Hitek Global Inc. Announces Fiscal Year 2022 Financial Results
XIAMEN, China, April 27, 2023 /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, 2022.
Ms. Xiaoyang Huang, Chief Executive Officer and Director of Hitek Global Inc. commented, "During the year of 2022, there were restrictions on the mobility and normal activities in place from time to time in China, in response to the COVID-19 pandemic. However, we maintained our revenue in fiscal year 2022 at the same level as last fiscal year, despite the challenging and uncertain market conditions. We also achieved a stable gross profit margin and a positive profit even after deducting the expenses relating to our initial public offering. With the lifting of pandemic restrictions in China in December 2022, we believe that we are well-positioned to become a future-ready company as we actively seek business opportunities."
Ms. Huang continued, "Currently, China is encouraging self-employment in various ways, and we are exploring opportunities in related markets accordingly. We firmly believe that our accumulated stable experience in serving small and micro enterprises, especially in the field of IT services, will always be the solid foundation for our long-term development. Additionally, we strive to enhance our capabilities to provide more comprehensive IT solutions and expand our service offerings to diversify our income streams in the near future."
Fiscal Year 2022 Financial Results
Revenue
Total revenues were $6.4 million in fiscal year 2022, slightly decreased from $6.5 million in fiscal year 2021, mainly due to decrease in revenue generated from tax devices and services sales, and partially offset by increase in revenue generated from hardware sales and software sales.
- Revenue generated from hardware sales was $2.5 million in fiscal year 2022, increased by 2.9% to $2.4 million in fiscal year 2021, the increase was mainly from small retail sales.
- Revenue generated from software sales was $2.1 million in fiscal year 2022, increased by 3.1% to $2.0 million in fiscal year 2021, the increase was due to increase of maintenance service revenue.
- Revenue generated from tax devices and services was $1.8 million in fiscal year 2022, decreased by 8.5% to $2.0 million in fiscal year 2021. The decrease was due to the decline in demand of our tax devices and services because, according to a new policy effective since January 2021, as a new policy was enacted in January 2021 that the new taxpayers in Xiamen can 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 $3.5 million in fiscal year 2022, decreased by 8.8% from $3.9 million in fiscal year 2021. Gross margin was 55.0% in fiscal year 2022, compared to 60.1% in fiscal year 2021.
Operating Expenses
Operating expenses were $1.9 million in fiscal year 2022, increased by 7.5% from $1.8 million in fiscal year 2021.
- Selling expenses were $437,185 in fiscal year 2022, increased by 471.7% from $76,477 in fiscal year 2021. The increase was mainly because of the increase of the Company's sales commission in connection with obtaining new orders.
- General and administrative expenses were $1.5 million in fiscal year 2022, decreased by 13.4% from $1.7 million in fiscal year 2021. The decrease was mainly due to the decrease of bad debt recovery of $0.1 million and offset with the decrease of depreciation expense of $0.3 million.
Other Income
Other income was $0.2 million in fiscal year 2022, increased by 122.5% from $0.1 million in fiscal year 2021. The increase was primarily due to the increase of interest income related to the loan receivables in the amount of $0.6 million offset by the increase of interest expense for the borrowings of $0.3 million.
Net Income
Net income was $1.4 million in fiscal year 2022, compared to $1.7 million in fiscal year 2021.
Basic and Diluted Earnings per Share
Basic and diluted earnings per share were $0.13 in fiscal year 2022, compared to $0.15 in fiscal year 2021.
Balance Sheet
As of December 31, 2022, the Company had cash of $1.2 million, compared to $2.1 million as of December 31, 2021.
Cash Flow
Net cash provided by operating activities was $3.8 million in fiscal year 2022, compared to net cash used in operating activities of $0.2 million in fiscal year 2021.
Net cash used in investing activities was $7.3 million in fiscal year 2022, compared to net cash provided by investing activities of $0.4 million in fiscal year 2021.
Net cash provided by financing activities was $2.7 million in fiscal year 2022. The Company did not have net cash provided by financing activities in fiscal year 2021.
Recent Development
On April 4, 2023, the Company completed its initial public offering of 3,200,000 ordinary shares at a public offering price of US$5.00 per ordinary share. The ordinary shares of the Company began trading on the Nasdaq Capital Market on March 31, 2023 under the ticker symbol "HKIT."
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:
Ascent Investor Relations LLC
Tina Xiao
Phone: +1 917-609-0333
Email: [email protected]
HITEK GLOBAL INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 1,203,160 | $ | 2,091,308 | ||||
Short-term investments | 4,290,348 | 5,197,015 | ||||||
Accounts receivable, net | 3,271,218 | 2,357,114 | ||||||
Accounts receivable - related party, net | 399,465 | 414,639 | ||||||
Advances to suppliers, net | 481,769 | 1,110,923 | ||||||
Inventories, net | 430,670 | 409,021 | ||||||
Deferred offering cost | 917,446 | 1,026,567 | ||||||
Loan receivable | 1,013,157 | 204,441 | ||||||
Prepaid expenses and other current assets | 94,925 | 156,111 | ||||||
Total current assets | 12,102,158 | 12,967,139 | ||||||
Non-current assets | ||||||||
Non-current accounts receivable | 4,209,546 | 3,134,361 | ||||||
Non-current accounts receivable - related party | - | 548,395 | ||||||
Non-current advance to a third party | 421,679 | 333,717 | ||||||
Non-current loan receivable | 4,342,100 | - | ||||||
Property, equipment and software, net | 122,967 | 156,761 | ||||||
Operating lease right-of-use assets | 6,641 | - | ||||||
Total non-current assets | 9,102,933 | 4,173,234 | ||||||
Total Assets | $ | 21,205,091 | $ | 17,140,373 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 696,734 | $ | 518,739 | ||||
Loan payable | 506,578 | - | ||||||
Deferred revenue | 977,054 | 784,530 | ||||||
Taxes payable | 1,671,322 | 1,299,147 | ||||||
Due to related parties | 598 | 4,163 | ||||||
Accrued expenses and other current liabilities | 348,167 | 181,925 | ||||||
Operating lease liabilities | 3,242 | - | ||||||
Total current liabilities | 4,203,695 | 2,788,504 | ||||||
Non-current Liabilities | ||||||||
Loan payable, non-current | 2,171,050 | - | ||||||
Deferred income tax liabilities, non-current | 1,300,421 | 1,225,641 | ||||||
Operating lease liabilities, non-current | 3,399 | - | ||||||
Total non-current liabilities | 3,474,870 | 1,225,641 | ||||||
Total Liabilities | 7,678,565 | 4,014,145 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity | ||||||||
Ordinary Shares*, par value $0.0001 per share, 490,000,000 shares authorized; | 1,099 | 1,099 | ||||||
Additional paid-in capital | 2,628,356 | 2,628,356 | ||||||
Statutory reserve | 836,215 | 767,207 | ||||||
Retained earnings | 10,340,107 | 8,993,370 | ||||||
Accumulated other comprehensive (loss) income | (279,251) | 736,196 | ||||||
Total Shareholders' Equity | 13,526,526 | 13,126,228 | ||||||
Total Liabilities and Shareholders' Equity | $ | 21,205,091 | $ | 17,140,373 | ||||
* | Retrospectively restated for effect of Reverse Split. |
HITEK GLOBAL INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||||||
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Revenues | $ | 6,428,608 | $ | 6,461,163 | $ | 5,804,727 | ||||||
Cost of revenues | (2,891,565) | (2,581,218) | (2,633,455) | |||||||||
Gross profit | 3,537,043 | 3,879,945 | 3,171,272 | |||||||||
Operating expenses: | ||||||||||||
General and administrative | 1,472,648 | 1,699,934 | 1,415,484 | |||||||||
Selling | 437,185 | 76,477 | 2,012 | |||||||||
Total operating expenses | 1,909,833 | 1,776,411 | 1,417,496 | |||||||||
Operating income | 1,627,210 | 2,103,534 | 1,753,776 | |||||||||
Other income (expense) | ||||||||||||
Government subsidies | 9,838 | 6,883 | 101,965 | |||||||||
Net investment (loss) income | (19,363) | 103,375 | 99,574 | |||||||||
Financial income (expense), net | 250,172 | (2,190) | 2,607 | |||||||||
Other, net | 1,106 | 608 | 179 | |||||||||
Total other income | 241,753 | 108,676 | 204,325 | |||||||||
Net Income before provision for income taxes | 1,868,963 | 2,212,210 | 1,958,101 | |||||||||
Income tax expense | 453,218 | 542,853 | 269,242 | |||||||||
Net income | $ | 1,415,745 | $ | 1,669,357 | $ | 1,688,859 | ||||||
Comprehensive income | ||||||||||||
Net income | $ | 1,415,745 | $ | 1,669,357 | $ | 1,688,859 | ||||||
Foreign currency translation (loss) gain | (1,015,447) | 290,407 | 521,914 | |||||||||
Comprehensive income | $ | 400,298 | $ | 1,959,764 | $ | 2,210,773 | ||||||
Earnings per ordinary share | ||||||||||||
– Basic and diluted | $ | 0.13 | $ | 0.15 | $ | 0.15 | ||||||
Weighted average number of ordinary shares outstanding | ||||||||||||
– Basic and diluted | 10,987,679 | 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 December31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 1,415,745 | $ | 1,669,357 | $ | 1,688,859 | ||||||
Adjustments to reconcile net income to net cash (used in) provided by | ||||||||||||
Depreciation and amortization | 21,881 | 355,738 | 378,594 | |||||||||
Loss on disposal of property, plant and equipment | 94 | |||||||||||
Interest income | (21,699) | (6,525) | (6,522) | |||||||||
Net investment loss (gain) | 19,363 | (103,375) | (99,574) | |||||||||
(Reversal of) doubtful accounts of receivables and advances to suppliers | (6,442) | (123,754) | (33,519) | |||||||||
(Reversal of) provision for obsolete inventories | 2,217 | (5,317) | 6,783 | |||||||||
Deferred income tax | 177,029 | 340,624 | 242,296 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Short-term investment –trading securities | 2,418,675 | (2,625,216) | (174,379) | |||||||||
Accounts receivable | (2,490,725) | (1,100,056) | 934,525 | |||||||||
Accounts receivable - related party | 499,933 | 578,157 | 186,223 | |||||||||
Advances to suppliers | 560,352 | (184,369) | (848,649) | |||||||||
Deferred offering cost | 60,000 | 155,915 | (335,898) | |||||||||
Inventory | (57,899) | (276,672) | 397,603 | |||||||||
Prepaid expenses and other current assets | 89,583 | 769,913 | (673,019) | |||||||||
Due from related party | 708 | |||||||||||
Accounts payable | 225,198 | 127,422 | 172,025 | |||||||||
Deferred revenue | 261,856 | 12,089 | (58,463) | |||||||||
Taxes payable | 488,419 | 327,807 | 159,464 | |||||||||
Due to related parties | (3,320) | 1,062 | 2,843 | |||||||||
Accrued expenses and other current liabilities | 163,884 | (127,375) | (7,144) | |||||||||
Net cash provided by (used in) operating activities | 3,824,050 | (214,575) | 1,932,850 | |||||||||
Investing Activities | ||||||||||||
Advance payment for software development | (117,617) | (25,582) | (285,346) | |||||||||
Loans to third parties | (5,498,997) | (356,595) | (144,925) | |||||||||
Repayment from third-party loans | 199,463 | 317,059 | - | |||||||||
Purchases of held-to-maturity investments | (1,932,080) | (1,240,329) | (2,463,732) | |||||||||
Redemption of held-to-maturity Investments | - | 1,705,453 | 2,028,956 | |||||||||
Net cash (used in) provided by investing activities | (7,349,231) | 400,006 | (865,047) | |||||||||
Financing activities: | ||||||||||||
Borrowing from third parties | 2,749,498 | - | - | |||||||||
Net cash provided by financing activities | 2,749,498 | - | - | |||||||||
Effect of exchange rate changes on cash and equivalents | (112,465) | 44,323 | 17,531 | |||||||||
Net (decrease) increase in cash | (888,148) | 229,754 | 1,085,334 | |||||||||
Cash and equivalents at beginning of year | 2,091,308 | 1,861,554 | 776,220 | |||||||||
Cash and equivalents at end of year | $ | 1,203,160 | $ | 2,091,308 | 1,861,554 | |||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Cash paid for income taxes | $ | 45,002 | $ | 32,646 | 26,300 | |||||||
Non-cash transactions: | ||||||||||||
Operating right-of-use assets recognized for related operating lease | $ | 6,820 | $ | - | - | |||||||
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SOURCE Hitek Global Inc.