EX-99.3 4 ea187741ex99-3_hitekglobal.htm PRESS RELEASE, DATED NOVEMBER 6, 2023

Exhibit 99.3

 

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

 

XIAMEN, China, November 6, 2023 /PRNewswire/ -- Hitek Global Inc. (Nasdaq: HKIT) (the “Company”), a China-based information technology consulting and solutions service provider, today announced its unaudited interim 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 pandemic 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 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 mainly resulted from the increase in 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 the decrease in 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 in software sales, which have a higher 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 due to the decrease in 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 professional service fee of $61,315, other fees related to the offering of $99,514, impairment losses of $72,472, and offset by 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 primarily due to the decrease in gross profit.

 

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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 in investment income of $94,970 and the increase in 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/.

 

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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

 

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HITEK GLOBAL INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31, 
   2023   2022 
  (Unaudited)     
Assets        
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 

 

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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 income (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 

 

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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 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 allowance for obsolete inventories   (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 office 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   $- 

 

 

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