SOYO Achieves 10th Consecutive Quarter of Quarter Over Quarter
Sales Increases
Increased Fuel and Shipping Expenses Lead to Profit Shortfall
ONTARIO, Calif., Aug. 14, 2008 (PRIME NEWSWIRE) -- SOYO Group Inc. ("SOYO" or "Company") (OTCBB:SOYO) today announced that net revenues increased by $7,992,565 or 33.0% to $32,194,960 in the three months ended June 30, 2008 compared to $24,202,395 for the same period in 2007. Additionally, income from operations increased by $655,165, or 181%, to $1,017,705 in second quarter 2008 compared to $362,540 for the same period in 2007. However, our net income for the quarter was only $29,878, well below the projected net income of $1,000,000 for the quarter. Net income for the six months ended June 30, 2008 was $235,587, also well below the companies projected net income of $1,500,000. The company commented earlier today that the profit short fall was a direct result of increased shipping costs, a result of higher fuel costs. The company's internal analysis showed that shipping charges during the quarter exceed expectation by more than $1,300,000 based on the volume of goods shipped.
Ming Chok, SOYO's Chairman and CEO, stated: "I am satisfied with our results, considering the current economic climate. We continue to grow our business and now must focus on solutions to control the increased cost of transportation and finance. We remain focused on our goals and objectives and believe our overall business will continue to remain strong."
Second Quarter 2008 Results
The gross margin was $4,986,082 or 15.4% in 2008 compared to $3,803,092 or 15.7% in 2007. The slight decrease in gross margin as a percentage was due to the increasing percentage of product sales to larger national retail chains at somewhat lower margins and a significant increase in the cost of shipping, as a result of higher fuel costs. The Company's internal analysis shows that shipping costs during the quarter were more than $1.3 million above forecast, for the volume of goods shipped. The Company expects gross margins to stabilize around 15% for the remainder of the year, as it markets and rolls out its higher margin "Top Line" branded products.
Selling and marketing expenses increased by $15,497 to $1,140,379 in 2008, as compared to $1,124,882 in 2007. The increase was due to the product development cost of creating and rolling out the new "Top Line" brand of consumer electronics products.
Net income was $29,878 for the three months ended June 30, 2008, compared to $285,174 for the three months ended June 30, 2007.
Guidance
The Company will provide forward looking guidance during its earnings call.
Conference Call Information
* Date/Time: Thursday, August 14, 2008 3pm Pacific (6pm Eastern)
* U.S./Canada Toll-Free Call-in Number: (866) 830-4434
* International Toll-Free Call-in Number: (706) 902-0008
* Pass code: # 595771295
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2008 2007
(Unaudited) (Restated)
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents 571,855 1,848,249
Accounts receivable, net of allowance
for doubtful accounts of $ 1,134,900
and $783,573 at June 30, 2008 and
Dec. 31, 2007 respectively 30,261,898 27,123,985
Inventories, net of allowance for
inventory obsolescence of $222,044 and
$88,114 at June 30, 2008 and December
31, 2007 respectively 14,960,525 12,221,265
Prepaid expenses 700,160 187,749
Deferred income tax assets 575,000 544,688
Deposits 4,151,958 8,808,408
----------- -----------
Total Current Assets 51,221,396 50,734,344
----------- -----------
Investment in 247 MGI 400,000 400,000
Property and equipment 326,009 316,287
Less accumulated depreciation and
amortization (166,777) (141,613)
----------- -----------
159,232 174,674
Deferred income tax - noncurrent 677,000 658,312
Total noncurrent assets 1,236,232 1,232,986
Total Assets $52,457,628 $51,967,330
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $8,327,606 $14,336,196
Accrued liabilities 742,202 789,526
Commercial Loans due to UCB 23,907,492 27,824,490
Gateway Trade Finance 3,198,539
Income Tax Payable 1,088,697 889,518
----------- -----------
Total current liabilities 37,264,536 43,839,730
----------- -----------
Long term payable 0 0
----------- -----------
Total liabilities 37,264,536 43,839,730
----------- -----------
EQUITY
Class B Preferred stock, $0.001 par
value, authorized - 10,000,000 shares,
Issued and outstanding - 2,750,000
shares in 2008 and 2,797,738 shares
in 2007 2,344,400 2,187,165
Preferred stock backup withholding (277,572) (230,402)
Common stock, $0.001 par value.
Authorized - 75,000,000 shares, Issued
and outstanding - 52,179,656 shares in
2008 and 52,004,656 shares in 2007 58,964 52,005
Additional paid-in capital 27,666,380 20,233,500
Accumulated deficit (13,879,080) (14,114,668)
Subscriptions Receivable (720,000) 0
----------- -----------
Total shareholders' Equity 15,193,092 8,127,600
----------- -----------
Total liabilities and shareholders'
equity $52,457,628 $51,967,330
=========== ===========
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
- June 30
2008 2007
Net revenues $32,194,960 $24,202,395
Cost of revenues 27,208,878 20,399,303
-------------------------
Gross margin 4,986,082 3,803,092
-------------------------
Costs and expenses:
Sales and marketing 1,140,379 1,124,882
General and administrative 2,086,432 2,168,198
Provision for doubtful accounts 729,037 125,063
Depreciation and amortization:
Property and equipment 12,529 22,409
-------------------------
Total costs and expenses 3,968,377 3,440,552
-------------------------
Income from operations 1,017,705 362,540
Other income (expense):
Interest income 363 17,409
Interest expense (739,790) (322,166)
Other income (expense) (312,983) (16,876)
-------------------------
Other income (expense), net (1,052,410) (321,633)
Income before provision for income taxes (34,705) 40,907
Provision for income taxes 24,820 129,775
Deferred income tax benefit 8,000 (439,802)
Net income (loss) (67,525) 350,934
Less: dividends on convertible preferred
stock (97,403) 65,160
Net income (loss) attributable to common
shareholders 29,878 285,174
Net income (loss) per common share -
Basic and .00 .01
diluted .00 .01
Weighted average number of shares of
common stock outstanding - Basic and 52,324,723 49,039,156
diluted 57,357,723 56,541,914
About SOYO Inc.
SOYO, Inc. is a leading global provider of computer, consumer electronics, and broadband telecommunications products and services. Headquartered in Ontario, Calif., with sales offices in Latin America. For more information about the company and its products, please call 909-292-2500 or visit our Web site at http://www.SOYO.com.
"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.