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; | 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 | |||||||||||
– 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 | |||||||||||
Depreciation and amortization | 50,662 | 21,881 | 355,738 | ||||||||
Loss on disposal of property, plant and | 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 | (2,325) | (6,442) | (123,754) | ||||||||
(Reversal of) provision for obsolete | 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 | (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 | (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 | (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 | $ | - | $ | 6,820 | - | ||||||
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SOURCE HITEK GLOBAL INC