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Sitoa Global Rings up a Solid Year of Growth

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Sitoa Global Rings up a Solid Year of Growth

Ken Nagy, CFA

On March 27, 2012, Sitoa Global Inc. , the Palo Alto, California based e-commerce facilitator that develops, integrates and hosts B2C (business-to-consumer) social e-commerce sites, reported financial results for its year ended December 31, 2011.

Sitoa reported mixed results with year over year revenues exploding to $847,344 from $0 in revenues for the year ended December 31, 2010.

The year over year jump in revenues was primarily a result of the recognition of revenues from the Company’s hosting of five existing e-commerce solutions which include;  B2B e-commerce platform 4-GS, Ltd. (www.4-gs.com); ZBL Cybermarketing, Ltd., Google's largest Search Engine Marketing (SEM) and Search Engine Optimization provider in Northern China; iMedia, Ltd. a mobile advertising platform;
Chunjie365 (www.chunjie365.com), a bi-lingual e-commerce site in China that targets consumer and corporate online customers looking to purchase rare and unique U.S. specialty products and Chinese gift items;  and Sonsi, Inc. (www.sonsi.lanebryant.com) a destination e-commerce site for women sizes 12 and up that allows purchases of retail clothing products as well as social networking through Sonsi Living, (www.sonsiliving.com).

Cost of service for year ended December 31, 2011 was $649,937 resulting in gross profit of $197,407 and gross margin of 23.3 percent for the fiscal year ended December 31, 2011.

Still, Sitoa’s net loss increased to a net loss of $1.899 million for fiscal 2011 compared to a net loss of $577,531 during the twelve months ended December 31, 2010.

The increase in net loss was primarily a result of higher general and administrative expenses in fiscal 2011 compared to the same twelve months of 2010.

General and administrative expense increased to $1.204 million during the year ended December 31, 2011 compared to $276,538 for fiscal 2010.

The increase in general and administrative expense was mainly a result of the development of the Company’s new e-commerce business, acquisition of new customers, and corporate restructuring.

Based on a weighted average number of basic and fully diluted common shares of 13.849 million, basic and diluted net loss per share resulted in a net loss of $0.14 per share for the full year ended December 31, 2011.  This compared to a basic and diluted net loss per share of $0.06 based on a weighted average number of basic and fully diluted shares of 9.108 million during the fiscal year ended December 31, 2010.

As of December 31, 2011, the Company reported cash and equivalents of $40,373 and a working capital deficit of $477,511.

Still recently, Sitoa Global entered into two partnership agreements to develop additional e-commerce solutions.

During its third quarter fiscal 2011, Sitoa began the build out and launch ShopShipUSA, (www.shopshipusa.com).

ShopShipUSA is a Filipino social e-commerce site that focuses on branded U.S. or European luxury items.

Additionally, Sitoa recently entered into a partnership agreement with BCLN Golf, Ltd (www.bclngolf.com).

BCLN, the 3rd largest golf apparel designer and retailer in Hong Kong and Mainland China, enables online sales of BCLN’s golf apparel as well as other golf related products from US and European golf specialty companies.
The Company is expected to receive monthly hosting fees and a revenue share in return for the developing and hosting of a marketplace for online sales of BCLN’s golf apparel as well as other golf related products from US and European golf specialty companies.

In 2011, analysts estimate that the Chinese golf industry generated revenues of over 3 billion Yuan (US$500 million) and project it to grow at over 15% per year over the next five years.
 

To view a free copy of our most recent research report on STOA or subscribe to our daily morning email alert, visit Ken Nagy's coverage page at https://scr.zacks.com/.



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