ONTARIO, Calif., Nov. 11, 2008 (GLOBE NEWSWIRE) -- SOYO Group Inc. ("SOYO" or "Company") (OTCBB:SOYO) today announced that for the three months ended September 30, 2008, net revenues were $29,481,939; gross margin was $5,390,397 or 18.3%; and net income of $22,640. For nine months ended September 30, the Company earned $527,138 or $0.01 per share before dividends on preferred stock.
"Given the challenging market conditions, the fundamental strength of our business has never been more apparent," said SOYO Chairman and CEO Ming Chok. "Our business strategy, which includes four distinct product lines and our North and South American sales capability have kept our business moving forward, while many of our competitors are suffering big setbacks. In spite of a deteriorating global economy year-to-date, we have grown net revenues 19.55%, and improved our gross margin to 16.0%. As we move forward, we plan to focus more of our effort to improving the bottom line, without sacrificing current revenue growth trajectory."
Third Quarter Highlights
Net revenues decreased by $3,953,245 or 11.8%, to $29,481,939 in the three months ended September 30, 2008, as compared to $33,435,184 in 2007. The decrease in revenues was mainly due to reduced sales in the United States, resulting from the poor economy and sales initiatives the Company made to reduce its credit risk. Additionally, decreasing credit limits impaired the Company's ability to purchase certain manufacturing goods.
Gross margin was $5,390,397 or 18.3% in 2008, as compared to $3,630,362 or 10.9% in 2007. The large increase in gross margin was due primarily to the Company cutting marketing and sales promotion expenses and secondly to the agreement with a logistics Company, which is responsible for coordinating transportation of the Company's products throughout the world. The Company believes that these are prudent changes based on changing economic and market conditions and is poised to make additional adjustments to maintain an optimum balance between growth and profits.
Net income was $22,640 for the three months ended September 30, 2008, as compared to $2,441,113 for the three months ended September 30, 2007.
Year-to-Date Highlights
Net revenues increased by $14,143,525 or 19.55%, to $86,472,214 to the nine months ended September 30, 2008, as compared to $72,328,689 in 2007. The increase in revenues was mainly due to strong US sales in the first six months, and several new accounts opened during the first half of the year. The third quarter of 2008 was the first quarter in almost two years that the Company did post a year-over-year revenue increase of at least 40%.
Gross margin was $13,482,583 or 16.0% in 2008, as compared to $10,041,650 or 14.0% in 2007. In addition to the cost saving measures sighted in the "Third Quarter Highlights" above, gross margins were helped as the Company increased its business in Latin America, where the margins are better than on U.S. sales.
Net income was $527,138 for the nine months ended September 30, 2008, as compared to $3,382,981 for the nine months ended September 30, 2007.
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
September 30, December 31,
2008 2007
----------- -----------
(Unaudited) (Restated)
ASSETS
Current Assets
Cash and cash equivalents 44,186 1,848,249
Accounts receivable, net of
allowance for doubtful
accounts of $933,040 and
$783,573 at September 30,
2008 and December 31, 2007
respectively 43,309,525 27,123,985
Inventories, net of allowance
for inventory obsolescence of
$222,044 and $168,600 at
September 30, 2008 and
December 31, 2007 respectively 8,358,053 12,221,265
Prepaid expenses 130,075 187,749
Deferred income tax assets 586,000 544,688
Deposits 2,390,967 8,808,408
----------- -----------
Total Current Assets 54,818,806 50,734,344
----------- -----------
Investment in 247 MGI 4,000 400,000
Property and equipment 340,993 316,287
Less accumulated depreciation
and amortization (172,194) (141,613)
----------- -----------
168,799 174,674
Deferred income tax - noncurrent 801,000 658,312
Total noncurrent assets 973,799 1,232,986
Total Assets $55,792,605 $51,967,330
=========== ===========
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable $10,770,431 $14,336,196
Accrued liabilities 217,707 789,526
Commercial Loans due to UCB 25,495,237 27,824,490
Gateway Trade Finance 2,049,064 0
Short Term Note Payable 557,082 0
Income Tax Payable 1,378,698 889,518
----------- -----------
Total current liabilities 40,468,219 43,839,730
----------- -----------
Long term payable 0
----------- -----------
Total liabilities 40,468,219 43,839,730
----------- -----------
EQUITY
Class B Preferred stock,
$0.001 par value, authorized
- 10,000,000 shares, Issued
and Outstanding - 0 shares
in 2008 and 2,614,195 shares
in 2007 0 2,187,165
Preferred stock backup
withholding 0 (230,402)
Common stock, $0.001 par value.
Authorized - 200,000,000 in
2008 and 75,000,000 shares
in 2007, Issued and
outstanding - 61,718,656
shares in 2008 and
52,004,656 shares in 2007 61,719 52,005
Additional paid-in capital 29,839,107 20,233,500
Accumulated deficit (13,856,440) (14,114,668)
Subscriptions Receivable (720,000) 0
----------- -----------
Total shareholders' Equity 15,324,386 8,127,600
----------- -----------
Total liabilities and
shareholders' equity $55,792,605 $51,967,330
=========== ===========
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
For the Nine Months Ended September 30
2008 2007
(Unaudited) (Restated)
----------- -----------
Net revenues $29,481,939 $33,435,184
Cost of revenues 24,091,542 29,804,822
----------------------------
Gross margin 5,390,397 3,630,362
----------------------------
Costs and expenses:
Sales and marketing 896,805 (315,296)
General and administrative 2,944,906 1,750,423
Provision for doubtful accounts 346,419 20,635
Depreciation and amortization:
Property and equipment 5,417 27,107
----------------------------
Total costs and expenses 4,193,547 1,609,129
----------------------------
Income from operations 1,196,850 2,021,233
Other income (expense):
Interest income 20 18,037
Interest expense (490,139) (440,277)
Unrealized gain (loss) on equity
investment (396,000) --
----------------------------
Other income (expense) (21,415) (6,399)
----------------------------
Other income (expense), net (907,534) (177,786)
Income before provision for income
taxes 289,316 1,843,447
Provision for income taxes 290,000 78,379
Deferred income tax benefit (135,000) --
Net income (loss) 134,316 2,509,857
Less: dividends on convertible
preferred stock 111,676 68,744
Net income (loss) attributable to
common shareholders 22,640 2,441,113
Net income (loss) per common share - .00 .05
Basic and diluted .00 .05
Weighted average number of shares
of common stock outstanding 54,519,525 49,039,156
- Basic and diluted 58,226,599 54,163,754
SOYO Group, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
September 30,
2008 2007
OPERATING ACTIVITIES
Net Income (loss) 527,138 3,382,981
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and Amortization 30,581 68,159
Unrealized gain (loss) on
investment in 247MGI (396,000)
Non cash payments for public relations 6,825
Stock based compensation 395,494 1,169,437
Provision for doubtful accounts 149,467 278,042
Provision for Inventory Obsolescence 53,444
Changes in operating assets
and liabilities:
(Increase) decrease in:
Accounts Receivable (16,335,007) (16,153,639)
Inventories 3,809,768 (8,825,582)
Prepaid expenses 57,674 (69,063)
Deposits 6,417,441 (314,453)
Deferred income tax asset (184,000) (1,370,569)
Increase (Decrease) in:
Accounts payable 2,438,263 3,831,034
Accrued liabilities (571,819) 551,884
Income tax payable 489,180
----------------------------
Net cash used in operating activities (2,326,376) (21,180,142)
----------------------------
INVESTING ACTIVITIES
Purchase of property and equipment (24,706) (33,056)
Net cash used in investing activities (24,706) (33,056)
----------------------------
FINANCING ACTIVITIES
Proceeds from business loan - net 276,893 22,506,404
Payment of backup withholding tax on
accreted dividends on preferred stock (80,674) (58,700)
Proceeds from Issuance of
Common Stock 350,800
Payment of Short term loan (100,000)
----------------------------
Payment of long term debt (3,735,198)
----------------------------
Net cash provided by (used in)
financing activities 547,019 18,612,506
----------------------------
CASH AND CASH EQUIVALENTS
Net Increase (Decrease) (1,804,063) 1,134,506
At beginning of Period 1,848,249 1,501,040
----------------------------
At End of Period 44,186 2,635,546
============================
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
Accretion of discount on Class B
preferred stock 268,911 195,666
Stock Option Compensation 395,494 1,169,437
Non Cash- conversion of
accounts payable to common stock 6,004,028
Non Cash- conversion of
convertible preferred stock
to common stock 2,456,075
Guidance
The Company will provide forward looking guidance during its earnings call.
Conference Call Information
The Company will host a conference call on Tuesday, November 11, 2008 to discuss the results for third quarter and provide forward looking guidance for fourth quarter and year-end 2008, and for the first two quarters of 2009. Details for the call are as follows:
* Date/Time: Tuesday, November 11, 2008 3:00pm Pacific Time
(6:00pm Eastern)
* U.S./Canada Toll-Free Call-in Number: (866) 830 - 4434
* International Toll-Free Call-in Number: (706) 902 - 0008
* Conference ID # 72653538
It is recommended that participants call in five to ten minutes prior to the beginning of the call.
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.