Document And Entity Information
Document And Entity Information | 6 Months Ended |
Jun. 30, 2023 | |
Document Information Line Items | |
Entity Registrant Name | HITEK GLOBAL INC. |
Document Type | 6-K |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Entity Central Index Key | 0001742341 |
Document Period End Date | Jun. 30, 2023 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | Q2 |
Entity File Number | 001-39339 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
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 |
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 |
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 |
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 |
Related Party | ||
Current assets | ||
Accounts receivable, net | 399,465 | |
Current liabilities | ||
Due to related parties | $ 1,114 | $ 598 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary shares, authorized | 490,000,000 | 490,000,000 |
Ordinary shares, issued | 14,392,364 | 10,987,679 |
Ordinary shares, outstanding | 14,392,364 | 10,987,679 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||
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 | ||
Earnings per ordinary share basic (in Dollars per share) | $ 0.05 | $ 0.06 |
Weighted average number of ordinary shares outstanding | ||
Weighted average number of ordinary shares outstanding basic (in Shares) | 12,122,574 | 10,987,679 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Parentheticals) - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||
Earnings per ordinary share diluted | $ 0.05 | $ 0.06 |
Weighted average number of ordinary shares outstanding diluted | 12,122,574 | 10,987,679 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity - USD ($) | Ordinary Shares | Additional paid-in capital | Statutory reserve | Retained earnings | Accumulated other comprehensive (loss) income | Total |
Balance at Dec. 31, 2021 | $ 1,099 | $ 2,628,356 | $ 767,207 | $ 8,993,370 | $ 736,196 | $ 13,126,228 |
Balance (in Shares) at Dec. 31, 2021 | 10,987,679 | |||||
Adoption of ASC 326 | ||||||
Foreign currency translation adjustment | (638,625) | (638,625) | ||||
Net income | 638,427 | 638,427 | ||||
Balance at Jun. 30, 2022 | $ 1,099 | 2,628,356 | 767,207 | 9,631,797 | 97,571 | 13,126,030 |
Balance (in Shares) at Jun. 30, 2022 | 10,987,679 | |||||
Balance at Dec. 31, 2022 | $ 1,099 | 2,628,356 | 836,215 | 10,340,107 | (279,251) | 13,526,526 |
Balance (in Shares) at Dec. 31, 2022 | 10,987,679 | |||||
Adoption of ASC 326 | (1,787,386) | (1,787,386) | ||||
Shares issued | $ 340 | 14,093,195 | 14,093,535 | |||
Shares issued (in Shares) | 3,404,685 | |||||
Foreign currency translation adjustment | (497,345) | (497,345) | ||||
Net income | 621,974 | 621,974 | ||||
Balance at Jun. 30, 2023 | $ 1,439 | $ 16,721,551 | $ 836,215 | $ 9,174,695 | $ (776,596) | $ 25,957,304 |
Balance (in Shares) at Jun. 30, 2023 | 14,392,364 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
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 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2023 | |
Nature of Operations [Abstract] | |
NATURE OF OPERATIONS | NOTE 1 – NATURE OF OPERATIONS HiTek Global Inc. ( “HiTek Global”) was incorporated under the laws of the Cayman Islands on November 3, 2017 in anticipation of an initial public offering. HiTek Global, through its variable interest entity (“VIE”) and VIE’s subsidiaries (collectively, the “Company”) provides hardware sales, software sales, information technology (“IT”) maintenance services and tax devices and services in the People’s Republic of China (the “PRC”). On November 20, 2017, HiTek Global formed its wholly-owned subsidiary, HiTek Hong Kong Limited (“HiTek HK”) in Hong Kong. On March 15, 2018, HiTek HK formed its wholly-owned subsidiary, Tian Dahai (Xiamen) Information Technology Co. Ltd. (“WFOE”) in PRC. Xiamen Hengda HiTek Computer Network Co., Ltd. (“HiTek”), was established in January 1996 by Shenping Yin, Xiaoyang Huang (the spouse of Shenping Yin) and nine other shareholders, who held 29.83%, 44.74% and 25.43% of its equity interests, respectively, in Xiamen, Fujian Province, PRC pursuant to PRC laws. HiTek Global entered into a series of contractual arrangements with HiTek which were effective in March 2018, and its equity holders through WFOE to obtain control and became the primary beneficiary of HiTek for accounting purposes. In September 1999, Xiamen Huasheng HiTek Computer Network Co., Ltd (“Huasheng”), a wholly owned subsidiary of HiTek was incorporated under the laws of the PRC. In September 2017, Huoerguosi Hengda Information Technology Co., Ltd (“Huoerguosi”), a wholly owned subsidiary of HiTek was established in XinJiang Province, PRC. In April 2021, Xiamen Haitian Weilai Technology Co., Ltd. (“Haitian Weilai”), a wholly owned subsidiary of WFOE was incorporated under the laws of the PRC. The Company’s current corporate structure is as follows: As all the above mentioned companies presented were under common control, the series of contractual arrangements between HiTek Global and HiTek in March 2018 constituted a reorganization under common control and was retrospectively applied to the consolidated financial statements (“CFS”) at their historical amounts. The CFS are prepared as if the existing corporate structure had been in existence throughout all periods. This includes a retrospective presentation for all equity related disclosures, including share and per share, which have been revised to reflect the effects of the reorganization. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Financial Information The unaudited condensed consolidated financial statements as of June 30, 2023 and for the six months periods ended June 30, 2023 and 2022 are unaudited. The accompanying unaudited condensed CFS have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Operating results as presented are not necessarily indicative of the results to be expected for a full year. Principles of Consolidation The accompanying unaudited condensed CFS include financial information related to the Company and its wholly-owned subsidiaries and those variable interest entities (“VIEs”) where the Company is the primary beneficiary. In preparing the unaudited condensed CFS, all significant inter-company accounts and transactions were eliminated. VIE Agreements with HiTek During the six months ended June 30, 2023 and 2022, there were no transactions in HiTek Global Inc. and HiTek HK besides minimal capital transactions, professional fee payments and interest income. As of June 30, 2023, the VIEs accounted for 54% and 99% of the Company’s total assets and total liabilities, respectively. As of December 31, 2022, the VIEs accounted for 96% and 98% of the Company’s total assets and total liabilities, respectively. As of June 30, 2023 and December 31, 2022, $1,088,701 and $955,941 of cash was denominated in RMB, respectively. For more information regarding the VIE agreements with Hitek, refer to the Company’s annual report on Form 20-F/A for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 22, 2023. Use of Estimates and Assumptions The preparation of the unaudited condensed CFS in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed CFS and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s unaudited condensed CFS include allowance for doubtful accounts, inventory obsolescence, deferred taxes, and the useful lives of property and equipment. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Fair Values of Financial Instruments The U.S. GAAP regarding fair value (“FV”) of financial instruments and related FV measurements define FV, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring FV. The three levels of inputs are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable. ASC 825-10 “Financial Instruments”, allows entities to choose to measure certain financial assets and liabilities at FV (FV option). The FV option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the FV option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the FV option to any outstanding instruments. The carrying amounts in the consolidated balance sheets for cash, accounts receivable, accounts receivable – related party, advances to suppliers, deferred offering costs, prepaid expenses and other, accounts payable and accrued liabilities, income taxes payable, VAT and other taxes payable, and due to related parties approximate their FV based on the short-term maturity of these instruments. The Company’s investments measured at FV on a recurring basis consist of trading securities and held-to-maturity debt securities. The valuation for the Level 1 position is based on quoted prices in active markets. Detailed information is in “NOTE 3-INVESTMENTS” in this report. Earnings Per Share Basic EPS is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted-average number of ordinary shares and dilutive potential ordinary shares outstanding during the period. For the six months ended June 30, 2023 and 2022, there were no other contracts to issue options, warrants or conversion rights, which would have a dilutive effect on EPS. Cash Cash consists of cash on hand and in banks. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains cash with various financial institutions in the PRC. As of June 30, 2023 and December 31, 2022 (audited), cash balances held in PRC banks are uninsured. The Company has not experienced any losses in bank accounts during the six months ended June 30, 2023 and 2022. Concentrations of Credit Risk Currently, all of the Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, short-term investments, trade accounts receivable, and accounts receivable from related parties and advances to suppliers. A portion of the Company’s sales are credit sales which are to the customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. Investments Short-term investments consist of trading stock and debt securities, which include mutual funds and wealth management products issued by commercial banks with maturity within one year. Considering the Company’s short-term investments are highly liquid in nature, changes in the FV and related transactions of short-term investments are presented as operating activities in the Company’s consolidated statements of cash flows. Long-term investments include mutual funds and wealth management products with maturity over one year. The Company accounts for investment in accordance with FASB ASC Topic 320 “Investments — Debt and Equity Securities.” Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities is included in unaudited condensed Consolidated Statements of Operations. Net realized and unrealized holding gains and losses for investments are included in unaudited condensed Consolidated Statements of Operations. If a security is acquired with the intent of selling it within hours or days, the security is classified as a trading security. The Company classifies investments in trading stock and mutual funds as trading securities. Unrealized holding gains and losses for trading securities are included in earnings. If the Company has positive intent and ability to hold to maturity, the security is classified as a held-to-maturity security. The Company classifies investments in wealth management products as held-to-maturity securities as the Company intends to hold these investments until maturity. The investments in wealth management products are valued at carrying value, which approximates the amortized cost. For individual securities classified as held-to-maturity securities, the Company evaluates whether a decline in FV below the amortized cost basis is other-than-temporary, in accordance with ASC 320. Other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the debt security’s amortized cost basis over its FV at the balance sheet date of the reporting period for which the assessment is made. Expected Credit Losses On January 1, 2023, the Company adopted ASC 326, Credit Losses (“ASC 326”), which replaced previously issued guidance regarding the impairment of financial instruments with an expected loss methodology that will result in more timely recognition of credit losses. The Company used a modified retrospective approach and did not restate the comparable prior periods, which resulted in recording the related financial impact in retained earnings in 2023. Upon adoption of ASC 326, the Company maintains an allowance for credit losses in accordance with ASC 326 and records the allowance for credit losses as an offset to assets such as accounts receivable, etc., and the estimated credit losses charged to the allowance are classified as general and administrative expenses in the consolidated statements of operations and comprehensive income (loss). The Company assesses collectability by reviewing receivables on a collective basis where similar characteristics exist, primarily based on the size and nature of specific customers’ receivables. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Bad debts are written off as incurred. Advances to Suppliers Advances to suppliers are amounts prepaid to suppliers for purchases of inventories and outsourced software services. In evaluating the recoverability of such advances, the Company mainly considers the age of the balance and the ability of the suppliers to perform the related obligations. Deferred Offering Cost The Company complies with ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Deferred offering cost consists of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Proposed Public Offering. Deferred offering cost is charged to shareholders’ equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred cost, as well as additional expenses to be incurred, will be charged to operations. Inventories Inventories are stated at the lower of cost (weighted average basis) or net realizable value. The methods of determining inventory costs are used consistently from year to year. Allowance for inventory obsolescence is provided when the market value of certain inventory items is lower than the cost. Property, Equipment and Software Property, equipment and software are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in the statement of operations in the year of disposition. The Company examines the possibility of decreases in the value of property, equipment and software, when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Estimated useful lives are as follows, taking into account the assets’ estimated residual value: Classification Estimated Furniture and office equipment 2-3 years Computer equipment 2-3 years Transportation equipment 5 years Buildings and improvements 20 years Software 3 years Impairment of Long-lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated FV and its book value. The Company did not record any impairment charge during the six months ended June 30, 2023 and 2022. Revenue Recognition The Company follows ASU 2014-09, Topic 606, “Revenue from Contracts with Customers” and its related amendments (collectively referred to as “ASC 606”) for its revenue recognition accounting policy that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In accordance with ASC 606, revenue is recognized when all of the following five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company generates its revenues primarily from three sources: (1) hardware sales, (2) software sales, and (3) tax devices and services. The Company recognizes revenue when performance obligations under the terms of a contract with its customers are satisfied. This occurs when the control of the goods and services have been transferred to the customer. ● Hardware sales Hardware revenues are generated primarily from the sale of computer and network hardware to end users. The products include computers, printers, internet cables, certain internet servers, cameras and monitors. Sales of hardware have a single performance obligation. The Company usually recognizes the revenue when ownership is transferred to end customers. The Company’s revenue from sales of hardware is reported on a gross basis since the Company is primarily obligated in the transaction, bears inventory and credit risk and has discretion to establish the prices. Hardware sales are classified as “Revenue” in the Company’s consolidated statements of operations. ● Software sales HiTek also does business in software sales and focuses on the perpetual licenses sales for one of the self-developed software Communication Interface System (“CIS”). CIS is based on LINUX, which is a general embedded interface system used in petrochemical and coal enterprises. The system is used to communicate the RCTX-X module, collect the work diagram, the electricity diagram, the pressure temperature and other measures, and can extract the data and import it to the software of the windows platform to display analysis. Performance Obligations - Software contracts with customers include multiple performance obligations such as sale of software license, installation of software, operation training service and warranty. The installation and operation training are essential to the functionality of the software which are provided to the clients prior to the acceptance of the software. The Company provides one-year warranty which mainly telephone supports. The Company estimates that costs associated with warranty are de minimis to the overall contract. Therefore, the Company does not further allocate transaction price. The Company recognizes revenue when the software is accepted by the customer. Revenues from software sales contracts are classified as “Revenue” on the Company’s consolidated statements of operations. ● Tax Devices and Services Before January 21, 2021, all VAT general taxpayer businesses in China are required to purchase the Anti-Counterfeiting Tax Control System (“ACTCS” or Golden Tax Disk or GTD) tax devices to issue the VAT Invoice and for quarterly VAT filing. HiTek is authorized to carry out the implementation of ACTCS specialty hardware retailing. The price of GTD and related supporting services are determined by the National Development and Reform Commission. From January 21, 2021, new taxpayers can receive electronic tax control ukey for free from the Tax authority. HiTek could provide supporting services to the new taxpayers. Performance Obligations - Tax devices and services contracts with customers include multiple performance obligations such as delivery of products, installation and after-sales supporting services, tax control system risk investigation service, and tax invoicing management service, such as training service on issuing electronic invoice, complete tax declaration automatically and back up data online. Revenue from the sales of GTD devices is recognized when ownership is transferred to end customers. The Company provides the tax device after-sales supporting services and tax invoicing management service, charging the service fee on an annual basis because the service period is usually one year. Revenue from its service is recognized as the services are performed and amounts are earned, using the straight-line method over the term of the related services agreement. The Company also charges a one-time service charge for each investigation request. Revenue from tax control system risk investigation service is recognized when the services are performed. Revenue is recognized based on each performance obligation’s standalone selling price that is sold separately and charged to customers at contract inception. The Company’s revenue from its gross billings is reported on a gross basis since the Company is primarily obligated in the transaction, is subject to inventory and credit risk and has several but not all of the indications that revenue should be recorded on the gross basis. Revenue was comprised of the following. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Revenues Hardware $ 1,313,059 $ 799,247 Tax devices and service 859,855 961,054 Software 775,201 1,098,849 Total revenues $ 2,948,115 $ 2,859,150 ● Contract balances Prepayments received from customers prior to the services being performed are recorded as deferred revenue. Deferred revenue consists of the annual service fees for GTD and tax invoicing management service received from customers while the services have not yet been performed. The Company recognizes the service fees as revenue on a straight-line basis in accordance with the service periods. ● Practical expedients and exemptions The Company generally expenses sales commissions as incurred because the amortization period would have been one year or less. Deferred Revenue Deferred revenue consists of the annual service fees for GTD received from customers but the services have not yet been performed. The Company recognizes the service amount as revenue on a straight-line basis in accordance with the service periods. For the six months ended June 30, 2023 and 2022, the Company recognized revenue of $649,333 and $136,657 respectively, that was included in the deferred revenue balance at the beginning of each period. Cost of Revenue Cost of revenue is comprised of (i) the direct cost of our hardware products purchased from third parties; (ii) logistics-related costs, which primarily include product packaging and freight-in charges; (iii) third-party royalties paid for the GTD; and (iv) compensation for the employees who handle the products and other costs that are necessary for us to provide the services to our customers. Selling Expenses Selling expenses consists of primarily shipping and handling costs for products sold and advertising and marketing expenses for promotion of our products. General and Administrative Expenses General and administrative expenses consist primarily of costs of salary and welfare for our general administrative and management staff, facilities costs, depreciation and amortization expenses, professional fees, accounting fees, meals and entertainment, utilities, additional expenses for public offering, and other miscellaneous expenses incurred in connection with general operations. All depreciation and amortization was recorded in general and administrative expenses because fixed assets are mainly for sales and administrative purposes. Government Subsidies Grants are given by the government to mainly support the Company for the increase in production and social insurance compensation for rural laborers. Grants are recognized as government subsidies income in the unaudited condensed consolidated statements of operations when received. Research and Development Expenses The Company follows FASB ASC 985-20, Cost of Software to Be Sold, Leased or Marketed, regarding software development costs to be sold, leased, or otherwise marketed. FASB ASC 985-20-25 requires research and development (“R&D”) costs for software development to be expensed as incurred until the software model is technologically feasible. Technological feasibility is established when the enterprise has completed all planning, designing, coding, testing, and identification of risks activities necessary to establish that the product can be produced to meet its design specifications, features, functions, technical performance requirements. Some judgment and estimation is required to assess when technological feasibility Is established, as well as the ongoing assessment of the recoverability of capitalized costs. The Company’s products reach technological feasibility shortly before the products are released and sold to the public. Therefore, R&D costs are generally expensed as incurred. The Company expenses R&D expenses as incurred and they are included as part of general and administrative expenses. R&D expenses for the six months ended June 30, 2023 and 2022 were $19,597 and $25,035, respectively. The Company defers certain costs for the software development activities associated with certain software, which the Company determined has future economic benefit. Management periodically reviews and revises, when necessary, its estimate of the future benefit of these costs and expenses if it deems there no longer is a future benefit. The Company has two software (for internal use) (Finance and Taxation Service Platform Mobile Application and Corporate Full-Service Platform Mobile Application) and they were fully amortized as of December 31, 2022. Income Taxes The Company is governed by the Income Tax Law of the PRC. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s CFS. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. Value Added Taxes (“VAT”) VAT is reported as a deduction of revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. Foreign Currency Translation The functional currency of the Company’s operations in the PRC is the Chinese Yuan or Renminbi (“RMB”). The unaudited condensed CFS are translated to U.S. dollars using the period end rates of exchange for assets and liabilities, equity is translated at historical exchange rates, and average rates of exchange (for the period) are used for revenues and expenses and cash flows. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income / loss. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in its functional currency. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. The exchange rates as of June 30, 2023 (unaudited) and December 31, 2022 and for the six months ended June 30, 2023 and 2022 (unaudited) are as follows: June 30, December 31, Six Months Ended June 30, 2023 2022 2023 2022 Foreign currency Balance Sheet Balance Sheet Profits/Loss Profits/Loss RMB:1USD 7.2537 6.9091 6.9237 6.4758 Comprehensive Income Comprehensive income is comprised of net income and all changes to the statements of shareholders’ equity, except those due to investments by shareholders and changes in paid-in capital. For the Company, comprehensive income(loss) for the six months ended June 30, 2023 and 2022 consisted of net income and unrealized (loss from foreign currency translation adjustment. Related Parties A party is considered related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. Leases On December 31, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (as amended by ASU 2018-01, 2018-10, 2018-11, 2018-20, and 2019-01, collectively “ASC 842”), using the modified retrospective method. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheet for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such lease on a straight-line basis over the lease term. The most significant impact upon adoption is for the recognition of Right-of-use (“ROU”) assets and lease liabilities on the Company’s consolidated balance sheets for office and warehouse space leases. At the commencement date of a lease, the Company recognizes a lease liability for future fixed lease payments and a ROU asset representing the right to use the underlying asset during the lease term. The lease liability is initially measured as the present value of the future fixed lease payments that will be made over the lease term. The lease term includes periods for which it’s reasonably certain that the renewal options will be exercised and periods for which it’s reasonably certain the termination options will not be exercised. The future fixed lease payments are discounted using the rate implicit in the lease, if available, or the incremental borrowing rate (“IBR”). The Company will evaluate the carrying value of ROU assets if there are indicators of impairment and review the recoverability of the related asset group. If the carrying value of the asset group is determined to not be recoverable and is in excess of the estimated fair value, the Company will record an impairment loss in other expenses in the consolidated statements of operations. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace the “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of adoption of this guidance on its CFS. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on its unaudited condensed CFS. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2023 | |
Short-term Investments [Abstract] | |
INVESTMENTS | NOTE 3 – INVESTMENTS Short-term investments consist of trading stock and debt securities, which include mutual funds and wealth management products issued by commercial banks with maturity within one year. Long-term investments consist of wealth management products with maturity over one year. Investments consisted of the following. Quoted Significant Significant Prices in Other Other Active Observable Unobservable June 30, Markets Inputs Inputs 2023 (Level 1) (Level 2) (Level 3) (Unaudited) Short-term investments Trading securities $ 1,934,952 $ 1,934,952 $ - $ - Held-to-maturity debt securities 4,792,189 4,792,189 - - Long-term investment Held-to-maturity debt securities 5,000,000 5,000,000 - - Total $ 11,727,141 $ 11,727,141 $ - $ - Quoted Significant Significant Prices in Other Other Active Observable Unobservable December 31, Markets Inputs Inputs 2022 (Level 1) (Level 2) (Level 3) Short-term investment Trading securities $ 2,408,772 $ 2,408,772 $ - $ - Held-to-maturity debt securities 1,881,576 1,881,576 - - Total $ 4,290,348 $ 4,290,348 $ - $ - Net investment (loss) income for the six months ended June 30, 2023 and 2022 consists of the following. 2023 2022 (Unaudited) (Unaudited) Gain (loss) from sales of short-term investments: Trading securities $ 31,721 $ (24,453 ) Unrealized holding (loss) income of short-term investments: Trading securities (15,263 ) 6,872 Held-to-maturity debt securities 7,950 11,457 Unrealized holding (loss) income of long-term investments: Held-to-maturity debt securities 64,438 - Net investment income (loss) $ 88,846 $ (6,124 ) |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 30, 2023 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 4 – accounts receivable, Net At June 30, 2023 and December 31, 2022, accounts receivable, net consisted of the following. June 30, 2023 December 31, (Unaudited) Accounts receivable $ 3,148,195 $ 3,435,340 Less: allowance for credit losses (1,884,744 ) $ (164,122 ) Accounts receivable, net $ 1,263,451 $ 3,271,218 Accounts receivable – related party, net $ - $ 399,465 Non-current accounts receivable $ 5,165,528 $ 4,209,546 The following table describes the movements in the allowance for credit losses during the six months ended June 30, 2023. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Balance at December 31, $ 164,122 $ 179,475 Adoption of ASC 326 1,787,386 - Provision for doubtful accounts 73,805 1,324 Foreign exchange difference (140,569 ) (9,030 ) Balance at June 30 (Unaudited) $ 1,884,744 $ 171,769 The Company reviews the outstanding receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. |
Advances to Suppliers, Net
Advances to Suppliers, Net | 6 Months Ended |
Jun. 30, 2023 | |
Advances to Suppliers, Net [Abstract] | |
ADVANCES TO SUPPLIERS, NET | NOTE 5 – ADVANCES TO SUPPLIERS, Net As of June 30, 2023 and December 31, 2022, advances to suppliers consisted of the following: June 30, December 31, (Unaudited) Advances to suppliers - Inventories $ 11,871 $ 483,435 Advances to suppliers – Services (1) 330,866 - Less: reserve for amount not recoverable - (1,666 ) Total $ 342,737 $ 481,769 (1) In 2023, the Company signed a software upgrade and development contract (for internal use) (Interface System), which obligated the software company to perform certain software upgrade and development activities from May to September 2023. As of June 30, 2023, the total contract price was $661,731 and shall be paid using installment payment method (50% within 5 working days after the signing of this contract, 40% within 5 working days upon launching of the official version, and 10% within 30 working days upon launching of the official version). The ownership of the final product belongs to the Company. |
Inventories, Net
Inventories, Net | 6 Months Ended |
Jun. 30, 2023 | |
Inventories, Net [Abstract] | |
INVENTORIES, NET | NOTE 6 – INVENTORIES, NET At June 30, 2023 and December 31, 2022, inventories consisted of the following. June 30, 2023 December 31, (Unaudited) Inventory $ 463,691 $ 442,681 Less: reserve for obsolete inventories (7,175 ) (12,011 ) Total $ 456,516 $ 430,670 Inventories include computer, network hardware, and GTDs. The Company reviews its inventories periodically to determine if any reserves are necessary for potential obsolescence or if a write-down is necessary if the carrying value exceeds net realizable value. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2023 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 7 – PREPAID EXPENSES AND OTHER CURRENT ASSETS At June 30, 2023 and December 31, 2022, prepaid expenses and current assets consisted of the following. June 30, 2023 December 31, (Unaudited) Interest receivable (1) $ 315,466 $ 42,263 Prepaid expenses (2) 156,958 4,342 Prepayment for office renovation 117,974 - Other receivables, net (3) 12,098 48,280 Total $ 602,496 $ 94,925 (1) Interest receivable primarily consists of interest from loans to third parties and interest from investments. (2) Prepaid expenses primarily consist of insurance premium, investor relations and lawyer’s fee. (3) Other receivables primarily consist of cash advance to employees for business travel or expenses incurred in the ordinary courses of business, net of expected credit loss. |
Loan Receivable
Loan Receivable | 6 Months Ended |
Jun. 30, 2023 | |
Loan Receivable [Abstract] | |
LOAN RECEIVABLE | NOTE 8 – LOAN RECEIVABLE At June 30, 2023 and December 31, 2022, loan receivable consisted of the following. June 30, 2023 December 31, (Unaudited) Guangxi Beihengda Mining Co., Ltd. (1) $ 5,100,845 $ 5,355,257 Hongkong Sanyou Petroleum Co., Ltd (2) 2,386,321 - Total loan receivable 7,487,166 5,355,257 Less: current portion 7,487,166 1,013,157 Loan receivable - non current $ - $ 4,342,100 (1) On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB30,000,000 ($4,135,820), RMB3,000,000 ($413,582) and RMB7,000,000 ($965,025) to a third party, which were restricted for its operating activities, carrying interest at 12%. The RMB30,000,000 loan and RMB 7,000,00 (2) In 2023, the Company provided loans with interest of 1.5% per month to another third party for its operating activities. The loans are secured by their respective pledge contracts using their underlying assets. Such loans will mature within nine months from the date of issue, with loan principal, interest and handling fees to be settled immediately after the maturity date. From April to June 2023, total loans to such third party amounted to $2,986,321, of which $600,000 of the principal was repaid prior to June 30, 2023. Interest income for the six months ended June 30, 2023 and 2022 was $363,224 and $231,632, respectively. |
Non-Current Advance to a Third
Non-Current Advance to a Third Party | 6 Months Ended |
Jun. 30, 2023 | |
Non-Current Advance to a Third Party [Abstract] | |
NON-CURRENT ADVANCE TO A THIRD PARTY | NOTE 9 – NON-CURRENT ADVANCE TO A THIRD PARTY In 2020, the Company signed a software development contract (for internal use) (Corporate Full-Service Platform Mobile Application) which obligated the software development company to perform certain software development activities on September 10, 2020. The scope of the work includes analyzing and confirming the application requirements checklist provided by the Company, designing under user interface, coding, arranging/locating the servers, and launching. As of June 30, 2023, the total contract price was $413,582 and shall be paid using installment payment method (30% within 30 working days after the signing of this contract, 50% within 30 working days upon launching of the official version, and 20% within 90 working days upon launching of the official version). The ownership of the final product belongs to the Company and the copyrights will be shared with the software development company. As of June 30, 2023, product development costs capitalized totaled $401,647 (recorded in non-current advances to a third party) and the Company’s commitments to additional costs under software development contracts were $11,935 as of June 30, 2023. The Company plans to restart this software development project after the final payment of $11,935 in the last quarter of 2023. |
Property, Equipment and Softwar
Property, Equipment and Software, Net | 6 Months Ended |
Jun. 30, 2023 | |
Property, Equipment and Software, Net [Abstract] | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | NOTE 10 – PROPERTY, equipment AND SOFTWARE, net At June 30, 2023 and December 31, 2022, property, equipment and software consisted of the following. June 30, 2023 December 31, (Unaudited) Office furniture $ - $ 2,576 Computer equipment - 6,545 Transportation equipment 161,265 67,580 Buildings and improvements 427,295 448,607 Software 1,017,412 1,068,156 1,605,972 1,593,464 Less: accumulated depreciation and amortization (1,370,577 ) (1,470,497 ) $ 235,395 $ 122,967 |
Taxes payable
Taxes payable | 6 Months Ended |
Jun. 30, 2023 | |
Taxes payable [Abstract] | |
TAXES PAYABLE | NOTE 11 – Taxes payable At June 30, 2023 and December 31, 2022, taxes payable consisted of the following. June 30, 2023 December 31, (Unaudited) Value-added tax payable $ 1,171,501 $ 1,135,002 Income tax payable 396,918 404,617 Other taxes payable 140,265 131,703 Total $ 1,708,684 $ 1,671,322 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS The following are related party balances as of June 30, 2023 and December 31, 2022. June 30, 2023 December 31, (Unaudited) Accounts receivable Beijing Zhongzhe Yuantong Technology Co., Ltd. (1) $ - $ 399,465 $ - $ 399,465 June 30, 2023 December 31, (Unaudited) Due to related parties Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ 1,114 $ 598 $ 1,114 $ 598 The following are related party transactions for the six months ended June 30, 2023 and 2022. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Cost of revenues Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ 8,663 $ - $ 8,663 $ - (1) Beijing Zhongzhe Yuantong Technology Co., Ltd. (“Beijing Zhongzhe”) and one of the minority shareholders of HiTek are under common control. As of December 31, 2022, accounts receivable from Beijing Zhongzhe Yuantong Technology Co., Ltd. was $399,465. As of June 30, 2023, it was collected by the Company. (2) Mr. Yin is the director and a minority shareholder of Fengqi (Beijing) Zhineng Technology Co., Ltd. The Company purchased from Fengqi (Beijing) Zhineng Technology Co., Ltd. hardware of $8,663 nil |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | NOTE 13 – LEASES A summary of supplemental information related to operating leases (unaudited) as of June 30, 2023 is as follows. Operating lease ROU assets $ 4,800 Operating lease liabilities-current $ 3,162 Operating lease liabilities-non current 1,638 Total operating lease liabilities $ 4,800 Weighted average remaining lease term 1.5 years Weighted average discount rate 4.8 % The following table represents the maturity of lease liabilities (unaudited) as of June 30, 2023. 12 months ending June 30, 2024 $ 3,309 2025 1,654 Total lease payments 4,963 Less: interest (163 ) Present value of lease liabilities $ 4,800 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 14 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES At June 30, 2023 and December 31, 2022, accrued expenses and other current liabilities consisted of the following. June 30, 2023 December 31, (Unaudited) Payroll $ 121,079 $ 253,212 Interest payable 96,640 21,132 Other 93,053 73,823 Total $ 310,772 $ 348,167 |
Loan Payables
Loan Payables | 6 Months Ended |
Jun. 30, 2023 | |
Loan Payables [Abstract] | |
LOAN PAYABLES | NOTE 15 – LOAN PAYABLES At June 30, 2023 and December 31, 2022, loan payables consisted of the following. June 30, 2023 December 31, (Unaudited) Short-term borrowings $ 2,550,423 $ 506,578 Long-term borrowings - 2,171,050 Total $ 2,550,423 $ 2,677,628 On January 21, March 28 and June 14, 2022, the Company entered into three loans of RMB15,000,000 ($2,067,910), RMB1,500,000 ($206,791) and RMB3,500,000 ($482,512) from a third party, carrying interest at 12%. The RMB15,000,000 loan and RMB3,500,000 loan are due on January 20, 2024 and June 13, 2024, respectively. The RMB1,500,000 loan was repaid prior to December 31, 2022. The change in the carrying value of these outstanding loans from $2,677,628 in 2022 to $2,550,423 in 2023 was due mainly to currency translation. The interest expense for the six months ended June 30, 2023 and 2022 was $160,319 and $122,765. Respectively. |
Ordinary Shares
Ordinary Shares | 6 Months Ended |
Jun. 30, 2023 | |
Ordinary Shares [Abstract] | |
ORDINARY SHARES | NOTE 16 – ORDINARY SHARES In April 2023, the Company issued 3,404,685 Ordinary Shares, of which 3,200,000 shares were related to the public offering and 204,685 shares to an over-allotment arrangement, at $5.00 per share with net proceeds of approximately $15.1 million. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax [Abstract] | |
INCOME TAXES | NOTE 17 – INCOME TAXES The entities within the Company file separate tax returns in the respective tax jurisdictions in which they operate. Cayman Islands The Company is a tax-exempt entity incorporated in Cayman Islands. Hong Kong HiTek Hong Kong Limited was incorporated in Hong Kong and does not conduct any substantial operations of its own. No provision for Hong Kong profits tax has been made in the CFS as HiTek Hong Kong Limited has no assessable profits for the six months ended June 30, 2023 and 2022. PRC The Company’s PRC operating subsidiary and VIEs, being incorporated in the PRC, are governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). The EIT rate of PRC is 25%, which applies to both domestic and foreign invested enterprises. One of the Company’s subsidiaries located in the Xinjiang Huoerguosi special development zones, Huoerguosi, is currently exempt from corporate income tax in China from January 1, 2017 to December 31, 2021. Since the beginning of 2022, Huoerguosi did not enjoy the above preferential tax policy. State Administration of Taxation and Ministry of Finance issued a notice related to the tax relief policy of the small- scale enterprises in January 2019. According to the notice, from January 1, 2019 to December 31, 2021, if a small profit-making enterprise has annual taxable income less than or equal to RMB 1 million, only 25% of its annual taxable income will be subject to income tax at a reduced rate of 20%; for those with annual taxable income more than RMB 1 million but less than RMB 3 million, 50% of their annual taxable income will be subject to income tax at the reduced rate of 20%. In April 2021, on the basis of the previous preferential policy, State Administration of Taxation and Ministry of Finance issued a notice stating that, from January 1, 2021 to December 31, 2022, for those with annual taxable income less than or equal to RMB 1 million, only 12.5% of its annual taxable income will be subject to income tax at a reduced rate of 20%. In March 2022, on the basis of the previous preferential policy, State Administration of Taxation and Ministry of Finance further issued a notice stating that, from January 1, 2022 to December 31, 2024, for those with annual taxable income more than RMB 1 million but did not exceed RMB 3 million, 25% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. In March 2023, on the basis of the previous preferential policy, State Administration of Taxation and Ministry of Finance issued a notice stating that, from January 1, 2023 to December 31, 2024, for those with annual taxable income less than or equal to RMB 1 million, 25% of their annual taxable income will be subject to income tax at the same reduced rate of 20%. The Company’s income (loss) before income taxes includes the following for the six months ended June 30. 2023 2022 (Unaudited) (Unaudited) Non-PRC operations $ (270,571 ) $ (276,088 ) PRC operations 1,218,486 1,161,865 Total income before income taxes $ 947,915 $ 885,777 Income tax expense was comprised of the following for the six months ended June 30. 2023 2022 (Unaudited) (Unaudited) Current tax expense $ 36,221 $ 83,673 Deferred tax expense 289,720 163,677 Total income tax expense $ 325,941 $ 247,350 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The cumulative tax effect at the expected rate of 25% of significant items comprising the net deferred tax amount is at June 30, 2023 and December 31, 2022 as follows. June 30, December 31, (Unaudited) Deferred tax assets Net operating loss $ 7,124 $ 5,313 Deferred revenue 116,000 205,605 Unbilled cost 348,601 355,461 Unbilled interest expenses 36,912 34,592 Software amortization 254,353 267,039 Allowance for doubtful accounts 38,673 8,308 Inventories obsolescence 2,739 7,043 Unrealized losses on trading securities 1,723 1,809 Accrued Bonus 42,144 62,441 Other 16,097 31,819 Total deferred tax assets 864,366 979,430 Deferred tax liabilities Unbilled revenue (2,226,177 ) (2,149,169 ) Unbilled interest income (73,342 ) (69,149 ) Deferred government subsidiary income (40,773 ) (42,806 ) Unrealized gain on short-term investment (11,868 ) (2,796 ) Other (5,766 ) (4,462 ) Total deferred tax liabilities (2,357,926 ) (2,268,382 ) Valuation allowance (21,622 ) (11,469 ) Net deferred tax liabilities $ (1,515,182 ) $ (1,300,421 ) Following is a reconciliation of income tax expense at the effective rate to income tax at the calculated statutory rates for the six months ended June 30. 2023 2022 (Unaudited) (Unaudited) PRC statutory tax rate 25 % 25 % Effect of different tax rates in different jurisdictions 7.1 % 7.8 % Permanent difference 0.1 % - % Tax holiday effect 2.2 % (4.9 )% Effective tax rate 34.4 % 27.9 % Uncertain Tax Positions The Company had no significant unrecognized uncertain tax positions or unrecognized liabilities, interest or penalties associated with unrecognized tax benefit as of and for the six months ended June 30, 2023 and 2022. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2023 | |
Concentrations [Abstract] | |
CONCENTRATIONS | NOTE 18 – CONCENTRATIONS Major Customers Details of customers which accounted for 10% or more of the Company’s total revenues are as follows. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Customer A $ 808,726 27 % $ 979,560 34 % Customer B 407,092 14 % 477,749 17 % Total $ 1,215,818 41 % $ 1,457,309 51 % Details of customers which accounted for 10% or more of the Company’s accounts receivable are as follows. June 30, December 31, 2023 2022 (Unaudited) (Audited) Customer A $ 5,616,058 68 % $ 5,274,060 67 % Customer B 2,214,732 27 % 1,864,208 24 % Total $ 7,830,790 95 % $ 7,138,268 91 % Major Suppliers Details of suppliers which accounted for 10% or more of the Company’s total purchases are as follows. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Supplier A $ 318,777 22 % $ - - % Supplier B - - % 203,247 20 % Supplier C 167,867 12 % 257,597 25 % Supplier D - - % 281,511 28 % Total $ 486,644 34 % $ 742,355 73 % Details of suppliers which accounted for 10% or more of the Company’s accounts payable are as follows. June 30, December 31, 2023 2022 (Unaudited) (Audited) Supplier E $ 95,692 17 % $ - - % Supplier F 75,823 14 % 79,605 11 % Supplier B 69,904 12 % 155,990 22 % Supplier G - - % 131,661 19 % Total $ 241,419 43 % $ 367,256 52 % |
Commitments and Contingency
Commitments and Contingency | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingency [Abstract] | |
COMMITMENTS AND CONTINGENCY | NOTE 19 – COMMITMENTS AND CONTINGENCY Contingencies The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. As of June 30, 2023, the Company was not aware of any litigation or proceedings against it. Risks in relation to the VIE structure It is possible the Company’s operations and businesses through its VIE could be found by PRC authorities to violate PRC law and regulations prohibiting or restricting foreign ownership of companies that engage in such operations and businesses. While the Company’s management considers the possibility of such a finding by PRC regulatory authorities under current law and regulations to be remote, on January 19, 2015, the Ministry of Commerce of the PRC, or (the “MOFCOM”) released on its Website for public comment a proposed PRC law (the “Draft FIE Law”) that appears to include VIEs within the scope of entities that could be considered foreign invested enterprises (or “FIEs”) that would be subject to restrictions under existing PRC law on foreign investment in certain categories of industry. Specifically, the Draft FIE Law introduces the concept of “actual control” for determining whether an entity is considered to be an FIE. In addition to control through direct or indirect ownership or equity, the Draft FIE Law includes control through contractual arrangements within the definition of “actual control.” If the Draft FIE Law is passed by the People’s Congress of the PRC and goes into effect in its current form, these provisions regarding control through contractual arrangements could be construed to reach the Company’s VIE arrangements, and as a result the Company’s VIE could become subject to the current restrictions on foreign investment in certain categories of industry. If a finding were made by PRC authorities, under existing law and regulations or under the Draft FIE Law if it becomes effective, about the Company’s operation of certain of its operations and businesses through its VIEs, regulatory authorities with jurisdiction over the licensing and operation of such operations and businesses would have broad discretion in dealing with such a violation, including levying fines, confiscating the Company’s income, revoking the business or operating licenses of the affected businesses, requiring the Company to restructure its ownership structure or operations, or requiring the Company to discontinue all or any portion of its operations. Any of these actions could cause significant disruption to the Company’s business operations, and have a severe adverse impact on the Company’s cash flows, financial position and operating performance. In addition, it is possible the contracts among WFOE, HiTek and HiTek’s shareholders would not be enforceable in China if PRC government authorities or courts found that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. If the Company was unable to enforce these contractual arrangements, the Company would not be able to exert effective control over the VIEs. Consequently, the VIEs’ results of operations, assets and liabilities would not be included in the Company’s CFS. If such were the case, the Company’s cash flows, financial position, and operating performance would be materially adversely affected. The Company’s contractual arrangements WFOE, HiTek and HiTek’s shareholders are approved and in place. Management believes such contracts are enforceable, and considers the possibility remote that PRC regulatory authorities with jurisdiction over the Company’s operations and contractual relationships would find the contracts to be unenforceable. The Company’s operations and businesses rely on the operations and businesses of its VIEs, which hold certain recognized revenue-producing assets. The VIEs also have an assembled workforce, focused primarily on R&D, whose costs are expensed as incurred. The Company’s operations and businesses may be adversely impacted if the Company loses the ability to use and enjoy assets held by its VIE. VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs and their subsidiaries of the Company must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. Summary information regarding consolidated VIEs and their subsidiaries is as follows. As of As of 2023 2022 (Unaudited) Total current assets $ 12,241,892 $ 11,276,852 Total non-current assets $ 5,807,370 $ 9,102,933 Total Assets $ 18,049,262 $ 20,379,785 Total Liabilities $ 7,172,377 $ 5,329,843 Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Revenues $ 2,797,326 $ 2,752,332 Net income $ 780,309 $ 845,693 Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Net cash provided by operating activities $ 804,159 $ 4,431,188 Net cash used in investing activities $ (610,768 ) $ (7,636,014 ) Net cash provided by financing activities $ - $ 3,088,422 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20 – SUBSEQUENT EVENTS The Company performed an evaluation of events and transactions for potential recognition or disclosure through the date of this report. The Company is not aware of any material subsequent event other than the item disclosed below. From July to October 2023, the Company provided loans with interest of 1.5% per month to a third party for its operating activities. The loans are secured by their respective pledge contracts using their underlying assets. Such loans will mature within nine months from the date of issue, with loan principal, interest and handling fees to be settled immediately after the expiration date. Total loans to such third party amounted to $5.1 million, of which $2.8 million of the principal and $78,447 of the interest was repaid prior to this report. |
Condensed Financial Information
Condensed Financial Information of the Parent Company | 6 Months Ended |
Jun. 30, 2023 | |
Condensed Financial Information of the Parent Company [Abstract] | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | NOTE 21- CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY Pursuant to Rules 12-04(a), 5-04(c), and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such rules and concluded they were applicable to the Company as the restricted net assets of the Company’s PRC subsidiary and VIEs exceeded 25% of the consolidated net assets of the Company. Therefore, the condensed CFS for the parent company are included herein. PARENT COMPANY BALANCE SHEETS June 30, December 31, 2023 2022 Assets Current assets Cash $ 4,387,925 $ 226,578 Short-term investments 3,000,000 - Intercompany receivables 10,000 10,000 Deferred offering cost - 349,842 Prepaid expenses and other current assets 2,582,045 - Total current assets 9,979,970 586,420 Non-current assets Long-term investments 5,000,000 - Investments in non-VIE subsidiaries 12,336,264 14,299,036 Total non-current assets 17,336,264 14,299,036 Total Assets $ 27,316,234 $ 14,885,456 Liabilities and Shareholders’ Equity Current liabilities Intercompany payable $ 1,358,930 $ 1,358,930 Total current liabilities 1,358,930 1,358,930 Total Liabilities 1,358,930 1,358,930 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 $ 27,316,234 $ 14,885,456 PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Operating expenses: General and administrative $ 394,676 $ 270,810 Total operating expenses 394,676 270,810 Operating loss (394,676 ) (270,810 ) Other income (expense) Net investment income 64,989 - Interest income 60,924 21 Other expense, net (615 ) (4,169 ) Total other income (loss) 125,298 (4,148 ) Share of income from subsidiaries 891,352 913,385 Income before provision for income taxes 621,974 638,427 Net income $ 621,974 $ 638,427 Comprehensive income Net income $ 621,974 $ 638,427 Comprehensive income $ 621,974 $ 638,427 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 PARENT COMPANY 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 operating activities: Net investment gain (956,341 ) (913,385 ) Changes in operating assets and liabilities: Deferred offering cost (130,134 ) 60,000 Prepaid expenses and other current assets (130,735 ) - Net cash used in operating activities (595,236 ) (214,958 ) Investing Activities Loans to third parties (2,986,321 ) - Repayment from third-party loans 600,000 - Purchases of held-to-maturity investments (8,000,000 ) - Net cash used in investing activities (10,386,321 ) - Financing activities: Proceeds from issuance of ordinary shares 15,142,902 - Net cash provided by financing activities 15,142,902 - Net increase (decrease) in cash 4,161,345 (214,958 ) Cash and equivalents at beginning of period 226,578 509,728 Cash and equivalents at end of period $ 4,387,923 $ 294,770 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | |
Basis of Financial Information | Basis of Financial Information The unaudited condensed consolidated financial statements as of June 30, 2023 and for the six months periods ended June 30, 2023 and 2022 are unaudited. The accompanying unaudited condensed CFS have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Operating results as presented are not necessarily indicative of the results to be expected for a full year. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed CFS include financial information related to the Company and its wholly-owned subsidiaries and those variable interest entities (“VIEs”) where the Company is the primary beneficiary. |
VIE Agreements with HiTek | VIE Agreements with HiTek During the six months ended June 30, 2023 and 2022, there were no transactions in HiTek Global Inc. and HiTek HK besides minimal capital transactions, professional fee payments and interest income. As of June 30, 2023, the VIEs accounted for 54% and 99% of the Company’s total assets and total liabilities, respectively. As of December 31, 2022, the VIEs accounted for 96% and 98% of the Company’s total assets and total liabilities, respectively. As of June 30, 2023 and December 31, 2022, $1,088,701 and $955,941 of cash was denominated in RMB, respectively. For more information regarding the VIE agreements with Hitek, refer to the Company’s annual report on Form 20-F/A for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 22, 2023. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the unaudited condensed CFS in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed CFS and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s unaudited condensed CFS include allowance for doubtful accounts, inventory obsolescence, deferred taxes, and the useful lives of property and equipment. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments The U.S. GAAP regarding fair value (“FV”) of financial instruments and related FV measurements define FV, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring FV. The three levels of inputs are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable. ASC 825-10 “Financial Instruments”, allows entities to choose to measure certain financial assets and liabilities at FV (FV option). The FV option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the FV option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the FV option to any outstanding instruments. The carrying amounts in the consolidated balance sheets for cash, accounts receivable, accounts receivable – related party, advances to suppliers, deferred offering costs, prepaid expenses and other, accounts payable and accrued liabilities, income taxes payable, VAT and other taxes payable, and due to related parties approximate their FV based on the short-term maturity of these instruments. The Company’s investments measured at FV on a recurring basis consist of trading securities and held-to-maturity debt securities. The valuation for the Level 1 position is based on quoted prices in active markets. Detailed information is in “NOTE 3-INVESTMENTS” in this report. |
Earnings Per Share (“EPS”) | Earnings Per Share Basic EPS is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted-average number of ordinary shares and dilutive potential ordinary shares outstanding during the period. For the six months ended June 30, 2023 and 2022, there were no other contracts to issue options, warrants or conversion rights, which would have a dilutive effect on EPS. |
Cash | Cash Cash consists of cash on hand and in banks. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains cash with various financial institutions in the PRC. As of June 30, 2023 and December 31, 2022 (audited), cash balances held in PRC banks are uninsured. The Company has not experienced any losses in bank accounts during the six months ended June 30, 2023 and 2022. |
Concentrations of Credit Risk | Concentrations of Credit Risk Currently, all of the Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, short-term investments, trade accounts receivable, and accounts receivable from related parties and advances to suppliers. A portion of the Company’s sales are credit sales which are to the customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. |
Investments | Investments Short-term investments consist of trading stock and debt securities, which include mutual funds and wealth management products issued by commercial banks with maturity within one year. Considering the Company’s short-term investments are highly liquid in nature, changes in the FV and related transactions of short-term investments are presented as operating activities in the Company’s consolidated statements of cash flows. Long-term investments include mutual funds and wealth management products with maturity over one year. The Company accounts for investment in accordance with FASB ASC Topic 320 “Investments — Debt and Equity Securities.” Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities is included in unaudited condensed Consolidated Statements of Operations. Net realized and unrealized holding gains and losses for investments are included in unaudited condensed Consolidated Statements of Operations. If a security is acquired with the intent of selling it within hours or days, the security is classified as a trading security. The Company classifies investments in trading stock and mutual funds as trading securities. Unrealized holding gains and losses for trading securities are included in earnings. If the Company has positive intent and ability to hold to maturity, the security is classified as a held-to-maturity security. The Company classifies investments in wealth management products as held-to-maturity securities as the Company intends to hold these investments until maturity. The investments in wealth management products are valued at carrying value, which approximates the amortized cost. For individual securities classified as held-to-maturity securities, the Company evaluates whether a decline in FV below the amortized cost basis is other-than-temporary, in accordance with ASC 320. Other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the debt security’s amortized cost basis over its FV at the balance sheet date of the reporting period for which the assessment is made. |
Expected Credit Losses | Expected Credit Losses On January 1, 2023, the Company adopted ASC 326, Credit Losses (“ASC 326”), which replaced previously issued guidance regarding the impairment of financial instruments with an expected loss methodology that will result in more timely recognition of credit losses. The Company used a modified retrospective approach and did not restate the comparable prior periods, which resulted in recording the related financial impact in retained earnings in 2023. Upon adoption of ASC 326, the Company maintains an allowance for credit losses in accordance with ASC 326 and records the allowance for credit losses as an offset to assets such as accounts receivable, etc., and the estimated credit losses charged to the allowance are classified as general and administrative expenses in the consolidated statements of operations and comprehensive income (loss). The Company assesses collectability by reviewing receivables on a collective basis where similar characteristics exist, primarily based on the size and nature of specific customers’ receivables. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Bad debts are written off as incurred. |
Advances to Suppliers | Advances to Suppliers Advances to suppliers are amounts prepaid to suppliers for purchases of inventories and outsourced software services. In evaluating the recoverability of such advances, the Company mainly considers the age of the balance and the ability of the suppliers to perform the related obligations. |
Deferred Offering Cost | Deferred Offering Cost The Company complies with ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Deferred offering cost consists of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Proposed Public Offering. Deferred offering cost is charged to shareholders’ equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred cost, as well as additional expenses to be incurred, will be charged to operations. |
Inventories | Inventories Inventories are stated at the lower of cost (weighted average basis) or net realizable value. The methods of determining inventory costs are used consistently from year to year. Allowance for inventory obsolescence is provided when the market value of certain inventory items is lower than the cost. |
Property, Equipment and Software | Property, Equipment and Software Property, equipment and software are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in the statement of operations in the year of disposition. The Company examines the possibility of decreases in the value of property, equipment and software, when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Estimated useful lives are as follows, taking into account the assets’ estimated residual value: Classification Estimated Furniture and office equipment 2-3 years Computer equipment 2-3 years Transportation equipment 5 years Buildings and improvements 20 years Software 3 years |
Impairment of Long-lived Assets | Impairment of Long-lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated FV and its book value. The Company did not record any impairment charge during the six months ended June 30, 2023 and 2022. |
Revenue Recognition | Revenue Recognition The Company follows ASU 2014-09, Topic 606, “Revenue from Contracts with Customers” and its related amendments (collectively referred to as “ASC 606”) for its revenue recognition accounting policy that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In accordance with ASC 606, revenue is recognized when all of the following five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company generates its revenues primarily from three sources: (1) hardware sales, (2) software sales, and (3) tax devices and services. The Company recognizes revenue when performance obligations under the terms of a contract with its customers are satisfied. This occurs when the control of the goods and services have been transferred to the customer. ● Hardware sales Hardware revenues are generated primarily from the sale of computer and network hardware to end users. The products include computers, printers, internet cables, certain internet servers, cameras and monitors. Sales of hardware have a single performance obligation. The Company usually recognizes the revenue when ownership is transferred to end customers. The Company’s revenue from sales of hardware is reported on a gross basis since the Company is primarily obligated in the transaction, bears inventory and credit risk and has discretion to establish the prices. Hardware sales are classified as “Revenue” in the Company’s consolidated statements of operations. ● Software sales HiTek also does business in software sales and focuses on the perpetual licenses sales for one of the self-developed software Communication Interface System (“CIS”). CIS is based on LINUX, which is a general embedded interface system used in petrochemical and coal enterprises. The system is used to communicate the RCTX-X module, collect the work diagram, the electricity diagram, the pressure temperature and other measures, and can extract the data and import it to the software of the windows platform to display analysis. Performance Obligations - Software contracts with customers include multiple performance obligations such as sale of software license, installation of software, operation training service and warranty. The installation and operation training are essential to the functionality of the software which are provided to the clients prior to the acceptance of the software. The Company provides one-year warranty which mainly telephone supports. The Company estimates that costs associated with warranty are de minimis to the overall contract. Therefore, the Company does not further allocate transaction price. The Company recognizes revenue when the software is accepted by the customer. Revenues from software sales contracts are classified as “Revenue” on the Company’s consolidated statements of operations. ● Tax Devices and Services Before January 21, 2021, all VAT general taxpayer businesses in China are required to purchase the Anti-Counterfeiting Tax Control System (“ACTCS” or Golden Tax Disk or GTD) tax devices to issue the VAT Invoice and for quarterly VAT filing. HiTek is authorized to carry out the implementation of ACTCS specialty hardware retailing. The price of GTD and related supporting services are determined by the National Development and Reform Commission. From January 21, 2021, new taxpayers can receive electronic tax control ukey for free from the Tax authority. HiTek could provide supporting services to the new taxpayers. Performance Obligations - Tax devices and services contracts with customers include multiple performance obligations such as delivery of products, installation and after-sales supporting services, tax control system risk investigation service, and tax invoicing management service, such as training service on issuing electronic invoice, complete tax declaration automatically and back up data online. Revenue from the sales of GTD devices is recognized when ownership is transferred to end customers. The Company provides the tax device after-sales supporting services and tax invoicing management service, charging the service fee on an annual basis because the service period is usually one year. Revenue from its service is recognized as the services are performed and amounts are earned, using the straight-line method over the term of the related services agreement. The Company also charges a one-time service charge for each investigation request. Revenue from tax control system risk investigation service is recognized when the services are performed. Revenue is recognized based on each performance obligation’s standalone selling price that is sold separately and charged to customers at contract inception. The Company’s revenue from its gross billings is reported on a gross basis since the Company is primarily obligated in the transaction, is subject to inventory and credit risk and has several but not all of the indications that revenue should be recorded on the gross basis. Revenue was comprised of the following. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Revenues Hardware $ 1,313,059 $ 799,247 Tax devices and service 859,855 961,054 Software 775,201 1,098,849 Total revenues $ 2,948,115 $ 2,859,150 ● Contract balances Prepayments received from customers prior to the services being performed are recorded as deferred revenue. Deferred revenue consists of the annual service fees for GTD and tax invoicing management service received from customers while the services have not yet been performed. The Company recognizes the service fees as revenue on a straight-line basis in accordance with the service periods. ● Practical expedients and exemptions The Company generally expenses sales commissions as incurred because the amortization period would have been one year or less. |
Deferred Revenue | Deferred Revenue Deferred revenue consists of the annual service fees for GTD received from customers but the services have not yet been performed. The Company recognizes the service amount as revenue on a straight-line basis in accordance with the service periods. For the six months ended June 30, 2023 and 2022, the Company recognized revenue of $649,333 and $136,657 respectively, that was included in the deferred revenue balance at the beginning of each period. |
Cost of Revenue | Cost of Revenue Cost of revenue is comprised of (i) the direct cost of our hardware products purchased from third parties; (ii) logistics-related costs, which primarily include product packaging and freight-in charges; (iii) third-party royalties paid for the GTD; and (iv) compensation for the employees who handle the products and other costs that are necessary for us to provide the services to our customers. |
Selling Expenses | Selling Expenses Selling expenses consists of primarily shipping and handling costs for products sold and advertising and marketing expenses for promotion of our products. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses consist primarily of costs of salary and welfare for our general administrative and management staff, facilities costs, depreciation and amortization expenses, professional fees, accounting fees, meals and entertainment, utilities, additional expenses for public offering, and other miscellaneous expenses incurred in connection with general operations. All depreciation and amortization was recorded in general and administrative expenses because fixed assets are mainly for sales and administrative purposes. |
Government Subsidies | Government Subsidies Grants are given by the government to mainly support the Company for the increase in production and social insurance compensation for rural laborers. Grants are recognized as government subsidies income in the unaudited condensed consolidated statements of operations when received. |
Research and Development Expenses | Research and Development Expenses The Company follows FASB ASC 985-20, Cost of Software to Be Sold, Leased or Marketed, regarding software development costs to be sold, leased, or otherwise marketed. FASB ASC 985-20-25 requires research and development (“R&D”) costs for software development to be expensed as incurred until the software model is technologically feasible. Technological feasibility is established when the enterprise has completed all planning, designing, coding, testing, and identification of risks activities necessary to establish that the product can be produced to meet its design specifications, features, functions, technical performance requirements. Some judgment and estimation is required to assess when technological feasibility Is established, as well as the ongoing assessment of the recoverability of capitalized costs. The Company’s products reach technological feasibility shortly before the products are released and sold to the public. Therefore, R&D costs are generally expensed as incurred. The Company expenses R&D expenses as incurred and they are included as part of general and administrative expenses. R&D expenses for the six months ended June 30, 2023 and 2022 were $19,597 and $25,035, respectively. The Company defers certain costs for the software development activities associated with certain software, which the Company determined has future economic benefit. Management periodically reviews and revises, when necessary, its estimate of the future benefit of these costs and expenses if it deems there no longer is a future benefit. The Company has two software (for internal use) (Finance and Taxation Service Platform Mobile Application and Corporate Full-Service Platform Mobile Application) and they were fully amortized as of December 31, 2022. |
Income Taxes | Income Taxes The Company is governed by the Income Tax Law of the PRC. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s CFS. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. |
Value Added Taxes (“VAT”) | Value Added Taxes (“VAT”) VAT is reported as a deduction of revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company’s operations in the PRC is the Chinese Yuan or Renminbi (“RMB”). The unaudited condensed CFS are translated to U.S. dollars using the period end rates of exchange for assets and liabilities, equity is translated at historical exchange rates, and average rates of exchange (for the period) are used for revenues and expenses and cash flows. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income / loss. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in its functional currency. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. The exchange rates as of June 30, 2023 (unaudited) and December 31, 2022 and for the six months ended June 30, 2023 and 2022 (unaudited) are as follows: June 30, December 31, Six Months Ended June 30, 2023 2022 2023 2022 Foreign currency Balance Sheet Balance Sheet Profits/Loss Profits/Loss RMB:1USD 7.2537 6.9091 6.9237 6.4758 |
Comprehensive Income | Comprehensive Income Comprehensive income is comprised of net income and all changes to the statements of shareholders’ equity, except those due to investments by shareholders and changes in paid-in capital. For the Company, comprehensive income(loss) for the six months ended June 30, 2023 and 2022 consisted of net income and unrealized (loss from foreign currency translation adjustment. |
Related Parties | Related Parties A party is considered related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
Leases | Leases On December 31, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (as amended by ASU 2018-01, 2018-10, 2018-11, 2018-20, and 2019-01, collectively “ASC 842”), using the modified retrospective method. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheet for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such lease on a straight-line basis over the lease term. The most significant impact upon adoption is for the recognition of Right-of-use (“ROU”) assets and lease liabilities on the Company’s consolidated balance sheets for office and warehouse space leases. At the commencement date of a lease, the Company recognizes a lease liability for future fixed lease payments and a ROU asset representing the right to use the underlying asset during the lease term. The lease liability is initially measured as the present value of the future fixed lease payments that will be made over the lease term. The lease term includes periods for which it’s reasonably certain that the renewal options will be exercised and periods for which it’s reasonably certain the termination options will not be exercised. The future fixed lease payments are discounted using the rate implicit in the lease, if available, or the incremental borrowing rate (“IBR”). The Company will evaluate the carrying value of ROU assets if there are indicators of impairment and review the recoverability of the related asset group. If the carrying value of the asset group is determined to not be recoverable and is in excess of the estimated fair value, the Company will record an impairment loss in other expenses in the consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace the “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of adoption of this guidance on its CFS. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on its unaudited condensed CFS. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives | Estimated useful lives are as follows, taking into account the assets’ estimated residual value: Classification Estimated Furniture and office equipment 2-3 years Computer equipment 2-3 years Transportation equipment 5 years Buildings and improvements 20 years Software 3 years |
Schedule of Revenue | Revenue was comprised of the following. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Revenues Hardware $ 1,313,059 $ 799,247 Tax devices and service 859,855 961,054 Software 775,201 1,098,849 Total revenues $ 2,948,115 $ 2,859,150 |
Schedule of Exchange Rates | The exchange rates as of June 30, 2023 (unaudited) and December 31, 2022 and for the six months ended June 30, 2023 and 2022 (unaudited) are as follows: June 30, December 31, Six Months Ended June 30, 2023 2022 2023 2022 Foreign currency Balance Sheet Balance Sheet Profits/Loss Profits/Loss RMB:1USD 7.2537 6.9091 6.9237 6.4758 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Short-term Investments [Abstract] | |
Schedule of Short-Term Investments | Short-term investments consist of trading stock and debt securities, which include mutual funds and wealth management products issued by commercial banks with maturity within one year. Long-term investments consist of wealth management products with maturity over one year. Investments consisted of the following. Quoted Significant Significant Prices in Other Other Active Observable Unobservable June 30, Markets Inputs Inputs 2023 (Level 1) (Level 2) (Level 3) (Unaudited) Short-term investments Trading securities $ 1,934,952 $ 1,934,952 $ - $ - Held-to-maturity debt securities 4,792,189 4,792,189 - - Long-term investment Held-to-maturity debt securities 5,000,000 5,000,000 - - Total $ 11,727,141 $ 11,727,141 $ - $ - Quoted Significant Significant Prices in Other Other Active Observable Unobservable December 31, Markets Inputs Inputs 2022 (Level 1) (Level 2) (Level 3) Short-term investment Trading securities $ 2,408,772 $ 2,408,772 $ - $ - Held-to-maturity debt securities 1,881,576 1,881,576 - - Total $ 4,290,348 $ 4,290,348 $ - $ - |
Schedule of Net Investment (loss) Income | Net investment (loss) income for the six months ended June 30, 2023 and 2022 consists of the following. 2023 2022 (Unaudited) (Unaudited) Gain (loss) from sales of short-term investments: Trading securities $ 31,721 $ (24,453 ) Unrealized holding (loss) income of short-term investments: Trading securities (15,263 ) 6,872 Held-to-maturity debt securities 7,950 11,457 Unrealized holding (loss) income of long-term investments: Held-to-maturity debt securities 64,438 - Net investment income (loss) $ 88,846 $ (6,124 ) |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts Receivable | At June 30, 2023 and December 31, 2022, accounts receivable, net consisted of the following. June 30, 2023 December 31, (Unaudited) Accounts receivable $ 3,148,195 $ 3,435,340 Less: allowance for credit losses (1,884,744 ) $ (164,122 ) Accounts receivable, net $ 1,263,451 $ 3,271,218 Accounts receivable – related party, net $ - $ 399,465 Non-current accounts receivable $ 5,165,528 $ 4,209,546 |
Schedule of Allowance for Credit Losses | The following table describes the movements in the allowance for credit losses during the six months ended June 30, 2023. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Balance at December 31, $ 164,122 $ 179,475 Adoption of ASC 326 1,787,386 - Provision for doubtful accounts 73,805 1,324 Foreign exchange difference (140,569 ) (9,030 ) Balance at June 30 (Unaudited) $ 1,884,744 $ 171,769 |
Advances to Suppliers, Net (Tab
Advances to Suppliers, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Advances to Suppliers, Net [Abstract] | |
Schedule of Advances to Suppliers, Net | As of June 30, 2023 and December 31, 2022, advances to suppliers consisted of the following: June 30, December 31, (Unaudited) Advances to suppliers - Inventories $ 11,871 $ 483,435 Advances to suppliers – Services (1) 330,866 - Less: reserve for amount not recoverable - (1,666 ) Total $ 342,737 $ 481,769 (1) In 2023, the Company signed a software upgrade and development contract (for internal use) (Interface System), which obligated the software company to perform certain software upgrade and development activities from May to September 2023. As of June 30, 2023, the total contract price was $661,731 and shall be paid using installment payment method (50% within 5 working days after the signing of this contract, 40% within 5 working days upon launching of the official version, and 10% within 30 working days upon launching of the official version). The ownership of the final product belongs to the Company. |
Inventories, Net (Tables)
Inventories, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventories, Net [Abstract] | |
Schedule of Inventories | At June 30, 2023 and December 31, 2022, inventories consisted of the following. June 30, 2023 December 31, (Unaudited) Inventory $ 463,691 $ 442,681 Less: reserve for obsolete inventories (7,175 ) (12,011 ) Total $ 456,516 $ 430,670 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of Prepaid Expenses and Current Assets | At June 30, 2023 and December 31, 2022, prepaid expenses and current assets consisted of the following. June 30, 2023 December 31, (Unaudited) Interest receivable (1) $ 315,466 $ 42,263 Prepaid expenses (2) 156,958 4,342 Prepayment for office renovation 117,974 - Other receivables, net (3) 12,098 48,280 Total $ 602,496 $ 94,925 (1) Interest receivable primarily consists of interest from loans to third parties and interest from investments. (2) Prepaid expenses primarily consist of insurance premium, investor relations and lawyer’s fee. (3) Other receivables primarily consist of cash advance to employees for business travel or expenses incurred in the ordinary courses of business, net of expected credit loss. |
Loan Receivable (Tables)
Loan Receivable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Loan Receivable [Abstract] | |
Schedule of Loan Receivable | At June 30, 2023 and December 31, 2022, loan receivable consisted of the following. June 30, 2023 December 31, (Unaudited) Guangxi Beihengda Mining Co., Ltd. (1) $ 5,100,845 $ 5,355,257 Hongkong Sanyou Petroleum Co., Ltd (2) 2,386,321 - Total loan receivable 7,487,166 5,355,257 Less: current portion 7,487,166 1,013,157 Loan receivable - non current $ - $ 4,342,100 (1) On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB30,000,000 ($4,135,820), RMB3,000,000 ($413,582) and RMB7,000,000 ($965,025) to a third party, which were restricted for its operating activities, carrying interest at 12%. The RMB30,000,000 loan and RMB 7,000,00 (2) In 2023, the Company provided loans with interest of 1.5% per month to another third party for its operating activities. The loans are secured by their respective pledge contracts using their underlying assets. Such loans will mature within nine months from the date of issue, with loan principal, interest and handling fees to be settled immediately after the maturity date. From April to June 2023, total loans to such third party amounted to $2,986,321, of which $600,000 of the principal was repaid prior to June 30, 2023. |
Property, Equipment and Softw_2
Property, Equipment and Software, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Equipment and Software, Net [Abstract] | |
Schedule of Property, Equipment and Software | At June 30, 2023 and December 31, 2022, property, equipment and software consisted of the following. June 30, 2023 December 31, (Unaudited) Office furniture $ - $ 2,576 Computer equipment - 6,545 Transportation equipment 161,265 67,580 Buildings and improvements 427,295 448,607 Software 1,017,412 1,068,156 1,605,972 1,593,464 Less: accumulated depreciation and amortization (1,370,577 ) (1,470,497 ) $ 235,395 $ 122,967 |
Taxes payable (Tables)
Taxes payable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Taxes payable [Abstract] | |
Schedule of Taxes Payable | At June 30, 2023 and December 31, 2022, taxes payable consisted of the following. June 30, 2023 December 31, (Unaudited) Value-added tax payable $ 1,171,501 $ 1,135,002 Income tax payable 396,918 404,617 Other taxes payable 140,265 131,703 Total $ 1,708,684 $ 1,671,322 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Balances | The following are related party balances as of June 30, 2023 and December 31, 2022. June 30, 2023 December 31, (Unaudited) Accounts receivable Beijing Zhongzhe Yuantong Technology Co., Ltd. (1) $ - $ 399,465 $ - $ 399,465 June 30, 2023 December 31, (Unaudited) Due to related parties Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ 1,114 $ 598 $ 1,114 $ 598 Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Cost of revenues Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ 8,663 $ - $ 8,663 $ - (1) Beijing Zhongzhe Yuantong Technology Co., Ltd. (“Beijing Zhongzhe”) and one of the minority shareholders of HiTek are under common control. As of December 31, 2022, accounts receivable from Beijing Zhongzhe Yuantong Technology Co., Ltd. was $399,465. As of June 30, 2023, it was collected by the Company. (2) Mr. Yin is the director and a minority shareholder of Fengqi (Beijing) Zhineng Technology Co., Ltd. The Company purchased from Fengqi (Beijing) Zhineng Technology Co., Ltd. hardware of $8,663 nil |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Operating Leases | A summary of supplemental information related to operating leases (unaudited) as of June 30, 2023 is as follows. Operating lease ROU assets $ 4,800 Operating lease liabilities-current $ 3,162 Operating lease liabilities-non current 1,638 Total operating lease liabilities $ 4,800 Weighted average remaining lease term 1.5 years Weighted average discount rate 4.8 % |
Schedule of Maturity of Lease Liabilities | The following table represents the maturity of lease liabilities (unaudited) as of June 30, 2023. 12 months ending June 30, 2024 $ 3,309 2025 1,654 Total lease payments 4,963 Less: interest (163 ) Present value of lease liabilities $ 4,800 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | At June 30, 2023 and December 31, 2022, accrued expenses and other current liabilities consisted of the following. June 30, 2023 December 31, (Unaudited) Payroll $ 121,079 $ 253,212 Interest payable 96,640 21,132 Other 93,053 73,823 Total $ 310,772 $ 348,167 |
Loan Payables (Tables)
Loan Payables (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Loan Payables [Abstract] | |
Schedule of Loan Payables | At June 30, 2023 and December 31, 2022, loan payables consisted of the following. June 30, 2023 December 31, (Unaudited) Short-term borrowings $ 2,550,423 $ 506,578 Long-term borrowings - 2,171,050 Total $ 2,550,423 $ 2,677,628 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax [Abstract] | |
Schedule of Income (Loss) Before Income Taxes | The Company’s income (loss) before income taxes includes the following for the six months ended June 30. 2023 2022 (Unaudited) (Unaudited) Non-PRC operations $ (270,571 ) $ (276,088 ) PRC operations 1,218,486 1,161,865 Total income before income taxes $ 947,915 $ 885,777 |
Schedule of Income Tax Expense | Income tax expense was comprised of the following for the six months ended June 30. 2023 2022 (Unaudited) (Unaudited) Current tax expense $ 36,221 $ 83,673 Deferred tax expense 289,720 163,677 Total income tax expense $ 325,941 $ 247,350 |
Schedule of Deferred Tax Assets and Liabilities | The cumulative tax effect at the expected rate of 25% of significant items comprising the net deferred tax amount is at June 30, 2023 and December 31, 2022 as follows. June 30, December 31, (Unaudited) Deferred tax assets Net operating loss $ 7,124 $ 5,313 Deferred revenue 116,000 205,605 Unbilled cost 348,601 355,461 Unbilled interest expenses 36,912 34,592 Software amortization 254,353 267,039 Allowance for doubtful accounts 38,673 8,308 Inventories obsolescence 2,739 7,043 Unrealized losses on trading securities 1,723 1,809 Accrued Bonus 42,144 62,441 Other 16,097 31,819 Total deferred tax assets 864,366 979,430 Deferred tax liabilities Unbilled revenue (2,226,177 ) (2,149,169 ) Unbilled interest income (73,342 ) (69,149 ) Deferred government subsidiary income (40,773 ) (42,806 ) Unrealized gain on short-term investment (11,868 ) (2,796 ) Other (5,766 ) (4,462 ) Total deferred tax liabilities (2,357,926 ) (2,268,382 ) Valuation allowance (21,622 ) (11,469 ) Net deferred tax liabilities $ (1,515,182 ) $ (1,300,421 ) |
Schedule of a Reconciliation of Income Tax Expense | Following is a reconciliation of income tax expense at the effective rate to income tax at the calculated statutory rates for the six months ended June 30. 2023 2022 (Unaudited) (Unaudited) PRC statutory tax rate 25 % 25 % Effect of different tax rates in different jurisdictions 7.1 % 7.8 % Permanent difference 0.1 % - % Tax holiday effect 2.2 % (4.9 )% Effective tax rate 34.4 % 27.9 % |
Concentrations (Tables)
Concentrations (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Concentrations [Abstract] | |
Schedule of Details of Customers Total Revenues | Details of customers which accounted for 10% or more of the Company’s total revenues are as follows. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Customer A $ 808,726 27 % $ 979,560 34 % Customer B 407,092 14 % 477,749 17 % Total $ 1,215,818 41 % $ 1,457,309 51 % |
Schedule of Details of Customers Accounts Receivable | Details of customers which accounted for 10% or more of the Company’s accounts receivable are as follows. June 30, December 31, 2023 2022 (Unaudited) (Audited) Customer A $ 5,616,058 68 % $ 5,274,060 67 % Customer B 2,214,732 27 % 1,864,208 24 % Total $ 7,830,790 95 % $ 7,138,268 91 % |
Schedule of Details of Suppliers Total Purchases | Details of suppliers which accounted for 10% or more of the Company’s total purchases are as follows. Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Supplier A $ 318,777 22 % $ - - % Supplier B - - % 203,247 20 % Supplier C 167,867 12 % 257,597 25 % Supplier D - - % 281,511 28 % Total $ 486,644 34 % $ 742,355 73 % |
Schedule of Details of Suppliers Accounts Payable | Details of suppliers which accounted for 10% or more of the Company’s accounts payable are as follows. June 30, December 31, 2023 2022 (Unaudited) (Audited) Supplier E $ 95,692 17 % $ - - % Supplier F 75,823 14 % 79,605 11 % Supplier B 69,904 12 % 155,990 22 % Supplier G - - % 131,661 19 % Total $ 241,419 43 % $ 367,256 52 % |
Commitments and Contingency (Ta
Commitments and Contingency (Tables) - VIE [Member] | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingency (Tables) [Line Items] | |
Schedule of Balance Sheets | Summary information regarding consolidated VIEs and their subsidiaries is as follows. As of As of 2023 2022 (Unaudited) Total current assets $ 12,241,892 $ 11,276,852 Total non-current assets $ 5,807,370 $ 9,102,933 Total Assets $ 18,049,262 $ 20,379,785 Total Liabilities $ 7,172,377 $ 5,329,843 |
Schedule of Operations | Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Revenues $ 2,797,326 $ 2,752,332 Net income $ 780,309 $ 845,693 |
Schedule of Cash Flows | Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Net cash provided by operating activities $ 804,159 $ 4,431,188 Net cash used in investing activities $ (610,768 ) $ (7,636,014 ) Net cash provided by financing activities $ - $ 3,088,422 |
Condensed Financial Informati_2
Condensed Financial Information of the Parent Company (Tables) - Parent Company [Member] | 6 Months Ended |
Jun. 30, 2023 | |
Condensed Financial Information of the Parent Company (Tables) [Line Items] | |
Parent Company Balance Sheets | June 30, December 31, 2023 2022 Assets Current assets Cash $ 4,387,925 $ 226,578 Short-term investments 3,000,000 - Intercompany receivables 10,000 10,000 Deferred offering cost - 349,842 Prepaid expenses and other current assets 2,582,045 - Total current assets 9,979,970 586,420 Non-current assets Long-term investments 5,000,000 - Investments in non-VIE subsidiaries 12,336,264 14,299,036 Total non-current assets 17,336,264 14,299,036 Total Assets $ 27,316,234 $ 14,885,456 Liabilities and Shareholders’ Equity Current liabilities Intercompany payable $ 1,358,930 $ 1,358,930 Total current liabilities 1,358,930 1,358,930 Total Liabilities 1,358,930 1,358,930 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 $ 27,316,234 $ 14,885,456 |
Parent Company Statements of Operations And Comprehensive Income | Six Months Ended June 30, 2023 2022 (Unaudited) (Unaudited) Operating expenses: General and administrative $ 394,676 $ 270,810 Total operating expenses 394,676 270,810 Operating loss (394,676 ) (270,810 ) Other income (expense) Net investment income 64,989 - Interest income 60,924 21 Other expense, net (615 ) (4,169 ) Total other income (loss) 125,298 (4,148 ) Share of income from subsidiaries 891,352 913,385 Income before provision for income taxes 621,974 638,427 Net income $ 621,974 $ 638,427 Comprehensive income Net income $ 621,974 $ 638,427 Comprehensive income $ 621,974 $ 638,427 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 |
Parent Company 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 operating activities: Net investment gain (956,341 ) (913,385 ) Changes in operating assets and liabilities: Deferred offering cost (130,134 ) 60,000 Prepaid expenses and other current assets (130,735 ) - Net cash used in operating activities (595,236 ) (214,958 ) Investing Activities Loans to third parties (2,986,321 ) - Repayment from third-party loans 600,000 - Purchases of held-to-maturity investments (8,000,000 ) - Net cash used in investing activities (10,386,321 ) - Financing activities: Proceeds from issuance of ordinary shares 15,142,902 - Net cash provided by financing activities 15,142,902 - Net increase (decrease) in cash 4,161,345 (214,958 ) Cash and equivalents at beginning of period 226,578 509,728 Cash and equivalents at end of period $ 4,387,923 $ 294,770 |
Nature of Operations (Details)
Nature of Operations (Details) | Jun. 30, 2023 |
Shenping Yin [Member] | |
Nature of Operations (Details) [Line Items] | |
Ownership percentage | 29.83% |
Xiaoyang Huang [Member] | |
Nature of Operations (Details) [Line Items] | |
Ownership percentage | 44.74% |
Spouse of Shenping Yin [Member] | |
Nature of Operations (Details) [Line Items] | |
Ownership percentage | 25.43% |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Cash and cash equivalents | $ 1,088,701 | $ 955,941 | |
Deferred revenue balance | 649,333 | $ 136,657 | |
Research and development expenses | $ 19,597 | $ 25,035 | |
Minimum [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Variable interest entities, percentage | 54% | 96% | |
Maximum [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Variable interest entities, percentage | 99% | 98% |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives | Jun. 30, 2023 |
Furniture and office equipment [Member[ | Minimum [Member] | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 2 years |
Furniture and office equipment [Member[ | Maximum [Member] | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 3 years |
Computer equipment [Member[ | Minimum [Member] | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 2 years |
Computer equipment [Member[ | Maximum [Member] | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 3 years |
Transportation equipment [Member[ | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 5 years |
Buildings and improvements [Member[ | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 20 years |
Software [Member[ | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 3 years |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Revenue - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues | ||
Total revenues | $ 2,948,115 | $ 2,859,150 |
Hardware [Member] | ||
Revenues | ||
Total revenues | 1,313,059 | 799,247 |
Tax devices and service [Member] | ||
Revenues | ||
Total revenues | 859,855 | 961,054 |
Software [Member] | ||
Revenues | ||
Total revenues | $ 775,201 | $ 1,098,849 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 |
Balance Sheet [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates [Line Items] | |||
RMB:1USD | 7.2537 | 6.9091 | |
Profits/Loss [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates [Line Items] | |||
RMB:1USD | 6.9237 | 6.4758 |
Investments (Details)
Investments (Details) | Jun. 30, 2023 |
Short-Term Investments [Member] | |
Investments (Details) [Line Items] | |
Maturity period of investment | 1 year |
Long-term investment [Member] | |
Investments (Details) [Line Items] | |
Maturity period of investment | 1 year |
Investments (Details) - Schedul
Investments (Details) - Schedule of Short-Term Investments - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Short-term investments | ||
Total | $ 11,727,141 | $ 4,290,348 |
Short-Term Investments [Member] | ||
Short-term investments | ||
Trading securities | 1,934,952 | 2,408,772 |
Held-to-maturity debt securities | 4,792,189 | 1,881,576 |
Long-Term Investments [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities | 5,000,000 | |
Quoted Prices in Active Markets (Level 1) [Member] | ||
Short-term investments | ||
Total | 11,727,141 | 4,290,348 |
Quoted Prices in Active Markets (Level 1) [Member] | Short-Term Investments [Member] | ||
Short-term investments | ||
Trading securities | 1,934,952 | 2,408,772 |
Held-to-maturity debt securities | 4,792,189 | 1,881,576 |
Quoted Prices in Active Markets (Level 1) [Member] | Long-Term Investments [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities | 5,000,000 | |
Significant Other Observable Inputs (Level 2) [Member] | ||
Short-term investments | ||
Total | ||
Significant Other Observable Inputs (Level 2) [Member] | Short-Term Investments [Member] | ||
Short-term investments | ||
Trading securities | ||
Held-to-maturity debt securities | ||
Significant Other Observable Inputs (Level 2) [Member] | Long-Term Investments [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities | ||
Significant Other Unobservable Inputs (Level 3) [Member] | ||
Short-term investments | ||
Total | ||
Significant Other Unobservable Inputs (Level 3) [Member] | Short-Term Investments [Member] | ||
Short-term investments | ||
Trading securities | ||
Held-to-maturity debt securities | ||
Significant Other Unobservable Inputs (Level 3) [Member] | Long-Term Investments [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities |
Investments (Details) - Sched_2
Investments (Details) - Schedule of Net Investment (loss) Income - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Gain (loss) from sales of short-term investments: | ||
Trading securities | $ 31,721 | $ (24,453) |
Unrealized holding (loss) income of short-term investments: | ||
Trading securities | (15,263) | 6,872 |
Net investment income (loss) | 88,846 | (6,124) |
Short-Term Investments [Member] | ||
Unrealized holding (loss) income of short-term investments: | ||
Held-to-maturity debt securities | 7,950 | 11,457 |
Long-Term Investments [Member] | ||
Unrealized holding (loss) income of short-term investments: | ||
Held-to-maturity debt securities | $ 64,438 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts receivable | $ 3,148,195 | $ 3,435,340 | ||
Less: allowance for credit losses | (1,884,744) | (164,122) | $ (171,769) | $ (179,475) |
Accounts receivable, net | 1,263,451 | 3,271,218 | ||
Non-current accounts receivable | 5,165,528 | 4,209,546 | ||
Related Party | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Accounts receivable, net | $ 399,465 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details) - Schedule of Allowance for Credit Losses - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Allowance for Credit Losses [Abstract] | ||
Balance at December 31, | $ 164,122 | $ 179,475 |
Adoption of ASC 326 | 1,787,386 | |
Provision for doubtful accounts | 73,805 | 1,324 |
Foreign exchange difference | (140,569) | (9,030) |
Balance at June 30 (Unaudited) | $ 1,884,744 | $ 171,769 |
Advances to Suppliers, Net (Det
Advances to Suppliers, Net (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Advances to Suppliers, Net (Details) [Line Items] | |
Total contract price (in Dollars) | $ 661,731 |
Installment payment percentage | 40% |
5 working days [Member] | |
Advances to Suppliers, Net (Details) [Line Items] | |
Installment payment percentage | 50% |
30 working days [Member] | |
Advances to Suppliers, Net (Details) [Line Items] | |
Installment payment percentage | 10% |
Advances to Suppliers, Net (D_2
Advances to Suppliers, Net (Details) - Schedule of Advances to Suppliers, Net - USD ($) | 6 Months Ended | ||
Jun. 30, 2023 | Dec. 31, 2022 | ||
Schedule Of Advances To Suppliers Net Abstract | |||
Advances to suppliers - Inventories | $ 11,871 | $ 483,435 | |
Advances to suppliers – Services | [1] | 330,866 | |
Less: reserve for amount not recoverable | (1,666) | ||
Total | $ 342,737 | $ 481,769 | |
[1]In 2023, the Company signed a software upgrade and development contract (for internal use) (Interface System), which obligated the software company to perform certain software upgrade and development activities from May to September 2023. As of June 30, 2023, the total contract price was $661,731 and shall be paid using installment payment method (50% within 5 working days after the signing of this contract, 40% within 5 working days upon launching of the official version, and 10% within 30 working days upon launching of the official version). The ownership of the final product belongs to the Company. |
Inventories, Net (Details) - Sc
Inventories, Net (Details) - Schedule of Inventories - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Inventories [Abstract] | ||
Inventory | $ 463,691 | $ 442,681 |
Less: reserve for obsolete inventories | (7,175) | (12,011) |
Total | $ 456,516 | $ 430,670 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid Expenses and Current Assets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | |
Schedule of Prepaid Expenses and Current Assets [Abstract] | ||||
Interest receivable | [1] | $ 315,466 | $ 42,263 | |
Prepaid expenses | [2] | 156,958 | 4,342 | |
Prepayment for office renovation | 117,974 | |||
Other receivables, net | [3] | 12,098 | 48,280 | |
Total | $ 602,496 | $ 94,925 | $ 94,925 | |
[1]Interest receivable primarily consists of interest from loans to third parties and interest from investments.[2]Prepaid expenses primarily consist of insurance premium, investor relations and lawyer’s fee.[3]Other receivables primarily consist of cash advance to employees for business travel or expenses incurred in the ordinary courses of business, net of expected credit loss. |
Loan Receivable (Details)
Loan Receivable (Details) CubicMeters in Thousands | 3 Months Ended | 6 Months Ended | |||||||||||
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) CubicMeters | Jun. 30, 2023 CNY (¥) CubicMeters | Jun. 30, 2022 USD ($) | Jun. 30, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Aug. 31, 2022 CNY (¥) | Jun. 14, 2022 USD ($) | Jun. 14, 2022 CNY (¥) | Mar. 28, 2022 USD ($) | Mar. 28, 2022 CNY (¥) | Jan. 21, 2022 USD ($) | Jan. 21, 2022 CNY (¥) | |
Loan Receivable (Details) [Line Items] | |||||||||||||
Loans amount | $ 7,487,166 | $ 7,487,166 | ¥ 30,000,000 | $ 1,013,157 | $ 965,025 | ¥ 7,000,000 | $ 413,582 | ¥ 3,000,000 | $ 4,135,820 | ¥ 30,000,000 | |||
Interest of loans | 12% | 12% | |||||||||||
Maturity loan amount (in Yuan Renminbi) | ¥ | ¥ 700,000 | ||||||||||||
Loan amount (in Yuan Renminbi) | ¥ 3,000,000 | $ 482,512 | ¥ 3,500,000 | $ 206,791 | ¥ 1,500,000 | $ 2,067,910 | ¥ 15,000,000 | ||||||
Interest repaid | $ (16,543) | ¥ 120,000 | |||||||||||
Outstanding loans | 5,100,845 | $ 5,100,845 | $ 5,355,257 | ||||||||||
Terms of loan | 20 years | 20 years | |||||||||||
Production of cost (in CubicMeters) | CubicMeters | 1,306 | 1,306 | |||||||||||
Repayment from third-party loans | $ 600,000 | 207,247 | |||||||||||
Interest income | $ 363,224 | $ 231,632 | |||||||||||
Loans Receivable [Member] | |||||||||||||
Loan Receivable (Details) [Line Items] | |||||||||||||
Interest of loans | 1.50% | 1.50% | |||||||||||
Loans to third parties | $ 2,986,321 | ||||||||||||
Repayment from third-party loans | $ 600,000 |
Loan Receivable (Details) - Sch
Loan Receivable (Details) - Schedule of Loan Receivable | Jun. 30, 2023 USD ($) | Jun. 30, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Jun. 14, 2022 USD ($) | Jun. 14, 2022 CNY (¥) | Mar. 28, 2022 USD ($) | Mar. 28, 2022 CNY (¥) | Jan. 21, 2022 USD ($) | Jan. 21, 2022 CNY (¥) | |
Loan Receivable (Details) - Schedule of Loan Receivable [Line Items] | ||||||||||
Total loan receivable | $ 7,487,166 | $ 5,355,257 | ||||||||
Less: current portion | 7,487,166 | ¥ 30,000,000 | 1,013,157 | $ 965,025 | ¥ 7,000,000 | $ 413,582 | ¥ 3,000,000 | $ 4,135,820 | ¥ 30,000,000 | |
Loan receivable - non current | 4,342,100 | |||||||||
Guangxi Beihengda Mining Co., Ltd. [Member] | ||||||||||
Loan Receivable (Details) - Schedule of Loan Receivable [Line Items] | ||||||||||
Total loan receivable | [1] | 5,100,845 | 5,355,257 | |||||||
Hongkong Sanyou Petroleum Co., Ltd [Member] | ||||||||||
Loan Receivable (Details) - Schedule of Loan Receivable [Line Items] | ||||||||||
Total loan receivable | [2] | $ 2,386,321 | ||||||||
[1]On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB30,000,000 ($4,135,820), RMB3,000,000 ($413,582) and RMB7,000,000 ($965,025) to a third party, which were restricted for its operating activities, carrying interest at 12%. The RMB30,000,000 loan and RMB 7,000,00 |
Non-Current Advance to a Thir_2
Non-Current Advance to a Third Party (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Dec. 31, 2023 | Jun. 30, 2023 | |
Total Price [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Contract price | $413,582 | |
First Method [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Installment payment percentage | 30% | |
Working days | 30 | |
Second Method [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Installment payment percentage | 50% | |
Working days | 30 | |
Third Method [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Installment payment percentage | 20% | |
Working days | 90 | |
Forecast [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Final payment | $ 11,935 | |
Product Development [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Development costs | $ 401,647 | |
Software Development [Member] | ||
Non-Current Advance to a Third Party (Details) [Line Items] | ||
Development costs | $ 11,935 |
Property, Equipment and Softw_3
Property, Equipment and Software, Net (Details) - Schedule of Property, Equipment and Software - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,605,972 | $ 1,593,464 |
Less: accumulated depreciation and amortization | (1,370,577) | (1,470,497) |
Property and equipment, net | 235,395 | 122,967 |
Office furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,576 | |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 6,545 | |
Transportation equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 161,265 | 67,580 |
Buildings and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 427,295 | 448,607 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,017,412 | $ 1,068,156 |
Taxes payable (Details) - Sched
Taxes payable (Details) - Schedule of Taxes Payable - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Taxes Payable [Abstract] | ||
Value-added tax payable | $ 1,171,501 | $ 1,135,002 |
Income tax payable | 396,918 | 404,617 |
Other taxes payable | 140,265 | 131,703 |
Total | $ 1,708,684 | $ 1,671,322 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | |
Related Party Transactions (Details) [Line Items] | |||
Software sale | |||
Hardware sales | |||
Outstanding advances owed | $ 1,114 | $ 598 | |
HiTek [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
Minority shareholders | one | ||
Beijing Zhongzhe Yuantong Technology Co., Ltd. [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
Accounts receivable | $ 399,465 |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of Related Party Balances - Related Party [Member] - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | ||
Related Party Transaction [Line Items] | |||
Accounts receivable | $ 399,465 | ||
Due to related parties | 1,114 | 598 | |
Cost of revenues | 8,663 | ||
Beijing Zhongzhe Yuantong Technology Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Accounts receivable | [1] | 399,465 | |
Fengqi (Beijing) Zhineng Technology Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Due to related parties | [2] | 1,114 | 598 |
Cost of revenues | [2] | $ 8,663 | |
[1]Beijing Zhongzhe Yuantong Technology Co., Ltd. (“Beijing Zhongzhe”) and one of the minority shareholders of HiTek are under common control. As of December 31, 2022, accounts receivable from Beijing Zhongzhe Yuantong Technology Co., Ltd. was $399,465. As of June 30, 2023, it was collected by the Company.[2] Mr. Yin is the director and a minority shareholder of Fengqi (Beijing) Zhineng Technology Co., Ltd. The Company purchased from Fengqi (Beijing) Zhineng Technology Co., Ltd. hardware of $8,663 nil |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Operating Leases - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of operating leases [Abstract] | ||
Operating lease ROU assets | $ 4,800 | $ 6,641 |
Operating lease liabilities-current | 3,162 | 3,242 |
Operating lease liabilities-non current | 1,638 | $ 3,399 |
Total operating lease liabilities | $ 4,800 | |
Weighted average remaining lease term | 1 year 6 months | |
Weighted average discount rate | 4.80% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of Maturity of Lease Liabilities | Jun. 30, 2023 USD ($) |
Schedule of maturity of lease liabilities [Abstract] | |
2024 | $ 3,309 |
2025 | 1,654 |
Total lease payments | 4,963 |
Less: interest | (163) |
Present value of lease liabilities | $ 4,800 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of Accrued Expenses and Other Current Liabilities - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Accrued Expenses And Other Current Liabilities [Abstract] | ||
Payroll | $ 121,079 | $ 253,212 |
Interest payable | 96,640 | 21,132 |
Other payable | 93,053 | 73,823 |
Total | $ 310,772 | $ 348,167 |
Loan Payables (Details)
Loan Payables (Details) | 6 Months Ended | ||||||||||||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 13, 2024 CNY (¥) | Jan. 20, 2024 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Aug. 31, 2022 CNY (¥) | Jun. 14, 2022 USD ($) | Jun. 14, 2022 CNY (¥) | Mar. 28, 2022 USD ($) | Mar. 28, 2022 CNY (¥) | Jan. 21, 2022 USD ($) | Jan. 21, 2022 CNY (¥) | |
Loan Payables (Details) [Line Items] | |||||||||||||
Loan amount | ¥ 3,000,000 | $ 482,512 | ¥ 3,500,000 | $ 206,791 | ¥ 1,500,000 | $ 2,067,910 | ¥ 15,000,000 | ||||||
Carrying interest rate | 12% | 12% | 12% | 12% | 12% | 12% | |||||||
Loan repaid (in Yuan Renminbi) | ¥ | ¥ 1,500,000 | ||||||||||||
Outstanding loan | $ | $ 2,550,423 | $ 2,677,628 | |||||||||||
Interest expense | $ | $ 160,319 | $ 122,765 | |||||||||||
Forecast [Member] | |||||||||||||
Loan Payables (Details) [Line Items] | |||||||||||||
Loan amount | ¥ | ¥ 3,500,000 | ¥ 15,000,000 |
Loan Payables (Details) - Sched
Loan Payables (Details) - Schedule of Loan Payables - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule Of Loan Payables Abstract | ||
Short-term borrowings | $ 2,550,423 | $ 506,578 |
Long-term borrowings | 2,171,050 | |
Total | $ 2,550,423 | $ 2,677,628 |
Ordinary Shares (Details)
Ordinary Shares (Details) $ / shares in Units, $ in Millions | Apr. 30, 2023 USD ($) $ / shares shares |
Ordinary Shares (Details) [Line Items] | |
Issued of ordinary shares | 3,404,685 |
Price per share (in Dollars per share) | $ / shares | $ 5 |
Net proceeds (in Dollars) | $ | $ 15.1 |
Public offering [Member] | |
Ordinary Shares (Details) [Line Items] | |
Issued of ordinary shares | 3,200,000 |
Over-Allotment [Member] | |
Ordinary Shares (Details) [Line Items] | |
Issued of ordinary shares | 204,685 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | 12 Months Ended | 24 Months Ended | 36 Months Ended | |||||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 | Dec. 31, 2024 USD ($) | Dec. 31, 2024 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2024 USD ($) | Dec. 31, 2024 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
Income Taxes (Details) [Line Items] | |||||||||
Annual taxable income percentage | 50% | ||||||||
Income tax reduced rate | 20% | ||||||||
Annual taxable income | $ | $ 325,941 | $ 247,350 | |||||||
Cumulative tax effect, percentage | 25% | 25% | |||||||
PRC [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Income tax EIT rate percentage | 25% | ||||||||
Annual taxable income | ¥ 1 | ¥ 1 | |||||||
Annual taxable income percentage | 12.50% | 25% | |||||||
Income tax reduced rate | 20% | 20% | |||||||
PRC [Member] | Minimum [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Annual taxable income | ¥ 1 | ||||||||
PRC [Member] | Maximum [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Annual taxable income | ¥ 3 | ||||||||
Forecast [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Income tax reduced rate | 20% | 20% | |||||||
Forecast [Member] | Minimum [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Annual taxable income | ¥ 1 | ||||||||
Forecast [Member] | Latest Tax Year [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Annual taxable income percentage | 25% | 25% | |||||||
Annual taxable income | $ | $ 3,000,000 | ||||||||
Forecast [Member] | PRC [Member] | Latest Tax Year [Member] | |||||||||
Income Taxes (Details) [Line Items] | |||||||||
Annual taxable income | $ | $ 25 | ||||||||
Income tax reduced rate | 20% | 20% | |||||||
Annual taxable income | ¥ 1 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of Income (Loss) Before Income Taxes - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Taxes (Details) - Schedule of Income (Loss) Before Income Taxes [Line Items] | ||
Total income before income taxes | $ 947,915 | $ 885,777 |
Non-PRC operations [Member] | ||
Income Taxes (Details) - Schedule of Income (Loss) Before Income Taxes [Line Items] | ||
Total income before income taxes | (270,571) | (276,088) |
PRC operations [Member] | ||
Income Taxes (Details) - Schedule of Income (Loss) Before Income Taxes [Line Items] | ||
Total income before income taxes | $ 1,218,486 | $ 1,161,865 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of Income Tax Expense - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule Of Income Tax Expense Abstract | ||
Current tax expense | $ 36,221 | $ 83,673 |
Deferred tax expense | 289,720 | 163,677 |
Total income tax expense | $ 325,941 | $ 247,350 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred tax assets | ||
Net operating loss | $ 7,124 | $ 5,313 |
Deferred revenue | 116,000 | 205,605 |
Unbilled cost | 348,601 | 355,461 |
Unbilled interest expenses | 36,912 | 34,592 |
Software amortization | 254,353 | 267,039 |
Allowance for doubtful accounts | 38,673 | 8,308 |
Inventories obsolescence | 2,739 | 7,043 |
Unrealized losses on trading securities | 1,723 | 1,809 |
Accrued Bonus | 42,144 | 62,441 |
Other | 16,097 | 31,819 |
Total deferred tax assets | 864,366 | 979,430 |
Deferred tax liabilities | ||
Unbilled revenue | (2,226,177) | (2,149,169) |
Unbilled interest income | (73,342) | (69,149) |
Deferred government subsidiary income | (40,773) | (42,806) |
Unrealized gain on short-term investment | (11,868) | (2,796) |
Other | (5,766) | (4,462) |
Total deferred tax liabilities | (2,357,926) | (2,268,382) |
Valuation allowance | (21,622) | (11,469) |
Net deferred tax liabilities | $ (1,515,182) | $ (1,300,421) |
Income Taxes (Details) - Sche_4
Income Taxes (Details) - Schedule of a Reconciliation of Income Tax Expense | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of A Reconciliation Of Income Tax Expense [Abstract] | ||
PRC statutory tax rate | 25% | 25% |
Effect of different tax rates in different jurisdictions | 7.10% | 7.80% |
For others | 0.10% | |
Tax holiday effect | 2.20% | (4.90%) |
Effective tax rate | 34.40% | 27.90% |
Concentrations (Details)
Concentrations (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Total Revenue [Member] | |
Concentrations (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Accounts Receivable [Member] | |
Concentrations (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Supplier [Member] | |
Concentrations (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Accounts Payable [Member] | |
Concentrations (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Concentrations (Details) - Sche
Concentrations (Details) - Schedule of Details of Customers Total Revenues - Revenue [Member] - Customer Concentration Risk [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Customer A [Member] | ||
Concentration Risk [Line Items] | ||
Total Revenue, Amount | $ 808,726 | $ 979,560 |
Total Revenue, Percentage | 27% | 34% |
Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Total Revenue, Amount | $ 407,092 | $ 477,749 |
Total Revenue, Percentage | 14% | 17% |
Customer [Member] | ||
Concentration Risk [Line Items] | ||
Total Revenue, Amount | $ 1,215,818 | $ 1,457,309 |
Total Revenue, Percentage | 41% | 51% |
Concentrations (Details) - Sc_2
Concentrations (Details) - Schedule of Details of Customers Accounts Receivable - Accounts Receivable [Member] - Customer Concentration Risk [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Customer A [Member] | ||
Concentrations (Details) - Schedule of Details of Customers Accounts Receivable [Line Items] | ||
Accounts receivable, Amount | $ 5,616,058 | $ 5,274,060 |
Accounts receivable, Percentage | 68% | 67% |
Customer B [Member] | ||
Concentrations (Details) - Schedule of Details of Customers Accounts Receivable [Line Items] | ||
Accounts receivable, Amount | $ 2,214,732 | $ 1,864,208 |
Accounts receivable, Percentage | 27% | 24% |
Customer [Member] | ||
Concentrations (Details) - Schedule of Details of Customers Accounts Receivable [Line Items] | ||
Accounts receivable, Amount | $ 7,830,790 | $ 7,138,268 |
Accounts receivable, Percentage | 95% | 91% |
Concentrations (Details) - Sc_3
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases - Purchase [Member] - Supplier Concentration Risk [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Supplier A [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases [Line Items] | ||
Total purchase, Amount | $ 318,777 | |
Total purchase, Percentage | 22% | |
Supplier B [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases [Line Items] | ||
Total purchase, Amount | $ 203,247 | |
Total purchase, Percentage | 20% | |
Supplier C [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases [Line Items] | ||
Total purchase, Amount | $ 167,867 | $ 257,597 |
Total purchase, Percentage | 12% | 25% |
Supplier D [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases [Line Items] | ||
Total purchase, Amount | $ 281,511 | |
Total purchase, Percentage | 28% | |
Supplier [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases [Line Items] | ||
Total purchase, Amount | $ 486,644 | $ 742,355 |
Total purchase, Percentage | 34% | 73% |
Concentrations (Details) - Sc_4
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable - Accounts Payable [Member] - Supplier Concentration Risk [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Supplier E [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable [Line Items] | ||
Total accounts payable, Amount | $ 95,692 | |
Total accounts payable, Percentage | 17% | |
Supplier F [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable [Line Items] | ||
Total accounts payable, Amount | $ 75,823 | $ 79,605 |
Total accounts payable, Percentage | 14% | 11% |
Supplier B [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable [Line Items] | ||
Total accounts payable, Amount | $ 69,904 | $ 155,990 |
Total accounts payable, Percentage | 12% | 22% |
Supplier G [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable [Line Items] | ||
Total accounts payable, Amount | $ 131,661 | |
Total accounts payable, Percentage | 19% | |
Supplier [Member] | ||
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable [Line Items] | ||
Total accounts payable, Amount | $ 241,419 | $ 367,256 |
Total accounts payable, Percentage | 43% | 52% |
Commitments and Contingency (De
Commitments and Contingency (Details) - Schedule of Balance Sheets - VIE [Member] - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of selected condensed consolidating balance sheets [Abstract] | ||
Total current assets | $ 12,241,892 | $ 11,276,852 |
Total non-current assets | 5,807,370 | 9,102,933 |
Total Assets | 18,049,262 | 20,379,785 |
Total Liabilities | $ 7,172,377 | $ 5,329,843 |
Commitments and Contingency (_2
Commitments and Contingency (Details) - Schedule of Operations - VIE [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Condensed Income Statements, Captions [Line Items] | ||
Revenues | $ 2,797,326 | $ 2,752,332 |
Net income | $ 780,309 | $ 845,693 |
Commitments and Contingency (_3
Commitments and Contingency (Details) - Schedule of Cash Flows - VIE [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by operating activities | $ 804,159 | $ 4,431,188 |
Net cash used in investing activities | (610,768) | (7,636,014) |
Net cash provided by financing activities | $ 3,088,422 |
Subsequent Events (Details)
Subsequent Events (Details) - Forecast [Member] | 4 Months Ended |
Oct. 31, 2023 USD ($) | |
Subsequent Events (Details) [Line Items] | |
Interest of loan | 1.50% |
Total loan payments | $ 5,100,000 |
Repaid amount | 78,447 |
Loans Receivable [Member] | |
Subsequent Events (Details) [Line Items] | |
Repaid amount | $ 2,800,000 |
Condensed Financial Informati_3
Condensed Financial Information of the Parent Company (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Condensed Financial Information of the Parent Company (Details) [Line Items] | ||
Net assets percentage | 25% | |
Parent Company [Member] | ||
Condensed Financial Information of the Parent Company (Details) [Line Items] | ||
Net assets percentage | 25% |
Condensed Financial Informati_4
Condensed Financial Information of the Parent Company (Details) - Parent Company Balance Sheets - Parent Company [Member] - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 4,387,925 | $ 226,578 |
Short-term investments | 3,000,000 | |
Intercompany receivables | 10,000 | 10,000 |
Deferred offering cost | 349,842 | |
Prepaid expenses and other current assets | 2,582,045 | |
Total current assets | 9,979,970 | 586,420 |
Non-current assets | ||
Long-term investments | 5,000,000 | |
Investments in non-VIE subsidiaries | 12,336,264 | 14,299,036 |
Total non-current assets | 17,336,264 | 14,299,036 |
Total Assets | 27,316,234 | 14,885,456 |
Current liabilities | ||
Intercompany payable | 1,358,930 | 1,358,930 |
Total current liabilities | 1,358,930 | 1,358,930 |
Total Liabilities | 1,358,930 | 1,358,930 |
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 | $ 27,316,234 | $ 14,885,456 |
Condensed Financial Informati_5
Condensed Financial Information of the Parent Company (Details) - Parent Company Balance Sheets (Parentheticals) - Parent Company [Member] - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares authorized | 490,000,000 | 490,000,000 |
Ordinary shares, shares issued | 14,392,364 | 10,987,679 |
Ordinary shares, shares outstanding | 14,392,364 | 10,987,679 |
Condensed Financial Informati_6
Condensed Financial Information of the Parent Company (Details) - Parent Company Statements of Operations And Comprehensive Income - Parent Company [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Operating expenses: | ||
General and administrative | $ 394,676 | $ 270,810 |
Total operating expenses | 394,676 | 270,810 |
Operating loss | (394,676) | (270,810) |
Other income (expense) | ||
Net investment income | 64,989 | |
Interest income | 60,924 | 21 |
Other expense, net | (615) | (4,169) |
Total other income (loss) | 125,298 | (4,148) |
Share of income from subsidiaries | 891,352 | 913,385 |
Income before provision for income taxes | 621,974 | 638,427 |
Net income | 621,974 | 638,427 |
Comprehensive income | ||
Net income | 621,974 | 638,427 |
Comprehensive income | $ 621,974 | $ 638,427 |
Earnings per ordinary share | ||
Earnings per ordinary share basic (in Dollars per share) | $ 0.05 | $ 0.06 |
Weighted average number of ordinary shares outstanding | ||
Weighted average number of ordinary shares outstanding basic (in Shares) | 12,122,574 | 10,987,679 |
Condensed Financial Informati_7
Condensed Financial Information of the Parent Company (Details) - Parent Company Statements of Operations And Comprehensive Income (Parentheticals) - Parent Company [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Condensed Income Statements, Captions [Line Items] | ||
Earnings per ordinary share diluted | $ 0.05 | $ 0.06 |
Weighted average number of ordinary shares outstanding diluted | 12,122,574 | 10,987,679 |
Condensed Financial Informati_8
Condensed Financial Information of the Parent Company (Details) - Parent Company Statements of Cash Flows - Parent Company [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Operating Activities | ||
Net income | $ 621,974 | $ 638,427 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Net investment gain | (956,341) | (913,385) |
Changes in operating assets and liabilities: | ||
Deferred offering cost | (130,134) | 60,000 |
Prepaid expenses and other current assets | (130,735) | |
Net cash used in operating activities | (595,236) | (214,958) |
Investing Activities | ||
Loans to third parties | (2,986,321) | |
Repayment from third-party loans | 600,000 | |
Purchases of held-to-maturity investments | (8,000,000) | |
Net cash used in investing activities | (10,386,321) | |
Financing activities: | ||
Proceeds from issuance of ordinary shares | 15,142,902 | |
Net cash provided by financing activities | 15,142,902 | |
Net increase (decrease) in cash | 4,161,345 | (214,958) |
Cash at beginning of period | 226,578 | 509,728 |
Cash at end of period | $ 4,387,923 | $ 294,770 |