
Tax payable			292		(8,371)
Other payables			1,484		5,003
Amount due to related parties			(3,666)		868
Contract liability			546		(454)
Lease liabilities
Net cash （used in）in generating from operating activities:			(43,552)		(218,563)
Cash flows from investing activities:
Purchase of property, equipment and software			(501)		(33,034)
Investment in equity			-		0
Disposition of assets			3,500		-
Net cash (used in)generated from investing activities			2,999		(33,034)
Cash flows from financing activities:
Repayment of principle portion of  lease liabilities					(1,764.00)
Proceeds from share issuance, net of issuance costs			3,578		585,839
Proceeds from private equity placement,net of issuance costs			39,973		-
Net cash generated from(used in) financing activities			43,551		584,075
Effect of exchange rates on cash			683		1,825
Net increase/(decrease), effect of exchange rate changes on cash and cash equivalent			3,680		334,303
Cash and cash equivalent at beginning of the period			42		3,722
Cash and cash equivalent at end of the period			3,722		338,026

 

Yandai Wang, the CEO comments that "In the past year, we have provided technical services through artificial intelligence and blockchain technologies by leveraging data-driven marketing, digital based commodity trading, digital supercomputer and emergency rescue technology. Through this we were able to realize revenue of $357.8 million as of December 31,2021, which represents 661% growth. over 2020.

In our data marketing business, we rely on artificial intelligence technology & comprehensive intelligent screening to acquire customers more effectively; we also utilize blockchain technology to solve the information security problems to provide customers with one-stop benchmark customer acquisition services; In our digital-based commodity trading segmentt, we make full use of the accurate traceability of blockchain technology, product quality assurance, smart contracts, Intelligent trading matching technology to provides a one-stop trust trading platform for customer trading; in emergency rescue, we team up with some industry experts to invest and design emergency rescue watches, Emergency rescue amphibious rescue boat.

We believe we are well-positioned to grow our business in all segments. Within China we are focused on data-driven insurance marketing, and commodity trading. In U.S. we have launched our supercomputing hosting center in Wisconsin.

Mainland China, as one of the world's largest markets, demands huge amount of raw material products and food commodities to sustain its long -term growth. In 2020 we established our commodity trading business to bridge supply and demand by providing seamless trading exchange through our block-chain technology and plat-form. We started from green field and are proud to report that our commodity trading business generated revenue of $275million during the twelve -month period ended December 31,2021.

Our aspiration is to expand beyond China especially in North America. We are in the process of building a leading supercomputer center in North America which will provide customers with cryptocurrency mining capacity & hosting service.

One of the tools we used to accelerate this goal is the innovative mobile container data center. We believe it will improve user experience and be attractive to small to medium size customers. Our plans continue to proceed as we have secured a renewable energy supply of 25 MW at its facility in Price County Wisconsin, which is expected to be increased to 37MW.

We look forward to continued growth and expansion in both China and U.S.

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 maybe expand into cryptocurrency security and insurance in the future Since April 2021, we launched commodity trading via our subsidiary SOS International Trading Co. Ltd, The core infrastructure of SOS' marketing data, technology and solutions to insurance and emergency rescue services is built on big data, blockchain-based technology, cloud computing, AI, satellite, and 5G network, etc. SOS has created a cloud "software as a service (SaaS)" platform for emergency rescue services, with three major product categories: basic cloud, cooperative cloud, and information cloud. This system provides innovative marketing solutions to clients such as insurance companies, financial institutions, medical institutions, healthcare providers, auto manufacturers, security providers, senior living assistance providers, and other service providers in the emergency rescue services industry. 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

FAQ

What was SOS Limited's revenue growth in 2021?

SOS Limited reported a revenue growth of 612%, reaching $357.8 million for the fiscal year 2021.

What contributed to the revenue increase for SOS Limited?

The revenue increase was primarily due to expansion in crypto-mining and commodity trading operations.

What was the net loss reported by SOS Limited for 2021?

SOS Limited reported a net loss of $43.9 million for the fiscal year ending December 31, 2021.

How much revenue did SOS Limited generate from commodity trading?

SOS Limited generated $275.4 million in revenue from commodity trading, which accounted for 77% of total sales.

Where has SOS Limited transitioned its mining operations?

SOS Limited has transitioned its mining operations from China to the U.S., launching a facility in Wisconsin.