SOS Ltd H1 2026 net loss widens to $34.5M
SOS generated $223.724 million of operating cash in the first half, alongside a $27.376 million digital-asset fair-value loss.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
SOS Limited reported unaudited revenue of $48.825 million for the six months ended June 30, 2026, compared with $89.595 million for the six months ended June 30, 2025. Gross loss was $3.673 million, versus $1.309 million, and net loss attributable to SOS Limited was $34.520 million, versus $14.216 million. Operating expenses included $27.376 million of fair-value losses on digital assets.
Operating activities generated $223.724 million of cash, compared with $240.366 million used in the prior-year period. Cash and cash equivalents were $231.895 million as of June 30, 2026, compared with $3.232 million as of December 31, 2025. Net other receivables were $85.907 million as of June 30, 2026, down from $310.393 million as of December 31, 2025; SOS said it received refunds on approximately US$228 million in prepayments to seven service providers after terminating system-development arrangements the providers could not complete. SOS held 802.77 BTC and 2,949.79 ETH, valued at approximately $47.1 million and $4.6 million, respectively, and did not run its mining rigs during the period.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Major pointOperating cash: $223.724 million generated; $240.366 million used in first-half 2025.
Negative
- Major pointSOS-attributable net loss: $34.520 million in first-half 2026, versus $14.216 million in 2025.
- Moderate pointRevenue: $48.825 million in first-half 2026 versus $89.595 million in 2025.
Filing Explained
SOS still reported an approximately eleven point four million dollar enforceable server payable under ongoing settlement discussions.
This Form 6-K furnishes SOS Limited’s unaudited six-month financial statements and incorporates them into its Form F-3 and Form S-8 registration statements. The statements report that SOS issued 2 million Class B ordinary shares to its CEO as share-based compensation during the first half of 2026, increasing the share count and reducing other holders’ percentage ownership absent offsetting changes.
The filing classifies the issuance as share-based compensation; its cash-flow statement reports no proceeds from share issuance during the six months ended
As of
Key Figures
Key Terms
fair value hierarchy financial
allowance for expected credit losses financial
net realizable value financial
noncash consideration financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What revenue did SOS report for the first half of 2026?
How much was SOS's net loss in the first half of 2026?
What did SOS's June 2026 defective-server settlement involve?
How concentrated were SOS's revenues among customers in the first half of 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
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
Commission File Number:
(Translation of registrant’s name into English)
Building 6, East Seaview Park, 298 Haijing Road, Yinzhu Street
West Coast New District, Qingdao City, Shandong Province 266400
People’s Republic of China
+86-532-86617117
(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 ☐
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 statements of the Company on Form F-3 (Registration Number 333-285820) and Form S-8 (Registration Number 333-262636), 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, 2026 and for the Six Months Ended June 30, 2026 and 2025 | |
| 99.2 | Operating and Financial Review and Prospects in Connection with the Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2026 and 2025 | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104* | Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101 |
1
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 7, 2026 | SOS Limited | |
| By: | /s/ Yandai Wang | |
| Name: | Yandai Wang | |
| Title: | Chief Executive Officer | |
2
Exhibit 99.1
SOS Limited
Interim Condensed Consolidated Balance Sheets
(US$ thousands, except share data and per share data, or otherwise noted)
| As of | As of | |||||||
| December 31, 2025 |
June 30, 2026 |
|||||||
| Audited | Unaudited | |||||||
| US$ | US$ | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Trading financial assets | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Other receivables, net | ||||||||
| Amount due from related parties | ||||||||
| Tax recoverable | ||||||||
| Digital assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Operating lease, right-of-use assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Goodwill | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accrued liabilities | ||||||||
| Accounts payable | ||||||||
| Amount due to related parties | ||||||||
| Operating lease liabilities | ||||||||
| Tax payable | ||||||||
| Other payables | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity | ||||||||
| Paid up capital | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Other comprehensive loss | ( | ) | ( | ) | ||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total Shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
SOS Limited
Interim Condensed Consolidated Statements of Comprehensive Loss
(US$ thousands, except share data and per share data, or otherwise noted)
Six months ended June 30, |
Six months ended June 30, |
|||||||
| Unaudited | Unaudited | |||||||
| US$ | US$ | |||||||
| Revenue | ||||||||
| Operating costs | ( | ) | ( | ) | ||||
| Gross loss | ( | ) | ( | ) | ||||
| Gross loss ratio | ( | )% | ( | )% | ||||
| Operating expenses | ||||||||
| Selling expense | ( | ) | ( | ) | ||||
| General and administrative expense | ( | ) | ( | ) | ||||
| Share-based compensation | ( | ) | ( | ) | ||||
| Fair value loss on digital assets | - | ( | ) | |||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses): | ||||||||
| Interest expense | ( | ) | - | |||||
| Other income, net | ||||||||
| Total other income, net | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Non-controlling interests | ||||||||
| Net loss attributable to SOS Limited | ( | ) | ( | ) | ||||
| Other comprehensive loss: | ||||||||
| Foreign currency translation adjustment-net of tax | ( | ) | ||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
| Weighted average number of ordinary shares | ||||||||
| Basic | ||||||||
| Diluted* | ||||||||
| LOSS PER SHARE | ||||||||
| Basic | ( | ) | ( | ) | ||||
| Diluted* | ( | ) | ( | ) | ||||
2
SOS Limited
Unaudited Interim Condensed Consolidated Statements of Equity
(US$ thousands, except share data and per share data, or otherwise noted)
| Ordinary shares | Additional | Accumulated other |
Non- | Total | ||||||||||||||||||||||||||||||||||||||||
| Class A shares |
Class B shares |
Treasury stock |
Total shares |
Par value |
Paid-in capital |
Accumulated deficits |
Statutory Reserve |
comprehensive loss |
controlling interests |
shareholders’ equity |
||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of Class A Ordinary Shares and warrant | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Disposition of NCI | - | - | - | - | - | - | ( | ) | - | - | ) | - | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Ordinary shares | Additional | Accumulated other |
Non- | Total | ||||||||||||||||||||||||||||||||||||||||
| Class A shares |
Class B shares |
Treasury stock |
Total shares |
Par value |
Paid-in capital |
Accumulated deficits |
Statutory Reserve |
comprehensive loss |
controlling interests |
shareholders’ equity |
||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
3
SOS Limited
Interim Condensed Consolidated Statement of Cash Flow
(US$ thousands, except share data and per share data, or otherwise noted)
| Six months ended |
Six months ended |
|||||||
| June 30, 2025 |
June 30, 2026 |
|||||||
| Unaudited | Unaudited | |||||||
| US$ | US$ | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation | ||||||||
| Amortization of right of use assets | - | |||||||
| Disposition of NCI | - | |||||||
| Fair value loss on digital assets | - | |||||||
| Allowance for credit losses - accounts receivable | - | |||||||
| Allowance for credit losses - other receivable | - | |||||||
| Gain on settlement of inventory purchase agreement | - | ( | ) | |||||
| Operating cash flows before movements in working capital | ( | ) | ( | ) | ||||
| Changes in working capital: | ||||||||
| Inventory | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Trading financial assets | - | |||||||
| Other receivables | ( | ) | ||||||
| Amount due from related parties | ( | ) | ( | ) | ||||
| Accrued liabilities | ||||||||
| Accounts payable | ( | ) | ||||||
| Tax payable | ( | ) | ( | ) | ||||
| Other payables | ||||||||
| Net cash (used in)/generated from operating activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Repayment of principle portion of lease liabilities | - | ( | ) | |||||
| Proceeds from share issuance, net of issuance costs | - | |||||||
| Net cash generated from/(used in) financing activities | ( | ) | ||||||
| Net (decrease)/increase on cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of the period | ||||||||
| Effect of exchange rates on cash and cash equivalents | ||||||||
| Cash and cash equivalents at end of the period | ||||||||
| Supplemental cash flow information | ||||||||
| Cash paid for income tax | ||||||||
4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(US$ thousands, except share data and per share data, or otherwise noted)
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES |
We are an emerging blockchain-based and big data-driven marketing solution provider, also engaged in blockchain and cryptocurrency operations, which previously included cryptocurrency mining and is currently suspended. Since April 2021, we launched commodity trading via our subsidiary SOS International Trading Co. Ltd and Weigou International Trading Co Ltd. Major trading commodity includes mineral resin, soy bean, wheat, sesame, liquid sulfur, petrol coke and latex etc.
We were formed in Delaware on July 12, 2004 as China Risk Finance LLC. We began our credit analytics service provider business in 2001. We developed our proprietary, advanced technology over the past 18 years, during which our founders and management team advised many of China’s largest banks in analyzing consumer credit to issue over
On May 5, 2020, we entered into a set of agreements with Yong Bao Two Limited (“YBT”), the shareholders of YBT (the “YBT Shareholders”), eight individual investors introduced by YBT (collectively with the YBT Shareholders, the “Investors”) and True North Financial, LLC to acquire YBT, which controls its variable interest entity SOS Information Technology Co., Ltd.. The transaction was consummated on May 15, 2020. As a result, we now own
On August 3, 2020, we entered into certain share purchase agreement (the “Disposition SPA”) with Hantu (Hangzhou) Asset Management Co., Ltd. (the “Purchaser”). Pursuant to the Disposition SPA, the Purchaser agreed to purchase CRF China Holding Co. Limited, a Hong Kong limited company, China Capital Financial LLC, a Delaware limited liability company, CRF China Limited, a British Virgin Islands company, CRF Technology LLC, a California limited liability company, and HML China LLC, a Delaware limited liability company (collectively, the “XRF Subsidiaries”) in exchange for cash consideration of $
In 2020, we launched our crypto mining business, and started infrastructure services in blockchain security for our big data insurance marketing as well as provide insurance and banking services for digital assets and cryptocurrencies. The Company temporarily shut down mining operations in 2025, as electricity price stayed high causing cryptocurrency mining to no longer be cost-effective.
On May 5, 2020, we acquired data marketing business by entering into a set of agreements with YBT (Yongbao Two Ltd.), the shareholders of YBT (the “YBT Shareholders”), eight individual investors introduced by YBT (collectively with the YBT Shareholders, the “Investors”) and True North Financial, LLC to acquire YBT, which controls its variable interest entity SOS Information. The transaction was consummated on May 15, 2020. As a result, we now own
We purchase data from our suppliers, including Shandong Subao 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 data within the large amounts of data we collect. We then provide specific data point recommendations to our clients.
On November 2, 2022, the Company disposed Qingdao SOS Industry Holding Co, Ltd. off by entering into a certain share purchase agreement (the “Disposition SPA”) with S International Holdings Limited (the “Purchaser”), a Cayman Islands exempt company, and S International Group Limited (“S International” or the “Target”), a British Virgin Islands company and the Company’s wholly owned subsidiary prior to the Disposition. Pursuant to the Disposition SPA, the Purchaser agreed to purchase S International in exchange for cash consideration of $
The Company re-classified revenue generated from incomplete data marketing contract into “Other” in FY2022 and FY2023 annual reporting respectively. The Company ceased entering into new contracts under the legacy business during FY2024; however, certain remaining contracts continued to operate during the current reporting period.
5
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES - continued |
The accompanying consolidated financial statements reflect the activities of SOS Limited and each of the following entities:
| Name | Background | Abbreviation | ||
| SOS Information Technology New York Inc. | ||||
| Yong Bao Two Ltd. | ||||
| Canada XX Exchange Ltd. | ||||
| US XX Exchange Ltd. | ||||
| Future Technology Global Ltd. (HK) | ||||
| FDW Limited | ||||
| China SOS Ltd. | ||||
| FD LLC | ||||
| Qingdao SOS Investment Management Co., Ltd. | ||||
| Qingdao SOS Investment LLP | ||||
| SOS Auto Service Co., Ltd. | ||||
| Inner Mongolia SOS Insurance Agency Co., Ltd. | ||||
| Common Prosperity Technology Co., Ltd. | ||||
| SOS International Trading Co., Ltd. | ||||
| S International Trading Co Limited | ||||
| Weigou International Trading Co., Ltd. |
6
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES - continued |
| Name | Background | Abbreviation | ||
| Shuyun International Trading Co., Ltd. | ||||
| Chexiaoer Technology Co., Ltd. | ||||
| Hebei S Cloud Enterprise Management Co., Ltd. | ||||
| SOS Rescue Service LLC | ||||
| SOS Emergency Rescue Service Ltd. | ||||
| Future Digital Investment Ltd. | ||||
| Qingdao Zhonghai Venture Capital Management Co., Ltd. | ||||
| Chexiaoer (Tianjin Automobile) Management Co., Ltd. | ||||
| Hebei Chexiaoer Technology Co., Ltd. | ||||
| Zhongjian Tianxia(Beijing) Investment Co., Ltd. | ||||
| Xinxin Ranran International Trading Co. Ltd | ||||
| Future Digital Trading Ltd. | ||||
| Qingdao Yonbao Ronghe International Trading Co Ltd. | ||||
| Future Digital Trading Pte. Ltd. |
7
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES |
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP to reflect the financial position and results of operations of the Company. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for any other interim period or for the full year of 2026. Accordingly, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the years ended December 31, 2025 and 2024.
The significant accounting policies followed by the Company in the preparation of the accompanying unaudited condensed consolidated financial statements are summarized below.
Principles of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the wholly- foreign owned enterprise (“WFOE”) over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
Variable Interest Entity Agreement
On November 2, 2022, the Company entered into a certain share purchase agreement (the “Disposition SPA”) with S International Holdings Limited (the “Purchaser”), a Cayman Islands exempt company, and S International Group Limited (“S International” or the “Target”), a British Virgin Islands company and the Company’s wholly owned subsidiary prior to the Disposition. Pursuant to the Disposition SPA, the Purchaser agreed to purchase S International in exchange for cash consideration of $
As the VIE structure has been unwound, the financial results of the former VIE and its subsidiaries are no longer consolidated into the Company’s financial statements after the Closing Date. As of the date of the annual report of December 31, 2026, our current corporate structure does not contain any VIE in mainland China and neither we nor our subsidiaries has intention establishing any VIEs in mainland China in the future.
8
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Reverse Acquisitions of China Rapid Finance by SOS
On May 18, 2020, the Company completed the reverse acquisition with Yong Bao Two Ltd. (“YBT”), the parent company of SOS Information Technology Co., Ltd. (“SOS”), acquiring
Following the completion of the acquisition, the operations of the Company were primarily comprised of the operations of SOS.
SOS was determined to be the accounting acquirer of the Company. As such, the historical financial statements are those of SOS, and SOS’s equity has been re-cast to reflect the equity structure of the Company and the shares of common stock received.
The reverse acquisition was accounted for as asset acquisitions. The purchase price for China Rapid Finance (“CRF”) was $
On May 18, 2020, the fair value of the following assets and liabilities were acquired resulting in the total loss of approximately $
| US$ thousands | ||||
| Total Purchase Price | $ | |||
| Net Assets Acquired: | ||||
| Assets | ||||
| Cash and cash equivalents | ||||
| Restricted cash | ||||
| Accounts receivable | ||||
| Inventories | ||||
| Prepaid expenses and other current assets | ||||
| Intangible assets | ||||
| Other assets | ||||
| Total Assets | ||||
| Liabilities | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Total Liabilities | ( | ) | ||
| Net Assets Acquired | ||||
| Loss on Acquisition | $ | |||
9
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
On August 3, 2020, SOS Limited (the “Company,” previously known as China Rapid Finance Limited) and Hantu (Hangzhou) Asset Management Co., Ltd. (the “Purchaser”) entered into certain share purchase agreement (the “Disposition SPA”). Pursuant to the Disposition SPA, the Purchaser agreed to purchase CRF China Holding Co. Limited, a Hong Kong limited company (“CRF China”), China Capital Financial LLC, a Delaware limited liability company (“China Capital”), CRF China Limited, a British Virgin Islands company (“CRF BVI”), CRF Technology LLC, a California limited liability company (“CRF Technology”), and HML China LLC, a Delaware limited liability company (“HML”) (collectively, the “Subsidiaries”) in exchange for cash consideration of $
On August 3, 2020, the fair value of the following assets and liabilities were disposed of resulting in the total gain of approximately $
| US$ thousands | ||||
| Total Selling Price | $ | |||
| Net Assets Disposed: | ||||
| Total Assets | ||||
| Total Liabilities | ( | ) | ||
| Net Assets Disposed | ||||
| Income from disposal of discontinued operations | $ | |||
Loss on discontinued operations for the year ended December 31, 2020 was as follows:
| US$ thousands | ||||
| Revenue | $ | |||
| Expenses | ( | ) | ||
| Loss on discontinued operations | $ | ( | ) | |
On November 2, 2022, the fair value of the following assets and liabilities were disposed of resulting in the total gain of approximately $
| US$ thousands | ||||
| Total Selling Price | $ | |||
| Net Assets Disposed: | ||||
| Total Assets | ||||
| Total Liabilities | ( | ) | ||
| Net Assets Disposed | ||||
| Gain on disposal of discontinued operations | $ | |||
Loss on discontinued operations for the year ended December 31, 2022 was as follows:
| US$ thousands | ||||
| Revenue | $ | |||
| Expenses | ( | ) | ||
| Loss on discontinued operations | $ | ( | ) | |
10
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Disposal loss from selling off insurance marketing business segment
Pursuant to the Share Purchase Agreement (this “Agreement”) is made and entered into as of November 2, 2022 by and among (i) S International Holdings Limited, a Cayman Islands exempt company (the “Purchaser”), (ii) S International Group Limited, a British Virgin Islands company (the “Company”), and (iii) SOS Limited, a Cayman Islands exempt company (“SOS” or the “Seller” of disposed asset group in insurance marketing). The Purchaser, the Company and the Seller are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.
As at the date hereof, (i) SOS owns
The Seller desires to sell to the Purchaser, and the Purchaser desire to purchase from the Seller, all of the Purchased Shares (as hereinafter defined) in exchange for US$
| US$ thousands | ||||
| Total Purchase Price | ||||
| Net Assets Acquired: | ||||
| Assets | ||||
| Cash and cash equivalents | ||||
| Accounts receivable | ||||
| Inventories | ||||
| Prepaid expenses and other current assets | ||||
| Fixed assets | ||||
| Long term investment | ||||
| Total assets | ||||
| Liabilities | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Tax recovery | ||||
| Leasing liabilities | ( | ) | ||
| Total Liabilities | ( | ) | ||
| Accumulated Other Comprehensive Income | ||||
| Net Assets Sold: | ||||
| Gain on disposal | ||||
11
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Use of estimates and assumptions
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the balance sheet date, and the reported amounts of revenues and expenses during the reporting period.
Significant estimates and judgments reflected in the Company’s consolidated financial statements include, but are not limited to:
| ● | allowance for expected credit losses and recoverability of receivables and prepayments; |
| ● | valuation of inventories at the lower of cost and net realizable value. |
These estimates are based on historical experience, current market conditions, and various other assumptions that management believes to be reasonable under the circumstances. However, actual results could differ materially from those estimates.
The Company’s estimates are subject to a higher degree of uncertainty due to the nature of its operations, including commodity trading activities, digital asset exposure, and evolving business strategies.
Foreign currency translation and transaction
The reporting currency of the Company is the U.S. dollar. The Company in China conducts its businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. The statement of income accounts is translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
Translation adjustments included in accumulated other comprehensive loss amounted to $
12
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand; demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than three months.
Derivative Instruments and Trading Activities
The Company engages in futures trading activities through accounts held with a licensed futures broker. These activities are classified as trading activities and are not designated as hedging instruments.
Funds held in futures trading accounts primarily represent margin deposits and settlement balances and are not classified as cash and cash equivalents due to their restricted nature and exposure to market risk.
The Company accounts for its futures contracts as derivative instruments in accordance with applicable accounting guidance. Derivatives are recognized as either assets or liabilities in the consolidated balance sheets and are measured at fair value.
Changes in the fair value of derivative instruments, including both realized and unrealized gains and losses, are recognized in earnings in the period in which they arise.
The Company closed out its open futures positions with associated margin deposits in May 2026.
Accounts receivable, net
Accounts receivable represent amounts due from customers for goods delivered or services rendered for which the Company has an unconditional right to consideration. Accounts receivable are recognized when control of goods or services has been transferred to the customer and are recorded at the invoiced amount, net of an allowance for expected credit losses.
The Company maintains an allowance for expected credit losses in accordance with ASC 326. The allowance is based on management’s estimate of lifetime expected credit losses inherent in the accounts receivable balance. In estimating expected credit losses, the Company considers a combination of factors, including the aging of receivables, historical collection experience, current economic conditions, industry trends, and forward-looking information, as well as specific customer credit risk characteristics.
The Company also evaluates subsequent cash collections, customer payment history, and the financial condition of significant customers in assessing the adequacy of the allowance. Receivables are assessed on a collective basis when similar risk characteristics exist and on an individual basis for customers with elevated credit risk or significant outstanding balances.
A significant portion of the Company’s accounts receivable is generated from commodity trading transactions and service arrangements with a limited number of counterparties. These balances may be subject to increased credit risk due to the nature of the transactions and the financial condition of the customers.
The determination of the allowance for expected credit losses requires significant judgment and is sensitive to changes in economic conditions, customer creditworthiness, and other factors. If actual collections differ from management’s estimates, the Company may be required to record additional provisions in future periods.
Receivables are written off when management determines that collection is not probable after all reasonable collection efforts have been exhausted.
In certain arrangements, customers may make advance payments or balances may be settled through offsetting transactions. The Company evaluates the substance of these arrangements to determine whether amounts should be classified as accounts receivable or contract liabilities based on the timing of revenue recognition and the Company’s right to consideration.
13
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Other receivables and prepayments
Other receivables and prepayments include advances to suppliers, deposits, loans to third parties and employees, and other non-trade receivables arising from the Company’s operations.
Prepayments primarily represent amounts advanced to suppliers in connection with commodity trading transactions and are expected to be settled through delivery of goods or services.
Other receivables include, among others, loan receivables, refundable deposits, advances, and other non-operating receivables.
The Company evaluates the classification of balances based on the underlying nature of the transaction, including whether amounts represent prepayments for goods or services, financing arrangements, or other receivable balances.
Allowance for credit losses
The Company recognizes an allowance for expected credit losses on other receivables and certain prepayments where recovery is uncertain. The allowance is determined based on:
| ● | aging of balances; |
| ● | historical collection experience; |
| ● | specific identification of high-risk balances; |
| ● | counterparty creditworthiness; |
| ● | existence of supporting agreements and collateral; |
| ● | subsequent settlement or recovery; |
| ● | macroeconomic and industry conditions. |
For certain balances, particularly long-outstanding advances or loans, the Company applies a specific assessment approach, whereby additional allowance is recognized based on management’s assessment of expected recoverability.
Balances deemed uncollectible are written off against the allowance when all reasonable collection efforts have been exhausted.
Inventories
The availability and prices of inventories are subject to wide fluctuations due to factors such as changes in weather conditions, government programs and policies, competition, changes in customer preferences. Currently, the Company entered into non-derivative contracts. The inventories are valued at the lower of cost or market. The Company determines cost based on the first-in, first-out method. Net realizable value represents the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
The Company’s inventories primarily consist of commodities and trading goods, including sesame, gold concentrate powder, sulfur, coal, diluted asphalt, servers, mining machines, and other related products.
The Company performs periodic reviews of inventory to identify slow-moving, excess, or obsolete items. Such reviews consider inventory ageing, historical turnover, current market conditions, expected selling prices, and estimated costs to sell. Where the carrying value of inventory exceeds its net realizable value, an impairment loss is recognized in cost of revenues.
For certain commodity-based inventories, including metal-related products, the Company estimates NRV based on observable market prices of underlying commodities (e.g., gold and silver), product-specific characteristics such as grade or metal content, and applicable pricing or recovery coefficients. Estimated costs to complete and sell, including processing, refining, and logistics costs, are also considered in determining NRV.
The Company applies additional scrutiny to inventories held for extended periods, as such inventories may be subject to increased uncertainty regarding realizability and timing of sale.
Inventory write-downs establish a new cost basis and are not subsequently reversed in future periods under U.S. GAAP. Value-added taxes (“VAT”) related to inventory purchases are recorded separately and are not included in inventory cost.
The determination of NRV involves significant judgment and estimates, particularly in relation to market price volatility, expected selling prices, and costs to sell.
14
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Property, plant and equipment, net
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
| Category | Depreciation method | Estimated useful lives | ||
| Office equipment, fixtures and furniture | Straight-line | |||
| Mining equipment | Straight-line | |||
| Computer | Straight-line | |||
| Motor vehicles | Straight-line |
The cost and accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of income and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.
Digital assets
The Company’s digital assets consist primarily of Bitcoin (“BTC”) and Ethereum (“ETH”). Effective January 1, 2025, the Company adopted ASU 2023-08, Accounting for and Disclosure of Crypto Assets, which requires qualifying crypto assets to be measured at fair value, with changes in fair value recognized in earnings.
Digital assets are initially recognized at fair value at the time of receipt or acquisition. Subsequent to initial recognition, digital assets are remeasured at fair value at each reporting date using quoted prices in active markets for identical assets.
Changes in fair value are recognized in earnings and presented separately as fair value gain or loss on digital assets in the consolidated statements of operations.
The Company determines fair value based on observable market prices from major cryptocurrency exchanges, which represent the principal market for these assets. Digital assets are classified as Level 1 within the fair value hierarchy under ASC 820.
The Company has designated Blockchain.com (www.blockchain.com) as its principal active market for the trading of crypto assets, including BTC and ETH.
The Company has determined that Blockchain.com constitutes the principal active market for its crypto asset holdings based on the following selection factors set forth under US GAAP, in particular ASC 820 (Fair Value Measurement) and ASC 350-60 (Intangible Assets — Crypto Assets). Under ASC 820-10-20, fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Among markets accessible to the Company, Blockchain.com exhibits characteristics that support its designation as the principal market: consistent and accessible trading volume enabling price discovery, established global recognition as a leading digital asset platform, publicly verifiable and real-time quoted prices, and substantive regulatory compliance facilitating reliable valuation inputs.
The Company adopted this standard using the modified retrospective method, with a cumulative effect adjustment recorded to retained earnings as of January 1, 2025.
Prior to adoption, digital assets were accounted for as indefinite-lived intangible assets and measured at cost less impairment.
Digital asset mining
The Company has entered into digital asset mining pools by executing contracts with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed digital assets award the mining pool operator receives, for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.
Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.
15
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
The Company participates in digital asset mining activities by providing computing power to mining pool operators in exchange for digital asset rewards.
These arrangements are accounted for as contracts with customers under ASC 606. The Company has a single performance obligation, which is to provide computing power to the mining pool operator.
The performance obligation is satisfied at a point in time when the mining pool operator successfully validates a block and the Company becomes entitled to its share of the reward.
The consideration received is noncash and is measured at fair value at the time control of the digital assets is transferred to the Company. The transaction price is variable and is constrained until it is probable that a significant reversal of cumulative revenue will not occur, which is generally when the reward is confirmed by the mining pool operator.
Revenue is recognized at that point in time based on the fair value of the digital assets received.
The Company did not generate revenue from digital asset mining during the period ended June 30, 2026.
Goodwill
Goodwill of $
Impairment for long-lived assets
Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
Such events or changes in circumstances include, but are not limited to:
| ● | significant adverse changes in market conditions; |
| ● | declines in cryptocurrency prices; |
| ● | reduced mining output or utilization; |
| ● | technological obsolescence of mining equipment; and |
| ● | changes in the expected use of the assets. |
The determination of impairment involves significant judgment and estimates, including assumptions related to future cash flows, expected utilization of assets, cryptocurrency market conditions, and discount rates.
The Company has recognized significant impairment losses on mining equipment and related infrastructure in prior periods, reflecting changes in market conditions and expected economic benefits.
As disclosed in Note 8, impairment losses recognized during the period ended June 30, 2026 and the years ended December 31, 2025 amounted to nil and $
16
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Other payables
Other payables primarily consist of non-trade operating liabilities, including deposits received under hosting arrangements, freight and logistics-related balances, rental and service-related payables, and other operational settlement obligations.
Other payables are initially recognized at the invoiced or contractual amount and subsequently measured at amortized cost, which approximates fair value due to the short-term nature of the balances.
Deposits received under hosting and operational agreements are recognized as liabilities until the related contractual obligations are fulfilled, settled, refunded, or otherwise extinguished in accordance with the underlying agreements.
The Company periodically evaluates long-outstanding balances to assess settlement expectations, contractual obligations, and appropriate financial statement classification.
Accounts payable
Accounts payable primarily represent obligations arising from purchases of inventory, commodity trading goods, equipment, logistics services, and other operating expenditures incurred in the ordinary course of business.
Certain balances classified within accounts payable relate to advances received from customers in connection with commodity trading arrangements. Such balances primarily represent customer prepayments received prior to delivery of goods and are recognized as contract liabilities until the related performance obligations are satisfied in accordance with ASC 606.
The Company’s trading activities may also involve advances paid to suppliers and settlement arrangements associated with commodity transactions. Management evaluates the nature and classification of balances based on the underlying contractual arrangements and transaction substance.
Accounts payable are initially recognized at the invoiced amount and subsequently measured at amortized cost, which approximates fair value due to the short-term nature of the balances.
The Company periodically evaluates long-outstanding balances to assess:
| ● | commercial substance; |
| ● | legal enforceability; |
| ● | settlement expectations; |
| ● | related-party considerations; and |
| ● | whether reclassification or additional disclosure is required. |
The determination of appropriate classification and settlement assessment involves management judgment, particularly for balances arising from commodity trading arrangements and long-outstanding transactions.
Fair value measurement
The Company measures certain financial assets at fair value in accordance with ASC 820, Fair Value Measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company uses a three-level hierarchy to prioritize inputs used in measuring fair value:
| ● | Level 1 — quoted prices (unadjusted) in active markets for identical assets; |
| ● | Level 2 — observable inputs other than quoted prices included in Level 1; |
| ● | Level 3 — unobservable inputs. |
17
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Digital Assets
The Company accounts for its digital assets, including Bitcoin (“BTC”) and Ethereum (“ETH”), in accordance with ASU 2023-08. Digital assets are measured at fair value with changes in fair value recognized in earnings in the period in which they occur.
Fair value is determined based on quoted market prices in active markets for identical assets and is classified as Level 1 in the fair value hierarchy.
As of June 30, 2026 and December 31, 2025, the carrying value of digital assets approximated their fair value.
Fair value measurement of digital assets
Effective January 1, 2025, the Company adopted ASU 2023-08, Accounting for and Disclosure of Crypto Assets, which requires qualifying crypto assets to be subsequently measured at fair value with changes in fair value recognized in earnings.
The Company’s digital assets consist primarily of Bitcoin (“BTC”) and Ethereum (“ETH”). Digital assets are measured at fair value at each reporting date using quoted prices in active markets for identical assets and are classified as Level 1 fair value measurements under ASC 820, Fair Value Measurement.
As of June 30, 2026, the Company held approximately:
During the period ended June 30, 2026, the Company recognized net unrealized fair value losses on digital assets of approximately $
Prior to adoption of ASU 2023-08, digital assets were accounted for as indefinite-lived intangible assets under ASC 350 and measured at cost less impairment.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, using the five-step model: (i) identify the contract, (ii) identify performance obligations, (iii) determine transaction price, (iv) allocate transaction price, and (v) recognize revenue when or as performance obligations are satisfied. The Company’s revenue streams primarily consist of (i) commodity trading revenue and (ii) hosting and technology service revenue.
| (a) | Commodity Trading Revenue |
The Company generates revenue from the purchase and sale of commodities (including agricultural products, coal, and other materials).
Revenue is recognized at a point in time when control of the goods is transferred to the customer. Control is generally considered transferred when:
| ● | the goods have been delivered to the customer or designated third-party warehouse; |
| ● | legal title has passed to the customer; |
| ● | the customer has assumed the significant risks and rewards of ownership; and |
| ● | the Company has a present right to payment. |
The Company enters into back-to-back purchase and sales arrangements and acts as a principal in these transactions, as it controls the goods prior to transfer and is primarily responsible for fulfillment. Accordingly, revenue is recognized on a gross basis.
18
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
| (b) | Service Revenue (Technology Services) |
The Company provides technology services, including insurance marketing and customer data processing.
Revenue is recognized over time, as services are rendered, based on monthly service periods. The Company typically:
| ● | provides services continuously over the contract period; and |
| ● | recognizes revenue based on monthly service settlement statements agreed with customers. |
Revenue is recognized when:
| ● | services have been performed; |
| ● | the customer has acknowledged or accepted the services; and |
| ● | the Company has an enforceable right to payment. |
| (c) | Hosting Services Revenue |
The Company is engaged in cryptocurrency mining (which was temporarily suspended during the reporting period) and provides hosting services, including electricity supply, infrastructure support, and equipment maintenance.
Revenue is recognized over time as the services are provided, as customers simultaneously receive and consume the benefits of the services.
Service fees are typically based on agreed rates (e.g., power usage or hosting capacity) and are recognized in the period the services are rendered.
| (d) | Cryptocurrency Mining Revenue |
In prior periods, the Company generated revenue from cryptocurrency mining. During the first half year of 2026, the Company did not engage in cryptocurrency mining activities due to economic factors and the lack of suitable mining equipment. Accordingly, no mining revenue was recognized during the year. The Company is currently focused on hosting service activities and may resume mining operations upon acquisition of new equipment.
Transaction Price and Variable Consideration
The transaction price is based on contractual consideration and excludes value-added taxes (“VAT”), which are presented as a reduction of revenue.
Variable consideration is included only to the extent that it is probable that a significant reversal will not occur. Variable consideration is generally not significant for the Company’s current revenue streams.
Significant Judgments
Significant judgments applied by management include:
| ● | determining whether the Company acts as principal or agent in commodity trading transactions; |
| ● | assessing the timing of transfer of control for commodity sales; |
| ● | determining the appropriate pattern of revenue recognition for service arrangements; and |
| ● | evaluating collectability and whether it is probable that consideration will be received. |
Management considers contractual terms, delivery documentation, customer acceptance, and historical collection experience in making these judgments.
19
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Operating lease
We adopted ASU No. 2016-02, Leases (Topic 842), or ASC 842, from January 1, 2019. We determine if an arrangement is a lease or contains a lease at lease inception. For operating leases, we recognize a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of our leases do not provide an implicit rate, we estimate our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. Our leases often include options to extend and lease terms include such extended terms when we are reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when we are reasonably certain not to exercise those options.
Value added taxes
Revenue is presented net of value-added taxes (“VAT”). VAT is levied on the Company’s sales of goods and services in the PRC at applicable rates ranging primarily from
Entities that are general VAT taxpayers are permitted to offset qualified input VAT paid to suppliers against output VAT on sales. The net amount of VAT payable or recoverable is recorded within “taxes payable” or “other receivables,” as appropriate.
Input VAT that has not yet been certified or is pending verification by tax authorities (“uncertified input VAT”) is recorded separately and is not available for offset until certification is completed.
Excess input VAT may be carried forward to future periods for offset against output VAT. The Company assesses the recoverability of input VAT balances based on expected future taxable sales.
Certain gold and gold concentrate transactions may qualify for VAT exemption under applicable PRC tax regulations.
VAT returns filed by the Company’s subsidiaries in the PRC are subject to examination by the tax authorities for a period of up to
Income taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Current income taxes are provided based on taxable income in accordance with the applicable tax laws and regulations of the relevant tax jurisdictions.
Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which the temporary differences are expected to be recovered or settled.
The Company records a valuation allowance against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers both positive and negative evidence in determining whether a valuation allowance is required. The Company accounts for uncertain tax positions in accordance with ASC 740. A tax benefit from an uncertain tax position is recognized only when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority, based on the technical merits of the position. The amount recognized is measured as the largest amount of tax benefit that is greater than
For interim reporting purposes, the Company determines its income tax provision in accordance with the applicable interim reporting requirements of ASC 740, based on the estimated annual effective tax rate, adjusted for the tax effects of significant unusual or infrequently occurring items, where applicable.
Other comprehensive income
Comprehensive income consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes revenues, expenses, gains and losses that, under U.S. GAAP, are included in comprehensive income but excluded from net income (loss). The Company’s other comprehensive income (loss) primarily consists of foreign currency translation adjustments arising from the translation of the financial statements of subsidiaries whose functional currencies are other than the U.S. dollar.
20
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Losses per share
The Company computes losses per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Accordingly, basic and diluted loss per share are the same where all potentially dilutive ordinary shares are anti-dilutive. For the period ended June 30, 2026 and the period ended June 30, 2025, there are
Share-based compensation
The Company recognizes compensation expense for all share–based payments in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. The Company follows the fair value method of accounting for awards granted to employees, directors, officers and consultants. Share-based awards are measured at their estimated fair value on each respective grant date. The Company recognizes share-based payment expenses over the vesting period. The Company’s share-based compensation awards are subject only to service-based vesting conditions. Forfeitures are accounted for as they occur. The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option and the expected dividend yield which is based on the historical dividends issued by the Company. The Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected volatility is calculated based on the analysis of other public companies. Risk–free interest rates are calculated based on risk–free rates for the appropriate term. The expected life is calculated as (i) the mid-point between the average vested date and the contractual expiration of the option for executives and directors and (ii) three years from the average vesting date for all others due to limited exercise history. Determining the appropriate fair value model and calculating the fair value of equity–based payment awards require the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment.
Employee benefits
The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans by law. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued.
21
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - continued |
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 added a new impairment model (known as the CECL model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to financial assets measured at amortized costs, including loans and accounts receivable. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. As the company was no longer an emerging growth company, the Company adopted ASU 2016-13 effective January 1, 2025, which did not have a material impact on the consolidated financial statements.
Income Taxes (Topic 740)
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740). ASU No. 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024, on a prospective basis. Early adoption is permitted. The Company adopted ASU 2016-13 effective January 1, 2025, which did not have a material impact on the consolidated financial statements.
| 3. | Trading Financial Assets and Futures Trading Activities |
During 2025, the Company engaged in speculative futures trading activities through accounts held with a licensed futures broker in the PRC. These activities were conducted to facilitate the Company’s commodity trading operations and were not designated as hedging instruments for accounting purposes.
Balances held within futures trading accounts, including margin deposits and settlement balances, are classified as trading financial assets and are measured at fair value.
As of June 30, 2026 and December 31, 2025, trading financial assets primarily consisted of balances held with a licensed futures broker related to commodity futures trading activities.
For the period ended June 30, 2026, the Company recognized:
| ● | realized trading gains of approximately RMB |
The Company closed out its open futures positions with associated margin deposits in May 2026.
22
| 4. | ACCOUNTS RECEIVABLE, NET |
Accounts receivable represent amounts due from customers for goods delivered or services rendered for which the Company has an unconditional right to consideration. Accounts receivable are recorded net of an allowance for credit losses in accordance with ASC 326.
Accounts receivable, net consist of the following:
| US$ thousands | December 31, 2025 | June 30, 2026 | ||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
| Movements of allowance for credit losses are as follows: | ||||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Foreign exchange translation | ||||||||
| Ending balance | $ | $ | ||||||
The Company estimates expected credit losses using a combination of aging analysis, historical loss experience, and forward-looking information, including current economic conditions, industry trends, and specific customer credit risk factors. Management also considers subsequent cash collections, customer payment history, and the financial condition of significant customers in evaluating the adequacy of the allowance.
The determination of the allowance for expected credit losses requires significant judgment. Changes in assumptions regarding customer credit risk, economic conditions, and collectability could materially affect the amount of the allowance recorded.
Given the concentration of receivables and limited collection history for certain customers, actual collections may differ from management’s current estimates and assumptions used in determining the allowance for expected credit losses.
Credit Risk and Concentration
The Company’s accounts receivable are primarily generated from its commodity trading business and service arrangements. These receivables are concentrated among a limited number of customers. During the six months ended June 30, 2026, the Company had two customers that accounted over
As of June 30, 2026, a significant portion of accounts receivable was due from a small number of counterparties. The financial condition of these customers and their ability to make timely payments may be affected by market conditions, which could adversely impact the Company’s ability to collect outstanding balances.
Collectability and Subsequent Receipts
As of June 30, 2026, certain accounts receivable balances remained outstanding beyond their contractual payment terms, and collections subsequent to year-end were limited for certain customers. These factors indicate an increased level of estimation uncertainty in determining the allowance for expected credit losses.
The Company monitors the collectability of its receivables on an ongoing basis and records additional allowances when necessary. Receivables are written off when all reasonable collection efforts have been exhausted.
Classification and Presentation
Certain customer arrangements may involve advance payments, offsetting transactions, or settlement through non-standard payment terms. The Company evaluates these arrangements to determine whether balances should be presented as accounts receivable or contract liabilities based on the underlying contractual terms and the timing of revenue recognition.
Management applies judgment in determining the appropriate classification of such balances. Management applies judgment in determining the appropriate classification of such balances based on the underlying contractual arrangements and settlement terms.
23
| 5. | OTHER RECEIVABLES, NET |
Other receivables consist of the following:
| US$ thousands | December 31, 2025 | June 30, 2026 | ||||||
| Deposit to non-trade suppliers | $ | $ | ||||||
| Loan receivable | ||||||||
| Prepayments | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total other receivables, net | $ | $ | ||||||
| Movements of allowance for credit losses are as follows: | ||||||||
| Beginning balance | $ | $ | ||||||
| Addition | 1,644 | |||||||
| Foreign exchange translation | ||||||||
| Ending balance | $ | $ | ||||||
Prepayments primarily represent advances to suppliers and service providers in connection with commodity trading, procurement and other operating activities. These balances are generally expected to be settled through the delivery of goods, provision of services or, where applicable, refunds in accordance with the underlying contractual arrangements.
During the six months ended June 30, 2026, prepayments decreased significantly, primarily due to refunds received in respect of certain system development arrangements entered into during 2025. The Company had made prepayments of approximately US$
Loan receivable include loans to third parties and employees, refundable deposits, and other advances. Certain balances relate to non-operating or financing-type arrangements and are subject to separate recoverability assessment.
Credit risk and aging
A portion of the Company’s other receivables and prepayments has been outstanding for extended periods. Long-aged balances are subject to increased uncertainty regarding recoverability, particularly where:
| ● | no recent settlement activity exists; |
| ● | contractual terms have expired or are unclear; or |
| ● | counterparties are experiencing financial difficulty. |
Management performs specific assessments for such balances and records allowances where appropriate. As of June 30, 2026, the total allowance of approximately US$
During the six months ended June 30, 2026, the Company recognized impairment losses of approximately US$
These impairments primarily relate to:
| ● | long-outstanding advances to suppliers; |
| ● | balances where delivery of goods or services is uncertain or no longer expected; and |
| ● | receivables where recovery is uncertain due to counterparty-specific factors. |
24
| 5. | OTHER RECEIVABLES, NET - continued |
Significant judgment and estimation uncertainty
The determination of recoverability involves significant judgment, particularly for:
| ● | long-aged balances; |
| ● | advances subject to extended settlement periods or non-standard contractual arrangements; |
| ● | loan-type arrangements with third parties; and |
| ● | balances subject to dispute or restructuring. |
Changes in assumptions or future collection outcomes could result in material adjustments to the carrying amounts.
| 6. | INVENTORIES |
Inventories consist of the following:
| December 31, | June 30, | |||||||
| US$ thousands | 2025 | 2026 | ||||||
| Commodity inventories and trading goods | $ | $ | ||||||
| Allowance for inventory obsolescence | ( | ) | ( | ) | ||||
| Total Inventory, net | ||||||||
The movement of inventory reserve was as follows:
SCHEDULE OF INVENTORY RESERVE
| Six months ended | ||||||||
| Twelve months ended | December 31, 2025 | June 30, 2026 | ||||||
| Balance at beginning of year | $ | $ | ||||||
| Additional/(reversal) charge | ( | ) | ||||||
| Foreign currency translation difference | ||||||||
| Balance at the end of year | $ | $ | ||||||
The Company’s inventories primarily consist of commodity trading goods, including metal-related products, agricultural commodities, and other materials.
Inventories are stated at the lower of cost or net realizable value. The Company periodically reviews its inventories for slow-moving, excess or obsolete items and for declines in estimated net realizable value. In determining net realizable value, the Company considers, among other factors, observable commodity prices, inventory age, expected selling prices, historical transaction experience, market conditions and estimated costs to complete and sell.
During the six months ended June 30, 2026, no new inventory write-down was recognized. The decrease in the allowance for inventory obsolescence from approximately $
In June 2026, the Company reached a settlement agreement with the supplier in respect of certain supercomputing servers purchased under contracts entered into in March 2024. Under the settlement agreement, the supplier agreed to refund the full contract amount of approximately RMB
The
The balance of the refund relating to the
Certain commodity inventories are held as part of the Company’s trading activities and may remain in inventory for extended periods pending favorable market conditions. Accordingly, actual realizable values may differ from management’s estimates and may be affected by future changes in commodity prices, market liquidity, customer demand and the timing of sale.
25
| 7. | OPERATING LEASE LIABILITIES |
The Company adopted ASU No. 2016-02 and related standards (collectively ASC 842, Leases), which replaced previous lease accounting guidance, on January 1, 2019 using the modified retrospective method of adoption. The Company elected the transition method expedient which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, prior periods have not been restated.
Operating lease expense for six months ended June 30, 2026 and 2025 was $
On February 5, 2025, the Company entered into a virtual office lease agreement with a monthly lease payment of $
Supplemental balance sheet information related to leases is as follows:
| Location on Face of Balance Sheet | December 31, 2025 | June 30, 2026 | ||||||||
| Operating leases: | ||||||||||
| Operating lease right of use assets | Operating lease, right-of-use assets | $ | | $ | | |||||
| Current operating lease liabilities | Operating lease liabilities - current | $ | $ | |||||||
| Non-current operating lease liabilities | Operating lease liabilities | - | - | |||||||
| Total operating lease liabilities | $ | $ | ||||||||
| 8. | PROPERTY, PLANT AND EQUIPMENT, NET |
Property, plant and equipment consist of the following:
| December 31, 2025 | June 30, 2026 | |||||||
| Office equipment, fixtures and furniture | $ | $ | ||||||
| Mining equipment | ||||||||
| Motor vehicle | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Less: Impairment | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The depreciation expenses for the years ended June 30, 2026 and 2025 was $
The Company’s mining equipment primarily consists of cryptocurrency mining machines and related infrastructure used in digital asset mining operations. Due to significant changes in market conditions in recent years, including declines in cryptocurrency mining profitability, increases in mining difficulty, technological obsolescence of mining equipment, reduced mining output, and changes in expected future economic benefits, the Company recognized substantial impairment losses on certain mining equipment assets in prior periods.
The determination of impairment involves significant judgment and estimates, including assumptions regarding future mining output, cryptocurrency market conditions, expected utilization, useful lives, residual values, and estimated future cash flows. Actual results could differ materially from those estimates.
The Company continues to evaluate the remaining useful lives, utilization, and recoverability of mining equipment in light of evolving market conditions and operational performance.
| 9. | DIGITAL ASSETS |
The Company’s digital assets consist of Bitcoin (“BTC”) and Ethereum (“ETH”).
| Balance as of January 1, 2025 | ||||
| Cumulative effect upon adoption of ASU 2023-08 | ||||
| Less: Fair value loss on digital assets | ( | ) | ||
| Balance as of December 31, 2025 | ||||
| Less: Fair value loss on digital assets | ( | ) | ||
| Balance as of June 30, 2026 |
26
| 10. | INTANGIBLE ASSETS |
Adoption of ASU 2023-08
Effective January 1, 2025, the Company adopted ASU 2023-08, which requires digital assets to be measured at fair value, with changes in fair value recognized in earnings.
Upon adoption, the Company recorded a cumulative effect adjustment of approximately $
Bitcoin Production
The following table presents our Bitcoin mining activities for the six months ended June 30, 2026.
| US$ thousands except BTC units | Number of Bitcoins | Amount | ||||||
| Balance as of January 1, 2025 | $ | |||||||
| Receipt of BTC from mining services and investment income | - | |||||||
| Cumulative effect upon adoption of ASU 2023-08 | ||||||||
| Change in fair value recognized in earnings | ( | ) | ||||||
| Balance as of December 31, 2025 | $ | |||||||
| Receipt of BTC from mining services and investment income | - | - | ||||||
| Change in fair value recognized in earnings | - | ( | ) | |||||
| Balance as of June 30, 2026 | $ | |||||||
The following table presents our Ethereum mining activities for the six months ended June 30, 2026.
| US$ thousands except BTC units | Number of Ethereum | Amount | ||||||
| Balance as of January 1, 2025 | $ | |||||||
| Receipt of ETH from mining services and investment income | - | |||||||
| Cumulative effect upon adoption of ASU 2023-08 | ||||||||
| Change in fair value recognized in earnings | ( | ) | ||||||
| Balance as of December 31, 2025 | $ | |||||||
| Receipt of ETH from mining services and investment income | - | - | ||||||
| Change in fair value recognized in earnings | - | ( | ) | |||||
| Balance as of June 30, 2026 | $ | |||||||
Fair Value Measurement
Digital assets are measured at fair value using quoted prices in active markets for identical assets.
The Company uses observable market prices from major cryptocurrency exchanges (e.g.Blockchain.com, Investing.com Binance.com etc historical cryptocurrency data.) as of June 30, 2026, based on a consistent pricing methodology.
Digital assets are classified as Level 1 within the fair value hierarchy under ASC 820.
There were no transfers between levels during the six months ended June 30, 2026.
Impact on Earnings
For the period ended June 30, 2026, the Company recognized a fair value loss on digital assets of approximately $
Digital Asset Activity
The Company did not run the mining rigs during the period ended June 30, 2026, and no digital assets were generated during the year.
27
| 10. | INTANGIBLE ASSETS - continued |
Significant Judgment
The determination of fair value requires judgment in selecting:
| ● | the principal market; |
| ● | pricing sources; and |
| ● | timing of measurement. |
| 11. | account PAYABLE |
Trade accounts payable primarily relate to:
| December 31, 2025 | June 30, 2026 | |||||||
| Commodity trading purchases | $ | $ | ||||||
| Server and equipment purchases | ||||||||
| Operating service arrangements | ||||||||
| $ | $ | |||||||
Long-outstanding balances
Certain balances within accounts payable originated from transactions entered into during 2021 and 2022 and remained unsettled as of June 30, 2026.
The most significant long-outstanding payable relates to a supercomputing server purchase agreement entered into in April 2021 with an outstanding balance of approximately $11.4 million as of June 30, 2026. Management represented that the balance remains payable and enforceable and that settlement discussions with the counterparty remain ongoing.
Management evaluated the long-outstanding balances as of June 30, 2026 and concluded that no derecognition adjustment was required. However, the assessment involves significant judgment regarding:
| ● | enforceability of contractual obligations; |
| ● | settlement expectations; |
| ● | underlying commercial substance; and |
| ● | classification of balances arising from trading arrangements. |
| 12. | ACCRUED LIABILITIES |
Accrued liabilities primarily represent customer prepayments received in connection with commodity trading transactions, including rubber and other trading arrangements for which performance obligations had not yet been satisfied as of period end.
The Company’s trading activities involve substantial advances received and settlement balances as part of ordinary commodity trading practices. Accordingly, certain balances may remain outstanding for extended periods depending on shipment timing, contract settlement, logistics arrangements, and commercial negotiations.
28
| 13. | OTHER PAYABLES |
Other payables consist of the following:
| December 31, 2025 | June 30, 2026 | |||||||
| Payables to non-trade vendors and service providers | $ | $ | ||||||
| Accrued salary | ||||||||
| $ | $ | |||||||
Other payables primarily consist of:
| ● | deposits received under hosting and operational arrangements; |
| ● | freight, logistics, and warehouse-related balances; |
| ● | rental and service-related payables; and |
| ● | other non-trade operating obligations. |
During the first half year of 2026, the Company performed a review and reclassification of certain balances previously recorded within other payables, including intercompany and related-party balances, to conform to the appropriate financial statement presentation.
Management evaluated the remaining balances as of June 30, 2026 and concluded that liability classification remained appropriate.
| 14. | RELATED PARTY BALANCES AND TRANSACTIONS |
Amount due from related parties
US$ thousands
| Name of Related Party | Relationship | Nature | Repayment terms | December 31, 2025 | June 30, 2026 | |||||||||
| Yongbao Insurance Agency Co., Ltd. and subsidiaries | $ | $ | ||||||||||||
| Wang Yaxian | $ | |||||||||||||
| Feng Weidong | $ | |||||||||||||
| Wu Xianlong | $ | |||||||||||||
| Qingdao SOS Industry Holding Co, Ltd | $ | |||||||||||||
| $ | $ | |||||||||||||
Amount due to related parties
| Name of Related Party | Relationship | Nature | Repayment terms | December 31, 2025 | June 30, 2026 | |||||||||
| Wang Yilin | ||||||||||||||
| Wu Wenbin | ||||||||||||||
| Li Sing Leung | ||||||||||||||
| Wang Yaxian | ||||||||||||||
| Qingdao SOS Industry Holding Co, Ltd. | ||||||||||||||
| $ | $ | |||||||||||||
29
| 15. | TAXES |
Income tax
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
British Virgin Islands
YBT is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will be imposed.
Hong Kong
China SOS is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is
PRC
The subsidiaries including WOFE, Qingdao SOS, SOS Mongolia, SOS Auto Service, Common Prosperity Technology, Weigou International Trading and SOS Trading are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified
Significant components of the provision for income taxes are as follows:
| Six months ended June 30, 2025 | Six months ended June 30, 2026 | |||||||
| Current | $ | $ | ( | ) | ||||
| Income tax expenses | $ | $ | ( | ) | ||||
The following table reconciles China statutory rates to the Company’s effective tax rate:
| Six months ended June 30, | Six months ended June 30, | |||||||
| 2026 | 2025 | |||||||
| China statutory income tax rate | % | % | ||||||
| Change in valuation allowance | ( | ) | ( | )% | ||||
| Effective tax rate | - | - | ||||||
The Company has incurred tax losses in certain jurisdictions. While these losses may be available for carryforward, management has determined that it is not more likely than not that sufficient taxable income will be available to realize the related deferred tax assets. Accordingly, a full valuation allowance has been recorded against the deferred tax assets as management concluded that it is more likely than not that such deferred tax assets will not be realized.
30
| 15. | TAXES - continued |
Uncertain tax positions
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits and measures the unrecognized benefits associated with the tax positions. As of June 30, 2026 and December 31, 2025, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur any interest and penalties tax for the six months ended June 30, 2026 and 2025. The Company does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months from June 30, 2026.
Value added tax
All of the Company’s service revenues that are earned and received in the PRC are subject to a Chinese VAT. The rate of Chinese VAT is
Taxes recoverable consisted of the following:
| December 31, 2025 | June 30, 2026 | |||||||
| VAT taxes recoverable | $ | |||||||
| Corporate income tax payable | ( | ) | ( | ) | ||||
| Other taxes payable | ( | ) | ( | ) | ||||
| Total | $ | |||||||
| 16. | CONCENTRATION OF RISK |
Credit risk
The Company is exposed to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
A significant portion of the Company’s receivables and prepayments is concentrated among a limited number of counterparties. In addition, certain balances have been outstanding for extended periods, which increases the uncertainty regarding recoverability. The Company monitors these exposures on an ongoing basis and records allowances where appropriate.
The Company also maintains deposits and engages in transactions with various financial institutions and counterparties. To manage this risk, the Company performs ongoing evaluations of counterparty creditworthiness; however, there can be no assurance that these counterparties will be able to meet their obligations.
A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
Our functional currency is the RMB, and our financial statements are presented in U.S. dollars. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB.
To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.
31
| 16. | CONCENTRATION OF RISK - continued |
Liquidity and treasury risk
The Company is exposed to risks related to the management of cash and liquidity, including large or unusual cash inflows and outflows and transactions with multiple counterparties across different jurisdictions. These activities may involve increased operational and counterparty risks. Management monitors cash flows and transaction activity on an ongoing basis to manage such risks.
Commodity price risk
The Company’s operations involve trading of commodities and products whose values are subject to market price fluctuations. Changes in commodity prices may affect the net realizable value of inventory and the Company’s operating results.
Digital asset risk
The Company holds digital assets that are subject to significant price volatility. The value of these assets may fluctuate materially based on market conditions. In addition, the Company is exposed to risks related to custody, security, and regulatory developments associated with digital assets.
Management monitors these risks on an ongoing basis; however, such risks cannot be completely eliminated.
| 17. | SHAREHOLDERS’ EQUITY |
Ordinary shares
SOS Limited was established under the laws of Cayman Islands on August 18, 2015. The authorized number of ordinary shares is
Common stock
[Securities Purchase Agreement
Registered Direct Offering in December 2020
On December 22, 2020, the Company entered into certain securities purchase agreement (the “December SPA”) with the Purchasers pursuant to which the Company agreed to sell
Registered Direct Offering in January 2021
On January 7, 2021, the Company entered into certain securities purchase agreement (the “January SPA”) with the Purchasers pursuant to which the Company agreed to sell
32
| 17. | SHAREHOLDERS’ EQUITY - continued |
January 2021 Warrant Solicitation
On January 15, 2021, the Company entered into a letter agreement (the “January Letter Agreement”) with certain holders of Company’s warrants, pursuant to which the holders of Company’s warrants exercised all of the unexercised December Warrants and January Warrants (collectively, the “Existing Warrants”) to purchase up
February 2021 Warrant Solicitations
On February 9, 2021, the Company entered into a letter agreement (the “February Letter Agreement”) with certain holders of the Company’s warrants, pursuant to which the holders of the Company’s warrants exercised all of the January Inducement Warrants to purchase up to
On February 24, 2021, the Company entered into a letter agreement (the “Second February Letter Agreement”) with certain holders of the Company’s warrants, pursuant to which the holders of the Company’s warrants exercised all of the February Inducement Warrants to purchase up to
Registered Direct Offerings in February 2021
On February 11, 2021, the Company entered into certain securities purchase agreement (the “February SPA”) with the Purchasers pursuant to which the Company agreed to sell
33
| 17. | SHAREHOLDERS’ EQUITY - continued |
On February 18, 2021, the Company entered into certain securities purchase agreement (the “Second February SPA”) with the Purchasers pursuant to which the Company agreed to sell
On March 29, 2021, we entered security purchase agreement with certain accredited investors to sell
On November 9, 2021, the Company entered into certain securities purchase agreement (the “November SPA”) with the purchasers party thereto pursuant to which the Company agreed to sell
On October 2, 2023, the Company entered into certain securities purchase agreement with certain non-U.S. Persons as defined in Regulation S of the Securities Act of 1933, pursuant to which the Company agreed to sell an aggregate of
On March 19, 2025, the Company entered into certain securities purchase agreement with certain “non-U.S. Persons” as defined in Regulation S of the Securities Act of 1933, as amended pursuant to which the Company agreed to sell an aggregate of
On July 31, 2025, the Company entered into certain securities purchase agreement with certain non-affiliated institutional investors pursuant to which the Company agreed to sell
On August 11, 2025, the Company held its extraordinary general meeting of shareholders to approve that the authorized share capital of the Company be increased by the creation of an additional
34
| 17. | SHAREHOLDERS’ EQUITY - continued |
The Company held its extraordinary general meeting of shareholders (the “Extraordinary General Meeting”) on July 27, 2026 to approve share reduction and re-organization as follows:
As a special resolution, that subject to all further requirements prescribed by sections 14, 14A and 14B of the Companies Act (As Revised) of the Cayman Islands (the “Companies Act”) relating to share capital reduction being complied with, that (together, the “Share Capital Reduction and Reorganization”), to approve:
Share Capital Reduction
a. the par value of each authorized and issued Class A Ordinary Share of a nominal or par value of US$
b. following the Share Capital Reduction, the amount deemed to be paid up on each issued Class A Ordinary Share and Class B Ordinary Share of the Company shall be US$
c. the credit arising from the Share Capital Reduction be transferred to a distributable reserve account of the Company which may be utilised by the Company as the board of directors of the Company (the “Board”) may deem fit and as permitted under the Companies Act, the Company’s memorandum and articles of association (as further amended, restated or amended and restated, from time to time), and all relevant applicable laws, including, without limitation, eliminating or setting off any accumulated losses of the Company (if any) from time to time;
Share Capital Subdivision
d. immediately following the Share Capital Reduction:
| i. | each authorised but unissued Class A Ordinary Share of a nominal or par value of US$ |
| ii. | each authorised but unissued Class B Ordinary Share of a nominal or par value of US$ |
(the “Share Capital Subdivision”);
Share Capital Cancellation
e. immediately following the Share Capital Subdivision, the authorised share capital of the Company be altered by the cancellation of excess authorized but unissued number of Class A Ordinary Shares of a nominal or par value of US$
Authorised Share Capital Confirmation
35
| 17. | SHAREHOLDERS’ EQUITY - continued |
The Company’s outstanding warrants are classified as equity since they qualify for exemption from derivative accounting as they are considered to be indexed to the Company’s own stock and require net share settlement. The fair value of the warrants were recorded as additional paid-in capital from common stock.
Following is a summary of the status of warrants outstanding and exercisable as of June 30, 2026:
| *Warrants | Weighted Average Exercise Price | |||||||
| Warrants outstanding, as of January 1, 2025 | $ | - | ||||||
| Warrants issued on July 31,2025 | ||||||||
| Warrants outstanding, as of December 31, 2025 | ||||||||
| Warrants outstanding, as of June 30, 2026 | ||||||||
| Warrants expired during the six month period | ||||||||
| * | |
| Warrants Outstanding | *Warrants Exercisable | Weighted Average Exercise Price | Average Remaining Contractual Life | |||||||
| February 24, 2021 Warrants | $ | |||||||||
| February 11, 2021 Warrants | $ | |||||||||
| February 18, 2021 Warrants | $ | |||||||||
| March 29, 2021 Warrants | $ | |||||||||
| June 19, 2024 Private Placement | $ | |||||||||
| March 15, 2024 F1-FO | $ | |||||||||
| Warrants issued on July 31,2025 | $ | |||||||||
| * | Warrants in ordinary shares |
| 18. | COMMITMENTS AND CONTINGENCIES |
Purchase commitments
The Company has entered into one agreement for leasehold improvements on the office premises. As of June 30, 2026, the Company did not enter any new lease contract with any parties, the new commitment is nil.
Due to restrictions on the distribution of share capital from the Group’s PRC subsidiaries and also as a result of these entities’ unreserved accumulated losses, total restrictions placed on the distribution of the Group’s PRC subsidiaries’ net liabilities were $
36
| 19. | Subsequent events |
Share Capital Reorganization and Amendments to the Memorandum and Articles of Association
On July 27, 2026, the Company held an extraordinary general meeting of shareholders (the “EGM”), at which shareholders approved, among other matters, a share capital reduction and reorganization, an increase in authorized share capital, the adoption of the seventh and eighth amended and restated memorandum and articles of association, and an authorization for the board of directors (the “Board”) to implement one or more share consolidations.
On July 29, 2026, the Company effected the share capital reduction and reorganization. The par value of each issued Class A ordinary share and Class B ordinary share was reduced from US$
The Company’s seventh amended and restated memorandum and articles of association, approved by special resolution at the EGM, became effective on July 29, 2026, immediately following the share capital reduction and reorganization, and replaced the sixth amended and restated memorandum and articles of association to reflect the resulting share capital.
Subsequently, on July 29, 2026, the Company increased its authorized share capital from US$
The Company’s eighth amended and restated memorandum and articles of association, also approved by special resolution at the EGM, became effective on July 29, 2026, immediately following the share capital increase, and replaced the seventh amended and restated memorandum and articles of association to reflect the increased authorized share capital. As of the date of this report, the eighth amended and restated memorandum and articles of association remained in effect.
NYSE Minimum Share Price Deficiency Notice
On Aug 7, 2026, the Company has received a letter from the New York Stock Exchange dated August 7, 2026, notifying SOS that it is below compliance standards due to the trading price of SOS’s Class A ordinary shares. Specifically, the Notice indicated that the Company is not in compliance with Section 802.01C of the NYSE Listed Company Manual, which requires a listed company to maintain an average closing price of its listed securities of at least US$
September 15, 2026 Private Placement
On September 15, 2026, the Company entry into a securities purchase agreement with certain “non-U.S. Persons”, as defined in Regulation S under the Securities Act of 1933, as amended, pursuant to which the Company agreed to sell an aggregate of
NYSE Public Reprimand Letter
On September 21, 2026 the Company received a Public Reprimand Letter from NYSE Regulation relating to the timing and accuracy of the Company’s disclosure of the September 2026 SPA.
September 24, 2026 Private Placement
On September 24, 2026, SOS Limited entered into certain securities purchase agreement with certain “non-U.S. Persons” as defined in Regulation S of the Securities Act of 1933, as amended pursuant to which the Company agreed to sell an aggregate of
* * * * *
37
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Overview and Outlook
SOS Limited (“SOS”) is an emerging blockchain-based and big data-driven marketing solution provider. SOS is also engaged in blockchain and cryptocurrency operations, which previously included cryptocurrency mining and is currently suspended. Since April 2021, we launched a commodities trading business via our subsidiaries SOS International Trading Co. and Weigou International Trading Co Ltd. We facilitate trading of commodities including but not limited to mineral resin, soybean, wheat, sesame, liquid sulfur and latex.
Our Products and Services
As of June 30, 2026, SOS focuses on three service lines including Commodities Trading, Hosting service and Others. For the six months ended June 30, 2026, our total revenues were $48.8 million, including commodities trading revenues of $47.7 million, hosting services revenues of $1.0 million and other revenues of $0.2 million.
Revenue by Products and Services
| Six months ended June 30, 2026 |
||||||||
| Revenue by Products and Services | US$ | Percentage | ||||||
| Commodities Trading | 47,663 | 97.6 | % | |||||
| Hosting Services | 950 | 2.0 | % | |||||
| Others | 212 | 0.4 | % | |||||
| Total revenue -net | $ | 48,825 | 100 | % | ||||
| Six months ended June 30, 2025 | ||||||||
| Revenue by Products and Services | US$ | Percentage | ||||||
| Commodities Trading | 85,011 | 94.9 | % | |||||
| Hosting Services | 3,850 | 4.3 | % | |||||
| Others | 734 | 0.8 | % | |||||
| Total revenue -net | $ | 89,595 | 100 | % | ||||
Commodities Trading
Since April 2021, we launched our commodities trading business via our subsidiaries including SOS International Trading Co. Ltd. and Weigou International Trading, and we trade commodities including but not limited to mineral resin, soybean, wheat, sesame, liquid sulfur, petrol coke and latex. The Company’s gross profit represents the difference between the gross selling price to customers and the cost of commodities purchased from suppliers. Because the Company acts as principal, the gross selling price is presented as revenue and the supplier cost is presented as operating costs. Revenue is recognized after products have been delivered and title to the goods and risk has been transferred from a seller to a buyer.
Hosting Services
From January 2022, SOS took the initiative to build a supercomputing center in Wisconsin USA by providing individual & business users a comprehensive experience of cryptocurrency mining capacity and hosting service. Part of the facility was up and running since April 2022 and we recorded a revenue of $3.9 million down to $1.0 million from six months ended June 30, 2025 to the same period of 2026; as BTC price persistently dropped, market demand for hosting service decline and so it was with hosting revenue.
Others
Others refer to the legacy data-mining business relating to remaining contracts, which continued into the current reporting period.
Components of Our Results of Operation
Revenue
Revenue is derived from providing services to our customers including commodity trading, hosting service and cryptocurrency mining. The legacy business of data-mining business ceased entering into new contracts; however, certain remaining contracts continued into the current reporting period ended June 30, 2026. Key factors that affect our future revenue growth include our introduction to new lines of services, 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, or products have been delivered together with transfer of title from a seller to a buyer.
Operating Costs and Gross Profit/(Loss)
Our major operating costs are purchase costs of power supply, depreciation and amortization from hardware, software for cryptocurrency mining, costs of goods sold & warehouse rental for the commodities trading business.
We calculate our gross profit/(loss) as revenue less operating costs. Our gross profit/(loss) 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, market price fluctuation and local government policy towards cryptocurrency.
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 such as costs & expenses related to direct public offering and legal fees to defend us against class actions.
2
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. SOS Information Technology Co., Ltd with significant insurance marketing service is a qualified high-tech enterprise and as such can enjoys a corporate income tax concession rate of 15%, all other domestic legal entities have 25% corporate tax rate. Depending on jurisdictions, offshore legal entities have various tax rate.
Interim Financial Results from Operations
Six months ended June 30, 2026 compared to June 30, 2025
Revenue
As of June 30, 2026, SOS focuses on three product and service lines including Commodities Trading, Hosting Services and Others. Commodities Trading contributes 97.6% of the total revenue, 2.0% from Hosting Services and 0.4% from Others.
| Six months ended June 30, 2026 | ||||||||
| Revenue by Products and Services | US$ | Percentage | ||||||
| Commodities Trading | 47,663 | 97.6 | % | |||||
| Hosting Services | 950 | 2.0 | % | |||||
| Others | 212 | 0.4 | % | |||||
| Total revenue -net | $ | 48,825 | 100 | % | ||||
| Six months ended June 30, 2025 | ||||||||
| Revenue by Products and Services | US$ | Percentage | ||||||
| Commodity Trading | 85,011 | 94.9 | % | |||||
| Hosting Services | 3,850 | 4.3 | % | |||||
| Others | 734 | 0.8 | % | |||||
| Total revenue -net | $ | 89,595 | 100 | % | ||||
Net revenue was $48.8 million for the six months ended June 30, 2026, a decrease of $40.8 million, or 45.5%, from $89.6 million for the six months ended June 30, 2025. This decrease was primarily attributable to two factors. First, commodity trading revenue decreased by $37.3 million, from $85.0 million to $47.7 million, primarily due to weakening domestic demand in China, which reduced customer orders and average selling prices for certain commodities. Second, hosting services revenue decreased by $2.9 million, from $3.9 million to $1.0 million, primarily because persistently low Bitcoin prices and unfavorable mining economics caused us to scale back our hosting services and cease cryptocurrency mining during the first half of 2026, consistent with our operating plan. These factors together accounted for substantially all of the period-over-period decrease in net revenue.
3
Unaudited Condensed Consolidated Statements of Comprehensive Loss
(US$ thousands, except share data and per share data, or otherwise notes)
| Six months ended | ||||||||
| June 30, 2025 | June 30, 2026 | |||||||
| US$ | US$ | |||||||
| Revenue | 89,595 | 48,825 | ||||||
| Operating costs | (90,904 | ) | (52,498 | ) | ||||
| Gross loss | (1,309 | ) | (3,673 | ) | ||||
| Gross loss ratio | (1.5 | )% | (7.5 | )% | ||||
Revenue and Service by Products
| Six months ended June 30, 2025 | Six months ended June 30, 2026 | |||||||||||||||
| Revenue by Products and Services | US$ | Percentage | US$ | Percentage | ||||||||||||
| Commodity Trading | 85,011 | 94.9 | % | 47,663 | 97.6 | % | ||||||||||
| Hosting Services | 3,850 | 4.3 | % | 950 | 2.0 | % | ||||||||||
| Others | 734 | 0.8 | % | 212 | 0.4 | % | ||||||||||
| Total | 89,595 | 100 | % | 48,825 | 100 | % | ||||||||||
Operating Costs and Expenses
Operating costs were $52.5 million, decrease 42.2% period-on-period from $90.9 million in the six months ended June 30, 2025 which is consistent with our revenue decrease. Operating costs comprised of depreciation of hardware, electricity power and depreciation from property equipment for cryptocurrency mining as well as costs of goods sold & warehouse rental for commodity trading.
4
Selling Expenses
Selling expenses mainly relate to our commodity business and include freight-out expenses, custom clearing agency fee, warehouse rental expense, promotional expense, sales commission and payroll expenses to sales team. Selling expenses increased to $2.6 million from $2.3 million for the six months ended June 30, 2025 mainly attributable to the higher transportation costs.
General and Administrative Expenses
General and administrative expenses were $6.0 million, 36.0% down period-on-period from $9.4 million at the end of 2025. The decrease was mainly due to the fact that no depreciation expense of mining machines is recorded for them in this period.
Operating Loss
GAAP net loss was $34.5 million, compared to a net loss of $14.2 million at the end of the six months ended June 30, 2025, representing an increase of 142.8%. We concluded the period with a gross margin of -7.5%. Amid challenging market conditions, we proactively lowered its profit margin to retain existing customers and maintain market share — trading price for volume and building a foundation for future business.
Income Tax
The Company paid $666 of corporate income tax for the current period as compared to $3,000 at the end of the six months ended June 30, 2025.
GAAP net loss attributable to ordinary shareholders was $34.5 million, as compared to a net loss of $14.2 million in the six months ended June 30, 2025.
GAAP Basic EPS was $(1.91) per share, as compared to $(2.09) per share in the six months ended June 30, 2025.
5
Liquidity and Capital Resources
Our principal sources of liquidity are cash and cash equivalents and cash flows generated from our operations.
As of June 30, 2026, we had cash and cash equivalents of approximately $231.9 million, compared to $3.2 million for the period ended December 31, 2025. The net increase in cash flow was mainly due to increase in operating cash inflow generated from the refund of prepayment of $228.0 million.
The Company believes that its cash resources are adequate to fund its current operations and short-term growth initiatives, current liquidity and capital resources are sufficient to meet anticipated working capital needs (net cash used in operating activities), commitments, capital expenditures and for at least the next twelve months. The Company may, however, require additional cash resources due to changes in business conditions and other future developments, or changes in general economic conditions.
Cash Flows and Working Capital
US$ thousands
| Six months ended | Six months ended | |||||||
| 2025 | 2026 | |||||||
| Net cash (used in)/generated from operating activities | (240,366 | ) | 223,724 | |||||
| Net cash used in investing activity | - | - | ||||||
| Net cash generated from/(used in) financing activities | 6,817 | (2 | ) | |||||
| Effect of exchange rates on cash | 228 | 4,941 | ||||||
Cash Flow Used in Operating Activities
As of June 30, 2026, the Company held $231.9 million in cash and cash equivalents, an increase of $228.7 million from the prior year. The majority of this increase stems from the recovery of USD 228.0 million in other receivables.
Cash Flow Used in Investing Activity
The Company experienced nil investing activity for this period.
Cash Flow Used in Financing Activities
The Company has no significant financing activities for the six months ended June 30, 2026.
6