Hitek Global Inc. announces first half of fiscal year 2024 financial results

XIAMEN, China, Oct. 29, 2024 /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, 2024.

Ms. Xiaoyang Huang, Chief Executive Officer and Director of Hitek Global Inc., commented, "We are pleased to report a solid performance for the first half of fiscal year 2024, as we continue to adapt to an evolving market environment. Despite facing challenges, particularly due to the implementation of Golden Tax Phase IV, which introduced new complexities for enterprises in managing their taxes, we have remained resilient. One of the key highlights of our financial performance is the increase in our gross profit margin, which rose to 52.0% for the six months ended June 30, 2024, compared to 50.9% in the same period last year. This improvement reflects our successful shift toward higher-margin revenue streams, especially in software sales, which continue to grow as we cater to larger clients. As we move forward, we are also actively expanding into new business modules to strengthen our market position. We are exploring strategic acquisitions and partnerships, particularly in the technical services, which we believe will offer immense growth potential. These moves are aligned with our long-term vision. By leveraging our expertise and seizing these emerging opportunities, we are confident in our ability to drive sustainable growth and deliver greater value to our shareholders."

First Half 2024 Financial Highlights

• Revenue was $1.83 million for the six months ended June 30, 2024 compared to $2.95 million for the same period of last year.
• Gross profit was $0.95 million for the six months ended June 30, 2024 compared to $1.5 million for the same period of last year.
• Gross profit margin as a percentage of revenue increased to 52.0% for the six months ended June 30, 2024 from 50.9% for the same period of last year.
• Basic and diluted earnings per share was $0.01 for the six months ended June 30, 2024 compared to $0.05 for the same period of last year.

First Half 2024 Financial Results

Revenue

Total revenues were $1.83 million for the six months ended June 30, 2024, compared to $2.95 million for the same period of last year.

• Revenue generated from hardware sales was $0.75 million for the six months ended June 30, 2024, compared to $1.31 million for the same period of last year. The hardware sales decrease was mainly due to the decrease in our customers' demands affected by the sluggish economic environment.
• Revenue generated from CIS software sales was $0.82 million for the six months ended June 30, 2024, increased by 6.1% from $0.78 million for the same period of last year. CIS software sales increased mainly due to the increase in software sales to large customers.
• Revenue generated from tax devices and services was $0.26 million for the six months ended June 30, 2024, compared to $0.86 million for the same period of last year. Tax devices and service sales decreased due to new policies that Xiamen tax authorities implemented the use of electronic invoices system to replace the prior tax control system.

Gross Profit and Gross Margin

Gross profit was $0.95 million for the six months ended June 30, 2024 compared to $1.5 million for the same period of last year.

Gross profit margin as a percentage of revenue increased to 52.0% for the six months ended June 30, 2024 from 50.9% for the same period of last year. This was mainly due to the increase of software sales, which has a relatively high gross profit margin compared with other revenue streams.

Operating Expenses

Operating expenses were $0.99 million for the six months ended June 30, 2024, decreased by 8.0% from $1.08 million for the same period of last year.

• Selling expenses were $9,844 for the six months ended June 30, 2024, increased by 2,928.9% from $325 for the same period of last year. Selling expenses were 0.5% of total revenues for the six months ended June 30, 2024 and 0.01% of total revenues in the comparable period of 2023. The increase results from marketing activities to attract new purchases from new and existing customers.
• General and administrative expenses were $1.32 million for the six months ended June 30, 2024, increased by 32.7% from $0.99 million for the same period of last year. The increase was mainly due to the increase in consulting fees for financing.

Operating loss was $0.37 million for the six months ended June 30, 2024 compared to operating income of $0.51 million for the comparable period of 2023. The decrease in operating income in 2024 was primarily due to the decrease in revenue and increase of general and administrative expenses.

Other Income

Other income was $0.66 million and $0.44 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily due to the increase in interest income from loan receivables and increase of net investment income.

Net Income

As a result of the factors described above, net income was $0.12 million for the six months ended June 30, 2024, compared to $0.62 million for the comparable period of 2023.

Basic and Diluted Earnings per Share

Basic and diluted earnings per share was $0.01 for the six months ended June 30, 2024, compared to $0.05 for the same period of last year.

Balance Sheet

As of June 30, 2024, the Company had cash of $7.22 million, compared to $9.31 million as of December 31, 2023.

Cash Flow

Net cash provided by operating activities was $0.75 million for the six months ended June 30, 2024, compared to $0.20 million for the same period of last year.

Net cash used in investing activities was $11.03 million for the six months ended June 30, 2024, compared to $11.00 million for the same period of last year.

Net cash provided by financing activities was $8.20 million for the six months ended June 30, 2024, compared to $15.14 million for the same period of last year.