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Hitek Global Inc. Announces First Half of Fiscal Year 2023 Financial Results

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Hitek Global Inc. reported a 3.1% increase in revenue for the first half of 2023, reaching $2.95 million, with plans to diversify into new business areas. However, the gross profit decreased by 18.5% to $1.50 million, and the gross margin fell from 64.4% to 50.9%. Operating income also dropped from $0.76 million to $0.51 million, and net income decreased from $0.64 million to $0.62 million.
Positive
  • Revenue increased by 3.1% to $2.95 million for the first half of 2023, indicating growth and market adaptation.
  • Plans for business diversification into supply chain finance and Software as a Service (SaaS) demonstrate a forward-thinking strategy.
  • The company's cash position improved significantly, reaching $5.50 million as of June 30, 2023, compared to $1.20 million as of December 31, 2022.
Negative
  • Gross profit decreased by 18.5% to $1.50 million, and gross margin dropped from 64.4% to 50.9% for the first half of 2023.
  • Operating income dropped from $0.76 million to $0.51 million, indicating a decline in profitability.
  • Net cash provided by operating activities decreased significantly from $4.22 million to $0.20 million for the same period.

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: ir@xmhitek.com

Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com

 

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;
   14,392
,364 shares and 10,987,679 shares issued and outstanding as of June 30,
   2023 and December 31, 2022, respectively.



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



$

-


 

Cision View original content:https://www.prnewswire.com/news-releases/hitek-global-inc-announces-first-half-of-fiscal-year-2023-financial-results-301979387.html

SOURCE Hitek Global Inc.

FAQ

What is Hitek Global Inc.'s revenue for the first half of 2023?

Hitek Global Inc. reported a revenue of $2.95 million for the first half of 2023, marking a 3.1% increase from the same period last year.

What new business areas is Hitek Global Inc. planning to diversify into?

Hitek Global Inc. plans to diversify its business into new areas, particularly in supply chain finance and Software as a Service (SaaS).

How has the company's cash position changed as of June 30, 2023?

As of June 30, 2023, Hitek Global Inc. had cash of $5.50 million, compared to $1.20 million as of December 31, 2022.

Hitek Global Inc.

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