Annual Report for Fiscal Year Ending December 31, 2024 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

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 in the future. Since April 2021, we launched a commodities trading business via our subsidiaries SOS International Trading Co. and Weigou International Trading Co Ltd. We facilitate trading of commodities including but not limited to mineral resin, soy bean, wheat, sesame, liquid sulfur and latex.

The Company provides substantially all of its services to large businesses and Small and medium-sized enterprises ("SMEs") in China via the former VIE and its subsidiaries, due to PRC legal restrictions of foreign ownership in certain sectors. Substantially all of the Company's revenues, costs and net income in China are directly or indirectly generated through the former VIE and its subsidiaries. The Company's indirectly-owned subsidiaries had the VIE Agreements with the former VIE and legal shareholders of the former VIE to allow the transfer of economic benefits from the former VIE to the Company and to direct the activities of the VIE.

Total assets and liabilities presented on the Company's consolidated balance sheets and revenue, expense, net income presented on consolidated statement of operations and comprehensive income as well as the cash flow from operating, investing and financing activities presented on the consolidated statement of cash flows are substantially the financial position, operation and cash flow of the Company's former VIE and the former VIE's subsidiaries. As of December 31, 2024, the former VIE and its subsidiaries accounted for an aggregate of 59.9% and 30.2% of our total assets and total liabilities, respectively. As of December 31, 2023, the former VIE and its subsidiaries accounted for an aggregate of 68.2% and 27.7% of our total assets and total liabilities, respectively. As of December 31, 2024, 2023 and 2022 $11.9 million and $47.4 million, $55.8 million of cash and cash equivalents were denominated in RMB, respectively. The following table sets forth the assets, liabilities, results of operations and changes in cash, cash equivalents the former VIE and its subsidiaries taken as a whole, which were included in the Company's consolidated balance sheets and statements of comprehensive income and statements of cash flows with intercompany transactions eliminated.

The following financial information of SOS, China SOS, Qingdao SOS Investment (one of WFOEs), VIE Subsidiaries outside China and Subsidiaries outside China was recorded in the accompanying consolidated financial statements:

Condensed Consolidated Balance Sheet

(US$ thousands, except share data and per share data, or otherwise noted)

		31-Dec-24
																										SOS Ltd.																																				Inter-				Subsidiaries				Subsidiaries
		SOS Ltd.				China SOS Ltd.				WOFE				VIE				Subsidiaries Outside China				Subsidiaries Inside China				Adjustement (a)				Adjustement (b)				Adjustement (c)				Adjustement (d)				Adjustement (e)				Adjustement (f)				China SOS Ltd. Adjustment				WOFE Adjustment				VIE Adjustment				company elimination (g)				Outside China Adjustment				Inside China Adjustment				SOS Ltd. Consolidated total
		US$				US$				US$				US$				$US				US$				US$								US$																US$				$US				US$				US$								US$				US$
ASSETS
Current assets:
Cash and cash equivalents			19,885				157,252				825								47,593				11,929																																																				237,484
Trading Financial Assets			200																																																																								200
Accounts receivable,net																			256				2,374																																																				2,630
Other receivables - net			5,958				973				-								-700				287,068																												-143,018												-												150,281
Amount due from related parties			-				900				-								8,100				837																																																				9,837
Inter-company receivable			152,575				21,737				278,380								(168,299	)			(318,614	)			34,221																																																-
Inventory																							33,011																																																				33,011
Intangible assets			-				6,289				-								23,584				-																																																				29,873
Tax recoverable			15				-				-												1,808				-																																																1,823
Total current assets			178,633				187,151				279,205				-				(89,466	)			18,413				34,221				-				-				-				-				-				(143,018	)			-				-																465,139
Non-current assets:
Operating lease, right-of-use assets																			-																																																								-
Property equipment and software,net			-				1,025				-								16,079				39																																																				17,143
Goodwill																							72																																																				72
Long-term investments																																																																											-
Investment in subsidiaries outside China			-																								-																-																																-
Investment in WFOE							314,335				-314,335																																																																-
Investment in China SOS							-64,794												64,794																																																								-
Prepaid expense																																																																											-
Total non-current assets			-				250,566				-314,335				-				80,873				111				-				-				-				-				-				-				-				-				-				-				-				-				17,215
Total assets			178,633				437,717				(35,130	)			-				(8,593	)			18,524				34,221				-				-				-				-				-				(143,018	)			-				-				-				-				-				482,354
LIABILITIES AND EQUITY
Current liabilities:
Liabilities:
Accounts payable			-				11,359				-								-				1,152																																																				12,511
Amount due to related parties			15				-				-								19				608																-																																-				642
Operating lease liability-current																			-																																																								-
Advance from customers																			-				21,498																																																				21,498
Tax payable			-				-												-				169																																																				169
Other payables			1,241				153,976				-								1,460				9,143																												-153,976												-												11,844
Total current liabilities			1,256				165,335				-				-				1,479				32,570				-				-				-				-				-				-				(153,976	)			-				-				-				-				-				46,664
Operating lease liabilty-noncurrent																			-																																																								-
Total non-current liability			-				-				-				-				-				-				-				-				-				-												-				-				-				-				-				-				-
Total liabilities			1,256				165,335				-				-				1,479				32,570				-				-				-				-				-								(153,976	)			-				-				-				-				-				46,664
Non-controlling interest																			(6,235	)			-																																																				(6,235	)
Shareholder's equity
Paid up capital			64,849				387,283				-								70,951				(520,905	)			13																								-																								2,191
Additional paid-in capital			200,684																				521,542				39,165																				-				-																								761,391
Statutory Reserve																							161																																																				161
Retained earnings			(88,156	)			(114,901	)			-								(74,788	)			(12,416	)																							-								-																				(390,261	)
Accumulated other comprehensive income (loss)											(35,130	)							-				(2,428	)			(4,957	)																							10,958																								(31,557	)
Total Shareholders' equity			177,377				272,382				(35,130	)			-				(3,837	)			(14,046	)			34,221				-				-				-				-				-				10,958				-				-				-				-				-				441,925
Total Liabilities and shareholders' equity			178,633				437,717				-35,130				-				(8,593	)			18,524				34,221				-				-				-				-				-				-143,018				-				-				-				-				-				482,354

Condensed Consolidated Balance Sheet

(US$ thousands, except share data and per share data, or otherwise noted)

		31-Dec-23
						China												Subsidiaries				Subsidiaries				SOS Ltd.																								China SOS
		SOS Ltd.				SOS Ltd.				WOFE				VIE				Outside China				Inside China				Adjustment (a)				Adjustment (b)				Adjustment (c)				Adjustment (d)				Adjustment (e)				Adjustment (f)				Ltd. Adjustment				WOFE Adjustment				VIE Adjustment				Consolidated total
		US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$
ASSETS
Current assets:
Cash and cash equivalents			19,447				156,811				859				-				54,990				47,070				-				-				-				-				-				-				-				-				-				279,177
Investment securities			-				-				-				-				-				307				-				-				-				-				-				-				-				-				-				307
Accounts receivable, net			-				-				-				-				231				578				-				-				-				-				-				-				-				-				-				809
Other receivables - net			7,203				490				-				-				2,270				217,042				-				-				-				-				-				-				-147,035				-				-				79,970
Amount due from related parties			-				900				-				-				8,100				30,582				-				-				-				-				-				-				-				-				-				39,582
Inter-company receivable			128,413				22,213				286,198								(146,707	)			(325,302	)			35,185				-				-				-				-				-				-				-				-				-
Inventory			-				-				-												32,875				-				-				-				-				-				-				-				-				-				32,875
Intangible assets			-				6,289				-								15,107				-																																								21,396
Tax recoverable			16				-				-								1				1,262				-				-				-				-				-				-				-				-				-				1,279
Total current assets			155,079				186,703				287,057				-				(66,008	)			4,414				35,185				-				-				-				-				-				(147,035	)			-				-				455,395
Non-current assets:			-				-				-				-				-				-				-				-				-				-				-				-				-				-				-				-
Operating lease, right-of-use assets			-				-				-				-				377				-				-				-				-				-				-				-				-				-				-				377
Property equipment and software, net			-				3,425				-				-				24,557				66				-				-				-				-				-				-				-				-				-				28,048
Goodwill			-				-				-				-				-				72				-				-				-				-				-				-				-				-				-				72
Long-term investments
Investment in subsidiaries outside China			-				-				-				-				-				-				-				-				-				-				-				-				-				-				-				-
Investment in WFOE			-				314,335				314,335				-				-				-				-				-				-				-				-				-				-				-				-				-
Investment in China SOS			-				-64,794				-				-				64,794				-				-				-				-				-				-				-				-				-				-				-
Prepaid expense																																																															-
Total non-current assets			-				252,966				-314,335				-				89,728				138				-				-				-				-				-				-				-				-				-				28,497
Total assets			155,079				439,669				(27,278	)			-				23,720				4,552				35,185				-				-				-				-				-				(147,035	)			-				-				483,892
LIABILITIES AND EQUITY
Current liabilities:
Liabilities:
Accounts payable			-				11,359				-				-				24,327				1,054				-				-				-				-				-				-				-				-				-				36,740
Amount due to related parties			1,015				-				-				-				19				607				-				-				-				-				-				-				-				-				-				1,641
Operating lease liability-current			-				-				-				-				377				-				-				-				-				-				-				-				-				-				-				377
Advance from customers			-				-				-				-				-				15,192				-				-				-				-				-				-				-				-				-				15,192
Tax payable			-				-				-				-				2				75				-				-				-				-				-				-				-				-				-				77
Other payables			241				153,976				-								7,161				90				-				-				-				-				-				-				153,976				-				-				7,492
Total current liabilities			1,256				165,335				-				-				31,886				17,018				-				-				-				-				-				-				(153,976	)			-				-				61,519
Operating lease liability-noncurrent			-				-				-				-				-				-				-				-				-				-				-				-				-				-				-				-
Total non-current liability			-				-				-				-				-				-				-				-				-				-				-				-				-				-				-				-
Total liabilities			1,256				165,335				-				-				31,886				17,018				-				-				-				-				-								(153,976	)			-				-				61,519
Non-controlling interest			-				-				-				-				(3,619	)			5				-				-				-				-				-				-				-				-				-				(3,614	)
Shareholder's equity
Paid up capital			54,301				387,283				-				-				70,951				(511,886	)			16				-				-				-				-				-				-				-				-				665
Additional paid-in capital			177,227				-				-				-				-				513,953				39,165				-				-				-				-				-				-				-				-				730,345
Statutory Reserve			-				-				-				-				-				161				-				-				-				-				-				-				-				-				-				161
Retained earnings			(77,705	)			(112,949	)			-								(75,498	)			(10,520	)			-				-				-				-				-				-				-				-				-				(276,672	)
Accumulated other comprehensive income (loss)			-				-				(27,278	)			-				-				(4,179	)			(3,996	)			-				-				-				-				-				6,941				-				-				(28,512	)
Total Shareholders' equity			153,823				274,334				(27,278	)			-				(4,547	)			(12,471	)			35,185				-				-				-				-				-				6,941				-				-				425,987
Total Liabilities and shareholders' equity			155,079				439,669				-27,278				-				23,720				4,552				35,185				-				-				-				-				-				-147,035				-				-				483,892

Condensed Consolidated Balance Sheet

(US$ thousands, except share data and per share data, or otherwise noted)

		31-Dec-22
																																										Inter-								Subsidiaries
		SOS Ltd.				China SOS Ltd.				WOFE				VIE				Subsidiaries Outside China				Subsidiaries Inside China				SOS Ltd. Adjustment (a)				China SOS Ltd. Adjustment				WOFE Adjustment				VIE Adjustment				company elimination (g)				Subsidiaries Outside China Adjustment				Inside China Adjustment				SOS Ltd. Consolidated total
		US$				US$				US$				US$				US$				US$				US$				US$				US$				US$				US$								US$				US$
ASSETS
Current assets:
Cash and cash equivalents			7,193				154,568				883				-				41,049				55,799				-				-				-				-				-				-				-				259,492
Accounts receivable, net			-				-				-				-				16				2,416				-				-				-				-				-				-				-				2,432
Other receivables - net			(1,659	)			(90,417	)			-				-				(39,345	)			10,819				-				-				-				-				(902	)			-				-				(121,504	)
Amount due from related parties			17,000				900				-				-				8,100				43,038				-				-				-				-				-				-				-				69,038
Inter-company receivable			151,010				24,989				294,670				-				(135,864	)			(334,805	)			-				-				-				-				-				-				-				-
Inventory			-				-				-				-				-				46,273				-				-				-				-				-				-				-				46,273
Tax recoverable			16				-				-				-				(7	)			2,534				-				-				-				-				-				-				-				2,543
Total current assets			173,560				90,040				295,553				-				(126,051	)			(173,926	)			-				-				-				-				(902	)			-				-				258,274
Non-current assets:
Operating lease, right-of-use assets			-				-				-				-				921				-				-				-				-				-				-				-				-				921
Property equipment and software, net			-				4,462				-				-				7,999				92				-				-				-				-				-				-				-				12,553
Goodwill			72				-				-				-				-				-				-				-				-				-				-				-				-				72
Intangible assets			-				6,289				-				-				117				-				-				-				-				-				-				-				-				6,406
Long-term investments			(19	)			-				-				-				-				19				-				-				-				-				-				-				-				-
Investment in subsidiaries outside China			-				-				-				-				-				-				-				-				-				-				-				-				-				-
Investment in WFOE			(314,335	)			314,335				-				-				-				-				-				-				-				-				-				-				-				-
Investment in China SOS			(64,794	)			-				-				-				64,794				-				-				-				-				-				-				-				-				-
Prepaid expense																																																							-
Advance payments			6,400				90,417				11				-				41,445				38,235				-				-				-				-				-				-				-				176,508
Total non-current assets			(372,676	)			415,503				11				-				115,276				38,346				-				-				-				-				-				-				-				196,460
Total assets			(199,116	)			505,543				295,564				-				(10,775	)			(135,580	)			-				-				-				-				(902	)			-				-				454,734

Condensed Consolidated Balance Sheet

(US$ thousands, except share data and per share data, or otherwise noted)

		31-Dec-22
																																										Inter-				Subsidiaries				Subsidiaries
		SOS Ltd.				China SOS Ltd.				WOFE				VIE				Subsidiaries Outside China				Subsidiaries Inside China				SOS Ltd. Adjustment (a)				China SOS Ltd. Adjustment				WOFE Adjustment				VIE Adjustment				company elimination (g)				Outside China Adjustment				Inside China Adjustment				SOS Ltd. Consolidated total
		US$				US$				US$				$US$				US$				US$				US$				US$				US$				US$				US$								US$				US$
LIABILITIES AND EQUITY
Current liabilities:
Liabilities:
Accounts payable			-				11,359				-				-				406				1,069				-				-				-				-				-				-				-				12,834
Amount due to related parties			622				-				1				-				19				1				-				-				-				-				-				-				-				643
Operating lease liability-current			-				-				-				-				544				-				-				-				-				-				-				-				-				544
Advance from customers			-				-				-				-				-				20,385				-				-				-				-				-				-				-				20,385
Payroll payable			-				-				-				-				-				2				-				-				-				-				-				-				-				2
Tax payable			-				-				-				-				2				92				-				-				-				-				-				-				-				94
Other payables			241				153,976				-				-				6,693				(148,929	)			-				-				-				-				(902	)			-				-				11,079
Total current liabilities			863				165,335				1				-				7,664				(127,380	)			-				-				-				-				(902	)			-				-				45,581
Operating lease liabilty-noncurrent			-				-				-				-				377				-				-				-				-				-				-				-				-				377
Total non-current liability			-				-				-				-				377				-				-				-				-				-				-				-				-				377
Total liabilities			863				165,335				1				-				8,041				(127,380	)			-				-				-				-				(902	)			-				-				45,958
Non-controlling interest			-				-				-				-				(841	)			15				-				-				-				-				-				-				-				(826	)
Shareholder's equity
Paid up capital			(818,741	)			452,078				295,491								70,950				596				-				-				-				-				-				-				-				374
Additional paid-in capital			191,536				-				-				-				-				7				-				-				-				-				513,945								-				705,488
Statutory Reserve			513,945				-				-				-				-				59				-				-				-				-				(513,945	)											59
Retained earnings			(60,680	)			(111,870	)			73				-				(88,925	)			(11,518	)			-				-				-				-				-				-				-				(272,920	)
Accumulated other comprehensive income (loss)			(26,039	)			-				(1	)			-				-				2,641				-				-				-				-				-				-				-				(23,399	)
Total Shareholders' equity			(199,979	)			340,208				295,563				-				(17,975	)			(8,215	)			-				-				-				-				-				-				-				409,602
Total Liabilities and shareholders' equity			(199,116	)			505,543				295,564				-				(10,775	)			(135,580	)			-				-				-				-				(902	)			-				-				454,734

Notes

(a)	SOS placed private equity from a number of investors, SOSINT received it on behalf of SOS. This entry represents that SOS is to pick it up by increasing paid-up & additional paid-up capital by going through inter-company account;

(b)	This entry is to eliminate China SOS's investment in WFOE against WFOE's paid-up capital, additional paid-up capital and retained earning if any;

(c)	This entry is to eliminate SOS's investment in China SOS against China SOS's paid-up capital, additional paid-up capital and retained earning if any;

(d)	China SOS received F3 financing net of issuance expenses on behalf of SOS. This entry is to increase SOS's paid-up capital & additional paid-up capital by going through inter-company account to offset other receivables and other payable;

(e)	This entry is to re-classify paid-up capital to additional capital by Register of members reconciliation table and re-classify between retained earnings and additional paid-up capital;

(f)	This entry is to eliminate SOSNY's investment in China SOS against China SOS's paid-up capital, additional paid-up capital and retained earning if any;

(g)	This entry represents an inter-company elimination entry between SOS and SOSNY.

A. Operating Results

Revenue

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

		FY 2024								FY 2023								FY 2022
		Amount				Percentage				Amount				Percentage				Amount				Percentage
Commodity trading			214,340				92.6	%			68,409				74.0	%			255,586				98.3	%
Cryptocurrency Mining			9,258				4.0	%			18,898				20.4	%			329				0.1	%
Hosting service			6,506				2.8	%			2,365				2.6	%			-				-	%
Other			1,320				0.6	%			2,744				3.0	%			4,111				1.6	%
Total			231,424				100.0	%			92,416				100.0	%			260, 026				100.0	%

The company reported a significant year-over-year increase in commodity trading revenue, which soared to $214.3 million FY 2024, accounting for 92.6% of total revenue-up from 74.0% in FY 2023. This growth was fueled by robust domestic demand and the expansion of the company's product portfolio to include rubber and coal.

Conversely, cryptocurrency mining revenue declined to $9.3 million from $18.9 million in FY 2023. The dip was attributed to the temporary shutdown of the Texas mining facility for upgrades during the first half of 2024.

Revenue from other segments, primarily the legacy auto insurance business, continued to taper, reflecting $1.4 million decrease from $2.7 million in FY 2023 to $1.3 million in FY2024 -as the company progresses toward its full disposal, initiated in 2022.

As of December 31, 2024, SOS has focused on four product lines and services, including commodity trading, cryptocurrency mining, hosting service and others, constitute 92.6%, 4.0%, 2.8% and 0.6% of the total revenues, respectively.

The Chinese government's ban on certain types of cryptocurrency mining in mainland China at the end of June 2021 caused the Company to lose BTC and ETH production capacity. As a result of being unable to continue currency mining business in China, the Company began transitioning the crypto-mining business to Wisconsin, USA.

The Company bought and sold commodity products such as sesame, sulfur, rubber, mung bean, asphalt and circuit modular units. The company recognizes revenue when the product has been delivered, title to the good and risk associated with it has been transferred to the customer. Revenue generated from commodity trading amounts to $21.4 million during the year of 2024 representing 92.6% of the total sales.

Bitcoin Production

The following table presents our bitcoin mining activities for the year ended December 31, 2024.

		Number of bitcoins (1)				Amount (2)
Balance as of December 31, 2023			675.65			$	17,871,099
Receipt of BTC from mining services and investment income			127.12				9,257,897
Impairment of BTC			-				(781,003	)
Balance as of December 31, 2024			802.77				26,347,993

(1)	Includes bitcoins and bitcoin equivalents.

(2)

Receipt of digital assets from mining services are the product of the number of bitcoins received multiplied by the bitcoin price published on https://coinmarketcap.com/currencies/bitcoin/historical-data/, calculated on a daily basis. Sales of digital assets are the actual amount received from sales. No production was generated from BTC pool during the year of 2024.

The following table presents our Etherum mining activities for the year ended December 31, 2024.

		Number of Etherums (1)				Amount (2)
Balance as of December 31, 2023			2,949.79			$	3,525,001
Receipt of ETH from mining services and investment income			-				-
Impairment loss			-				-
Balance as of December 31, 2024			2,949.79				3,525,001

(1)	Includes etherums and etherums equivalents.

(2)

Receipt of digital assets from mining services are the product of the number of etherums received multiplied by the etherum price published on https://coinmarketcap.com/currencies/etherum/historical-data/, calculated on a daily basis. Sales of digital assets are the actual amount received from sales.

Realized gain on exchange of digital assets

We record digital assets at cost and any gains or losses from sales of digital assets are recorded as "Realized gain (loss) on exchange of "digital assets" in the consolidated statements of operations. For the year ended December 31, 2024, we did not record the realized gain on exchange of digital assets.

Cost of Revenues

Revenue costs decreased from $270.6 million in 2022 to $78.2 million in 2023, constituting a decrease of $192.4 million. Revenue costs increased from $78.2 million in 2023 to $224.4million in 2024, increase of $146.2 million. It includes the cost of goods sold for commodity trading, maintenance expenses and power supply, salaries & benefits for on-site staffs, software amortization and hardware depreciation for cryptocurrency mining rigs.

Operating Expenses

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

		FY 2024								FY 2023								FY 2022
Selling			2,774				10	%			672				4	%			8,556				4	%
General and administrative			18,136				63	%			11,058				58	%			180,704				89	%
Share-based compensation			7,735				27	%			7,264				38	%			14,714				7	%
			28,645								18,994								203,974

Operating expenses decreased from $204.0 million in 2022 to $19.0 million in 2023, representing a decrease of $185.0 million and increased to $28.6 million in 2024, representing a year-on-year increase of $9.6 million.

Selling expenses

Selling expenses were $2.8 million for 2024, compared to $0.7 million and $8.6 million, respectively, for 2023 and 2022.

The year-on-year increase for 2024 was $2.1 million, representing a year-on-year decrease of 300%. The increase mainly consisted of a $1.4 million increase in transportation expenses for coal.

The year-on-year decrease for 2023 was $7.9 million, representing a year-on-year decrease of 91.9%. The decrease mainly consisted of a $6.7 million decrease in advertising and promotional expenses.

General and administrative expenses

General and administrative expenses were $18.1 million for 2024, compared to $11.1 million and $180.7 million, respectively, for 2023 and 2022

In 2024, G&A expenses for the year-on-year basis increased by $7.1 million, reflecting an overall of 64% increase, mainly attributable to the increase in depreciation of the Company's mining rigs of $5.9 million.

The year-on-year decrease for 2023 was $169.6 million, representing a year-on-year decrease of 93.9%. The decrease mainly attributable to $148.6 million decrease in bad debt provision for other receivables and prepayment.

Share-based compensation expenses

Share-based compensation expenses increased from $7.3 million in 2023 to $7.7 million in 2024, representing a increase of $0.4 million mainly attributable to issuance of S-8 of 52,000,000 common shares, which is a part of salaries of employee and management personnel.

Operating Loss

The Company had an operating loss of $21.6 million for 2024, compared to an operating loss of $4.8 million and an operating loss of $214.5 million, respectively, for 2023 and 2022.

Other Income / (Expense)

Other expense was $5.6 million for 2024, compared to $1.0 million and $15.1 million, respectively, for 2023 and 2022.

Income Tax Expense

The company incurred $0.2 million in corporate income tax mainly from mainland Chinese business of data mining and commodity trading segments for the current period compared to $0.6 million last year.

Net Loss

As a result of the foregoing, we had net loss from continuing operations of $16.2 million and $6.4 million for 2024 and 2023, respectively, compared to a net loss of $230.5 million, for 2022.

We had net income from discontinued operations of $0.3 million for 2022.

B. Liquidity and Capital Resources

Our principal sources of liquidity are cash and cash equivalents and cash flows generated from our operations.

As of December 31, 2024, we had cash and cash equivalents of approximately $239.5 million, compared to $279.2 million for the period ended December 31, 2023. The net decrease in cash flow was mainly due to decrease in operating cash inflow generated from decrease in gross margin of commodity trading revenue.

The Company believes that its cash resources are adequate to fund its current operations and short-term growth initiatives, current liquidity and capital resources are sufficient to meet anticipated working capital needs (net cash used in operating activities), commitments, capital expenditures and for at least the next twelve months. The Company may, however, require additional cash resources due to changes in business conditions and other future developments, or changes in general economic conditions.

Cash Flows and Working Capital

		Year ended December 31,				Year ended December 31				Year ended December 31,
		2024				2023				2022
Net cash (used in)/generated from operating activities			(63,558	)			9,708				(72,915	)
Net cash used in investing activities			-				-				(16,030	)
Net cash generated from financing activities			24,550				17,596				34,695
EFFECT OF EXCHANGE RATES ON CASH			(2,685	)			(7,619	)			(24,284	)

Net Cash Provided by/(Used in) Operating Activities

The Years Ended December 31, 2024 and 2023

Net cash generated from operating activities was $9.7 million for the year ended December 31, 2023, which decreased to $63.6 million which is used in 2024. The decrease was primarily due to the following major changes in our working capital and non-cash items:

	●	A cash outflow of $5.3 million from change in inventory for the year ended December 31, 2024, compared with a cash inflow of $13.2 million for the previous year.
	●	A cash outflow of $69.3 million from changes in other receivables for the year ended December 31, 2024, compared with a cash outflow of $25.2 million for the previous year.
	●	A cash outflow of $2.0 million in accounts receivable for the year ended December 31, 2024, compared with a cash inflow of $1.2 million for the previous year.

The Years Ended December 31, 2023 and 2022

Net cash used in operating activities was $72.9 million for the year ended December 31, 2022, which increased to positive $9.7 million in 2023. The increase was primarily due to the following major changes in our working capital and non-cash items:

	●	A cash inflow of $13.0 million from change in inventory for the year ended December 31, 2023, compared with a cash outflow of $5.3 million for the previous year.
	●	A cash outflow of $25.2 million from changes in other receivables for the year ended December 31, 2023, compared with a cash outflow of $60.1 million for the previous year.
	●	A cash inflow of $29.5 million in amount due from related parties for the year ended December 31, 2023, compared with a cash outflow of $53.7 million for the previous year.

Net Cash Used in Investing Activities

Years Ended December 31, 2024 and 2023

The net cash used in investing activities was nil for the year ended December 31, 2024 and 2023.

Years Ended December 31, 2023 and 2022

The net cash used in investing activities was nil for the year ended December 31, 2023, representing an increase in the spending of $16.0 million in 2022.

Net Cash Generated from Financing Activities

Years Ended December 31, 2024 and 2023

The net cash generated from financing activities was $24.6 million for the year ended December 31, 2024, an increase of $10.0 million compared to the same period of 2023. During the year ended December 31, 2024, the Company received aggregate net proceeds of $24.9 million from registered direct offerings in 2023 compared to $17.9 million in the same period of 2023.

We have financed our operations primarily through cash flows from operations, working capital from our shareholders, and equity financing through public and private offerings of our securities. We plan to support our future operations primarily from cash generated from our operations and equity financing.

Years Ended December 31, 2023 and 2022

The net cash generated from financing activities was $17.6 million for the year ended December 31, 2023, a decrease of $17.1 million compared to the same period of 2022. During the year ended December 31, 2023, the Company received aggregate net proceeds of $17.9 million from registered direct offerings in 2023 compared to $18.5 million in the same period of 2022.

We have financed our operations primarily through cash flows from operations, working capital from our shareholders, and equity financing through public and private offerings of our securities. We plan to support our future operations primarily from cash generated from our operations and equity financing.

Private Placements

On June 19 2024, the Company raised gross proceeds of approximately $16.99 million through private placements with certain non-U.S. investors.

C. Research and Development, Patents and Licenses, etc.

Research and development, patents and licenses, etc.

As of December 31, 2024, SOS Institution of Research & Development in Qingdao has achieved the following registered IPs in decentralized block-chain technology system, including:

SOS-Qingdao Research Institute (2021)

In line with the Company development direction, the R&D department of SOS-Qingdao Research Institute has achieved gratifying achievements in 2021. Major R&D achievements attained include the following platforms:

●

SOS cloud blockchain firewall system (software copyright certified)

●

SOS cloud blockchain personal bioinformation storage system (software copyright certified)

●

SOS cloud blockchain decentralized antivirus system (software copyright certified)

1.

Blockchain Inventory Management system for international trade (in operation). SOS Inventory Management System is a decentralized intelligent product track-and-trace platform that leverages blockchain technology. It provides reliable and comprehensive solution to traceability issues in value chain. The intelligent digital trading platform uses blockchain technology to digitize the commodity information across the full value chain, from product origin, manufacturers, channels, retailers, promoters to consumers. The information of each participant can be viewed in the blockchain. The structure of blockchain ensures that each step in the production is accountable and traceable.

2.

Blockchain supercomputing center management system (in operation): The R&D department of SOS-Qingdao Research Institute cooperates with Fish Pond, the world's largest Bitcoin mining pool and Litecoin mining pool service provider, to develop its own backend management system to assist the overseas business expansion of SOS Supercomputing Center.

Insurance promotion industry research and development

SOS is committed to the development of insurance product promotion projects, including:

●

SOS Cloud Alliance System: Integration of resources across industries to jointly promote the transformation, upgrade, development and integration of the insurance market to create an open platform, mainly for the accurate promotion of insurance products.

●

Yuge CRS agent distribution system: for insurance agents, brokers tailor-made development of a set of high-tech intelligent system for insurance business tracking and promotion of orders, through which the system can be managed, viewed, modified, quantified, inquired and other management operations, so that the process is standardized, improving work efficiency.

●

AI Smart and Artificial Electronic Marketing System: Developed automatic external voice robot for screening effective customer resources and manual tracking through manual electronic marketing system to improve the efficiency of ordering.

●

SOS Big Data Platform: Big Data Integration, Ledger Management Platform, can organize, match, process customer resources, high-performance data sharing services and provide compliance basis for relevant departments.

The foregoing R&D is being conducted through the cooperation of more than 60 high-tech talents and a number of project leaders. The R&D project is mainly being developed through, Java, .Net, PHP, Android and IOS, and continuous system upgrades, and functional expansions.

Cryptocurrency mining industry research and development

●

Secure wallet

■

Private key local secure save, support for a variety of wallet types, nation code backups for anti-loss, multi-signature anti-theft system, ease of import and export for wallet.

■

Add digital assets with one click, track trading trends in real time, and view asset balance changes.

■

Follow the world's major exchange prices and price alerts, seize investment opportunities with built-in trading exchange services.

■

Integrate third-party DAP interactions with push industry information, technology advances, and multi-dimensional data information to discover investment opportunities.

●

Private mine pool

■

Support for multi-currency mining (tentative support for ETH, BTC)

■

Intuitive revenue calculator, to fill in one's own mining machine's calculation power, so that each time one opens the wallet, he or she may intuitively see which currency is currently being mined with a higher yield, to help create mining strategies.

■

Information-rich monitoring interface computing power, estimated daily revenue, temperature, power consumption, electricity charges, fans, graphics card serial number, graphics card name, PCI socket, etc.

The foregoing R&D is being conducted through the cooperation of more than 39 high-tech talent and a number of system analysis management personnel. The R&D project is mainly being developed through C++, Python, Go, Java, .Net, PHP, Android, and IOS, with constant system upgrades and feature expansions.

D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material adverse effect on our revenues, net income, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial conditions.

E. Critical Accounting Estimates

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations relates to our consolidated financial statements, which have been prepared in accordance with United States of America generally accepted accounting principles ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures.

For a detailed discussion of our significant accounting policies and related judgments, please see "Note 2-Summary of Significant Accounting Policies". You should read the following description of critical accounting estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report.

Discontinued Operations

On December 5, 2023, the entity was deregistered following a period of dormancy with limited operational activity.

On October 4, 2022, the Company's Board of Directors and the Special Committee passed a resolution to sell the operation of S International Group Limited and SOS Information Technology Co., Ltd to S International Holdings Limited ("Purchaser"), a Cayman Islands exempt company in cash consideration of $17,000,000. The Company does not believe that the disposition will have a significant, material impact on the Company's consolidated financial statements. Mr. Yandai Wang, Chief Executive Officer and Chairman of the Board of Directors of the Company, holds 45% of the Purchaser's equity interests, and Ms. Yilin Wang, original shareholder of the VIE and legal representative of SOS Information Technology Co., Ltd., a subsidiary of the VIE, holds 40% of the Purchaser's equity interests. As a result, the disposition is a related party transaction. In accordance with ASC 205-20, the Company presented the operating results from these operations as a discontinued operation.

Segment Information Reclassification

Historically, the Company operated in seven segments: commodity trading, insurance marketing, cryptocurrency mining, telecom call center, bank call center SaaS and others. In fiscal year 2022, the Company classified business segment into four: commodity trading, cryptocurrency mining, hosting service and others.

Impact of Recently Issued Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its condensed consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's condensed consolidated financial statements properly reflect the change.

The FASB issued Accounting Standards Update No. 2021-08 Business Combinations (Topic 805) in October 2021, which will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Accounting Standards Update No. 2021-08 equires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination, which applies prospectively for all business combinations that occur on or after the date of initial application. The Group will evaluate the impact of this new guidance on the consolidated financial statements when necessary.

On June 30, 2022, FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

The FASB issued Accounting Standards Update No. 2022-02 Financial Instruments-Credit Losses (Topic 326) in March, 2022, which will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Accounting Standards Update No. 2022-02 is related to credit loss from troubled debt restructurings and vintage disclosures. The Group is currently evaluating the impact of this new guidance on the consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.

On March 28, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-01, Leases (Topic 842): Common Control Arrangements. The amendments in ASU 2023-01 improve current GAAP by clarifying the accounting for leasehold improvements associated with common control leases, thereby reducing diversity in practice. Additionally, the amendments provide investors and other allocators of capital with financial information that better reflects the economics of those transactions. The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

Recent Developments

Follow-on Offering

On March 15, 2024, the Company closed its registered follow-on offering in connection with the offering and sale (the "Offering") of 5,233,332 American Depositary Shares of the Company ("ADSs"), each representing ten (10) Class A ordinary shares, par value $0.005 per share, and warrants to purchase 10,466,664 ADSs (the "Warrants, and together with the ADSs, the "Securities") directly to certain institutional investors pursuant to that certain Securities Purchase Agreement (the "Purchase Agreement"), dated as of March 13, 2024, at an offering price per ADS and accompanying Warrant of $1.50. The Company generated gross proceeds of $7.85 million, before deducting offering expenses.

The Warrants are exercisable from and after the date of their issuance and expire on the fifth anniversary of such date, at an exercise price per ADS equal to $1.50. The holder of a Warrant will not be deemed a holder of our underlying ADSs until the Warrant is exercised. No fractional ADSs will be issued in connection with the exercise of Warrant. The Warrants will provide for adjustment in the number and price of such Warrants (and our ADSs underlying such Warrants) to prevent dilution in the event of a forward or reverse stock split, stock dividend or similar recapitalization. In addition, the exercise price of the Warrants is subject to an adjustment in the event that we issue or are deemed to issue ADSs for less than the applicable exercise price of the Warrant.

On March 14, 2025, we filed a shelf registration statement on Form F-3 with the SEC to offer and list our Class A Ordinary Shares, Class A ordinary shares represented by ADSs, preferred shares, debt securities, warrants, rights, and units on the NYSE. As of the date of this annual report, the registration statement has not yet become effective. Once the registration statement becomes effective, we may, from time to time and in one or more offerings, offer and sell the aforementioned securities, either individually or as units comprised of one or more of the other securities, of an aggregate offering price of up to US$500,000,000.

Change of ADS Ratio

In May 2023, the shareholders of the Company approved the 2023 Share Consolidation in the 2023 Annual General Meeting. In connection with the 2023 Share Consolidation, the Company adjusted its ADS Ratio from the previous ratio of 1 ADS representing 500 Class A ordinary shares to 1 ADS representing 10 Class A ordinary shares, effective June 16, 2023.

Effective November 19, 2024, the Company changed the ratio of its ADS to Class A ordinary shares from one (1) ADS representing ten (10) Class A ordinary shares to one (1) ADS representing one hundred and fifty (150) Class A ordinary shares (the "ADS Ratio Change").