SOS Limited Reports 2023 Financial Results
PR Newswire
NEW YORK, May 15, 2024
-- Operating loss of $4.8 million compared to $215 million in 2022
-- Revenues declined from $260.0 million to $92.4 million driven by a
decline in commodity revenues due to slowdown in China economic activity.
-- Crypto-Mining revenue up over 50X
-- Cash and cash equivalents of approximately $280 million
NEW YORK, May 15, 2024 /PRNewswire/ -- SOS Limited ("SOS" or the "Company") (NYSE: SOS) today reported its full year financial results for the twelve-months ended December 31, 2023.
Results of operations
Revenue
The company reported a notable decline in revenue from 2022 to 2023, with revenues dropping from $260.0 million to $92.4 million. This downturn was driven by the recession in the Chinese economy, which led to weakened demand in domestic markets.
FY 2023 FY 2022
------------------- -------------------
Amount Percentage Amount Percentage
------- ---------- ------- ----------
Commodity trading 68,456 74% 255,668 98.4%
Cryptocurrency
mining 18,898 20% 329 0.1%
Hosting service 2,365 2.6% - -
Other 2,746 3% 4,113 1.5%
Total 92,465 100% 260,110 100%
As of December 31, 2023, SOS has centered its operations around four primary product lines and services: commodity trading, cryptocurrency mining, hosting services and others. These product lines constitute 74.1%, 20.4%, 2.6%, and 3.0% of the total revenue, respectively. The "others" category encompasses the legacy business of SaaS, call centers, and insurance marketing services for uncompleted contracts. Commodity trading experienced a significant slowdown in 2023, from $255.7 million in 2022 to $68.5 million. This decline can be attributed to mainland China's ongoing sluggish demand in both the food processing and individual consumer markets.
The Company commenced generating revenue from cryptocurrency mining in February 2021. As of December 31, 2023, it had successfully mined an aggregate of 675.65 units of BTC and 2,949.79 units of ETH from its mining pools. Revenue from cryptocurrency mining experienced a significant surge, soaring from $0.33 million in 2022 to $18.9 million in 2023. This surge can be attributed to the substantial increase in the price of BTC, which rose from $16,477.60 per coin on January 1, 2023, to $44,786.80 per coin on December 31, 2023, over the course of the year. The Company benefited greatly from this price increase, leading to incremental profitability. The Company had suspended most of its ETH production by December 31, 2022, but has since maintained operation of a few ETH machines.
Costs of revenue
Revenue costs decreased from $270.60 million in 2022 to $78.2 million in 2023, constituting a reduction of $192.4 million. This includes the cost of goods sold for commodity trading, data acquisition costs for the power supply, salaries & benefits for on-site staff, software amortization & hardware depreciation for cryptocurrency mining rigs & hosting PP&E.
Operating expenses
The following table presents our operating expense by source and proportion for the periods indicated (in thousands, except percentages):
FY 2023 FY 2022
----------- -----------
Selling 672 4% 8,556 4%
General and
administrative 11,058 58% 180,704 89%
Share-based compensation 7,264 38% 14,714 7%
------ -------
18,994 203,974
Operating expenses decreased from $204.0 million in 2022 to $18.9 million in 2023, representing a year-on-year reduction of $185.0 million.
Selling expenses decreased from $8.6 million in 2022 to $0.7 million in 2023, representing a decrease of $7.9 million mainly attributable to decrease in customs duties, service fee of customs clearance and warehouse rental as the Company bough less goods & service as a result of decrease in sales & revenue.
General and administrative expenses decreased from $180.7 million in 2022 to $11.1 million in 2023, or 87.9% ($158.9M) attributable to the decrease of crypto mining rigs impairment loss, miner-related inventory write-down, bad debt provision for other receivables & prepayment; this write-down was $3.97 million in total in 2023. Initially the Company's accounting policy is to amortize mining property, plant and equipment (PP&E) over its useful life of five years, then the PP&E and related inventory is required to be written down to align with its peers in block-chain industry, to conform with the common practice of amortizing the PP&E over its useful life of 2-3 years. Share-based compensation expenses also decreased from $14.7 million in 2022 to $7.3 million in 2023.
GAAP Operating Loss and EPS
The Company had operating loss of $4.8 million for the year of 2023, compared to an operating loss of $214.5 million for the year of 2022; the Company has far less G&A expenses e.g. write-down for inventory, impairment loss for miners and bad debt provision for other receivables and prepayments.
GAAP EPS Basic (Diluted EPS is the same as EPS Basic was $(0.0005) per share for the period ended December 31, 2023, as compared to $(0.07) per share for the period ended December 31, 2022.
Income Tax
The company incurred $0.6 million in corporate income tax mainly from mainland Chinese business of commodity trading segments for the current period compared to $0.5 million last year.
Balance Sheet and Cash Flow
As of December 31, 2023, we had cash and cash equivalents of approximately $279.2 million, compared to $259.5 million for the period ended December 31, 2022. The net decrease in cash flow was mainly due to the decrease in operating activity, partially offset by financing activities through registered direct offerings. The Company believes that its cash resources are adequate to fund its current operations and short-term growth initiatives.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(US$ thousands, except share data
and per share data, or otherwise
noted)
Year ended Year ended
December 31, December 31,
2023 2022
-------------- --------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (3,651) $ (229,447)
Net loss from continuing operation (3,651) (229,186)
Net loss from discontinued operation (3,597) (261)
Adjustments for:
Depreciation of property, plant and
equipment 4,975 7,960
Depreciation of right-of-use asset 800 693
Share-based compensation 7,264 14,714
Accretion of finance leases 32 75
Allowance for doubtful accounts -
accounts receivable 451 $(500.SI)$
Allowance for doubtful accounts -
other receivables 228 170,842
Impairment of intangible assets 970 8,425
Impairment of mining equipment 4,455 25,043
Inventory impairment 194 16,786
---------- ----------
Adjustments, total 19,369 244,038
Changes in operating assets and
liabilities:
Accounts receivable 1,172 17,911
Investment securities (307) -
Other receivables (25,194) (60,083)
Amount due from related parties 29,456 (53,732)
Inventories 13,204 (5,267)
Intangible assets (15,960) (329)
Accrued liabilities (5,193) 1,076
Tax (recoverable)/payable 1,247 3,650
Accounts payable (94) 1,458
Other payables (4,795) 5,760
Amount due to related parties 998 607
Lease liabilities $(544.SI)$ 921
---------- ----------
Net cash generated from/(used in)
operating activities from
continuing operations 9,708 (73,176)
Net cash generating from
discontinued operating activities - 261
---------- ----------
Net cash generated from/(used in)
operating activities 9,708 (72,915)
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant and
equipment - (16,030)
Net cash used in investing
activities from continuing
operations - (16,030)
Net cash used in investing
activities from discontinued
operation - -
---------- ----------
Net cash (used in)/generated
from investing activities - (16,030)
---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of principle portion of
lease liabilities (288) (768)
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