Hitek(HKIT) - 2024 Q2 - Quarterly Report

Financial Performance - Revenues for the six months ended June 30, 2024, were $1.83 million, a decrease of 37.9% compared to $2.95 million for the same period in 2023[5] - Gross profit decreased to $953,410 for the first half of 2024, down 36.5% from $1.50 million in the prior year[5] - Operating loss for the six months ended June 30, 2024, was $371,854, compared to an operating income of $507,701 in 2023[5] - Net income for the first half of 2024 was $121,662, a decline of 80.5% from $621,974 in the same period last year[5] - The company reported a comprehensive loss of $193,047 for the first half of 2024, compared to a comprehensive income of $124,629 in 2023[5] - Basic and diluted earnings per share for the first half of 2024 were $0.01, down from $0.05 in the same period last year[5] - The total income before income taxes for the six months ended June 30, 2024, was $292,239, a decrease from $947,915 in 2023, reflecting a decline of approximately 69.1%[120] - Net income for the six months ended June 30, 2024, was $461,348, down from $780,309 in 2023, indicating a decrease of about 40.9%[139] Assets and Liabilities - Total assets increased to $43.50 million as of June 30, 2024, up from $35.43 million at the end of 2023, representing a growth of 22.5%[3] - Total current assets rose to $37.29 million as of June 30, 2024, compared to $24.79 million at the end of 2023, marking a 50.3% increase[3] - Total liabilities increased to $15.36 million as of June 30, 2024, up from $7.09 million at the end of 2023, reflecting a 116.0% rise[3] - Shareholders' equity decreased to $28.14 million as of June 30, 2024, down from $28.34 million at the end of 2023, a decline of 0.7%[3] - Total liabilities increased to $10,256,639 as of June 30, 2024, compared to $7,073,660 at the end of 2023, marking an increase of about 45.8%[139] - Total assets increased to $37.71 million as of June 30, 2024, compared to $29.70 million in the same period of 2023, reflecting a growth of approximately 26.8%[145] Cash Flow and Investments - Net cash provided by operating activities increased significantly to $754,123 compared to $200,869 for the same period in 2023, marking an increase of approximately 274.5%[10] - Total cash at the end of the period was $7,216,058, up from $5,495,270 as of June 30, 2023, indicating an increase of approximately 31.3%[10] - Cash flows from investing activities showed a net outflow of $11,028,114, compared to an outflow of $10,997,089 in the same period of 2023, reflecting a slight increase of 0.3%[10] - Net cash provided by operating activities increased significantly to $4,585,904 in 2024, compared to $804,161 in 2023, reflecting a growth of over 471%[139] - Net cash used in operating activities was $678,667 for the first half of 2024, compared to $595,236 in the same period of 2023, reflecting increased cash outflows[149] Revenue Breakdown - Hardware sales generated $747,378 in revenue for the six months ended June 30, 2024, compared to $1,313,059 in 2023, indicating a decrease of about 43%[60] - Revenue from tax devices and services was $263,768 for the six months ended June 30, 2024, down from $859,855 in 2023, reflecting a decline of approximately 69%[60] - The Company recognized $164,104 in revenue from deferred revenue for the six months ended June 30, 2024, compared to $649,333 in 2023, marking a decrease of about 75%[63] - Total revenues for the six months ended June 30, 2024, were $1,823,568, a decrease from $2,797,326 in the same period of 2023, representing a decline of approximately 34.8%[139] Customer Concentration - Major customers accounted for 45% of total revenues in the first half of 2024, up from 41% in the same period of 2023, indicating increased reliance on key clients[128] - Customer A contributed $397,838 (22% of total revenues) in 2024, while Customer B contributed $424,606 (23%), showing a shift in revenue distribution among major customers[128] Tax and Expenses - The effective tax rate for the six months ended June 30, 2024, was 58.4%, significantly higher than 34.4% in the same period of 2023, indicating a substantial increase in tax burden[125] - Operating expenses for the six months ended June 30, 2024, were $770,127, nearly double the $394,676 reported in the same period of 2023[147] - Interest expense for the six months ended June 30, 2024, was $154,015, slightly down from $160,319 in 2023[111] Development and Future Plans - The company made an advance payment for software development totaling $333,005 during the six months ended June 30, 2024[10] - The company has a refundable deposit of $1,010,000 related to a potential acquisition of Viva Champion Limited, which is currently in the due diligence phase[94] - The company raised $8.20 million through advances from private placements during the first half of 2024, contributing positively to financing activities[149] Currency and Exchange Rates - The company reported a foreign currency exchange rate of RMB 7.2674 to USD 1 as of June 30, 2024, compared to RMB 7.0971 as of December 31, 2023, indicating a depreciation of the RMB[73]