SOS Limited Reports Financial Results for the Fiscal Year Ended December 31, 2022

NEW YORK, May 18, 2023

https://service.sosyun.com/sos_en/investorRoom.html

The Company will provide a hard copy of its annual report containing the audited consolidated financial statements, free of charge, to its shareholders and ADS holders upon request. Requests should be directed to the Company at ir@sosyun.com

Results of operations

Revenue 

The revenue decreased from $290.9 million in 2021 to $260.1 million in 2022, representing a decrease of 11.8% which was primarily due to a decline in the commodity trading business segment's turnover volume. This decrease was negatively impacted by recurring pandemic outbreaks, prompting the Chinese local and central governments to enforce stringent control measures, including city-wide shutdowns, to prevent further spread. These measures severely restricted people's mobility and business operations both within China nationally and out of the country globally. The following table presents our revenue by source and by proportion for the periods indicated (in thousands, except percentages):

	FY 2022 ARIVA.DE Börsen-Geflüster Kurse SOS Ltd. ADR 1,06 € 0,00%			FY 2021
	Amount			Amount
Revenues	$"000"	Percentage		$"000"	Percentage
Continuing operations
Commodity trading	255,668	98.3 %		275,363	94.6 %
Cryptocurrency mining	329	0.1 %		15,427	5.3 %
Other	4113	1.6 %		159	0.1 %
Total	260,110	100.0 %		290,949	100.0 %

As of December 31, 2022, SOS has focused on four product lines and services, including commodity trading, insurance marketing, cryptocurrency mining and others. Insurance marketing was re-classified as discontinued operation for the year ended December 31, 2022 and 2021, respectively and was disposed of on November 2, 2022. The other three product lines, commodity trading, cryptocurrency and others constitute 98.3%, 0.1% and 1.6% of the total revenue, respectively. Commodity trading slowed down by 7.2% from $275.4 million to $255.7 million as it was affected by the pandemic control measures.

The Company began generating revenue from cryptocurrency mining in February 2021 and as of December 31, 2022, has mined an aggregate of 174.28 units of BTC and 2,949.79 units of ETH from its mining pools. Revenue from cyptocurreny mining largely decreased from $15.4 million to $0.3 million As the price of BTC fluctuated from $47,687 on January 1, 2022 to $16,548 on December 31, 2022 per coin over the year, its profitability diminished as the price further decreased. Consequently, the Company temporarily suspended its production line, maintaining only a few ETH machines in operation online. Others include legacy business of SaaS, call centers and promotional service.

Costs of revenue

Revenue costs increased from $227.9 million in 2021 to $270.6 million in 2022, an increase of $42.7 million. It includes the cost of goods sold for commodity trading, data acquisition costs for the insurance marketing business, maintenance expenses and power supply, salaries and benefits for on-site staffs, software amortization & hardware depreciation for cryptocurrency mining rigs.

Operating expenses

The following table presents our operating expense by source and by proportion for the periods indicated (in thousands, except percentages):

Operating expenses increased from $56.0 million in 2021 to $204.0 million in 2022, representing a year-on-year increase of $148.0 million.

Selling expenses increased from $0.7 million in 2021 to $8.6 million in 2022, representing an increase of $7.9 million, mainly attributable to customs duties, service fee of customs clearance and warehouse rental as the Company bought inventory from vendors in mainland China in the year of 2021, turning to import goods from oustside China which incurred additional costs including import duties and flight charges since early 2022.

General and administrative expenses increased from $21.8 million in 2021 to $180.7 million in 2022, representing a year-on-year increase of $158.9 million, mainly attributable to the increase of crypto miners' impairment loss, miner-related inventory writedown, bad debt provision for other receivables and prepayment of $151.8 million. 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 decreased from $33.5 million in 2021 to $14.7 million in 2022, representing a decrease of $18.8 million mainly due to the slump of global capital market, which lowered the Company's share price over the year; generally lower share price resulted in lower share-based compensation expenses.

GAAP Operating Loss and EPS

The Company had operating loss of $204.4 million for the year of 2022, compared to an operating loss of $41.4 million for the year of 2021 due to the heavy writedown 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 $(0.07) per share for the period ended December 31, 2022, as compared to $(0.02) per share for the period ended December 31, 2021.

Income Tax

The company incurred $0.5 million in corporate income tax mainly from mainland Chinese business of data mining and commodity trading segments for the current period compared to $0.77 million last year.

Balance Sheet and Cash Flow

As of December 31, 2022, the Company had cash and cash equivalents of $264.4 million, compared to $338.0 million for the period ended December 31, 2021. The net decrease in cash flow was mainly due to its 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.

Audited condensed consolidated statement of cash flow
(US$ thousands, except share data and per share data, or otherwise noted)
			31-Dec-21		31-Dec-22
			US$"000"		US$"000"
Net cash （used in）in generating from operating activities:			(218,563)		(73,176)
Net cash （used in）in generating from discountinued operating activities:					261
Cash flows from investing activities:
Purchase of property, equipment and software			(33,034)		(16,030)
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