CITIC Will Drive Second Half Growth at Sitoa - Analyst Blog
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CITIC Will Drive Second Half Growth at Sitoa
On August 8, 2012, Sitoa Global Inc. (STOA), an e-commerce facilitator that develops, integrates and hosts B2C (business-to-consumer) social e-commerce sites, reported financial results for its second quarter and six months ended June 30, 2012.
Sitoa reported enhanced results with year over year second quarter revenues lifting off to $959,409 from $0 in revenues for the second quarter 2011.
The jump in revenues was a result of increased revenues generated from hosting e-commerce solutions for its current customers.
Cost of service for the three months ended June 30, 2012 was $786,045 resulting in gross profit of $191,364 and gross margin of 20.0 percent.
Sitoa’s net loss improved to a net loss of $88,604 for the second quarter of fiscal 2012 compared to a net loss of $224,307 during the three months ended June 30, 2011.
The decrease in net loss was primarily a result of revenue from its five customers offset by slightly higher operating expenses due to development and hosting of e-commerce solutions for customers which were performed by the Company’s in-house project management team and an outsourced development team.
Total operating expense increased year over year by $60,661 mainly due to a $112,744 year over year increase in general and administrative costs.
Based on a weighted average number of basic and fully diluted common shares of 29.130 million, basic and diluted net loss per share resulted in a net loss of $0.00 per share for the second quarter of fiscal 2012. This compares to a basic and diluted net loss per share of $0.02 based on a weighted average number of basic and fully diluted shares of 13.722 million during the three months ended June 30, 2011.
Revenues for the six months ended June 30, 2012 were $1.771 million compared to $0 for the six months of the first half of 2011.
The Company’s net loss for the first half of 2012 improved by $55,942 to a net loss of $335,050, compared to a net loss of $390,992 for the comparable period of 2011.
Gross margin for the six months ended June 30, 2012 was 23.5 percent while total operating expenses increased year over year by $375,626 to $750,844.
Here again, the increase in operating expense was primarily a result of development and hosting of e-commerce solutions for customers which were performed by the Company’s in-house project management team and an outsourced development team.
Based on a weighted average number of basic and fully diluted common shares of 28.261 million, basic and diluted net loss per share resulted in a net loss of $0.01 per share for the first half of fiscal 2012. This compares to a basic and diluted net loss per share of $0.03 based on a weighted average number of basic and fully diluted shares of 12.315 million during the six months ended June 30, 2011.
Here again, the Company’s balance sheet continues to improve.
As of June 30, 2012, the Company reported cash and equivalents of $143,286 and a working capital deficit of $355,944. This compares to cash and equivalents of $58,557 and a working capital deficit of $425,673 for March 31, 2012.
Still, it should be noted that Sitoa recently entered into a strategic partnership agreement with a division of China International Trust and Investment Corporation (CITIC) in which CITIC will utilize Sitoa’s software technology and catalog management system to develop and expand its evolving Business-to-Business ("B2B") trading platform.
CITIC is a large state-owned multinational conglomerate of the People's Republic of China, and is one of the largest diversified conglomerates in Asia with a balanced development of both financial and non-financial businesses across forty-four subsidiaries.
Likewise, Sitoa received an investment of $500,000 in a private placement from Ingenium Capital. The investment was at a price of $0.15 per share where Ingenium has an option to invest an additional $300,000 at a price of $0.30 per share.
Similarly, the Company recently engaged IRG Limited, to explore strategic alternatives to accelerate the growth of the Company and enhance shareholder value.
Management believes that the recent strategic partnership with CITIC, the growth capital investment by Ingenium Capital and the engagement of IRG as Sitoa’s financial advisor, will enable the Company to accelerate its growth as well as explore strategic options.
Please visit scr.zacks.com to access a free copy of the STOA research report.
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