**Fiscal 2006 Net Sales: $56,758,688 Million
**Fiscal 2006 Net Income: $462,049 Thousand
**Fiscal 2006 Net income Per Share: $.01
ONTARIO, Calif., April 3, 2007 (PRIME NEWSWIRE) -- SOYO Group Inc. (OTCBB:SOYO) today reported operating income from continuing operations for the quarter ended December 31, 2006 of $566,706 compared to operating Income from continuing operations of $651,843 for the quarter ended December 31, 2005. The Company earned $0.01 per share in both periods. Net revenues for the quarter ended December 31, 2006 were $24,417,902, an increase of $7,845,131 or 47.3% over revenues of $16,572,771 for the quarter ended December 31, 2005. The increase for the quarter reflects continuing increased sales volume to Chain or Box retailers and the TV Shopping Networks as a result of its continuing rollout of LCD Product lines.
The Company reported operating income from continuing operations for the year ended December 31, 2006 of $1,519,271 compared to operating income from continuing operations of $514,920 for year ended December 31, 2005, an increase of 295%. Net revenues for the year ended December 31, 2006 were $56,758,688, an increase of $18,495,656 or 48% over revenues of $38,263,032 for the year ended December 31, 2005. The gross margin was 12.4% for the quarter ended December 31, 2006, compared to 11.5% for the quarter ended December 31, 2005. Gross margin for the year ended December 31, 2006 was 16.3% compared to 12.4% for the year ended December 31, 2005.
Total costs and expenses for the year ended December 31, 2006 increased by $3,527,118 (84%) to $7,705,168 when compared to total costs and expenses of$4,178,050 for the year ended December 31, 2005. The increased costs during the year resulted mainly from mandatory FASB 123 R compliance, increased costs of consultants, increased legal fees, and increased interest expense. Interest expense, net, increased for the year by $772,333 primarily due to new programs the Company began to ensure adequate levels of inventory for sale.
Statements in this press release may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict.Therefore, actual outcomes and results may, and probably will, differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in the Company's filings with the Securities and Exchange Commission filings, including the Risk Factors included in the Form 10-K for the year ended December 31, 2006 and the Management's Discussion and Analysis of Financial Conditions and Results of Operations in the Form 10-K for the year ended December 31, 2006. In addition, general industry and market conditions and growth rates, and general economic conditions could affect such statements. Any forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.
About SOYO Group Inc.
SOYO Group Inc. is a provider of computer, consumer electronics, and broadband telecommunications products and services. Headquartered in Ontario, California, with additional sales offices in South America, SOYO Group sells its products through an extensive network of authorized distributors, resellers, system integrators, VARs, retailers, mail-order catalogs and e-tailers, including Best Buy, Circuit City, Staples, Micro Center, Target.com, Walmart.com, eCost.com, Fry's Electronics, PC Mall, and Office Depot, among others. Products are sold under the Go Video, Dragon, Onyx, Dymond, Honeywell and SOYO brand names. For more information, please visit http://www.soyogroup.com.
Consolidated Balance Sheets
December 31,
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2006 2005
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ASSETS
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CURRENT
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Cash and cash equivalents $ 1,501,040 $ 828,294
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Accounts receivable, net of
allowance for doubtful
accounts of $388,958 and
$589,224 at December 31, 2006
and 2005 respectively 12,878,732 7,278,520
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Inventories 7,792,621 7,991,030
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Prepaid Expenses 36,633 20,984
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Income tax refund receivable 0 0
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Total Current Assets 22,209,026 16,118,828
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Property and Equipment 711,015 867,122
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Less: accumulated depreciation
and amortization (159,300) (115,480)
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551,715 751,642
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Deferred Income Tax Asset 177,177 0
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Deposits 243,095 36,920
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Total Assets $ 23,181,013 $ 16,907,390
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December 31,
---------------------------------------------------------------------
2006 2005
---------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------
CURRENT
---------------------------------------------------------------------
Accounts payable 16,073,617 13,977,579
---------------------------------------------------------------------
Total Accounts Payable 6,073,617 13,977,579
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Accrued liabilities 539,767 1,287,108
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Advances from officers,
directors and
major shareholder 0 0
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Business Loan 0 0
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Short Term Loan 100,000 165,000
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Current Liabilities 16,713,384 15,429,687
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Long Term Payable 3,735,198 0
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Total Liabilities 20,448,582 15,429,687
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EQUITY
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Class B Preferred stock,
$0.001 par value, authorized
- 10,000,000 shares, Issued
and outstanding - 2,797,738
shares in 2006 and 2005 1,918,974 1,702,486
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Preferred Stock Backup
Withholding (149,945) (84,999)
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Common stock, $0.001 par value
Authorized - 75,000,000 shares,
Issued and outstanding -
49,025,511 shares
(48,681,511 shares - 2005) 49,026 48,682
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Additional paid-in capital 17,866,531 17,225,738
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Accumulated deficit (16,952,155) (17,414,204)
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Total Shareholders' Equity 2,732,431 1,477,703
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Total Liabilities plus
Shareholders' Equity $ 23,181,013 $ 16,907,390
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SOYO Group, Inc. and Subsidiary
Consolidated Statements of Operations
Year Ended December 31,
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2006 2005 2004
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Net revenues $56,758,688 $38,263,032 $ 32,426,414
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Cost of revenues,
including inventory
purchased from SOYO
Computer, Inc. of $0,
$14,004,259 and
$20,188,354
in 2005, 2004 and
2003 respectively 47,534,249 34,905,874 30,210,042
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Prior years'
purchase discounts
and allowances
settled in 2005 0 (1,335,812) 0
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Gross margin 9,224,439 4,692,970 2,216,372
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Costs and expenses:
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Sales and marketing 1,143,475 911,039 1,577,609
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General and
administrative 5,610,810 3,659,338 3,560,710
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Provision for
doubtful
accounts 907,065 34,513 956,738
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Adjustment of
Allowance 0 (462,234) 0
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Depreciation and
amortization:
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Property and
equipment 43,818 35,394 34,998
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Total costs and
expenses 7,705,168 4,178,050 6,130,055
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Income (Loss) from
operations 1,519,271 514,920 (3,913,683)
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Other income (expense):
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Interest income 10,561 5,301 0
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Interest expense (901,900) (129,567) (23,371)
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Other income (expense) (106,262) 150,456 17,609
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Other income (expense),
net (997,601) 26,190 (5,762)
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Income (Loss) before
provision (benefit)
for income taxes 521,670 541,110 (3,919,445)
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Provision for income
taxes
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Current Income Tax
Expense (20,310) 800 800
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Deferred Income Tax
Gain
(Expense) 177,177 -- --
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Net Income (loss) 678,537 540,310 (3,920,245)
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Less: Dividends on
Convertible
Preferred
Stock (216,488) (1,173,753) (223,733)
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Net income/ (loss)
attributable to
common
shareholders 462,049 (633,443) (4,143,978)
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Net loss per common
share - 0.01 (0.01) (0.10)
Basic and diluted 0.01
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Weighted average
number of
shares of common
stock
outstanding - 49,025,511 48,511,681 40,000,000
Basic and diluted 59,786,042
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SOYO Group, Inc. and Subsidiary
Consolidated Statements of Shareholders' Equity (Deficit)
Years Ended December 31, 2006, 2005 and 2004
Balance, December 31, 2001
Common Stock Preferred Stock
Par Par
Shares Value Shares Value
28,182,750 28,183 1,000,000 1,000
Shares of common
stock retained
by shareholders
in October 2002
transaction 11,817,250 11,817
Net loss for the
year ended
December 31, 2002 -- -- -- --
---------------------------------------------
Balance,
December 31, 2002 40,000,000 40,000 1,000,000 1,000
---------------------------------------------
Net loss for the
year ended
December 31, 2003 -- -- -- --
---------------------------------------------
Balance, December
31, 2003 40,000,000 40,000 1,000,000 1,000
Issuance of
Preferred Stock
for Long Term Debt 2,500,000 1,304,000
Dividends 114,195 114,195
Accretion of Discount 109,538
Net loss for the
year ended
December 31, 2004 -- --
---------------------------------------------
Balance,
December 31, 2004 40,000,000 40,000 3,614,195 1,528,733
---------------------------------------------
Issuance of Common
Stock for Private
Placement 500,000 500
Issuance of Common
Stock for Payment
of Services 30,000 30
Issuance of Common
Stock for Payment
of Accounts Payable 5,645,330 5,645
Issuance of Common
Stock for Payment
of Loan 1,286,669 1,287
Issuance of Common
Stock for
Conversion of
Preferred Stock 1,219,512 1,220 (1,000,000) (1,000)
Accretion of
Discount 174,753
Preferred Stock
Backup Withholding (84,999)
Net Income
Preferred Stock
Dividends
---------------------------------------------
Balance,
December 31, 2005 48,681,511 48,682 2,614,195 1,617,487
============================================
Issuance of Common
Stock 39,000 39
Issuance of Common
Stock 267,000 267
Issuance of Common
Stock 38,000 38
Accretion of
Discount 216,488
Preferred Stock
Backup Withholding (64,946)
To book FAS 123
adjustment
Misc. Adjustment
Net Income
---------------------------------------------
49,025,511 49,026 2,614,195 1,769,029
============================================
Additional Total Shareholders
Paid In Accumulated
Balance, Capital Deficit Deficiency
December 31, 2001 470,817 (918,737) (418,737)
Shares of common
stock retained
by shareholders
in October 2002
transaction (11,817)
Net loss for the
year ended
December 31, 2002 (10,733,458) (10,733,458)
-------------------------------------------
Balance,
December 31, 2002 459,000 (11,652,195) (11,152,195)
-------------------------------------------
Net loss for the
year ended
December 31, 2003 (984,588) (984,588)
-------------------------------------------
Balance, December
31, 2003 459,000 (12,636,783) (12,136,783)
Issuance of
Preferred Stock
for Long Term Debt 10,696,000 12,000,000
Dividends 114,195
Accretion of Discount 109,538
Net loss for the
year ended
December 31, 2004 (4,143,978) (4,143,978)
-------------------------------------------
Balance,
December 31, 2004 11,155,000 (16,780,761) (4,057,028)
-------------------------------------------
Issuance of Common
Stock for Private
Placement 499,500 500,000
Issuance of Common
Stock for Payment
of Services 30
Issuance of Common
Stock for Payment
of Accounts Payable 3,608,744 3,614,389
Issuance of Common
Stock for Payment
of Loan 963,714 965,001
Issuance of Common
Stock for
Conversion of
Preferred Stock 998,780 999,000
Accretion of
Discount 174,753
Preferred Stock
Backup Withholding (84,999)
Net Income 540,310 540,310
Preferred Stock
Dividends (1,173,753) (1,173,753)
-------------------------------------------
Balance,
December 31, 2005 17,225,738 (17,414,204) 1,477,703
===========================================
Issuance of Common
Stock 24,531 24,570
Issuance of Common
Stock 80,100 80,367
Issuance of Common
Stock 12,502 12,540
Accretion of
Discount 216,488
Preferred Stock
Backup Withholding (64,946)
To book FAS 123
adjustment 506,221 506,221
Misc. Adjustment 17,439 17,439
Net Income 462,049 462,049
-------------------------------------------
17,866,531 (16,952,155) 2,732,431
===========================================
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SOYO Group, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Years Ended December 31,
---------------------------------------------------------------------
2006 2005 2004
---------------------------------------------------------------------
OPERATING ACTIVITIES
---------------------------------------------------------------------
Net Income (loss) $678,537 $540,310 $(3,920,245)
---------------------------------------------------------------------
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
---------------------------------------------------------------------
Depreciation 43,818 35,394 34,998
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Provision for doubtful
accounts 907,065 34,513 956,738
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Stock compensation for
employees 506,222 -- --
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Stock compensation paid for
professional services 134,915 -- --
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Changes in operating assets
and liabilities:
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(Increase) decrease in:
--------------------------------------- ---------------------- ------
Accounts receivable (6,507,277) (5,236,151) 3,785,110
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Inventories 198,409 (4,128,119) 1,173,214
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Prepaid expenses (15,649) 51,432 18,557
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Deferred Income Tax Asset (177,177) 0 0
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Deposits (206,175) (2,109) (9,776)
---------------------------------------------------------------------
Increase (decrease) in:
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Accounts payable - SOYO
Computer, Inc 0 (1,314,910) (5,242,343)
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Accounts payable - other 2,096,038 9,332,236 2,783,763
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Accrued liabilities (747,341) 509,316 236,059
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Net cash provided by (used
in) operating activities (3,088,615) (178,088) (183,925)
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INVESTING ACTIVITIES
---------------------------------------------------------------------
Purchase of property and
equipment (48,891) (621,970) (158,670)
--------------------------------------------------------------------
Disposal of Fixed Assets 205,000
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Net cash Supplied (used) in
investing activities 156,109 (621,970) (158,670)
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FINANCING ACTIVITIES
--------------------------------------------------------------------
Advances from officer,
director and major
shareholder 165,000
---------------------------------------------------------------------
Business Loan 913,750
---------------------------------------------------------------------
Long-term debt 3,735,198
---------------------------------------------------------------------
Repayment of advances to
officer, director and
major shareholder (65,000) (240,000)
---------------------------------------------------------------------
Proceeds from issuance of
common stock 500,000
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Payment of backup
withholding taxes on
accreted dividends
on preferred stock (64,946) (84,999)
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Net cash provided by
financing activities 3,605,252 340,001 913,750
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CASH AND CASH EQUIVALENTS:
---------------------------------------------------------------------
Net increase (decrease) (672,746) (460,057) 571,155
---------------------------------------------------------------------
At beginning of year 828,294 1,288,351 717,196
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At end of year $1,501,040 $ 828,294 $1,288,351
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SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
---------------------------------------------------------------------
Cash paid for interest 901,900 97,783 23,371
---------------------------------------------------------------------
Cash paid for income taxes 20,310 800 800
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NON-CASH INVESTING AND
FINANCING ACTIVITIES
---------------------------------------------------------------------
Settlement of business loan
of $913,750 and accrued
interest of $51,251
through issuance of common
stock 965,001
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Settlement of accounts
payable through issuance
of common stock 3,614,419
---------------------------------------------------------------------
Conversion of Class A
preferred stock to common
stock 1,000
---------------------------------------------------------------------
Accretion of discount on
Class B preferred stock 216,488 174,753 109,538
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Deemed dividend on Class A
preferred stock 999,000
---------------------------------------------------------------------
Noncash dividend on Class B
preferred stock -- 114,195
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