Company Earns $.05 Per Share for Three Months
Ending September 30, 2007
Net Revenue for the Third Quarter Was $33,435,184
Net Revenue Increases 234 Percent From Third Quarter
Fiscal Year 2006
ONTARIO, Calif., Nov. 14, 2007 (PRIME NEWSWIRE) -- SOYO Inc. (OTCBB:SOYO), an innovative provider of computer and consumer electronics products, announced their third quarter financial results for the period ending September 30, 2007.
The Company earned $2,441,113 or $.05 per share on a fully diluted basis for the three months ending September 30, 2007 as compared to $264,077, or $.01 for the same period in 2006. The Company earned $3,187,314 or $.06 per share on a fully diluted basis for the nine months ending September 30, 2007, as compared to $673,622 or $.01 for the same period in 2006.
The Company reported third quarter net revenues of $33,435,184 for the three months ending September 30, 2007; an increase of 234% compared to $10,005,084 in the third quarter fiscal year 2006. The Company also reported an increase in net revenues of 124% to $72,328,689 for the nine months ending September 30, 2007 compared to $32,340,785 for the same period in 2006. Gross margin for the three months was 10.9% or $3,630,362 in 2007 as compared to 22.3% or $2,233,361 in 2006. Gross margin for the nine months was 13.9% or $10,041,650 for 2007 as compared to 19.1% or $6,191,202 in 2006.
Ming Chok, CEO of SOYO said, "This was a great quarter for SOYO on all fronts. With record revenues and record profits, we feel now more than ever the SOYO brand name has become synonymous with quality and value. Our sales in the United States increased to $25,048,776 this quarter, as compared to $5,292,158 for the same period in 2006. Our sales team has done a terrific job opening new markets for our company and we are very pleased with the results of this quarter. We are looking forward to continued success."
In a press release and an 8-K issued October 11, 2007, the Company stated that they expected to report revenues exceeding $34 million. The Company reported actual revenues of $33,435,184. The difference in estimated revenues and actual revenues reported were based on the Company's revenue recognition policy. The Company's gross margin percentage was below expectations due to significantly higher than projected sales of several lower margin items during the quarter. As a result, gross margin was below expectations when expressed on a percentage basis, but significantly above estimates when expressed on a dollar basis. This led directly to EPS being well above expectations.
Business Outlook:
SOYO plans to complete production of their Honeywell Branded LCD TVs, LCD Monitors and SecuraDrive(tm) 1.8 Inch Hard Drives. SOYO plans to debut the products at the annual Consumer Electronics Show (CES) in front of the largest audience of industry professionals, major retailers and buyers. Additionally, SOYO plans to continue successful business with their Prive and SOYO brands of LCD TVs and LCD Monitors. SOYO will continue to offer a good, better, best strategy with their three brands of products: the value minded consumer (Prive), the quality over brand consumer (SOYO) and those that want that name they know with the upcoming launch of SOYO's Honeywell brand of LCD TVs.
About SOYO Inc.
SOYO Inc. is an innovative provider of consumer electronics such as LCD Monitors, LCD Televisions, Bluetooth, Portable Storage, LCD Furniture and broadband telecommunications products and services. Headquartered in Ontario, California, with additional sales offices in South America, SOYO sells its products through an extensive network of authorized distributors, resellers, system integrators, VARs, retailers, mail-order catalogs and e-tailers. Products are sold under the SOYO, Dragon, Onyx, Dymond, Honeywell, Le Vello, and Prive brand names. For more information, please visit http://www.soyogroup.com.
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
September 30 December 31
2007 2006
------------ ------------
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 2,635,546 $ 1,501,040
Accounts receivable, net of allowance for
doubtful accounts of $665,537 and
$388,958 at September 30, 2007 and
December 31, 2006, respectively 31,987,044 16,467,135
Other receivables 355,688
Inventories, net of allowance for inventory
losses of $168,600 and $88,114 at
September 30, 2007 and December 31,
2006, respectively 16,618,203 7,792,621
Prepaid expenses 105,696 36,633
Deferred income tax assets 1,547,746 177,177
Deposits 557,548 243,095
------------ ------------
Total current assets 53,807,471 26,217,701
------------ ------------
Property and equipment 744,071 711,015
Less: accumulated depreciation and
amortization (227,459) (159,300)
------------ ------------
516,612 551,715
------------ ------------
Total Assets $ 54,324,083 $ 26,769,416
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 19,904,651 $ 16,073,617
Accrued liabilities 1,091,651 539,767
Business loan 26,094,807 3,588,403
Short term loan -- 100,000
------------ ------------
Total current liabilities 47,091,109 20,301,787
Long term payable -- 3,735,198
------------ ------------
Total liabilities 47,091,109 24,036,985
------------ ------------
EQUITY
Class B Preferred stock, $0.001 par
value, authorized -- 10,000,000 shares,
Issued and outstanding -- 2,797,738
shares in 2007 and 2006 2,114,640 1,918,974
Preferred stock backup withholding (208,645) (149,945)
Common stock, $0.001 par value
Authorized - 75,000,000 shares,
issued and outstanding -
49,039,156 shares (49,025,511
shares - 2006) 49,039 49,026
Additional paid-in capital 19,042,780 17,866,531
Accumulated deficit (13,764,840) (16,952,155)
------------ ------------
Total shareholders' equity 7,232,974 2,732,431
------------ ------------
Total Liabilities and Shareholders'
Equity $ 54,324,083 $ 26,769,416
============ ============
See accompanying notes to unaudited condensed consolidated financial statements.
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
Three months
ended September 30
----------------------------
2007 2006
------------ ------------
Net revenues $ 33,435,184 $ 10,005,084
Cost of revenues 29,804,822 7,771,723
------------ ------------
Gross margin 3,630,362 2,233,361
------------ ------------
Costs and expenses:
Sales and marketing (315,296) 231,272
General and administrative 1,750,423 1,427,441
Bad debts 151,541 20,635
Depreciation and amortization 22,461 27,107
------------ ------------
Total cost and expenses 1,609,129 1,706,455
------------ ------------
Income from operations 2,021,233 526,906
------------ ------------
Other income (expenses):
Interest income 18,037 --
Interest expense (440,277) (200,939)
Other income (expenses) 244,454 (6,399)
------------ ------------
Other income (expenses) - net (177,786) (207,338)
------------ ------------
Income before provision (benefit) for
income taxes 1,843,447 319,568
Provision (benefit) for income taxes --
Current income tax 78,379 --
Deferred income tax (744,789) --
------------ ------------
Net income 2,509,857 319,568
Less: Dividends on Convertible Preferred
Stock 68,744 55,491
------------ ------------
Net income attributable to common
shareholders $ 2,441,113 $ 264,077
============ ============
Net income per common share - basic and
diluted $0.05/ $0.05 $0.01/ $0.01
Weighted average number of shares of
common stock outstanding - basic 49,039,156/ 49,025,511/
and diluted 54,163,754 58,591,295
See accompanying notes to unaudited condensed consolidated financial statements.
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
Nine months ended
September 30
----------------------------
2007 2006
------------ ------------
Net revenues $ 72,328,689 $ 32,340,785
Cost of revenues 62,287,039 26,149,583
------------ ------------
Gross margin 10,041,650 6,191,202
------------ ------------
Costs and expenses:
Sales and marketing 1,400,442 628,286
General and administrative 5,496,795 4,182,118
Bad debts 278,042 123,819
Depreciation and amortization 68,161 79,496
------------ ------------
Total cost and expenses 7,243,440 5,013,719
------------ ------------
Income from operations 3,144,672 1,177,483
------------ ------------
Other income (expenses):
Interest income 66,831 6,607
Interest expense (822,158) (351,408)
Other income (expenses) 139,888 (1,115)
------------ ------------
Other income (expenses) - net (615,439) (345,916)
------------ ------------
Income before provision (benefit) for
income taxes 2,182,771 831,567
Provision (benefit) for income taxes
Current income tax 271,239 --
Deferred income tax (1,471,449) --
------------ ------------
Net income 3,382,981 831,567
Less: Dividends on Convertible Preferred
Stock 195,667 157,945
------------ ------------
Net income attributable to common
shareholders $ 3,187,314 $ 673,622
============ ============
Net income per common share - basic and
diluted $0.06/ $0.06 $0.01/ $0.01
Weighted average number of shares of
Common stock outstanding - basic and 49,039,156/ 49,025,511/
diluted 54,163,754 58,591,295
See accompanying notes to unaudited condensed consolidated financial statements.
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited
Nine months ended
September 30
----------------------------
2007 2006
------------ ------------
OPERATING ACTIVITIES
Net Income $ 3,382,981 $ 831,567
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and Amortization 68,159 79,496
Non cash payments for director's
compensation -- 37,110
Non cash payments for public relations
and promotion 6,825 82,770
Stock based compensation 1,169,437 398,484
Bad debts 278,042 123,819
Payment of long-term debt (3,735,198) --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (15,797,951) 151,682
Other Receivables (355,688)
Inventories (8,825,582) 2,839,171
Prepaid expenses (69,063) 20,984
Deposits (314,453) (377,806)
Deferred income tax asset (1,370,569) --
Increase (Decrease) in:
Accounts payable 3,831,034 (2,432,944)
Accrued liabilities 551,884 (1,004,926)
------------ ------------
Net cash provided by (used in) operating
activities (21,180,142) 749,407
------------ ------------
INVESTING ACTIVITIES
Purchase of property and equipment (33,056) (109,448)
------------ ------------
Net cash used in investing activities (33,056) (109,448)
------------ ------------
FINANCING ACTIVITIES
Payment of Note Payable (65,000)
Proceeds from business loan-net 22,506,404 --
Payment of backup withholding tax on
accreted dividends on preferred stock (58,700) (47,384)
Payment of short-term loan (100,000) --
------------ ------------
Net cash provided by (used in) financing
activities 22,347,704 (112,384)
------------ ------------
CASH AND CASH EQUIVALENTS
Net Increase (Decrease) 1,134,506 527,575
At beginning of Period 1,501,040 828,294
------------ ------------
At End of Period $ 2,635,546 $ 1,355,869
============ ============
Supplemental disclosure of cash flow
information
Cash paid for interest 822,158
Cash paid for income taxes 21,503
Non cash investing and financing
activities:
Conversion of Business Loan of $913,750
and Accrued Interest of $51,552 to common
stock 965,302
Conversion of Accounts Payable of $554,871
to common stock 554,871
Accretion of discount on Class B
preferred stock 195,666 157,945
Director's Compensation --
Stock Option Compensation 1,169,437
See accompanying notes to unaudited condensed consolidated financial statements
"Safe Harbor" Statement"
This release contains certain statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward-looking statements. The words "plan," "confident that," "believe," "scheduled," "expect," or "intend to," and similar conditional expressions, are intended to identify forward-looking statements. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, the availability of components and successful production of the company's products, successful performance of internal plans, the impact of competitive services and pricing, general economic risks and uncertainties, and various other information detailed from time to time in the company's filings with the United States Securities and Exchange Commission. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Please refer to the company's filings at www.sec.gov.