Hitek Global Inc. Announces Fiscal Year 2023 Financial Results

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Revenue generated from hardware sales was $2.4 million in fiscal year 2023, as compared to $2.5 million in fiscal year 2022.

Metadata
Provider: 
PR NewswirePR Newswire
Retrieved on: 
Tuesday, April 9, 2024
Information
Tags: 
Government, USB, Total, Cryptocurrency
Geotags: 
CHINA
⚠ partially generated by AI ↴
Organisation: 
HITEK GLOBAL, HITEK GLOBAL INC, HITEK GLOBAL INC.
Stock Symbol: 
NASDAQ-NMS:HKIT
NASDAQ:HKIT
Summary
Key Points: 
  • Revenue generated from hardware sales was $2.4 million in fiscal year 2023, as compared to $2.5 million in fiscal year 2022.
  • Revenue generated from software sales was $0.8 million in fiscal year 2023, as compared to $2.1 million in fiscal year 2022.
  • Operating expenses were $ 1.8 million in fiscal year 2023, a decrease of 5% from $1.9 million in fiscal year 2022.
  • Other income was $1.5 million in fiscal year 2023, an increase of 517.8% from $0.2 million in fiscal year 2022.




Hitek Global Inc. Announces Fiscal Year 2023 Financial Results

XIAMEN, China, April 9, 2024 /PRNewswire/ -- Hitek Global Inc. (Nasdaq: HKIT) (the "Company"), a China-based information technology consulting and solutions service provider, today announced its financial results for the fiscal year ended December 31, 2023.

Ms. Xiaoyang Huang, Chief Executive Officer and Director of Hitek Global Inc. commented, "During the year ended December 31, 2023, due to governmental policy adjustments, the service fee portion of our tax control business has been affected to some extent, resulting in a decline in overall revenue. The Company is exploring new business opportunities to diversify the company's revenue and business."

Fiscal Year 2023 Financial Results

Revenue

Total revenue was $4.6 million in fiscal year 2023, as compared to $6.4 million in fiscal year 2022, mainly due to the decrease in revenue generated from tax devices and services sales due to governmental policy adjustments.

  • Revenue generated from hardware sales was $2.4 million in fiscal year 2023, as compared to $2.5 million in fiscal year 2022. The decrease was mainly due to the decrease in sales to large customers.
  • Revenue generated from software sales was $0.8 million in fiscal year 2023, as compared to $2.1 million in fiscal year 2022. The decrease was mainly due to the decrease in software sales to large customers that reduced their procurement.
  • Revenue generated from tax devices and services was $1.4 million in fiscal year 2023, as compared to $1.8 million in fiscal year 2022. The decrease was due to the decline in demand for our tax devices and services due to a new governmental policy effective in January 2021 that allows taxpayers in Xiamen to obtain tax Ukeys (USB security keys) from the PRC tax authorities for free to issue electronic invoices themselves.

Gross Profit and Gross Margin

Gross profit was $ 1.9 million in fiscal year 2023, a decreased by of 45% from $3.5 million in fiscal year 2022. Gross margin was 42.1% in fiscal year 2023, compared to 55% in fiscal year 2022.

Operating Expenses

Operating expenses were $ 1.8 million in fiscal year 2023, a decrease of 5% from $1.9 million in fiscal year 2022.

  • Selling expenses were $648 in fiscal year 2023, a decrease of 99% from $437,185 in fiscal year 2022. The decrease was mainly attributable to the decrease in the Company's sales commissions to obtain new orders in 2023.
  • General and administrative expenses were $1.8 million in fiscal year 2023, an increase of 23.6% from $1.5 million in fiscal year 2022. The increase was mainly due to (1) the increase of professional service fee of $233,458 resulting from financial and legal consulting in 2023, (2) other fees of $36,728 related to the Company's initial public offering in March 2023, and (3) rent of $78,246. The increase was offset by a decrease in salary expense of $133,492 resulting from the reduction of employees for cost-effectiveness consideration.

Other Income

Other income was $1.5 million in fiscal year 2023, an increase of 517.8% from $0.2 million in fiscal year 2022. The increase was primarily due to the increase in investment income of $349,915, government subsidies of $560,090 and interest income of $366,320.

Net Income

Net income was $1.0 million in fiscal year 2023, compared to $1.4 million in fiscal year 2022.

Basic and Diluted Earnings per Share

Basic and diluted earnings per share were $0.08 in fiscal year 2023, compared to $0.13 in fiscal year 2022.

Balance Sheet

As of December 31, 2023, the Company had cash of $9.3 million, compared to $1.2 million as of December 31, 2022.

Cash Flow

Net cash used by operating activities was $0.06 million in fiscal year 2023, compared to net cash provided in operating activities of $3.8 million in fiscal year 2022.

Net cash used in investing activities was $6.9 million in fiscal year 2023, compared to net cash used by investing activities of $7.3 million in fiscal year 2022.

Net cash provided by financing activities was $15.1 million in fiscal year 2023. compared to net cash provided by financing activities of $2.7 million in fiscal year 2022.

About Hitek Global Inc.

Hitek Global Inc., headquartered in Xiamen, China, is an information technology ("IT") consulting and solutions service provider in China. The Company has two lines of business: 1) services to small and medium businesses, which consists of Anti-Counterfeiting Tax Control System ("ACTCS") tax devices, ACTCS services, and IT services, and 2) services to large businesses, which consists of hardware sales and software sales. The Company's vision is to become a one-stop consulting destination for holistic IT and other business consulting services in China. For more information, visit the Company's website at http://ir.xmhitek.com/.

Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and in its other filings with the SEC.

For Investor and Media Inquiries Please Contact:
Tianyu Xia
Phone: +86 18519770823
Email: [email protected]

 

HITEK GLOBAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



As of December 31,


2023

2022

Assets




Current assets




    Cash

$

9,311,537

$

1,203,160

Short-term investments

8,837,445


4,290,348

Accounts receivable, net

2,118,738


3,271,218

Accounts receivable - related party, net

-


399,465

Advances to suppliers, net

338,166


481,769

Inventories, net

219,505


430,670

Deferred offering cost

-


917,446

Loan receivable

3,608,289


1,013,157

Prepaid expenses and other current assets

352,919


94,925

    Total current assets

24,786,599


12,102,158








Non-current assets






Non-current accounts receivable

4,597,214


4,209,546

Non-current accounts receivable - related party





-

Non-current advance to a third party

410,509


421,679

Non-current loan receivable

4,227,079


4,342,100

Property, equipment and software, net

403,330


122,967

Operating lease right-of-use assets

3,309


6,641

    Total non-current assets

10,641,441


9,102,933

Total Assets

$

35,428,040

$

21,205,091








Liabilities and Shareholders' Equity






Current liabilities








Accounts payable

$

532,130

$

696,734

Loan payable

493,159


506,578

Deferred revenue

166,760


977,054

Taxes payable

1,917,647


1,671,322

Due to related parties

-


598

Accrued expenses and other current liabilities

255,131


348,167

Operating lease liabilities

-


3,242

    Total current liabilities

3,372,752


4,203,695








Non-current Liabilities






Loan payable, non-current

2,113,539


2,171,050

Deferred income tax liabilities, non-current

1,604,163


1,300,421

Operating lease liabilities, non-current

-


3,399

Total non-current liabilities

3,717,702


3,474,870

Total Liabilities

7,090,454


7,678,565








Commitments and Contingencies














Shareholders' Equity






Ordinary Shares*, par value $0.0001 per share, 490,000,000 shares authorized;
10,987,679 shares issued and outstanding

1,099


1,099

Additional paid-in capital

2,628,356


2,628,356

Statutory reserve

836,215


836,215

Retained earnings

11,387,748


10,340,107

Accumulated other comprehensive (loss) income

(609,367)


(279,251)

    Total Shareholders' Equity

28,337,586


13,526,526








Total Liabilities and Shareholders' Equity

$

35,428,040

$

21,205,091

* Retrospectively restated for effect of Reverse Split.

 

 

HITEK GLOBAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME



Years Ended December 31,


2023

2022

2021

Revenues

$

4,563,731

$

6,428,608

$

6,461,163

Cost of revenues

(2,642,491)


(2,891,565)


(2,581,218)

Gross profit

1,921,240


3,537,043


3,879,945












Operating expenses:










General and administrative

1,819,531


1,472,648


1,699,934

Selling

648


437,185


76,477

Total operating expenses

1,820,179


1,909,833


1,776,411












Operating income

101,061


1,627,210


2,103,534












Other income (expense)










Government subsidies

569,928


9,838


6,883

Net investment (loss) income

330,552


(19,363)


103,575

Financial income (expense), net

911,875


250,172


(2,190)

Other, net

(318,890)


1,106


608

Total other income

1,493,465


241,753


108,676












Net Income before provision for income taxes

1,594,526


1,868,963


2,212,210

Income tax expense

546,885


453,218


542,853












Net income

$

1,047,641

$

1,415,745

$

1,669,357

Comprehensive income










Net income

$

1,047,641

$

1,415,745

$

1,669,357

Foreign currency translation (loss) gain

(330,116)


(1,015,447)


290,407












Comprehensive income

$

717,525

$

400,298

$

1,959,764

Earnings per ordinary share










– Basic and diluted

$

0

$

0

$

0












Weighted average number of ordinary shares
outstanding










– Basic and diluted

13,257,469


10,987,679


10,987,679

* Retrospectively restated for effect of Reverse Split.

 

 

HITEK GLOBAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



Years Ended December 31,


2023

2022

2021









Operating Activities







Net income

$

1,047,641

$

1,415,745

$

1,669,357

Adjustments to reconcile net income to net
cash (used in) provided by operating
activities:










Depreciation and amortization

50,662


21,881


355,738

Loss on disposal of property, plant and
equipment

1,413







Interest income

(102,418)


(21,699)


(6,525)

Net investment loss (gain)

(208,626)


19,363


(103,375)

(Reversal of) doubtful accounts of receivables
and advances to suppliers

(2,325)


(6,442)


(123,754)

(Reversal of) provision for obsolete
inventories

5,559


2,217


(5,317)

Deferred income tax

339,332


177,029


340,624

Changes in operating assets and liabilities:










Short-term investment - trading securities

(1,696,545)


2,418,675


(2,625,216)

Accounts receivable

567,480


(2,490,725)


(1,100,056)

Accounts receivable - related party

390,197


499,933


578,157

Advances to suppliers

472,219


560,352


(183,369)

Deferred offering cost

(130,134)


60,000


155,915

Inventory

194,872


(57,899)


(276,672)

Prepaid expenses and other current assets

(13,028)


89,583


769,913

Due from related party










Accounts payable

(146,642)


225,198


127,422

Deferred revenue

(787,062)


261,856


12,089

Taxes payable

291,578


488,419


327,807

Due to related parties

(584)


(3,320)


1,062

Accrued expenses and other current liabilities

(340,133)


163,884


(127,735)

Net cash provided by (used in) operating
activities

(61,912)


3,824,050)


(214,575)












Investing Activities










Advance payment for software development

(339,309)


(117,617)


(25,582)

Loans to third parties

(11,260,542)


(5,498,997)


(356,595)

Repayment from third-party loans

8,830,933


199,463


317,059

Purchases of held-to-maturity investments

(11,000,000)


(1,932,080)


(1,240,329)

Redemption of held-to-maturity Investments

7,159,018


-


1,705,453

Net cash (used in) provided by investing
activities

(6,946,555)


(7,349,231)


400,006












Financing activities:










 Borrowing from third parties

-


2,749,498



 Proceeds from issuing ordinary shares

15,142,902







  Net cash provided by financing activities

15,142,902


2,749,498


-












Effect of exchange rate changes on cash and
equivalents

(26,058)


(112,465)


44,323

Net (decrease) increase in cash

8,108,377


(888,148)


229,754

Cash and equivalents at beginning of year

1,203,160


2,091,308


1,861,554

Cash and equivalents at end of year

$

9,311,537

$

1,203,160


2,091,308












Supplemental disclosures of cash flow information:










Cash paid for income taxes

$

36,504

$

45,002


32,646












Non-cash transactions:










Operating right-of-use assets recognized for
related operating lease liabilities

$

-

$

6,820


-

 

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SOURCE HITEK GLOBAL INC



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