UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2020

 

Commission File Number: 001-38051

 

SOS LIMITED

(Translation of registrant’s name into English)

 

Room 8888, Jiudingfeng Building, 888 Changbaishan Road,

Qingdao Area, China (Shandong) Pilot Free Trade Zone

People’s Republic of China

+86 0311-80910921

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  ☒   Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 

 

 

  

EXPLANATORY NOTE

  

The Company is furnishing this Form 6-K to provide six-month interim financial statements and incorporate such financial statements into the Company’s registration statements referenced below.

 

This Form 6-K is hereby incorporated by reference into the registration statement of the Company on Form S-8 (Registration Number 333-220009), to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 

Financial Statements and Exhibits.

 

Exhibits.

 

Exhibit No.   Description
99.1   Unaudited Interim Consolidated Financial Statements as of June 30, 2020 and for the Six Months Ended June 30, 2020 and 2019
99.2   Operating and Financial Review and Prospects in Connection with the Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2020 and 2019
101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema Document
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated:  October 30, 2020 SOS Limited
     
  By: /s/ Yandai Wang
    Name:  Yangdai Wang
    Title:   Chief Executive Officer

 

 

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Exhibit 99.1

 

SOS LIMITED 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OF LOSS

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

 

    Six months ended  
    June 30, 2019     June 30, 2020  
    US$     US$  
Revenue     74       9,917  
Business taxes and surcharges     -       (8 )
Net revenue     74       9,909  
Operating costs     (19 )     (9,830 )
Gross profit     55       79  
Operating expenses                
Selling expense     -       -  
G&A expense     (259 )     (2,670 )
Finance expense     -       -  
Total operating expenses     (259 )     (2,670 )
Operating (profit)loss     (204 )     (2,591 )
Non-operating income     -       48  
Loss on acquisition     -       (5,679 )
Total other expenses     -       (5,631 )
Total loss before tax     (204 )     (8,222 )
Income tax expense     -       (1 )
Net loss from continuing operation     (204 )     (8,223 )
Net loss from discontinued operation     -       (545 )
Net loss     (204 )     (8,768 )
Preferred dividends     -       -  
Net loss attributable to ordinary shareholders     (204 )     (8,768 )
Foreign currency translation adjustment-net of tax     -       7  
Comprehensive of loss     (204 )     (8,761 )

  

 

 

 

SOS LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

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

 

    Six months ended  
    December 31, 2019     June 30, 2020  
Assets            
Cash and cash equivalents     41       610  
Receivables     3,223       1,288  
Prepayment and other assets     2,501       16,829  
Total current assets     5,765       18,727  
Property equipment and software-net     169       331  
Assets of discontinued group     -       53,654  
Total assets     5,934       72,713  
                 
Liabilities and Shareholder's Equity                
Liabilities:                
Accrued liabilities     3,216       13,813  
Tax payable     (1 )     (15 )
Other payables     2,683       6,764  
Total current liabilities     5,898       20,561  
Liabilities of discontinued group     -       50,217  
Total liabilities     5,898       70,778  
Paid up capital     -       14  
Additional paid-in capital     -       10,647  
Retained earnings     (36 )     35  
Current year net profit/(loss)     71       (8,768 )
Other comprehensive income     -       7  
Total Shareholders' Equity     36       1,935  
Total Liabilities and Shareholders’ Equity     5,934       72,713  

  

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SOS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

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

 

    Six months ended  
    June 30, 2019     June 30, 2020  
Cash flows from operating activities:            
Net (loss)     (204 )     (8,768 )
Adjustments:                
Depreciation and amortization     -       3  
Share-based compensation     -       737  
Loss on acquisition     -       5,679  
Receivables, prepayments and other assets     (3,379 )     (12,393 )
Accrued liabilities     3,570       14,678  
Tax payable     4       (15 )
Net cash used in operating activities from discontinued operation     -       545  
Net cash used in operating activities     (10 )     466  
Cash flows from investing activities:                
Purchase of property, equipment and software     (4 )     (202 )
Investment in equity     -       (591 )
Net cash used in investing activities     (4 )     (794 )
Cash flows from financing activities:     -       -  
Proceeds from private equity placement     -       898  
Net cash provided by financing activities     -       898  
Net increase/(decrease), effect of exchange rate changes on cash and cash equivalent     (14 )     570  
Cash and cash equivalent at beginning of the period     27       41  
Cash and cash equivalent at end of the period     13       610  

  

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SOS LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1. Reverse Acquisitions of China Rapid Finance by SOS Limited

 

On May 18, 2020, the Company completed the acquisition with Yong Bao Two Ltd. (“YBT”), the parent company of SOS Information Technology Co., Ltd. (“SOS”). Following the completion of the acquisition, the operations of the Company were primarily comprised of the operations of SOS.

  

The acquisition was accounted for as asset acquisitions. The purchase price for China Rapid Finance (“CRF”) was $9.7 million.  The transaction price of CRF includes 100% of all outstanding stock valued at net $9.7 million.  The stock exchange equaled the 72,636,230 shares of CRF outstanding prior to the issuance of additional shares in the acquisition, at the market price of $0.133 per share. The total purchase price has been allocated based on an estimate of the fair value of CRF’s assets acquired and liabilities assumed with the remainder recorded as an expense.

 

On May 18, 2020, the fair value of the following assets and liabilities were acquired resulting in the total loss of approximately $5.7 million:

 

Dollars in thousands      
Total Purchase Price     9,660  
Net Assets (Liabilities) Acquired:        
Assets        
Cash and cash equivalents     13,664  
Restricted cash     26,524  
Accounts receivable     7,462  
Inventories     8  
Prepaid expenses and other current assets     110  
Non-current assets     2,969  
Other assets     2,682  
Total Assets     53,419  
Liabilities        
Warrant derivative liability     -  
Accounts payable & accrued liabilities     (49,437 )
Total Liabilities     (49,437 )
Net Assets (Liabilities) Acquired     3,982  
Loss on Acquisitions     5,678  

 

2. Non-GAAP adjustments and Non-GAAP results

 

 

    Sixed months ended  
    30-Jun-19     30-Jun-20  
    US$'000'     US$'000'  
Non-GAAP adjusted loss before income tax expenses     (204 )     (1,263 )

 

 

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Exhibit 99.2

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Overview and outlook

 

We are an emerging high-technology company which provides a wide range of services to its corporate and individual members, including marketing data, technology and solutions for insurance companies and emergency rescue services in China. Our mission is to make it easier, safer and more efficient for our clients to obtain and process the data of their target customers.

  

We primarily address the large unmet demand for marketing-related data for clients such as insurance companies, financial institutions, medical institutions, healthcare providers and other service providers in the emergency rescue services industry by creating a SOS cloud emergency rescue service software as a service (SaaS) platform.

 

Furthermore, we have also established a data warehouse with 120 million active customer records as of the date of this report. Our data collection covers a wide variety of sources and are mainly from offline third party purchases, online subscription, AI recognition and cold calls, which account for approximately 75%, 18% and 7% of our data inventory, respectively.

 

Our Products and Services

 

The Company is currently focused on four product lines, including insurance marketing, 10086 hot-line, bank card call center and SaaS services. Currently insurance marketing represents 96.2% of the Company’s total revenue, of which approximately 30% consists of rescue service as a value-added service, with 10086 hot-line, bankcard call center and SaaS individually accounting for 3.3%, 0.3% and 0.2% of the Company’s total revenue, respectively.

 

Insurance marketing

 

We purchase data from our suppliers, including Shandong Shubao  IT Ltd., Jiangxi Chacha IT Ltd. and Liaoning Tianzheng Ltd. With a stable supply of data, we use data mining and analytics technologies to find patterns and valuable information on market opportunities within the large amounts of data we collect, which helps us to provide our clients with data point recommendations.

 

 

 

 

Our strong data mining capabilities lay a solid foundation for the solutions to our clients, which we believe differentiate us from many other competitors in the same market. We have an experienced team of data experts in this field and we have a well-established data infrastructure system, ranging from mining, to warehousing, processing and distribution.

 

We currently only possess an insurance agent license for operations within Inner Mongolia, China. As such, as of the date of this report, our revenues are mainly generated through various agents of the other insurance companies. We primarily work with two agents, Beijing Sense Time  Information Technology Co., Ltd. (“BSIT”), which generates the majority of our insurance marketing revenues, as well as Beijing Ruijing Hangbao  Insurance Agency Ltd

 

Insurance companies such as People's Insurance Company (Group) of China, Ltd. (“PICC”), or Ping An Insurance (Group) Company of China, Ltd. (“Ping An”) will request shortlists from these insurance agents. The insurance agents will then subcontract the task to various vendors such as SOS, and SOS will collect raw data from third parties or from its own data warehouse and utilize its data mining and analytics technologies to process the data, creating a shortlist and selling it to the agents. The agents will then provide the list to insurance companies. We charge information service fee from these insurance agents based on the amount of insurance policy orders placed by insurance companies through these agents. Our service model is represented by the following diagram:

 

 

10086 Hot-line

SOS is also contracted with China Mobile as its outsourced service center and operates the 10086 hot-line for the Hebei Province, charging China Mobile by customer call-in time.

 

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Bank Card Call Center

SOS also operates a promotional center for Guangdong Bank of Development and charges by the number of successfully registered accounts, major costs are air time of land lines.

 

SaaS service

The three major SaaS offerings by SOS are as follows:

 

● basic cloud system (Medical Rescue Card, Auto Rescue Card, Financial Rescue Card and Life Rescue Card)
● cooperative cloud system (information rescue center, intelligent big data, intelligent software and hardware)
● information cloud system (Information Today and E-commerce Today)

 

SOS provides warehouse access to insurance companies, financial institution and medical institutions etc., and generates revenues through a monthly subscription fee.

 

Components of our results of operation

 

Revenue

 

Revenue is derived from providing services to our customers including insurance marketing, 10086 hotline, a bank card call center service and SaaS service. Key factors that affect our future revenue growth include our introduction to new lines of services, our penetration in new territories and international expansion. We recognize revenue to depict the provision of service to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the service. Revenue is recognized after the service has been rendered or performed.

 

Operating costs and gross profit

 

Our major operating costs are purchase costs of data from information suppliers, offline and online collection for insurance marketing, air-time phone bills for our hotline and call center business, and hardware and software operating costs for our SaaS platform.

 

We calculate our gross profit as revenue less operating costs. Our gross profit has been and, we expect, will continue to be affected by a variety of factors, primarily our product line mix, volume sold, and unit fees that we can charge to the customer.

 

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General and administrative expenses

 

General and administrative expenses include management and office personnel compensation and bonuses, stock compensation, corporate level information technology related costs, rent, travel, professional service fees, insurance and general corporate expenses. We expect general and administrative expenses to continue to increase in absolute dollars as we expand our commercial infrastructure to both drive and support our planned growth in revenue and support the additional costs associated with being a public company.

 

Income tax

 

Our income tax provision consists of an estimate of central and provincial income taxes based on enacted central and provincial tax rates, as adjusted for allowable credits, deductions and uncertain tax positions. We are a qualified high-tech enterprise and as such can enjoy a corporate income tax concession rate of 15% instead of 25%.

 

Results of operation

 

Six months ended June 30, 2019 compared to June 30, 2020

 

Revenue

 

Revenue was $9.9 million, up 133 times period-on-period. The robust growth of revenue demonstrates the effectiveness and strong execution of the Company’s strategy, mainly rapid market penetration from regional to a national basis. The expansion occurred from the second-half of 2019 onwards from a single Hebei Province to adjacent territories including Henan Province, Shangdong Province, Zhejiang  Province, Beijing and Tianjing, etc.

 

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SOS Limited

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OF LOSS

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

 

    Six months ended  
    June 30, 2019     June 30, 2020  
    US$     US$  
Revenue     74       9,917  
Business taxes and surcharges     -       (8 )
Net revenue     74       9,909  
Operating costs     (19 )     (9,830 )
Gross profit     55       79  

   

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As of June 30, 2020, SOS focuses on four product lines, including insurance marketing, 10086 hotline, bank card call center service and SaaS service. Insurance marketing represents 96.2% of the Company’s total revenue, with the remaining 3.3% from 10086 hotline service, 0.3% from bank card call center service and 0.2% from SaaS service.

 

Operating Costs and Expenses

 

Operating costs were $9.8 million, almost 516 times up period-on-period from $0.019 million in the first half of 2019 as revenue growth drives up related costs. Mostly these costs include data acquisition costs for our insurance marketing business and land line telephone expenses.

 

General and administrative expenses

 

General and administrative expenses were $2.7 million, up 930% period-on-period from $0.26 million in the first half of 2019. The increase in general and administrative expenses was mainly due to the reverse take-over acquisition-related professional fees of $0.87 million, $0.74 million of increased share-based compensation expenses and $1 million in bad debt provision expenses.  

 

Operating loss

 

GAAP net loss was $8.8 million, compared to a net loss of $0.20 million in the first half of 2019.  The loss came about from increased expenses associated with the reverse take-over acquisition of XRF by SOS, bad debt provision expenses and share-based compensation expenses.

 

Loss on acquisition

 

Note 1 in notes to un-audited condensed consolidated financial statements details the impact of the transaction on May 18, 2020.

 

Income tax

 

The company paid US$0.01 million of corporate income tax for the current period.

 

Non-GAAP adjusted loss before income tax expense was $1.3 million, as compared to $0.2 million in the first half of 2019.  Compared to GAAP results, this loss excludes share-based compensation, loss from acquisition and loss from discontinued operations.

 

GAAP net loss attributable to ordinary shareholders was $8.8 million, as compared to a net loss of $0.20 million in the prior year period.

 

GAAP EPS was $(0.17) per share, as compared to $(0.0017) per share in the prior year period.

 

Balance Sheet and Cash Flow

 

As of June 30, 2020, the Company had cash and cash equivalents of $0.61 million, compared to $0.013 million in the prior year period.  The improvement in operating cash flow was mainly due to the increase in revenue.  The Company believes that its cash resources are more than adequate to fund operations and growth initiatives.

 

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SOS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

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

 

    Six months ended  
    June 30, 2019     June 30, 2020  
Cash flows from operating activities:            
Net (loss)     (204 )     (8,768 )
Adjustments:                
Depreciation and amortization     -       3  
Share-based compensation     -       737  
Loss on acquisition     -       5,679  
Receivables, prepayments and other assets     (3,379 )     (12,393 )
Accrued liabilities     3,570       14,678  
Tax payable     4       (15 )
Net cash used in operating activities from discontinued operation     -       545  
Net cash used in operating activities     (10 )     466  
Cash flows from investing activities:                
Purchase of property, equipment and software     (4 )     (202 )
Investment in equity     -       (591 )
Net cash used in investing activities     (4 )     (794 )
Cash flows from financing activities:     -       -  
Proceeds from private equity placement     -       898  
Net cash provided by financing activities     -       898  
Net increase/(decrease), effect of exchange rate changes on cash and cash equivalent     (14 )     570  
Cash and cash equivalent at beginning of the period     27       41  
Cash and cash equivalent at end of the period     13       610  

 

Investment in equity

 

SOS Limited through its subsidiary, SOS Information Technology Co., Ltd., acquired 100% shares of Inner Mongolia SOS Insurance Agency Co., Ltd. on June 19, 2020 for US$0.6 million.

 

Financing activities

 

SOS Limited received proceeds from private equity investment of eight individuals for the amount of U$0.9 million on May 19, 2020.

 

 

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