SOS Limited ("SOS" or the "Company") (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.