Hitek Global Inc. Announces First Half of Fiscal Year 2023 Financial Results
XIAMEN, China, Nov. 7, 2023 /PRNewswire/ -- Hitek Global Inc. (Nasdaq: HKIT) (the "Company"), a China-based information technology consulting and solutions service provider, today announced its unaudited financial results for the six months ended June 30, 2023.
Ms. Xiaoyang Huang, Chief Executive Officer and Director of Hitek Global Inc. commented, "We are proud to share our robust financial performance for the first half of fiscal year 2023, which underscores another six months of growth and profitability. At the beginning of 2023, China saw the COVID-19 pandamic impact receding, paving the way for a market revival. Amidst these positive changes, we stood strong, adapted to the evolving market landscape, and demonstrated remarkable resilience. Our revenues witnessed a steady rise of 3.1% from the same period of last year, which is a testament to the hard work and dedication of our team. In light of this improved environment and the wealth of opportunities it presents, we believe the time is ripe for expansion. We plan to work diligently to diversify our business into new areas, particularly in supply chain finance and Software as a Service (SaaS). We believe these strategic moves will enrich our business portfolio and position us for enduring success in the ever-evolving market landscape."
First Half 2023 Financial Highlights
- Revenue was $2.95 million for the six months ended June 30, 2023, increased by 3.1% from $2.86 million for the same period of last year.
- Gross profit was $1.50 million for the six months ended June 30, 2023, compared to $1.84 million for the same period of last year.
- Gross margin was 50.9% for the six months ended June 30, 2023, compared to 64.4% for the same period of last year.
- Net income was $0.62 million for the six months ended June 30, 2023, compared to $0.64 million for the same period of last year.
- Basic and diluted earnings per share was $0.05 for the six months ended June 30, 2023, compared to $0.06 for the same period of last year.
First Half 2023 Financial Results
Revenue
Total revenues were $2.95 million for the six months ended June 30, 2023, increased by 3.1% from $2.86 million for the same period of last year. The overall increase in revenue was mainly resulted from the increase of hardware sales.
- Revenue generated from hardware sales was $1.31 million for the six months ended June 30, 2023, increased by 64.3% from $0.80 million for the same period of last year. The increase was mainly from large customer sales.
- Revenue generated from software sales was $0.78 million for the six months ended June 30, 2023, decreased by 29.5% from $1.10 million for the same period of last year. The decrease was mainly due to decrease of software sales to large customers.
- Revenue generated from tax devices and services was $0.86 million for the six months ended June 30, 2023, decreased by 10.5% from $0.96 million for the same period of last year. The decrease was due to the new policies carried from January 2021 that the new taxpayers in Xiamen could get free tax Ukeys from the Tax authorization.
Gross Profit and Gross Margin
Gross profit was $1.50 million for the six months ended June 30, 2023, compared to $1.84 million for the same period of last year. Gross margin was 50.9% for the six months ended June 30, 2023, compared to 64.4% for the same period of last year. The decrease was mainly due to the decrease of software sales with high gross profit margin.
Operating Expenses
Operating expenses were $0.99 million for the six months ended June 30, 2023, decreased by 8.0% from $1.08 million for the same period of last year.
- Selling expenses were $325 for the six months ended June 30, 2023, decreased by 99.9% from $291,272 for the same period of last year. The decrease was mainly because of the decrease of the Company's sales commission in connection with obtaining new orders in 2023.
- General and administrative expenses were $0.99 million for the six months ended June 30, 2023, increased by 25.9% from $0.79 million for the same period of last year. The increase was mainly due to the increase of auding fee of $152,260, other fees related to offering of $99,514, impairment losses of $72,472 and offset with the decrease of salary expense of $120,536.
Operating Income
Operating income was $0.51 million for the six months ended June 30, 2023, compared to $0.76 million for the same period of last year. The decrease in operating income in 2022 was primary due to the decrease in gross profit.
Other Income
Other income was $0.44 million for the six months ended June 30, 2023, increased by 254.9% from $0.12 million for the same period of last year. The increase was primarily due to the increase of investment income of $94,970 and increase of government subsidies of $140,314.
Net Income
Net income was $0.62 million for the six months ended June 30, 2023, compared to $0.64 million for the same period of last year.
Basic and Diluted Earnings per Share
Basic and diluted earnings per share was $0.05 for the six months ended June 30, 2023, compared to $0.06 for the same period of last year.
Balance Sheet
As of June 30, 2023, the Company had cash of $5.50 million, compared to $1.20 million as of December 31, 2022.
Cash Flow
Net cash provided by operating activities was $0.20 million for the six months ended June 30, 2023, compared to $4.22 million for the same period of last year.
Net cash used in investing activities was $11.00 million for the six months ended June 30, 2023, compared to $7.64 million for the same period of last year.
Net cash provided by financing activities was $15.14 million for the six months ended June 30, 2023, compared to $3.09 million for the same period of last year.
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:
Hitek Global Inc.
Investor Relations Department
Email: [email protected]
Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: [email protected]
HITEK GLOBAL INC. AND SUBSIDIARIES |
||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
June 30, |
December 31, |
|||||||
2023 |
2022 |
|||||||
Assets |
(Unaudited) |
|||||||
Current assets |
||||||||
Cash |
$ |
5,495,270 |
$ |
1,203,160 |
||||
Short-term investments |
6,727,141 |
4,290,348 |
||||||
Accounts receivable, net |
1,263,451 |
3,271,218 |
||||||
Accounts receivable - related party, net |
- |
399,465 |
||||||
Advances to suppliers, net |
342,737 |
481,769 |
||||||
Inventories, net |
456,516 |
430,670 |
||||||
Deferred offering cost |
- |
917,446 |
||||||
Loans receivable |
7,487,166 |
1,013,157 |
||||||
Prepaid expenses and other current assets |
602,496 |
94,925 |
||||||
Total current assets |
22,374,777 |
12,102,158 |
||||||
Non-current assets |
||||||||
Non-current accounts receivable |
5,165,528 |
4,209,546 |
||||||
Non-current advance to a third party |
401,647 |
421,679 |
||||||
Non-current loan receivable |
- |
4,342,100 |
||||||
Property, equipment and software, net |
235,395 |
122,967 |
||||||
Operating lease right-of-use assets |
4,800 |
6,641 |
||||||
Long-term investments |
5,000,000 |
- |
||||||
Total non-current assets |
10,807,370 |
9,102,933 |
||||||
Total Assets |
$ |
33,182,147 |
$ |
21,205,091 |
||||
Liabilities and Shareholders' Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ |
559,573 |
$ |
696,734 |
||||
Advances from customers |
70,538 |
- |
||||||
Loan payable |
2,550,423 |
506,578 |
||||||
Deferred revenue |
503,757 |
977,054 |
||||||
Taxes payable |
1,708,684 |
1,671,322 |
||||||
Due to related parties |
1,114 |
598 |
||||||
Accrued expenses and other current liabilities |
310,772 |
348,167 |
||||||
Operating lease liabilities |
3,162 |
3,242 |
||||||
Total current liabilities |
5,708,023 |
4,203,695 |
||||||
Non-current Liabilities |
||||||||
Loan payable, non-current |
- |
2,171,050 |
||||||
Deferred income tax liabilities, non-current |
1,515,182 |
1,300,421 |
||||||
Operating lease liabilities, non-current |
1,638 |
3,399 |
||||||
Total non-current liabilities |
1,516,820 |
3,474,870 |
||||||
Total Liabilities |
7,224,843 |
7,678,565 |
||||||
Commitments and Contingencies |
- |
- |
||||||
Shareholders' Equity |
||||||||
Ordinary Shares, par value $0.0001 per share, 490,000,000 shares authorized; |
1,439 |
1,099 |
||||||
Additional paid-in capital |
16,721,551 |
2,628,356 |
||||||
Statutory reserve |
836,215 |
836,215 |
||||||
Retained earnings |
9,174,695 |
10,340,107 |
||||||
Accumulated other comprehensive loss |
(776,596) |
(279,251) |
||||||
Total Shareholders' Equity |
25,957,304 |
13,526,526 |
||||||
Total Liabilities and Shareholders' Equity |
$ |
33,182,147 |
$ |
21,205,091 |
||||
HITEK GLOBAL INC. AND SUBSIDIARIES |
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
AND COMPREHENSIVE INCOME (LOSS) |
||||||||
Six Months Ended June 30, |
||||||||
2023 |
2022 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Revenues |
$ |
2,948,115 |
$ |
2,859,150 |
||||
Cost of revenues |
(1,448,835) |
(1,019,028) |
||||||
Gross profit |
1,499,280 |
1,840,122 |
||||||
Operating expenses: |
||||||||
General and administrative |
991,254 |
787,113 |
||||||
Selling |
325 |
291,272 |
||||||
Total operating expenses |
991,579 |
1,078,385 |
||||||
Operating income |
507,701 |
761,737 |
||||||
Other income (expense) |
||||||||
Government subsidies |
148,902 |
8,588 |
||||||
Net investment income (loss) |
88,846 |
(6,124) |
||||||
Interest income |
364,042 |
250,666 |
||||||
Interest expense |
(160,319) |
(122,765) |
||||||
Other expense, net |
(1,257) |
(6,325) |
||||||
Total other income |
440,214 |
124,040 |
||||||
Income before provision for income taxes |
947,915 |
885,777 |
||||||
Income tax expense |
325,941 |
247,350 |
||||||
Net income |
$ |
621,974 |
$ |
638,427 |
||||
Comprehensive loss |
||||||||
Net income |
621,974 |
638,427 |
||||||
Foreign currency translation loss |
(497,345) |
(638,625) |
||||||
Comprehensive income (loss) |
$ |
124,629 |
$ |
(198) |
||||
Earnings per ordinary share |
||||||||
– Basic and diluted |
$ |
0.05 |
$ |
0.06 |
||||
Weighted average number of ordinary shares outstanding |
||||||||
– Basic and diluted |
12,122,574 |
10,987,679 |
||||||
HITEK GLOBAL INC. AND SUBSIDIARIES |
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
Six Months Ended June 30, |
||||||||
2023 |
2022 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Operating Activities |
||||||||
Net income |
$ |
621,974 |
$ |
638,427 |
||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||
Depreciation |
15,185 |
11,367 |
||||||
Amortization of right of use assets |
1,598 |
- |
||||||
Loss on disposal of property, plant and equipment |
1,444 |
- |
||||||
Accrued interest income from loans, net |
(47,807) |
(23,163) |
||||||
Net investment (gain) loss |
(88,846) |
6,124 |
||||||
Provision for (reversal of) credit losses of receivables and advances to suppliers |
71,984 |
(4,241) |
||||||
Reversal of obsolete inventories provision |
(4,469) |
(2,853) |
||||||
Deferred income tax |
289,720 |
163,677 |
||||||
Changes in operating assets and liabilities: |
||||||||
Short-term investments – trading securities |
400,374 |
3,742,348 |
||||||
Accounts receivable |
(1,081,209) |
(1,015,176) |
||||||
Accounts receivable – related party |
398,622 |
216,190 |
||||||
Advances to suppliers |
469,979 |
44,047 |
||||||
Deferred offering cost |
(130,134) |
60,000 |
||||||
Inventories |
(44,044) |
(228,306) |
||||||
Prepaid expenses and other current assets |
(189,358) |
34,285 |
||||||
Accounts payable |
(109,021) |
25,606 |
||||||
Advances from customers |
73,900 |
- |
||||||
Deferred revenue |
(447,227) |
313,257 |
||||||
Taxes payable |
122,326 |
176,134 |
||||||
Operating lease liabilities |
(1,598) |
- |
||||||
Due to related parties |
571 |
(3,450) |
||||||
Accrued expenses and other current liabilities |
(123,095) |
68,040 |
||||||
Net cash provided by operating activities |
200,869 |
4,222,313 |
||||||
Investing Activities |
||||||||
Advance payment for software development |
(346,635) |
(122,207) |
||||||
Loans to third parties |
(2,986,321) |
(6,176,843) |
||||||
Repayment from third-party loans |
600,000 |
207,247 |
||||||
Prepayment for renovation |
(123,597) |
- |
||||||
Purchases of property, plant and equipment |
(140,536) |
- |
||||||
Purchases of held-to-maturity investments |
(8,000,000) |
(1,544,211) |
||||||
Net cash used in investing activities |
(10,997,089) |
(7,636,014) |
||||||
Financing activities: |
||||||||
Borrowing from third parties |
- |
3,088,422 |
||||||
Proceeds from issuance of ordinary shares |
15,142,902 |
- |
||||||
Net cash provided by financing activities |
15,142,902 |
3,088,422 |
||||||
Effect of exchange rate changes on cash |
(54,572) |
(75,210) |
||||||
Net increase (decrease) in cash |
4,292,110 |
(400,489) |
||||||
Cash at beginning of period |
1,203,160 |
2,091,308 |
||||||
Cash at end of period |
$ |
5,495,270 |
$ |
1,690,819 |
||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid for income taxes |
$ |
21,104 |
$ |
34,202 |
||||
Cash paid for interest |
$ |
80,159 |
$ |
94,969 |
||||
Non-cash transactions: |
||||||||
Deferred offering cost |
$ |
1,049,367 |
$ |
- |
||||
SOURCE Hitek Global Inc.
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