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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: xiaty@xmhitek.com

 

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




-

 

Cision
Cision

View original content:https://www.prnewswire.com/news-releases/hitek-global-inc-announces-fiscal-year-2023-financial-results-302111338.html

SOURCE HITEK GLOBAL INC