Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2023 | |
Document Information Line Items | |
Entity Registrant Name | HITEK GLOBAL INC. |
Document Type | F-1 |
Amendment Flag | false |
Entity Central Index Key | 0001742341 |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | Unit 304 |
Entity Address, Address Line Two | No. 30 Guanri Road |
Entity Address, Address Line Three | Siming District |
Entity Address, City or Town | Xiamen City, Fujian Province |
Entity Address, Country | CN |
City Area Code | +86 |
Local Phone Number | 592-5395967 |
Business Contact | |
Document Information Line Items | |
Entity Address, Address Line One | 850 Library Avenue |
Entity Address, Address Line Two | Suite 204 |
Entity Address, City or Town | Newark |
Contact Personnel Name | Puglisi & Associates |
Entity Address, State or Province | DE |
Entity Address, Postal Zip Code | 19711 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 9,311,537 | $ 1,203,160 |
Short-term investments | 8,837,445 | 4,290,348 |
Accounts receivable, net | 2,118,738 | 3,271,218 |
Advances to suppliers, net | 338,166 | 481,769 |
Inventories, net | 219,505 | 430,670 |
Loans receivable | 3,608,289 | 1,013,157 |
Prepaid expenses and other current assets | 352,919 | 94,925 |
Total current assets | 24,786,599 | 11,184,712 |
Non-current assets | ||
Non-current accounts receivable | 4,597,214 | 4,209,546 |
Non-current advance to a third party | 410,509 | 421,679 |
Non-current loan receivable | 4,227,079 | 4,342,100 |
Property, equipment and software, net | 403,330 | 122,967 |
Deferred offering cost | 917,446 | |
Operating lease right-of-use assets | 3,309 | 6,641 |
Long-term investments | 1,000,000 | |
Total non-current assets | 10,641,441 | 10,020,379 |
Total Assets | 35,428,040 | 21,205,091 |
Current liabilities | ||
Accounts payable | 532,130 | 696,734 |
Advances from customers | 4,616 | |
Loan payable | 493,159 | 506,578 |
Deferred revenue | 166,760 | 977,054 |
Taxes payable | 1,917,647 | 1,671,322 |
Due to related parties | 598 | |
Accrued expenses and other current liabilities | 255,131 | 348,167 |
Operating lease liabilities | 3,309 | 3,242 |
Total current liabilities | 3,372,752 | 4,203,695 |
Non-current Liabilities | ||
Loan payable, non-current | 2,113,539 | 2,171,050 |
Deferred income tax liabilities, non-current | 1,604,163 | 1,300,421 |
Operating lease liabilities, non-current | 3,399 | |
Total non-current liabilities | 3,717,702 | 3,474,870 |
Total Liabilities | 7,090,454 | 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 December 31, 2023 and 2022, respectively. | 1,439 | 1,099 |
Additional paid-in capital | 16,721,551 | 2,628,356 |
Statutory reserve | 836,215 | 836,215 |
Retained earnings | 11,387,748 | 10,340,107 |
Accumulated other comprehensive loss | (609,367) | (279,251) |
Total Shareholders’ Equity | 28,337,586 | 13,526,526 |
Total Liabilities and Shareholders’ Equity | 35,428,040 | 21,205,091 |
Related Party | ||
Current assets | ||
Accounts receivable, net | $ 399,465 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 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 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | |||
Revenues | $ 4,563,731 | $ 6,428,608 | $ 6,461,163 |
Cost of revenues | (2,642,491) | (2,891,565) | (2,581,218) |
Gross profit | 1,921,240 | 3,537,043 | 3,879,945 |
Operating expenses: | |||
General and administrative | 1,819,531 | 1,472,648 | 1,699,934 |
Selling | 648 | 437,185 | 76,477 |
Total operating expenses | 1,820,179 | 1,909,833 | 1,776,411 |
Operating income | 101,061 | 1,627,210 | 2,103,534 |
Other income (expense) | |||
Government subsidies | 569,928 | 9,838 | 6,883 |
Net investment income (loss) | 330,552 | (19,363) | 103,375 |
Interest income | 911,875 | 545,555 | 10,515 |
Interest expense | (313,861) | (285,353) | |
Other expense, net | (5,029) | (8,924) | (12,097) |
Total other income | 1,493,465 | 241,753 | 108,676 |
Income before provision for income taxes | 1,594,526 | 1,868,963 | 2,212,210 |
Income tax expense | 546,885 | 453,218 | 542,853 |
Net income | 1,047,641 | 1,415,745 | 1,669,357 |
Comprehensive income | |||
Net income | 1,047,641 | 1,415,745 | 1,669,357 |
Foreign currency translation (loss) gain | (330,116) | (1,015,447) | 290,407 |
Comprehensive income | $ 717,525 | $ 400,298 | $ 1,959,764 |
Earnings per ordinary share | |||
Earnings per ordinary share basic (in Dollars per share) | $ 0.08 | $ 0.13 | $ 0.15 |
Weighted average number of ordinary shares outstanding | |||
Weighted average number of ordinary shares outstanding basic (in Shares) | 13,257,469 | 10,987,679 | 10,987,679 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | |||
Earnings per ordinary share diluted | $ 0.08 | $ 0.13 | $ 0.15 |
Weighted average number of ordinary shares outstanding diluted | 13,257,469 | 10,987,679 | 10,987,679 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders’ Equity - USD ($) | Ordinary Shares | Additional paid-in capital | Statutory reserve | Retained Earnings | Accumulated other comprehensive income (loss) | Total |
Balance at Dec. 31, 2020 | $ 1,099 | $ 2,628,356 | $ 713,737 | $ 7,377,483 | $ 445,789 | $ 11,166,464 |
Balance (in Shares) at Dec. 31, 2020 | 10,987,679 | |||||
Foreign currency translation adjustment | 290,407 | 290,407 | ||||
Net income | 1,669,357 | 1,669,357 | ||||
Appropriation of Statutory reserve | 53,470 | (53,470) | ||||
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 | |||||
Foreign currency translation adjustment | (1,015,447) | (1,015,447) | ||||
Net income | 1,415,745 | 1,415,745 | ||||
Appropriation of Statutory reserve | 69,008 | (69,008) | ||||
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 | |||||
Foreign currency translation adjustment | (330,116) | (330,116) | ||||
Shares issued | $ 340 | 14,093,195 | 14,093,535 | |||
Shares issued (in Shares) | 3,404,685 | |||||
Net income | 1,047,641 | 1,047,641 | ||||
Balance at Dec. 31, 2023 | $ 1,439 | $ 16,721,551 | $ 836,215 | $ 11,387,748 | $ (609,367) | $ 28,337,586 |
Balance (in Shares) at Dec. 31, 2023 | 14,392,364 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Activities | |||
Net income | $ 1,047,641 | $ 1,415,745 | $ 1,669,357 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation | 50,662 | 21,881 | 355,738 |
Amortization of right of use assets | 3,167 | ||
Loss on disposal of property, plant and equipment | 1,413 | ||
Accrued interest income from loans, net | (102,418) | (21,699) | (6,525) |
Net investment (gain) loss | (208,626) | 19,363 | (103,375) |
(Reversal of) credit losses of receivables and advances to suppliers | (2,325) | (6,442) | (123,754) |
Provision for (reversal of ) allowance for obsolete inventories | 5,559 | 2,217 | (5,317) |
Deferred income tax | 339,332 | 177,029 | 340,624 |
Changes in operating assets and liabilities: | |||
Short-term investments – trading securities | (1,696,545) | 2,418,675 | (2,625,216) |
Accounts receivable | 567,480 | (2,490,725) | (1,100,056) |
Accounts receivable – related party | 390,197 | 499,933 | 578,157 |
Advances to suppliers | 472,219 | 560,352 | (184,369) |
Deferred offering cost | (130,134) | 60,000 | 155,915 |
Inventories | 194,872 | (57,899) | (276,672) |
Prepaid expenses and other current assets | (13,028) | 89,583 | 769,913 |
Accounts payable | (146,642) | 225,198 | 127,422 |
Advances from customers | 4,632 | ||
Deferred revenue | (787,062) | 261,856 | 12,089 |
Taxes payable | 291,578 | 488,419 | 327,807 |
Operating lease liabilities | (3,167) | ||
Due to related parties | (584) | (3,320) | 1,062 |
Accrued expenses and other current liabilities | (340,133) | 163,884 | (127,375) |
Net cash (used in) provided by operating activities | (61,912) | 3,824,050 | (214,575) |
Investing Activities | |||
Advance payment for software development | (339,309) | (117,617) | (25,582) |
Loans to third parties | (11,260,542) | (5,498,997) | (356,595) |
Repayment from third-party loans | 8,830,933 | 199,463 | 317,059 |
Prepayment for office renovation | (150,156) | ||
Purchases of property, plant and equipment | (186,499) | ||
Purchases of held-to-maturity investments | (11,000,000) | (1,932,080) | (1,240,329) |
Redemption of held-to-maturity Investments | 7,159,018 | 1,705,453 | |
Net cash (used in) provided by investing activities | (6,946,555) | (7,349,231) | 400,006 |
Financing activities: | |||
Borrowing from third parties | 2,749,498 | ||
Proceeds from issuance of ordinary shares | 15,142,902 | ||
Net cash provided by financing activities | 15,142,902 | 2,749,498 | |
Effect of exchange rate changes on cash | (26,058) | (112,465) | 44,323 |
Net increase (decrease) in cash | 8,108,377 | (888,148) | 229,754 |
Cash at beginning of year | 1,203,160 | 2,091,308 | 1,861,554 |
Cash at end of year | 9,311,537 | 1,203,160 | 2,091,308 |
Supplemental disclosures of cash flow information: | |||
Cash paid for income taxes | 36,504 | 45,002 | 32,646 |
Non-cash transactions: | |||
Deferred offering cost | 1,049,367 | ||
Operating right-of-use assets recognized for related operating lease liabilities | $ 6,820 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 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 | 12 Months Ended |
Dec. 31, 2023 | |
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 accounting and financial reporting policies of the Company conform to generally accepted accounting principles (“GAAP”) in the United States and the preparation of the CFS is in conformity with GAAP which requires management to make estimates and assumptions that affect reported amounts and disclosures. Certain prior year balances have been reclassified to conform to current year presentation. Principles of Consolidation The accompanying 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 CFS, all significant inter-company accounts and transactions were eliminated. VIE Agreements with HiTek Due to PRC legal restrictions of foreign ownership in certain sectors, neither we nor our subsidiaries own any equity interest in HiTek. Instead, WFOE, HiTek and HiTek’s shareholders entered into a series of contractual arrangements (“VIE Agreements”) on March 31, 2018, which have not been tested in a court of law. The VIE Agreements by and among WFOE, HiTek, and HiTek’s shareholders include (i) certain power of attorney agreements and equity interest pledge agreement, which provide WFOE effective control over HiTek; (ii) an exclusive technical consulting and service agreement which allows WFOE to receive substantially all of the economic benefits from HiTek; and (iii) certain exclusive equity interest purchase agreements which provide WFOE with an exclusive option to purchase all or part of the equity interests in and/or assets of HiTek when and to the extent permitted by PRC laws. Accordingly, the Company is considered the primary beneficiary of VIE for accounting purpose and has consolidated the VIE and the VIE’s subsidiaries’ assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements. Each of the VIE Agreements is described in detail below: Exclusive Technical Consulting and Service Agreement Pursuant to the Exclusive Technical Consulting and Service Agreement between HiTek and WFOE, WFOE provides HiTek with technical support, consulting services and other management services relating to its day-to-day business operations and management, on an exclusive basis. The Exclusive Technical Consulting and Service Agreement came into effect as of March 31, 2018. For services rendered to HiTek by WFOE under this agreement, WFOE is entitled to collect a service fee that shall be paid per quarter of 100% of HiTek’s quarterly profit. The term of the Exclusive Technical Consulting and Service Agreement is ten years unless it is terminated by WFOE with 30-day prior notice. Equity Interest Pledge Agreement WFOE, HiTek and HiTek shareholders entered into an Equity Interest Pledge Agreement, pursuant to which HiTek shareholders pledged all of their equity interests in HiTek to WFOE in order to guarantee the performance of HiTek’s obligations under the Exclusive Technical Consulting and Service Agreement as described above. The Equity Interest Pledge Agreement came into effect as of March 31, 2018. During the term of the pledge, WFOE is entitled to receive any dividends declared on the pledged equity interests of HiTek. The Equity Interest Pledge Agreement ends when all contractual obligations under the Exclusive Technical Consulting and Service Agreement have been fully performed. Exclusive Equity Interests Purchase Agreement Under the Exclusive Equity Interests Purchase Agreement, the HiTek Shareholders granted WFOE (or its designee) an exclusive option to purchase, to the extent permitted under PRC law, part or all of their equity interests in HiTek. The option price is equal to the capital paid in by the HiTek Shareholders subject to any appraisal or restrictions required by applicable PRC laws and regulations. The Exclusive Equity Interests Purchase Agreement remains effective for a term of ten years and may be renewed at WFOE’s election. Power of Attorney Each shareholder of the HiTek has executed an irrevocable power of attorney in favor of WFOE. Pursuant to this power of attorney, WFOE has full power and authority to exercise all of such shareholders’ rights with respect to their equity interest in the VIE Companies, including HiTek, Huasheng and Huoerguosi. The power of attorney will remain in force for so long as the shareholder remains a shareholder of HiTek. During the years ended December 31, 2023, 2022 and 2021, there were no transactions in HiTek Global Inc. and HiTek HK besides minimal capital transactions, professional fee payments and interest income. As of December 31, 2023, the VIEs accounted for 57% and 100% 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 December 31, 2023 and 2022, $1,041,909 and $843,705 of cash was denominated in RMB, respectively. Use of Estimates and Assumptions The preparation of the 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 CFS and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s 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. For detailed information, please see “NOTE 3 – INVESTMENTS.” 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 year. For the years ended December 31, 2023, 2022 and 2021, there were no other contracts to issue ordinary shares, such as 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 December 31, 2023 and 2022, cash balances held in PRC banks were uninsured. The Company has not experienced any losses in bank accounts during the years ended December 31, 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 the United States of 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 a maturity of 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 Consolidated Statements of Operations. Net realized and unrealized holding gains and losses for investments are included in 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. The adoption did not have a material impact on the Company’s CFS. 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 consisted of underwriting, legal, accounting and other expenses incurred through the balance sheet date that were directly related to the Initial Public Offering (IPO), and it was charged to shareholders’ equity upon the completion of the IPO. 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 3-5 years Computer equipment 2-3 years Transportation equipment 5 years Buildings and improvements 5-20 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 for the years ended December 31, 2023, 2022 and 2021. 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 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. ● 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 companies. 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 from software sales when the software is accepted by the customer. ● Tax Devices and Services Before January 21, 2021, all VAT general taxpayer businesses in China were 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. Revenue was comprised of the following. Years Ended December 31, 2023 2022 2021 Revenues Hardware $ 2,428,592 $ 2,504,426 $ 2,434,694 Tax devices and service 1,376,323 1,803,650 1,970,363 Software 758,816 2,120,532 2,056,106 Total revenues $ 4,563,731 $ 6,428,608 $ 6,461,163 ● 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 years ended December 31, 2023, 2022 and 2021, the Company recognized revenue of $977,054, $784,530 and $752,286, respectively, that was included in the deferred revenue balance at the beginning of each year. 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 Subsidies are given by the government to mainly support the Company for the increase in production and social insurance compensation for rural laborers. Subsidies are recognized as government subsidies income in the 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 years ended December 31, 2023, 2022 and 2021 were $38,221, $42,052 and $43,661, 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 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 December 31, 2023 and 2022 and for the year ended December 31, 2023 and 2022 are as follows: December 31, Years Ended 2023 2022 2023 2022 Foreign currency Balance Sheet Balance Sheet Profits/Loss Profits/Loss RMB:1USD 7.0971 6.9091 7.0732 6.7285 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 for the years ended December 31, 2023, 2022 and 2021 consisted of net income and unrealized gain (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 |
Investments
Investments | 12 Months Ended |
Dec. 31, 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 December 31, Markets Inputs Inputs 2023 (Level 1) (Level 2) (Level 3) Short-term investments Trading securities $ 5,837,445 $ 5,837,445 $ - $ - Held-to-maturity debt securities 3,000,000 3,000,000 - - Long-term investment Held-to-maturity debt securities 1,000,000 1,000,000 - - Total $ 9,837,445 $ 9,837,445 $ - $ - 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 years ended December 31, 2023, 2022 and 2021 consists of the following. December 31, 2023 2022 2021 Gain (loss) from sales of short-term investments: Trading securities $ 31,097 $ (30,848 ) $ 3,945 Held-to-maturity debt securities 11,397 - 17,189 Unrealized holding income (loss) of short-term investments: Trading securities 49,245 (2,722 ) 82,241 Held-to-maturity debt securities 184,018 14,207 - Unrealized holding income of long-term investments: Held-to-maturity debt securities 54,795 - - Net investment income (loss) $ 330,552 $ (19,363 ) $ 103,375 |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2023 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 4 – accounts receivable, Net As of December 31, 2023 and 2022, accounts receivable, net consisted of the following. 2023 2022 Accounts receivable $ 2,279,593 $ 3,435,340 Less: allowance for credit losses (160,855 ) $ (164,122 ) Accounts receivable, net $ 2,118,738 $ 3,271,218 Accounts receivable – related party, net $ - $ 399,465 Non-current accounts receivable $ 4,597,214 $ 4,209,546 The following table describes the movements in the allowance for credit losses during the years ended December 31, 2023 and 2022. 2023 2022 2021 Balance at January 1 $ 164,122 $ 179,475 $ 298,224 Provision for (reversal of) doubtful accounts 1,084 (1,087 ) (124,881 ) Foreign exchange difference (4,351 ) (14,266 ) 6,132 Balance at December 31 $ 160,855 $ 164,122 $ 179,475 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 | 12 Months Ended |
Dec. 31, 2023 | |
Advances to Suppliers, Net [Abstract] | |
ADVANCES TO SUPPLIERS, NET | NOTE 5 – ADVANCES TO SUPPLIERS, Net As of December 31, 2023 and 2022, advances to suppliers consisted of the following: 2023 2022 Advances to suppliers - Inventories $ - $ 483,435 Advances to suppliers – Services (1) 338,166 - Less: reserve for amount not recoverable - (1,666 ) Total $ 338,166 $ 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 December 31, 2023, the total contract price was $676,333 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 | 12 Months Ended |
Dec. 31, 2023 | |
Inventories, Net [Abstract] | |
INVENTORIES, NET | NOTE 6 – INVENTORIES, NET As of December 31, 2023 and 2022, inventories consisted of the following. 2023 2022 Inventory $ 236,739 $ 442,681 Less: reserve for obsolete inventories (17,234 ) (12,011 ) Total $ 219,505 $ 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 | 12 Months Ended |
Dec. 31, 2023 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 7 – PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2023 and 2022, prepaid expenses and current assets consisted of the following. 2023 2022 Interest receivable (1) $ 171,657 $ 42,263 Prepaid expenses (2) 24,770 4,342 Other receivables, net (3) 156,492 48,320 Total $ 352,919 $ 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 | 12 Months Ended |
Dec. 31, 2023 | |
Loan Receivable [Abstract] | |
LOAN RECEIVABLE | NOTE 8 – LOAN RECEIVABLE As of December 31, 2023 and 2022, loan receivable consisted of the following. 2023 2022 Guangxi Beihengda Mining Co., Ltd. (1) $ 5,213,397 $ 5,355,257 Hongkong Sanyou Petroleum Co., Ltd (2) 2,621,971 - Total loan receivable 7,835,368 5,355,257 Less: current portion 3,608,289 1,013,157 Loan receivable - non current $ 4,227,079 $ 4,342,100 (1) On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB30,000,000 ($4,272,079), RMB3,000,000 ($422,708) and RMB7,000,000 ($986,318) to a third party, which were restricted for its operating activities, carrying interest at 12%. The RMB30,000,000 loan was extended for one year and will mature on January 21, 2025. The RMB7,000,000 will mature on June 13, 2024. The RMB3,000,000 loan was repaid in August 2022 with an interest of RMB120,000 ($17,368). The change in the carrying value of these outstanding loans from $5,355,257 in 2022 to $5,213,397 in 2023 was due mainly to currency translation. Pursuant to a mining right pledge agreement dated August 5, 2022 between HiTek, as representative of the Lenders, and the Borrower, these three loans are secured by the Borrower’s coal mining permit issued by Bobai County Natural Resources Bureau, which grants the Borrower a 20-year mining right for certain building granite mine in Daguang Village, Shuiming Town, Bobai County, Guangxi Province, for production of 1.306 million cubic meters per year. (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 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 December 2023, total loans to such a third party were $9.8 million, of which $7.3 million of the principal was repaid prior to December 31, 2023. Interest income for the loans for the years ended December 31, 2023, 2022 and 2021 was $909,362, $540,842 and $7,107, respectively. |
Non-Current Advance to a Third
Non-Current Advance to a Third Party | 12 Months Ended |
Dec. 31, 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 with a third party software development company to develop a Corporate Full-Service Platform Mobile Application for internal use. The ownership of the final product belongs to the Company and the copyrights will be shared with the software development company. In August 2023, the Company signed a supplemental agreement with an external vendor who took over the software development project. As of December 31, 2023, approximately $411,000 had been advanced to the software development company; and the Company is committed to additional costs under software development contract of approximately $12,000. The software development project is expected to be complete in the third quarter of 2024. |
Property, Equipment and Softwar
Property, Equipment and Software, Net | 12 Months Ended |
Dec. 31, 2023 | |
Property, Equipment and Software, Net [Abstract] | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | NOTE 10 – PROPERTY, equipment AND SOFTWARE, net As of December 31, 2023 and 2022, property, equipment and software consisted of the following. 2023 2022 Office furniture $ 51,277 $ 2,576 Computer equipment 6,371 6,545 Transportation equipment 202,893 67,580 Buildings and improvements 586,373 448,607 Software 1,039,861 1,068,156 1,886,775 1,593,464 Less: accumulated depreciation and amortization (1,483,445 ) (1,470,497 ) $ 403,330 $ 122,967 For the years ended December 31, 2023 and 2022, depreciation expenses were $50,662 and $21,881, respectively. |
Taxes Payable
Taxes Payable | 12 Months Ended |
Dec. 31, 2023 | |
Taxes Payable [Abstract] | |
TAXES PAYABLE | NOTE 11 – Taxes payable As of December 31, 2023 and 2022, taxes payable consisted of the following. 2023 2022 Value-added tax $ 1,219,713 $ 1,135,002 Income tax 564,372 404,617 Other taxes 133,562 131,703 Total $ 1,917,647 $ 1,671,322 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS The following are related party balances as of December 31, 2023 and 2022. 2023 2022 Accounts receivable Beijing Zhongzhe Yuantong Technology Co., Ltd. (1) $ - $ 399,465 $ - $ 399,465 2023 2022 Due to related parties Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ - $ 598 $ - $ 598 The following are related party transactions for the years ended December 31, 2023, 2022 and 2021. 2023 2022 2021 Cost of revenues Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ 8,480 $ 11,830 $ 52,961 $ 8,480 $ 11,830 $ 52,961 (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 December 31, 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 $8,480, $11,830 and $52,961 for fiscal year ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and 2022, the Company has outstanding advances owed to Fengqi (Beijing) Zhineng Technology Co., Ltd., of $ nil |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
LEASES | NOTE 13 – LEASES A summary of supplemental information related to operating leases as of December 31, 2023 is as follows. Operating lease ROU assets $ 3,309 Operating lease liabilities-current $ 3,309 Total operating lease liabilities $ 3,309 Weighted average remaining lease term 1.0 year Weighted average discount rate 4.8 % The following table represents the maturity of lease liabilities as of December 31, 2023. 12 months ending December 31, 2024 3,382 Total lease payments 3,382 Less: interest (73 ) Present value of lease liabilities $ 3,309 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 14 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2023 and 2022, accrued expenses and other current liabilities consisted of the following. 2023 2022 Payroll $ 130,463 $ 253,212 Interest payable 46,639 21,132 Other 78,029 73,823 Total $ 255,131 $ 348,167 |
Loan Payables
Loan Payables | 12 Months Ended |
Dec. 31, 2023 | |
Loan Payables [Abstract] | |
LOAN PAYABLES | NOTE 15 – LOAN PAYABLES As of December 31, 2023 and 2022, loan payables consisted of the following. 2023 2022 Short-term borrowings $ 493,159 $ 506,578 Long-term borrowings 2,113,539 2,171,050 Total $ 2,606,698 $ 2,677,628 On January 21, March 28 and June 14, 2022, the Company entered into three loans of RMB15,000,000 ($2,113,539), RMB1,500,000 ($211,354) and RMB3,500,000 ($493,159) from a third party, carrying interest at 12%. The RMB15,000,000 loan is extended for one year and will mature on January 21, 2025. The RMB3,500,000 loan is due on June 13, 2024. 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 $2,606,698 in 2023 was due mainly to currency translation. The interest expense for the years ended December 31, 2023, 2022 and 2021 was $313,861, $285,353 and $ nil |
Ordinary Shares
Ordinary Shares | 12 Months Ended |
Dec. 31, 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 IPO and 204,685 shares related to an over-allotment arrangement, at $5.00 per share with net proceeds of approximately $15.1 million. On February 5, 2024, the 2024 annual general meeting of shareholders adopted the resolutions that the issued 14,392,364 ordinary shares of par value of US$0.0001 each are re-designated and re-classified into 6,200,364 Class A ordinary shares of par value US$0.0001 each with one vote per share (the “Class A Ordinary Shares”) and 8,192,000 Class B ordinary shares of par value US$0.0001 each with 15 votes per share (the “Class B Ordinary Shares”) on a one for one basis. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes [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 years ended December 31, 2023, 2022 and 2021. 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 companies. 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 for small-scale companies 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 years ended December 31. 2023 2022 2021 Non-PRC operations $ (176,949 ) $ (385,297 ) $ (328,672 ) PRC operations 1,771,475 2,254,260 2,540,882 Total income before income taxes $ 1,594,526 $ 1,868,963 $ 2,212,210 Income tax expense was comprised of the following for the years ended December 31. 2023 2022 2021 Current tax expense $ 207,553 $ 276,189 $ 202,229 Deferred tax expense 339,332 177,029 340,624 Total income tax expense $ 546,885 $ 453,218 $ 542,853 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 December 31, 2023 and 2022 as follows. 2023 2022 Deferred tax assets Net operating loss $ 8,338 $ 5,313 Deferred revenue 39,340 205,605 Unbilled cost 374,357 355,461 Unbilled interest expenses 37,727 34,592 Software amortization 259,965 267,039 Allowance for doubtful accounts 13,459 8,308 Inventories obsolescence (6,591 ) 7,043 Unrealized losses on trading securities 1,761 1,809 Accrued Bonus 43,074 62,441 Other 34,246 31,819 Total deferred tax assets 805,676 979,430 Deferred tax liabilities Unbilled revenue (2,270,234 ) (2,149,169 ) Unbilled interest income (50,369 ) (69,149 ) Deferred government subsidiary income (41,673 ) (42,806 ) Unrealized gain on short-term investment (285 ) (2,796 ) Other (14,336 ) (4,462 ) Total deferred tax liabilities (2,376,897 ) (2,268,382 ) Valuation allowance (32,942 ) (11,469 ) Net deferred tax liabilities $ (1,604,163 ) $ (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 years ended December 31. 2023 2022 2021 PRC statutory tax rate 25 % 25.0 % 25.0 % Effect of different tax rates in different jurisdictions 2.8 % 5.2 % 3.7 % Permanent difference - % (0.1 )% 1.1 % Tax holiday effect (1) 6.5 % (5.9 )% (5.3 )% Effective tax rate 34.3 % 24.2 % 24.5 % (1) A PRC subsidiary incurred loss in 2023, which resulted in tax benefit and positive tax holiday effect in 2023. 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 years ended December 31, 2023 and 2022. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2023 | |
Concentrations [Abstract] | |
CONCENTRATIONS | NOTE 18 – CONCENTRATIONS Major Customers Details of the Company’s major customers (including those accounting for 10% or more of the Company’s total revenues) are as follows. Years Ended December 31, 2023 2022 2021 Customer A $ 801,344 18 % $ 2,291,651 36 % $ 1,784,738 28 % Customer B 398,488 9 % 834,911 13 % 896,220 14 % Total $ 1,199,832 27 % $ 3,126,562 49 % $ 2,680,958 42 % Details of the Company’s major customers (including those accounting for 10% or more of the Company’s accounts receivable are as follows. December 31, 2023 2022 2021 Customer A $ 4,615,308 67 % $ 5,274,060 67 % $ 4,256,804 66 % Customer B 1,901,481 28 % 1,864,208 24 % 1,027,238 16 % Customer C - - % 399,465 5 % 963,034 15 % Total $ 6,516,789 95 % $ 7,537,733 96 % $ 6,247,076 97 % Major Suppliers Details of the Company’s major suppliers (including those accounting for 10% or more of the Company’s total purchases) are as follows. Years Ended December 31, 2023 2022 2021 Supplier A $ 13,532 1 % $ 62,647 2 % $ 295,283 11 % Supplier B 312,039 12 % 20,586 1 % 109,764 4 % Supplier C - - % 472,988 16 % 215,526 8 % Supplier D - - % 430,744 15 % 267,933 10 % Supplier E 105,852 4 % 366,115 13 % 138,849 5 % Supplier F 94,348 4 % 326,836 11 % - - % Total $ 525,771 21 % $ 1,679,916 58 % $ 1,027,355 38 % Details of the Company’s major suppliers (including those accounting for 10% or more of the Company’s accounts payable) are as follows. December 31, 2023 2022 2021 Supplier C $ 256,623 47 % $ 52,539 8 % $ - - % Supplier E 18,562 3 % 155,990 22 % 39,077 8 % Supplier G 14,649 3 % 131,661 19 % 6,061 1 % Supplier H - - % 79,605 11 % 86,494 17 % Supplier I - - % 8,887 1 % 84,671 16 % Supplier J 59,195 11 % 60,806 9 % 66,068 13 % Total $ 349,029 64 % $ 489,488 70 % $ 282,371 55 % |
Commitments and Contingency
Commitments and Contingency | 12 Months Ended |
Dec. 31, 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 December 31, 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 companies (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 2023 2022 Total current assets $ 10,571,775 $ 11,276,852 Total non-current assets $ 9,641,441 $ 9,102,933 Total Assets $ 20,213,216 $ 20,379,785 Total Liabilities $ 7,073,660 $ 5,329,843 Years Ended December 31, 2023 2022 2021 Revenues $ 4,335,591 $ 6,228,595 $ 6,473,638 Net income $ 1,098,947 $ 1,684,991 $ 2,061,517 Years Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 834,596 $ 4,016,852 $ (757,861 ) Net cash (used in) provided by investing activities $ (675,964 ) $ (7,349,231 ) $ 400,006 Net cash provided by financing activities $ - $ 2,749,498 $ - |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 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. In January 2024, the Company signed a supplementary agreement with Beijing Baihengda Petroleum Technology Co., Ltd. (“Beijing Baihengda,” together with HiTek, the Lenders) and Guangxi Beihengda Mining Co., Ltd. (“Guangxi Beihengda,” or the Borrower) to extend RMB30,000,000 loan receivable and RMB15,000,000 loan payable for one year, due on January 21, 2025. On February 5, 2024, the 2024 annual general meeting of shareholders adopted the resolutions that the issued 14,392,364 ordinary shares of par value of US$0.0001 each are re-designated and re-classified into 6,200,364 Class A ordinary shares of par value US$0.0001 each with one vote per share (the “Class A Ordinary Shares”) and 8,192,000 Class B ordinary shares of par value US$0.0001 each with 15 votes per share (the “Class B Ordinary Shares”) on a one for one basis. |
Condensed Financial Information
Condensed Financial Information of the Parent Company | 12 Months Ended |
Dec. 31, 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 December 31, 2023 2022 Assets Current assets Cash $ 8,236,065 $ 226,578 Short-term investments 3,000,000 - Intercompany receivables 15,000 10,000 Loan receivable 2,621,971 - Prepaid expenses and other current assets 204,604 - Total current assets 14,077,640 236,578 Non-current assets Non-current deferred offering cost - 349,842 Long-term investments 1,000,000 - Investments in non-VIE subsidiaries 14,621,943 14,299,036 Total non-current assets 15,621,943 14,648,878 Total Assets $ 29,699,583 $ 14,885,456 Liabilities and Shareholders’ Equity Current liabilities Intercompany payable $ 1,361,997 $ 1,358,930 Total current liabilities 1,361,997 1,358,930 Total Liabilities 1,361,997 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 December 31, 2023 and 2022, respectively. 1,439 1,099 Additional paid-in capital 16,721,551 2,628,356 Statutory reserve 836,215 836,215 Retained earnings 11,387,748 10,340,107 Accumulated other comprehensive loss (609,367 ) (279,251 ) Total Shareholders’ Equity 28,337,586 13,526,526 Total Liabilities and Shareholders’ Equity $ 29,699,583 $ 14,885,456 PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Years Ended December 31, 2023 2022 Revenues $ 36,402 $ - Gross profit 36,402 - Operating expenses: General and administrative 764,111 378,857 Total operating expenses 764,111 378,857 Operating loss (727,709 ) (378,857 ) Other income (expense) Net investment income 238,812 - Interest income 317,505 35 Other expense, net (3,382 ) (4,327 ) Total other income (loss) 552,935 (4,292 ) Share of income from subsidiaries 1,222,415 1,798,894 Income before provision for income taxes 1,047,641 1,415,745 Net income $ 1,047,641 $ 1,415,745 Comprehensive income Net income $ 1,047,641 $ 1,415,745 Comprehensive income $ 1,047,641 $ 1,415,745 Earnings per ordinary share – Basic and diluted $ 0.08 $ 0.13 Weighted average number of ordinary shares outstanding – Basic and diluted 13,257,469 10,987,679 PARENT COMPANY STATEMENTS OF CASH FLOWS Years Ended December 31, 2023 2022 Operating Activities Net income $ 1,047,641 $ 1,415,745 Adjustments to reconcile net income to net cash used in operating activities: Accrued interest income from loans (317,172 ) - Net investment gain (1,461,227 ) (1,798,894 ) Changes in operating assets and liabilities: Deferred offering cost (130,134 ) 60,000 Due from intercompany (5,000 ) - Due to intercompany 3,067 - Prepaid expenses and other current assets - 40,000 Net cash used in operating activities (862,825 ) (283,149 ) Investing Activities Loans to third parties (11,260,542 ) - Repayment from third-party loans 8,830,933 - Purchases of held-to-maturity investments (11,000,000 ) - Redemption of held-to-maturity investments 7,159,018 - Net cash used in investing activities (6,270,591 ) - 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 8,009,486 (283,149 ) Cash and equivalents at beginning of year 226,578 509,727 Cash and equivalents at end of year $ 8,236,064 $ 226,578 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Financial Information | Basis of Financial Information The accounting and financial reporting policies of the Company conform to generally accepted accounting principles (“GAAP”) in the United States and the preparation of the CFS is in conformity with GAAP which requires management to make estimates and assumptions that affect reported amounts and disclosures. Certain prior year balances have been reclassified to conform to current year presentation. |
Principles of Consolidation | Principles of Consolidation The accompanying 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 CFS, all significant inter-company accounts and transactions were eliminated. |
VIE Agreements with HiTek | VIE Agreements with HiTek Due to PRC legal restrictions of foreign ownership in certain sectors, neither we nor our subsidiaries own any equity interest in HiTek. Instead, WFOE, HiTek and HiTek’s shareholders entered into a series of contractual arrangements (“VIE Agreements”) on March 31, 2018, which have not been tested in a court of law. The VIE Agreements by and among WFOE, HiTek, and HiTek’s shareholders include (i) certain power of attorney agreements and equity interest pledge agreement, which provide WFOE effective control over HiTek; (ii) an exclusive technical consulting and service agreement which allows WFOE to receive substantially all of the economic benefits from HiTek; and (iii) certain exclusive equity interest purchase agreements which provide WFOE with an exclusive option to purchase all or part of the equity interests in and/or assets of HiTek when and to the extent permitted by PRC laws. Accordingly, the Company is considered the primary beneficiary of VIE for accounting purpose and has consolidated the VIE and the VIE’s subsidiaries’ assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements. Each of the VIE Agreements is described in detail below: Exclusive Technical Consulting and Service Agreement Pursuant to the Exclusive Technical Consulting and Service Agreement between HiTek and WFOE, WFOE provides HiTek with technical support, consulting services and other management services relating to its day-to-day business operations and management, on an exclusive basis. The Exclusive Technical Consulting and Service Agreement came into effect as of March 31, 2018. For services rendered to HiTek by WFOE under this agreement, WFOE is entitled to collect a service fee that shall be paid per quarter of 100% of HiTek’s quarterly profit. The term of the Exclusive Technical Consulting and Service Agreement is ten years unless it is terminated by WFOE with 30-day prior notice. Equity Interest Pledge Agreement WFOE, HiTek and HiTek shareholders entered into an Equity Interest Pledge Agreement, pursuant to which HiTek shareholders pledged all of their equity interests in HiTek to WFOE in order to guarantee the performance of HiTek’s obligations under the Exclusive Technical Consulting and Service Agreement as described above. The Equity Interest Pledge Agreement came into effect as of March 31, 2018. During the term of the pledge, WFOE is entitled to receive any dividends declared on the pledged equity interests of HiTek. The Equity Interest Pledge Agreement ends when all contractual obligations under the Exclusive Technical Consulting and Service Agreement have been fully performed. Exclusive Equity Interests Purchase Agreement Under the Exclusive Equity Interests Purchase Agreement, the HiTek Shareholders granted WFOE (or its designee) an exclusive option to purchase, to the extent permitted under PRC law, part or all of their equity interests in HiTek. The option price is equal to the capital paid in by the HiTek Shareholders subject to any appraisal or restrictions required by applicable PRC laws and regulations. The Exclusive Equity Interests Purchase Agreement remains effective for a term of ten years and may be renewed at WFOE’s election. Power of Attorney Each shareholder of the HiTek has executed an irrevocable power of attorney in favor of WFOE. Pursuant to this power of attorney, WFOE has full power and authority to exercise all of such shareholders’ rights with respect to their equity interest in the VIE Companies, including HiTek, Huasheng and Huoerguosi. The power of attorney will remain in force for so long as the shareholder remains a shareholder of HiTek. During the years ended December 31, 2023, 2022 and 2021, there were no transactions in HiTek Global Inc. and HiTek HK besides minimal capital transactions, professional fee payments and interest income. As of December 31, 2023, the VIEs accounted for 57% and 100% 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 December 31, 2023 and 2022, $1,041,909 and $843,705 of cash was denominated in RMB, respectively. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the 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 CFS and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s 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. |
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 year. For the years ended December 31, 2023, 2022 and 2021, there were no other contracts to issue ordinary shares, such as 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 December 31, 2023 and 2022, cash balances held in PRC banks were uninsured. The Company has not experienced any losses in bank accounts during the years ended December 31, 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 the United States of 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 a maturity of 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 Consolidated Statements of Operations. Net realized and unrealized holding gains and losses for investments are included in 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. The adoption did not have a material impact on the Company’s CFS. 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 consisted of underwriting, legal, accounting and other expenses incurred through the balance sheet date that were directly related to the Initial Public Offering (IPO), and it was charged to shareholders’ equity upon the completion of the IPO. |
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 3-5 years Computer equipment 2-3 years Transportation equipment 5 years Buildings and improvements 5-20 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 for the years ended December 31, 2023, 2022 and 2021. |
Deferred Revenue | 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 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. ● 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 companies. 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 from software sales when the software is accepted by the customer. ● Tax Devices and Services Before January 21, 2021, all VAT general taxpayer businesses in China were 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. Revenue was comprised of the following. Years Ended December 31, 2023 2022 2021 Revenues Hardware $ 2,428,592 $ 2,504,426 $ 2,434,694 Tax devices and service 1,376,323 1,803,650 1,970,363 Software 758,816 2,120,532 2,056,106 Total revenues $ 4,563,731 $ 6,428,608 $ 6,461,163 ● 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 [Policy Text Block] | 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 years ended December 31, 2023, 2022 and 2021, the Company recognized revenue of $977,054, $784,530 and $752,286, respectively, that was included in the deferred revenue balance at the beginning of each year. |
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 Subsidies are given by the government to mainly support the Company for the increase in production and social insurance compensation for rural laborers. Subsidies are recognized as government subsidies income in the 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 years ended December 31, 2023, 2022 and 2021 were $38,221, $42,052 and $43,661, 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 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 December 31, 2023 and 2022 and for the year ended December 31, 2023 and 2022 are as follows: December 31, Years Ended 2023 2022 2023 2022 Foreign currency Balance Sheet Balance Sheet Profits/Loss Profits/Loss RMB:1USD 7.0971 6.9091 7.0732 6.7285 |
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 for the years ended December 31, 2023, 2022 and 2021 consisted of net income and unrealized gain (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 December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about an entity’s effective tax rate reconciliation and additional discloses on income taxes paid. The new requirements are effective for annual periods beginning after December 15, 2024. The guidance is to be applied prospectively, with an option for retrospective application. The Company is currently evaluating the impact of this new guidance on disclosures within 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 CFS. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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 3-5 years Computer equipment 2-3 years Transportation equipment 5 years Buildings and improvements 5-20 years Software 3 years |
Schedule of Revenue | Revenue was comprised of the following. Years Ended December 31, 2023 2022 2021 Revenues Hardware $ 2,428,592 $ 2,504,426 $ 2,434,694 Tax devices and service 1,376,323 1,803,650 1,970,363 Software 758,816 2,120,532 2,056,106 Total revenues $ 4,563,731 $ 6,428,608 $ 6,461,163 |
Schedule of Exchange Rates | The exchange rates as of December 31, 2023 and 2022 and for the year ended December 31, 2023 and 2022 are as follows: December 31, Years Ended 2023 2022 2023 2022 Foreign currency Balance Sheet Balance Sheet Profits/Loss Profits/Loss RMB:1USD 7.0971 6.9091 7.0732 6.7285 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Short-term Investments [Abstract] | |
Schedule of Short-Term Investments | Investments consisted of the following. Quoted Significant Significant Prices in Other Other Active Observable Unobservable December 31, Markets Inputs Inputs 2023 (Level 1) (Level 2) (Level 3) Short-term investments Trading securities $ 5,837,445 $ 5,837,445 $ - $ - Held-to-maturity debt securities 3,000,000 3,000,000 - - Long-term investment Held-to-maturity debt securities 1,000,000 1,000,000 - - Total $ 9,837,445 $ 9,837,445 $ - $ - 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 years ended December 31, 2023, 2022 and 2021 consists of the following. December 31, 2023 2022 2021 Gain (loss) from sales of short-term investments: Trading securities $ 31,097 $ (30,848 ) $ 3,945 Held-to-maturity debt securities 11,397 - 17,189 Unrealized holding income (loss) of short-term investments: Trading securities 49,245 (2,722 ) 82,241 Held-to-maturity debt securities 184,018 14,207 - Unrealized holding income of long-term investments: Held-to-maturity debt securities 54,795 - - Net investment income (loss) $ 330,552 $ (19,363 ) $ 103,375 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts Receivable | As of December 31, 2023 and 2022, accounts receivable, net consisted of the following. 2023 2022 Accounts receivable $ 2,279,593 $ 3,435,340 Less: allowance for credit losses (160,855 ) $ (164,122 ) Accounts receivable, net $ 2,118,738 $ 3,271,218 Accounts receivable – related party, net $ - $ 399,465 Non-current accounts receivable $ 4,597,214 $ 4,209,546 |
Schedule of the Allowance for Credit Losses | The following table describes the movements in the allowance for credit losses during the years ended December 31, 2023 and 2022. 2023 2022 2021 Balance at January 1 $ 164,122 $ 179,475 $ 298,224 Provision for (reversal of) doubtful accounts 1,084 (1,087 ) (124,881 ) Foreign exchange difference (4,351 ) (14,266 ) 6,132 Balance at December 31 $ 160,855 $ 164,122 $ 179,475 |
Advances to Suppliers, Net (Tab
Advances to Suppliers, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Advances to Suppliers, Net [Abstract] | |
Schedule of Advances to Suppliers, Net | As of December 31, 2023 and 2022, advances to suppliers consisted of the following: 2023 2022 Advances to suppliers - Inventories $ - $ 483,435 Advances to suppliers – Services (1) 338,166 - Less: reserve for amount not recoverable - (1,666 ) Total $ 338,166 $ 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 December 31, 2023, the total contract price was $676,333 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) | 12 Months Ended |
Dec. 31, 2023 | |
Inventories, Net [Abstract] | |
Schedule of Inventories | As of December 31, 2023 and 2022, inventories consisted of the following. 2023 2022 Inventory $ 236,739 $ 442,681 Less: reserve for obsolete inventories (17,234 ) (12,011 ) Total $ 219,505 $ 430,670 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of Prepaid Expenses and Current Assets | As of December 31, 2023 and 2022, prepaid expenses and current assets consisted of the following. 2023 2022 Interest receivable (1) $ 171,657 $ 42,263 Prepaid expenses (2) 24,770 4,342 Other receivables, net (3) 156,492 48,320 Total $ 352,919 $ 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) | 12 Months Ended |
Dec. 31, 2023 | |
Loan Receivable [Abstract] | |
Schedule of Loan Receivable | As of December 31, 2023 and 2022, loan receivable consisted of the following. 2023 2022 Guangxi Beihengda Mining Co., Ltd. (1) $ 5,213,397 $ 5,355,257 Hongkong Sanyou Petroleum Co., Ltd (2) 2,621,971 - Total loan receivable 7,835,368 5,355,257 Less: current portion 3,608,289 1,013,157 Loan receivable - non current $ 4,227,079 $ 4,342,100 (1) On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB30,000,000 ($4,272,079), RMB3,000,000 ($422,708) and RMB7,000,000 ($986,318) to a third party, which were restricted for its operating activities, carrying interest at 12%. The RMB30,000,000 loan was extended for one year and will mature on January 21, 2025. The RMB7,000,000 will mature on June 13, 2024. The RMB3,000,000 loan was repaid in August 2022 with an interest of RMB120,000 ($17,368). The change in the carrying value of these outstanding loans from $5,355,257 in 2022 to $5,213,397 in 2023 was due mainly to currency translation. Pursuant to a mining right pledge agreement dated August 5, 2022 between HiTek, as representative of the Lenders, and the Borrower, these three loans are secured by the Borrower’s coal mining permit issued by Bobai County Natural Resources Bureau, which grants the Borrower a 20-year mining right for certain building granite mine in Daguang Village, Shuiming Town, Bobai County, Guangxi Province, for production of 1.306 million cubic meters per year. (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 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 December 2023, total loans to such a third party were $9.8 million, of which $7.3 million of the principal was repaid prior to December 31, 2023. |
Property, Equipment and Softw_2
Property, Equipment and Software, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Equipment and Software, Net [Abstract] | |
Schedule of Property, Equipment and Software | As of December 31, 2023 and 2022, property, equipment and software consisted of the following. 2023 2022 Office furniture $ 51,277 $ 2,576 Computer equipment 6,371 6,545 Transportation equipment 202,893 67,580 Buildings and improvements 586,373 448,607 Software 1,039,861 1,068,156 1,886,775 1,593,464 Less: accumulated depreciation and amortization (1,483,445 ) (1,470,497 ) $ 403,330 $ 122,967 |
Taxes Payable (Tables)
Taxes Payable (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Taxes Payable [Abstract] | |
Schedule of Taxes Payable | As of December 31, 2023 and 2022, taxes payable consisted of the following. 2023 2022 Value-added tax $ 1,219,713 $ 1,135,002 Income tax 564,372 404,617 Other taxes 133,562 131,703 Total $ 1,917,647 $ 1,671,322 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Balances | The following are related party balances as of December 31, 2023 and 2022. 2023 2022 Accounts receivable Beijing Zhongzhe Yuantong Technology Co., Ltd. (1) $ - $ 399,465 $ - $ 399,465 2023 2022 Due to related parties Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ - $ 598 $ - $ 598 2023 2022 2021 Cost of revenues Fengqi (Beijing) Zhineng Technology Co., Ltd. (2) $ 8,480 $ 11,830 $ 52,961 $ 8,480 $ 11,830 $ 52,961 (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 December 31, 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 $8,480, $11,830 and $52,961 for fiscal year ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and 2022, the Company has outstanding advances owed to Fengqi (Beijing) Zhineng Technology Co., Ltd., of $ nil |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of Operating Leases | A summary of supplemental information related to operating leases as of December 31, 2023 is as follows. Operating lease ROU assets $ 3,309 Operating lease liabilities-current $ 3,309 Total operating lease liabilities $ 3,309 Weighted average remaining lease term 1.0 year Weighted average discount rate 4.8 % |
Schedule of Maturity of Lease Liabilities | The following table represents the maturity of lease liabilities as of December 31, 2023. 12 months ending December 31, 2024 3,382 Total lease payments 3,382 Less: interest (73 ) Present value of lease liabilities $ 3,309 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | As of December 31, 2023 and 2022, accrued expenses and other current liabilities consisted of the following. 2023 2022 Payroll $ 130,463 $ 253,212 Interest payable 46,639 21,132 Other 78,029 73,823 Total $ 255,131 $ 348,167 |
Loan Payables (Tables)
Loan Payables (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Loan Payables [Abstract] | |
Schedule of Loan Payables | As of December 31, 2023 and 2022, loan payables consisted of the following. 2023 2022 Short-term borrowings $ 493,159 $ 506,578 Long-term borrowings 2,113,539 2,171,050 Total $ 2,606,698 $ 2,677,628 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes [Abstract] | |
Schedule of Income (Loss) Before Income Taxes | The Company’s income (loss) before income taxes includes the following for the years ended December 31. 2023 2022 2021 Non-PRC operations $ (176,949 ) $ (385,297 ) $ (328,672 ) PRC operations 1,771,475 2,254,260 2,540,882 Total income before income taxes $ 1,594,526 $ 1,868,963 $ 2,212,210 |
Schedule of Income Tax Expense | Income tax expense was comprised of the following for the years ended December 31. 2023 2022 2021 Current tax expense $ 207,553 $ 276,189 $ 202,229 Deferred tax expense 339,332 177,029 340,624 Total income tax expense $ 546,885 $ 453,218 $ 542,853 |
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 December 31, 2023 and 2022 as follows. 2023 2022 Deferred tax assets Net operating loss $ 8,338 $ 5,313 Deferred revenue 39,340 205,605 Unbilled cost 374,357 355,461 Unbilled interest expenses 37,727 34,592 Software amortization 259,965 267,039 Allowance for doubtful accounts 13,459 8,308 Inventories obsolescence (6,591 ) 7,043 Unrealized losses on trading securities 1,761 1,809 Accrued Bonus 43,074 62,441 Other 34,246 31,819 Total deferred tax assets 805,676 979,430 Deferred tax liabilities Unbilled revenue (2,270,234 ) (2,149,169 ) Unbilled interest income (50,369 ) (69,149 ) Deferred government subsidiary income (41,673 ) (42,806 ) Unrealized gain on short-term investment (285 ) (2,796 ) Other (14,336 ) (4,462 ) Total deferred tax liabilities (2,376,897 ) (2,268,382 ) Valuation allowance (32,942 ) (11,469 ) Net deferred tax liabilities $ (1,604,163 ) $ (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 years ended December 31. 2023 2022 2021 PRC statutory tax rate 25 % 25.0 % 25.0 % Effect of different tax rates in different jurisdictions 2.8 % 5.2 % 3.7 % Permanent difference - % (0.1 )% 1.1 % Tax holiday effect (1) 6.5 % (5.9 )% (5.3 )% Effective tax rate 34.3 % 24.2 % 24.5 % (1) A PRC subsidiary incurred loss in 2023, which resulted in tax benefit and positive tax holiday effect in 2023. |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Concentrations (Tables) [Line Items] | |
Schedule of Details of Customers Total Revenues | Details of the Company’s major customers (including those accounting for 10% or more of the Company’s total revenues) are as follows. Years Ended December 31, 2023 2022 2021 Customer A $ 801,344 18 % $ 2,291,651 36 % $ 1,784,738 28 % Customer B 398,488 9 % 834,911 13 % 896,220 14 % Total $ 1,199,832 27 % $ 3,126,562 49 % $ 2,680,958 42 % |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | |
Concentrations (Tables) [Line Items] | |
Schedule of Details of Suppliers Accounts Payable | Details of the Company’s major customers (including those accounting for 10% or more of the Company’s accounts receivable are as follows. December 31, 2023 2022 2021 Customer A $ 4,615,308 67 % $ 5,274,060 67 % $ 4,256,804 66 % Customer B 1,901,481 28 % 1,864,208 24 % 1,027,238 16 % Customer C - - % 399,465 5 % 963,034 15 % Total $ 6,516,789 95 % $ 7,537,733 96 % $ 6,247,076 97 % |
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |
Concentrations (Tables) [Line Items] | |
Schedule of Details of Suppliers Accounts Payable | Details of the Company’s major suppliers (including those accounting for 10% or more of the Company’s total purchases) are as follows. Years Ended December 31, 2023 2022 2021 Supplier A $ 13,532 1 % $ 62,647 2 % $ 295,283 11 % Supplier B 312,039 12 % 20,586 1 % 109,764 4 % Supplier C - - % 472,988 16 % 215,526 8 % Supplier D - - % 430,744 15 % 267,933 10 % Supplier E 105,852 4 % 366,115 13 % 138,849 5 % Supplier F 94,348 4 % 326,836 11 % - - % Total $ 525,771 21 % $ 1,679,916 58 % $ 1,027,355 38 % |
Accounts Payable [Member] | Supplier Concentration Risk [Member] | |
Concentrations (Tables) [Line Items] | |
Schedule of Details of Suppliers Accounts Payable | Details of the Company’s major suppliers (including those accounting for 10% or more of the Company’s accounts payable) are as follows. December 31, 2023 2022 2021 Supplier C $ 256,623 47 % $ 52,539 8 % $ - - % Supplier E 18,562 3 % 155,990 22 % 39,077 8 % Supplier G 14,649 3 % 131,661 19 % 6,061 1 % Supplier H - - % 79,605 11 % 86,494 17 % Supplier I - - % 8,887 1 % 84,671 16 % Supplier J 59,195 11 % 60,806 9 % 66,068 13 % Total $ 349,029 64 % $ 489,488 70 % $ 282,371 55 % |
Commitments and Contingency (Ta
Commitments and Contingency (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingency [Abstract] | |
Schedule of Balance Sheets | Summary information regarding consolidated VIEs and their subsidiaries is as follows. As of 2023 2022 Total current assets $ 10,571,775 $ 11,276,852 Total non-current assets $ 9,641,441 $ 9,102,933 Total Assets $ 20,213,216 $ 20,379,785 Total Liabilities $ 7,073,660 $ 5,329,843 |
Schedule of Operations | Years Ended December 31, 2023 2022 2021 Revenues $ 4,335,591 $ 6,228,595 $ 6,473,638 Net income $ 1,098,947 $ 1,684,991 $ 2,061,517 |
Schedule of Cash Flows | Years Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 834,596 $ 4,016,852 $ (757,861 ) Net cash (used in) provided by investing activities $ (675,964 ) $ (7,349,231 ) $ 400,006 Net cash provided by financing activities $ - $ 2,749,498 $ - |
Condensed Financial Informati_2
Condensed Financial Information of the Parent Company (Tables) - Parent Company [Member] | 12 Months Ended |
Dec. 31, 2023 | |
Condensed Financial Information of the Parent Company (Tables) [Line Items] | |
Schedule of Parent Company Balance Sheets | PARENT COMPANY BALANCE SHEETS December 31, 2023 2022 Assets Current assets Cash $ 8,236,065 $ 226,578 Short-term investments 3,000,000 - Intercompany receivables 15,000 10,000 Loan receivable 2,621,971 - Prepaid expenses and other current assets 204,604 - Total current assets 14,077,640 236,578 Non-current assets Non-current deferred offering cost - 349,842 Long-term investments 1,000,000 - Investments in non-VIE subsidiaries 14,621,943 14,299,036 Total non-current assets 15,621,943 14,648,878 Total Assets $ 29,699,583 $ 14,885,456 Liabilities and Shareholders’ Equity Current liabilities Intercompany payable $ 1,361,997 $ 1,358,930 Total current liabilities 1,361,997 1,358,930 Total Liabilities 1,361,997 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 December 31, 2023 and 2022, respectively. 1,439 1,099 Additional paid-in capital 16,721,551 2,628,356 Statutory reserve 836,215 836,215 Retained earnings 11,387,748 10,340,107 Accumulated other comprehensive loss (609,367 ) (279,251 ) Total Shareholders’ Equity 28,337,586 13,526,526 Total Liabilities and Shareholders’ Equity $ 29,699,583 $ 14,885,456 |
Schedule of Parent Company Statements of Operations And Comprehensive Income | PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Years Ended December 31, 2023 2022 Revenues $ 36,402 $ - Gross profit 36,402 - Operating expenses: General and administrative 764,111 378,857 Total operating expenses 764,111 378,857 Operating loss (727,709 ) (378,857 ) Other income (expense) Net investment income 238,812 - Interest income 317,505 35 Other expense, net (3,382 ) (4,327 ) Total other income (loss) 552,935 (4,292 ) Share of income from subsidiaries 1,222,415 1,798,894 Income before provision for income taxes 1,047,641 1,415,745 Net income $ 1,047,641 $ 1,415,745 Comprehensive income Net income $ 1,047,641 $ 1,415,745 Comprehensive income $ 1,047,641 $ 1,415,745 Earnings per ordinary share – Basic and diluted $ 0.08 $ 0.13 Weighted average number of ordinary shares outstanding – Basic and diluted 13,257,469 10,987,679 |
Schedule of Parent Company Statements of Cash Flows | PARENT COMPANY STATEMENTS OF CASH FLOWS Years Ended December 31, 2023 2022 Operating Activities Net income $ 1,047,641 $ 1,415,745 Adjustments to reconcile net income to net cash used in operating activities: Accrued interest income from loans (317,172 ) - Net investment gain (1,461,227 ) (1,798,894 ) Changes in operating assets and liabilities: Deferred offering cost (130,134 ) 60,000 Due from intercompany (5,000 ) - Due to intercompany 3,067 - Prepaid expenses and other current assets - 40,000 Net cash used in operating activities (862,825 ) (283,149 ) Investing Activities Loans to third parties (11,260,542 ) - Repayment from third-party loans 8,830,933 - Purchases of held-to-maturity investments (11,000,000 ) - Redemption of held-to-maturity investments 7,159,018 - Net cash used in investing activities (6,270,591 ) - 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 8,009,486 (283,149 ) Cash and equivalents at beginning of year 226,578 509,727 Cash and equivalents at end of year $ 8,236,064 $ 226,578 |
Nature of Operations (Details)
Nature of Operations (Details) - Nonconsolidated Investees, Other [Member] | Dec. 31, 2023 |
Shenping Yin [Member] | |
Nature of Operations [Line Items] | |
Ownership percentage | 29.83% |
Xiaoyang Huang [Member] | |
Nature of Operations [Line Items] | |
Ownership percentage | 44.74% |
Shareholders [Member] | |
Nature of Operations [Line Items] | |
Ownership percentage | 25.43% |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Basis of Presentation and Summary of Significant Accounting Policies [Line Items] | |||
Cash amount | $ 1,041,909 | $ 843,705 | |
Recognized revenue | 977,054 | 784,530 | $ 752,286 |
Research and development expenses | $ 38,221 | $ 42,052 | $ 43,661 |
Variable Interest Entity, Primary Beneficiary [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies [Line Items] | |||
VIEs accounted percentage | 100% | ||
Variable Interest Entity, Primary Beneficiary [Member] | Assets, Total [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies [Line Items] | |||
VIEs accounted percentage | 57% | 96% | |
Variable Interest Entity, Primary Beneficiary [Member] | Liabilities, Total [Member] | |||
Basis of Presentation and Summary of Significant Accounting Policies [Line Items] | |||
VIEs accounted percentage | 100% | 98% |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Estimated Useful Lives | Dec. 31, 2023 |
Transportation equipment [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 5 years |
Software [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 3 years |
Minimum [Member] | Furniture and office equipment [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 3 years |
Minimum [Member] | Computer equipment [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 2 years |
Minimum [Member] | Buildings and improvements [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 5 years |
Maximum [Member] | Furniture and office equipment [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 5 years |
Maximum [Member] | Computer equipment [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 3 years |
Maximum [Member] | Buildings and improvements [Member[ | |
Schedule of Estimated Useful Lives [Line Items] | |
Estimated useful lives of assets | 20 years |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Revenue - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | |||
Total revenues | $ 4,563,731 | $ 6,428,608 | $ 6,461,163 |
Hardware [Member] | |||
Revenues | |||
Total revenues | 2,428,592 | 2,504,426 | 2,434,694 |
Tax devices and service [Member] | |||
Revenues | |||
Total revenues | 1,376,323 | 1,803,650 | 1,970,363 |
Software [Member] | |||
Revenues | |||
Total revenues | $ 758,816 | $ 2,120,532 | $ 2,056,106 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Profits/Loss [Member] | ||
Schedule of Exchange Rates [Line Items] | ||
Foreign currency | 7.0732 | 6.7285 |
Balance Sheet [Member] | ||
Schedule of Exchange Rates [Line Items] | ||
Foreign currency | 7.0971 | 6.9091 |
Investments (Details) - Schedul
Investments (Details) - Schedule of Short-Term Investments - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Short-term investments | ||
Total | $ 9,837,445 | $ 4,290,348 |
Quoted Prices in Active Markets (Level 1) [Member] | ||
Short-term investments | ||
Total | 9,837,445 | 4,290,348 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Short-term investments | ||
Total | ||
Significant Other Unobservable Inputs (Level 3) [Member] | ||
Short-term investments | ||
Total | ||
Short-Term Investments [Member] | ||
Short-term investments | ||
Trading securities | 5,837,445 | 2,408,772 |
Held-to-maturity debt securities | 3,000,000 | 1,881,576 |
Short-Term Investments [Member] | Quoted Prices in Active Markets (Level 1) [Member] | ||
Short-term investments | ||
Trading securities | 5,837,445 | 2,408,772 |
Held-to-maturity debt securities | 3,000,000 | 1,881,576 |
Short-Term Investments [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Short-term investments | ||
Trading securities | ||
Held-to-maturity debt securities | ||
Short-Term Investments [Member] | Significant Other Unobservable Inputs (Level 3) [Member] | ||
Short-term investments | ||
Trading securities | ||
Held-to-maturity debt securities | ||
Long-Term Investment [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities | 1,000,000 | |
Long-Term Investment [Member] | Quoted Prices in Active Markets (Level 1) [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities | 1,000,000 | |
Long-Term Investment [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities | ||
Long-Term Investment [Member] | Significant Other Unobservable Inputs (Level 3) [Member] | ||
Short-term investments | ||
Held-to-maturity debt securities |
Investments (Details) - Sched_2
Investments (Details) - Schedule of Net Investment (Loss) Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Unrealized holding income of long-term investments: | |||
Net investment income (loss) | $ 330,552 | $ (19,363) | $ 103,375 |
Trading securities [Member] | |||
Gain (loss) from sales of short-term investments: | |||
Gain (loss) from sales of short-term investments | 31,097 | (30,848) | 3,945 |
Unrealized holding income (loss) of short-term investments: | |||
Unrealized holding income (loss) of short-term investments | 49,245 | (2,722) | 82,241 |
Held-to-maturity debt securities [Member] | |||
Gain (loss) from sales of short-term investments: | |||
Gain (loss) from sales of short-term investments | 11,397 | 17,189 | |
Unrealized holding income (loss) of short-term investments: | |||
Unrealized holding income (loss) of short-term investments | 184,018 | 14,207 | |
Unrealized holding income of long-term investments: | |||
Unrealized holding income of long-term investments | $ 54,795 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Accounts Receivable [Abstract] | ||
Accounts receivable | $ 2,279,593 | $ 3,435,340 |
Less: allowance for credit losses | (160,855) | (164,122) |
Accounts receivable, net | 2,118,738 | 3,271,218 |
Accounts receivable – related party, net | 399,465 | |
Non-current accounts receivable | $ 4,597,214 | $ 4,209,546 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details) - Schedule of the Allowance for Credit Losses - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of the Allowance for Credit Losses [Abstract] | |||
Balance at beginning | $ 164,122 | $ 179,475 | $ 298,224 |
Provision for (reversal of) doubtful accounts | 1,084 | (1,087) | (124,881) |
Foreign exchange difference | (4,351) | (14,266) | 6,132 |
Balance at ending | $ 160,855 | $ 164,122 | $ 179,475 |
Advances to Suppliers, Net (Det
Advances to Suppliers, Net (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Advances to Suppliers, Net [Line Items] | |
Total contract price (in Dollars) | $ 676,333 |
Installment payment percentage | 40% |
5 Working Days [Member] | |
Advances to Suppliers, Net [Line Items] | |
Installment payment percentage | 50% |
30 Working Days [Member] | |
Advances to Suppliers, Net [Line Items] | |
Installment payment percentage | 10% |
Advances to Suppliers, Net (D_2
Advances to Suppliers, Net (Details) - Schedule of Advances to Suppliers, Net - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of Advances to Suppliers Net [Abstract] | |||
Advances to suppliers - Inventories | $ 483,435 | ||
Advances to suppliers – Services | [1] | 338,166 | |
Less: reserve for amount not recoverable | (1,666) | ||
Total | $ 338,166 | $ 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 December 31, 2023, the total contract price was $676,333 and shall be paid using installment payment method (50% within 5 working days after the signing of this contract, 40% within 5 working days upon launching of the official version, and 10% within 30 working days upon launching of the official version). The ownership of the final product belongs to the Company. |
Inventories, Net (Details) - Sc
Inventories, Net (Details) - Schedule of Inventories - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Inventories [Abstract] | ||
Inventory | $ 236,739 | $ 442,681 |
Less: reserve for obsolete inventories | (17,234) | (12,011) |
Total | $ 219,505 | $ 430,670 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid Expenses and Current Assets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of Prepaid Expenses and Current Assets [Abstract] | |||
Interest receivable | [1] | $ 171,657 | $ 42,263 |
Prepaid expenses | [2] | 24,770 | 4,342 |
Other receivables, net | [3] | 156,492 | 48,320 |
Total | $ 352,919 | $ 94,925 | |
[1] Interest receivable primarily consists of interest from loans to third parties and interest from investments. Prepaid expenses primarily consist of insurance premium, investor relations and lawyer’s fee. 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) | 9 Months Ended | 12 Months Ended | |||||||||||||
May 08, 2022 USD ($) | May 08, 2022 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jan. 21, 2025 CNY (¥) | Jun. 13, 2024 CNY (¥) | Aug. 31, 2022 USD ($) | Jun. 14, 2022 USD ($) | Jun. 14, 2022 CNY (¥) | Mar. 28, 2022 USD ($) | Mar. 28, 2022 CNY (¥) | Jan. 22, 2022 USD ($) | Jan. 22, 2022 CNY (¥) | |
Loan Receivable [Line Items] | |||||||||||||||
Loan amount | $ 3,000,000 | $ 986,318 | ¥ 7,000,000 | $ 422,708 | ¥ 3,000,000 | $ 4,272,079 | ¥ 30,000,000 | ||||||||
Interest percentage | 12% | 12% | |||||||||||||
Interest | $ 17,368 | ¥ 120,000 | |||||||||||||
Outstanding loans | $ 5,213,397 | $ 5,213,397 | $ 5,355,257 | ||||||||||||
Production cost per year | $ 1,306,000 | ||||||||||||||
Interest of loans | 1.50% | ||||||||||||||
Interest income | $ 909,362 | $ 540,842 | $ 7,107 | ||||||||||||
Third Party [Member] | |||||||||||||||
Loan Receivable [Line Items] | |||||||||||||||
Loans to third party | 9,800,000 | ||||||||||||||
Loans to third party | $ 7,300,000 | ||||||||||||||
Forecast [Member] | |||||||||||||||
Loan Receivable [Line Items] | |||||||||||||||
Loan amount | ¥ | ¥ 30,000,000 | ¥ 7,000,000 |
Loan Receivable (Details) - Sch
Loan Receivable (Details) - Schedule of Loan Receivable - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of Loan Receivable [Line Items] | |||
Total loan receivable | $ 7,835,368 | $ 5,355,257 | |
Less: current portion | 3,608,289 | 1,013,157 | |
Loan receivable - non current | 4,227,079 | 4,342,100 | |
Guangxi Beihengda Mining Co., Ltd. [Member] | |||
Schedule of Loan Receivable [Line Items] | |||
Total loan receivable | [1] | 5,213,397 | 5,355,257 |
Hongkong Sanyou Petroleum Co., Ltd [Member] | |||
Schedule of Loan Receivable [Line Items] | |||
Total loan receivable | [2] | $ 2,621,971 | |
[1]On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB30,000,000 ($4,272,079), RMB3,000,000 ($422,708) and RMB7,000,000 ($986,318) to a third party, which were restricted for its operating activities, carrying interest at 12%. The RMB30,000,000 loan was extended for one year and will mature on January 21, 2025. The RMB7,000,000 will mature on June 13, 2024. The RMB3,000,000 loan was repaid in August 2022 with an interest of RMB120,000 ($17,368). The change in the carrying value of these outstanding loans from $5,355,257 in 2022 to $5,213,397 in 2023 was due mainly to currency translation. Pursuant to a mining right pledge agreement dated August 5, 2022 between HiTek, as representative of the Lenders, and the Borrower, these three loans are secured by the Borrower’s coal mining permit issued by Bobai County Natural Resources Bureau, which grants the Borrower a 20-year mining right for certain building granite mine in Daguang Village, Shuiming Town, Bobai County, Guangxi Province, for production of 1.306 million cubic meters per year.[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 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 December 2023, total loans to such a third party were $9.8 million, of which $7.3 million of the principal was repaid prior to December 31, 2023. |
Non-Current Advance to a Thir_2
Non-Current Advance to a Third Party (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Non-Current Advance to a Third Party [Line Items] | |
Contract price | $ 411,000 |
Additional costs | $ 12,000 |
Property, Equipment and Softw_3
Property, Equipment and Software, Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Equipment and Software, Net [Abstract] | ||
Depreciation expenses | $ 50,662 | $ 21,881 |
Property, Equipment and Softw_4
Property, Equipment and Software, Net (Details) - Schedule of Property, Equipment and Software - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Equipment and Software [Line Items] | ||
Property and equipment, gross | $ 1,886,775 | $ 1,593,464 |
Less: accumulated depreciation and amortization | (1,483,445) | (1,470,497) |
Property and equipment, net | 403,330 | 122,967 |
Office furniture [Member] | ||
Property, Equipment and Software [Line Items] | ||
Property and equipment, gross | 51,277 | 2,576 |
Computer equipment [Member] | ||
Property, Equipment and Software [Line Items] | ||
Property and equipment, gross | 6,371 | 6,545 |
Transportation equipment [Member] | ||
Property, Equipment and Software [Line Items] | ||
Property and equipment, gross | 202,893 | 67,580 |
Buildings and improvements [Member] | ||
Property, Equipment and Software [Line Items] | ||
Property and equipment, gross | 586,373 | 448,607 |
Software [Member] | ||
Property, Equipment and Software [Line Items] | ||
Property and equipment, gross | $ 1,039,861 | $ 1,068,156 |
Taxes Payable (Details) - Sched
Taxes Payable (Details) - Schedule of Taxes Payable - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Taxes Payable [Abstract] | ||
Value-added tax | $ 1,219,713 | $ 1,135,002 |
Income tax | 564,372 | 404,617 |
Other taxes | 133,562 | 131,703 |
Total | $ 1,917,647 | $ 1,671,322 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||
Accounts and Other Receivables, Net, Current | $ 399,465 | ||
Cost of Revenue | 2,642,491 | 2,891,565 | $ 2,581,218 |
Notes Payable, Current | 598 | ||
Fengqi Beijing Zhineng Technology Co Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Notes Payable, Current | 598 | ||
Hardware [Member] | Fengqi Beijing Zhineng Technology Co Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Cost of Revenue | $ 8,480 | $ 11,830 | $ 52,961 |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of Related Party Balances - USD ($) | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Beijing Zhongzhe Yuantong Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable | [1] | $ 399,465 | ||
Related Party [Member] | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable | 399,465 | |||
Due to related parties | 598 | |||
Cost of revenues | 8,480 | 11,830 | $ 52,961 | |
Fengqi (Beijing) Zhineng Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | [2] | 598 | ||
Cost of revenues | [2] | $ 8,480 | $ 11,830 | $ 52,961 |
[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 December 31, 2023, it was collected by the Company. 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 $8,480, $11,830 and $52,961 for fiscal year ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and 2022, the Company has outstanding advances owed to Fengqi (Beijing) Zhineng Technology Co., Ltd., of $ nil |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Operating Leases - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Operating Leases [Abstract] | ||
Operating lease ROU assets | $ 3,309 | $ 6,641 |
Operating lease liabilities-current | 3,309 | $ 3,242 |
Total operating lease liabilities | $ 3,309 | |
Weighted average remaining lease term | 1 year | |
Weighted average discount rate | 4.80% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of Maturity of Lease Liabilities | Dec. 31, 2023 USD ($) |
Schedule of Maturity of Lease Liabilities [Abstract] | |
2024 | $ 3,382 |
Total lease payments | 3,382 |
Less: interest | (73) |
Present value of lease liabilities | $ 3,309 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of Accrued Expenses and Other Current Liabilities - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Accrued Expenses And Other Current Liabilities [Abstract] | ||
Payroll | $ 130,463 | $ 253,212 |
Interest payable | 46,639 | 21,132 |
Other | 78,029 | 73,823 |
Total | $ 255,131 | $ 348,167 |
Loan Payables (Details)
Loan Payables (Details) | 12 Months Ended | ||||||||||||
Dec. 31, 2023 USD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Jan. 21, 2025 CNY (¥) | Jun. 13, 2024 CNY (¥) | Jun. 14, 2022 USD ($) | Jun. 14, 2022 CNY (¥) | Mar. 28, 2022 USD ($) | Mar. 28, 2022 CNY (¥) | Jan. 21, 2022 USD ($) | Jan. 21, 2022 CNY (¥) | |
Loan Payables [Line Items] | |||||||||||||
Repaid (in Yuan Renminbi) | ¥ 15,000,000 | ||||||||||||
Outstanding loans | $ | $ 2,606,698 | $ 2,677,628 | |||||||||||
One Borrowing Agreement [Member] | |||||||||||||
Loan Payables [Line Items] | |||||||||||||
Loan amount | $ 211,354 | $ 2,113,539 | ¥ 15,000,000 | ||||||||||
Two Borrowing Agreement [Member] | |||||||||||||
Loan Payables [Line Items] | |||||||||||||
Loan amount | $ 493,159 | ¥ 1,500,000 | |||||||||||
Interest rate | 12% | 12% | |||||||||||
Three Borrowing Agreement [Member] | |||||||||||||
Loan Payables [Line Items] | |||||||||||||
Loan amount | ¥ 3,500,000 | ||||||||||||
Notes Payable, Other Payables [Member] | |||||||||||||
Loan Payables [Line Items] | |||||||||||||
Repaid (in Yuan Renminbi) | ¥ 1,500,000 | ||||||||||||
Interest expense | $ | $ 313,861 | $ 285,353 | |||||||||||
Forecast [Member] | |||||||||||||
Loan Payables [Line Items] | |||||||||||||
Loan amount | ¥ 15,000,000 | ¥ 3,500,000 |
Loan Payables (Details) - Sche
Loan Payables (Details) - Schedule of Loan Payables - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Borrowings [Abstract] | ||
Short-term borrowings | $ 493,159 | $ 506,578 |
Long-term borrowings | 2,113,539 | 2,171,050 |
Total | $ 2,606,698 | $ 2,677,628 |
Ordinary Shares (Details)
Ordinary Shares (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | |||
Feb. 05, 2024 | Apr. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Ordinary Shares [Line Items] | ||||
Price per share (in Dollars per share) | $ 5 | |||
Net proceeds (in Dollars) | $ 15.1 | |||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||
Subsequent Event [Member] | ||||
Ordinary Shares [Line Items] | ||||
Ordinary shares issued | 14,392,364 | |||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |||
Class A Ordinary Shares [Member] | Subsequent Event [Member] | ||||
Ordinary Shares [Line Items] | ||||
Ordinary shares issued | 6,200,364 | |||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |||
Vote per share | one | |||
Common Class B [Member] | Subsequent Event [Member] | ||||
Ordinary Shares [Line Items] | ||||
Ordinary shares issued | 8,192,000 | |||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |||
Vote per share | 15 | |||
Ordinary Shares [Member] | ||||
Ordinary Shares [Line Items] | ||||
Ordinary shares issued | 3,404,685 | |||
Public offering [Member] | ||||
Ordinary Shares [Line Items] | ||||
Ordinary shares issued | 3,200,000 | |||
Over-Allotment Option [Member] | Ordinary Shares [Member] | ||||
Ordinary Shares [Line Items] | ||||
Ordinary shares issued | 204,685 |
Income Taxes (Details)
Income Taxes (Details) ¥ in Millions | 12 Months Ended | 24 Months Ended | 36 Months Ended | |||
Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2024 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
Income Taxes [Line Items] | ||||||
Annual taxable income percentage | 50% | |||||
Income tax reduced rate | 20% | |||||
Annual taxable income (in Yuan Renminbi) | $ | $ 546,885 | $ 453,218 | $ 542,853 | |||
Cumulative tax effect, percentage | 25% | 25% | ||||
PRC [Member] | ||||||
Income Taxes [Line Items] | ||||||
Annual taxable income (in Yuan Renminbi) | ¥ 1 | ¥ 1 | ||||
Annual taxable income percentage | 12.50% | 25% | ||||
Income tax reduced rate | 20% | 20% | ||||
Minimum [Member] | PRC [Member] | ||||||
Income Taxes [Line Items] | ||||||
Annual taxable income (in Yuan Renminbi) | ¥ 1 | |||||
Maximum [Member] | PRC [Member] | ||||||
Income Taxes [Line Items] | ||||||
Annual taxable income (in Yuan Renminbi) | ¥ 3 | |||||
State Administration of Taxation, China [Member] | ||||||
Income Taxes [Line Items] | ||||||
EIT rate of PRC | 25% | |||||
Forecast [Member] | ||||||
Income Taxes [Line Items] | ||||||
Income tax reduced rate | 20% | |||||
Forecast [Member] | Minimum [Member] | ||||||
Income Taxes [Line Items] | ||||||
Annual taxable income (in Yuan Renminbi) | ¥ 1 | |||||
Forecast [Member] | Latest Tax Year [Member] | ||||||
Income Taxes [Line Items] | ||||||
Annual taxable income percentage | 25% | |||||
Annual taxable income (in Yuan Renminbi) | ¥ 3 | |||||
Forecast [Member] | Latest Tax Year [Member] | PRC [Member] | ||||||
Income Taxes [Line Items] | ||||||
Annual taxable income percentage | 25% | |||||
Income tax reduced rate | 20% | |||||
Annual taxable income (in Yuan Renminbi) | ¥ 1 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of Income (Loss) Before Income Taxes - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Income (Loss) Before Income Taxes [Line Items] | |||
Total income before income taxes | $ 1,594,526 | $ 1,868,963 | $ 2,212,210 |
Non-PRC operations [Member] | |||
Schedule of Income (Loss) Before Income Taxes [Line Items] | |||
Total income before income taxes | (176,949) | (385,297) | (328,672) |
PRC operations [Member] | |||
Schedule of Income (Loss) Before Income Taxes [Line Items] | |||
Total income before income taxes | $ 1,771,475 | $ 2,254,260 | $ 2,540,882 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of Income Tax Expense - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Income Tax Expense [Abstract] | |||
Current tax expense | $ 207,553 | $ 276,189 | $ 202,229 |
Deferred tax expense | 339,332 | 177,029 | 340,624 |
Total income tax expense | $ 546,885 | $ 453,218 | $ 542,853 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets | ||
Net operating loss | $ 8,338 | $ 5,313 |
Deferred revenue | 39,340 | 205,605 |
Unbilled cost | 374,357 | 355,461 |
Unbilled interest expenses | 37,727 | 34,592 |
Software amortization | 259,965 | 267,039 |
Allowance for doubtful accounts | 13,459 | 8,308 |
Inventories obsolescence | (6,591) | 7,043 |
Unrealized losses on trading securities | 1,761 | 1,809 |
Accrued Bonus | 43,074 | 62,441 |
Other | 34,246 | 31,819 |
Total deferred tax assets | 805,676 | 979,430 |
Deferred tax liabilities | ||
Unbilled revenue | (2,270,234) | (2,149,169) |
Unbilled interest income | (50,369) | (69,149) |
Deferred government subsidiary income | (41,673) | (42,806) |
Unrealized gain on short-term investment | (285) | (2,796) |
Other | (14,336) | (4,462) |
Total deferred tax liabilities | (2,376,897) | (2,268,382) |
Valuation allowance | (32,942) | (11,469) |
Net deferred tax liabilities | $ (1,604,163) | $ (1,300,421) |
Income Taxes (Details) - Sche_4
Income Taxes (Details) - Schedule of a Reconciliation of Income Tax Expense | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Schedule of a Reconciliation of Income Tax Expense [Abstract] | ||||
PRC statutory tax rate | 25% | 25% | 25% | |
Effect of different tax rates in different jurisdictions | 2.80% | 5.20% | 3.70% | |
Permanent difference | (0.10%) | 1.10% | ||
Tax holiday effect | [1] | 6.50% | (5.90%) | (5.30%) |
Effective tax rate | 34.30% | 24.20% | 24.50% | |
[1] A PRC subsidiary incurred loss in 2023, which resulted in tax benefit and positive tax holiday effect in 2023. |
Concentrations (Details) - Sche
Concentrations (Details) - Schedule of Details of Customers Total Revenues - Customer Concentration Risk [Member] - Total Revenue [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Customer A [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 801,344 | $ 2,291,651 | $ 1,784,738 |
Total Revenue, Percentage | 18% | 36% | 28% |
Customer B [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 398,488 | $ 834,911 | $ 896,220 |
Total Revenue, Percentage | 9% | 13% | 14% |
Major Customers [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 1,199,832 | $ 3,126,562 | $ 2,680,958 |
Total Revenue, Percentage | 27% | 49% | 42% |
Concentrations (Details) - Sc_2
Concentrations (Details) - Schedule of Details of Customers Accounts Receivable - Customer Concentration Risk [Member] - Accounts Receivable [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Accounts receivable, Amount | $ 4,615,308 | $ 5,274,060 | $ 4,256,804 |
Accounts receivable, Percentage | 67% | 67% | 66% |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Accounts receivable, Amount | $ 1,901,481 | $ 1,864,208 | $ 1,027,238 |
Accounts receivable, Percentage | 28% | 24% | 16% |
Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Accounts receivable, Amount | $ 399,465 | $ 963,034 | |
Accounts receivable, Percentage | 5% | 15% | |
Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Accounts receivable, Amount | $ 6,516,789 | $ 7,537,733 | $ 6,247,076 |
Accounts receivable, Percentage | 95% | 96% | 97% |
Concentrations (Details) - Sc_3
Concentrations (Details) - Schedule of Details of Suppliers Total Purchases - Supplier Concentration Risk [Member] - Cost of Goods and Service Benchmark [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Supplier A [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 13,532 | $ 62,647 | $ 295,283 |
Total purchase, Percentage | 1% | 2% | 11% |
Supplier B [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 312,039 | $ 20,586 | $ 109,764 |
Total purchase, Percentage | 12% | 1% | 4% |
Supplier C [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 472,988 | $ 215,526 | |
Total purchase, Percentage | 16% | 8% | |
Supplier D [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 430,744 | $ 267,933 | |
Total purchase, Percentage | 15% | 10% | |
Supplier E [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 105,852 | $ 366,115 | $ 138,849 |
Total purchase, Percentage | 4% | 13% | 5% |
Supplier F [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 94,348 | $ 326,836 | |
Total purchase, Percentage | 4% | 11% | |
Major Suppliers [Member] | |||
Concentration Risk [Line Items] | |||
Total purchase, Amount | $ 525,771 | $ 1,679,916 | $ 1,027,355 |
Total purchase, Percentage | 21% | 58% | 38% |
Concentrations (Details) - Sc_4
Concentrations (Details) - Schedule of Details of Suppliers Accounts Payable - Supplier Concentration Risk [Member] - Accounts Payable [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Supplier C [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 256,623 | $ 52,539 | |
Total accounts payable, Percentage | 47% | 8% | |
Supplier E [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 18,562 | $ 155,990 | $ 39,077 |
Total accounts payable, Percentage | 3% | 22% | 8% |
Supplier G [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 14,649 | $ 131,661 | $ 6,061 |
Total accounts payable, Percentage | 3% | 19% | 1% |
Supplier H [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 79,605 | $ 86,494 | |
Total accounts payable, Percentage | 11% | 17% | |
Supplier I [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 8,887 | $ 84,671 | |
Total accounts payable, Percentage | 1% | 16% | |
Supplier J [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 59,195 | $ 60,806 | $ 66,068 |
Total accounts payable, Percentage | 11% | 9% | 13% |
Major Suppliers [Member] | |||
Concentration Risk [Line Items] | |||
Total accounts payable, Amount | $ 349,029 | $ 489,488 | $ 282,371 |
Total accounts payable, Percentage | 64% | 70% | 55% |
Commitments and Contingency (De
Commitments and Contingency (Details) - Schedule of Balance Sheets - Variable Interest Entity, Primary Beneficiary [Member] - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Total current assets | $ 10,571,775 | $ 11,276,852 |
Total non-current assets | 9,641,441 | 9,102,933 |
Total Assets | 20,213,216 | 20,379,785 |
Total Liabilities | $ 7,073,660 | $ 5,329,843 |
Commitments and Contingency (_2
Commitments and Contingency (Details) - Schedule of Operations - Variable Interest Entity, Primary Beneficiary [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Condensed Statement of Income Captions [Line Items] | |||
Revenues | $ 4,335,591 | $ 6,228,595 | $ 6,473,638 |
Net income | $ 1,098,947 | $ 1,684,991 | $ 2,061,517 |
Commitments and Contingency (_3
Commitments and Contingency (Details) - Schedule of Cash Flows - Variable Interest Entity, Primary Beneficiary [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash provided by (used in) operating activities | $ 834,596 | $ 4,016,852 | $ (757,861) |
Net cash (used in) provided by investing activities | (675,964) | (7,349,231) | 400,006 |
Net cash provided by financing activities | $ 2,749,498 |
Subsequent Events (Details)
Subsequent Events (Details) | 12 Months Ended | |||
Feb. 05, 2024 $ / shares shares | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares | |
Subsequent Event [Line Items] | ||||
Loans receivable | ¥ | ¥ 30,000,000 | |||
Repayments of Debt | ¥ | ¥ 15,000,000 | |||
Loan due date | Jan. 21, 2025 | |||
Ordinary shares | $ 0.0001 | $ 0.0001 | ||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares issued | shares | 14,392,364 | |||
Ordinary shares | $ 0.0001 | |||
Subsequent Event [Member] | Class A Ordinary Shares [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares issued | shares | 6,200,364 | |||
Ordinary shares | $ 0.0001 | |||
Vote per share | one | |||
Subsequent Event [Member] | Class B Ordinary Shares [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares issued | shares | 8,192,000 | |||
Ordinary shares | $ 0.0001 | |||
Vote per share | 15 |
Condensed Financial Informati_3
Condensed Financial Information of the Parent Company (Details) | Dec. 31, 2023 |
Condensed Financial Information of the Parent Company [Line Items] | |
Net assets percentage | 25% |
Parent Company [Member] | |
Condensed Financial Information of the Parent Company [Line Items] | |
Net assets percentage | 25% |
Condensed Financial Informati_4
Condensed Financial Information of the Parent Company (Details) - Schedule of Parent Company Balance Sheets - Parent Company [Member] - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 8,236,065 | $ 226,578 |
Short-term investments | 3,000,000 | |
Intercompany receivables | 15,000 | 10,000 |
Loan receivable | 2,621,971 | |
Prepaid expenses and other current assets | 204,604 | |
Total current assets | 14,077,640 | 236,578 |
Non-current assets | ||
Non-current deferred offering cost | 349,842 | |
Long-term investments | 1,000,000 | |
Investments in non-VIE subsidiaries | 14,621,943 | 14,299,036 |
Total non-current assets | 15,621,943 | 14,648,878 |
Total Assets | 29,699,583 | 14,885,456 |
Current liabilities | ||
Intercompany payable | 1,361,997 | 1,358,930 |
Total current liabilities | 1,361,997 | 1,358,930 |
Total Liabilities | 1,361,997 | 1,358,930 |
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 December 31, 2023 and 2022, respectively. | 1,439 | 1,099 |
Additional paid-in capital | 16,721,551 | 2,628,356 |
Statutory reserve | 836,215 | 836,215 |
Retained earnings | 11,387,748 | 10,340,107 |
Accumulated other comprehensive loss | (609,367) | (279,251) |
Total Shareholders’ Equity | 28,337,586 | 13,526,526 |
Total Liabilities and Shareholders’ Equity | $ 29,699,583 | $ 14,885,456 |
Condensed Financial Informati_5
Condensed Financial Information of the Parent Company (Details) - Schedule of Parent Company Balance Sheets (Parentheticals) - Parent Company [Member] - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Parent Company Balance Sheets [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) - Schedule of Parent Company Statements of Operations And Comprehensive Income - Parent Company [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of Parent Company Statements of Operations And Comprehensive Income [Line Items] | ||
Revenues | $ 36,402 | |
Gross profit | 36,402 | |
Operating expenses: | ||
General and administrative | 764,111 | 378,857 |
Total operating expenses | 764,111 | 378,857 |
Operating loss | (727,709) | (378,857) |
Other income (expense) | ||
Net investment income | 238,812 | |
Interest income | 317,505 | 35 |
Other expense, net | (3,382) | (4,327) |
Total other income (loss) | 552,935 | (4,292) |
Share of income from subsidiaries | 1,222,415 | 1,798,894 |
Income before provision for income taxes | 1,047,641 | 1,415,745 |
Net income | 1,047,641 | 1,415,745 |
Comprehensive income | ||
Net income | 1,047,641 | 1,415,745 |
Comprehensive income | $ 1,047,641 | $ 1,415,745 |
Earnings per ordinary share | ||
Earnings per ordinary share basic (in Dollars per share) | $ 0.08 | $ 0.13 |
Weighted average number of ordinary shares outstanding | ||
Weighted average number of ordinary shares outstanding basic (in Shares) | 13,257,469 | 10,987,679 |
Condensed Financial Informati_7
Condensed Financial Information of the Parent Company (Details) - Schedule of Parent Company Statements of Operations And Comprehensive Income (Parentheticals) - Parent Company [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule of Parent Company Statements of Operations And Comprehensive Income [Line Items] | ||
Earnings per ordinary share diluted | $ 0.08 | $ 0.13 |
Weighted average number of ordinary shares outstanding diluted | 13,257,469 | 10,987,679 |
Condensed Financial Informati_8
Condensed Financial Information of the Parent Company (Details) - Schedule of Parent Company Statements of Cash Flows - Parent Company [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating Activities | ||
Net income | $ 1,047,641 | $ 1,415,745 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Accrued interest income from loans | (317,172) | |
Net investment gain | (1,461,227) | (1,798,894) |
Changes in operating assets and liabilities: | ||
Deferred offering cost | (130,134) | 60,000 |
Due from intercompany | (5,000) | |
Due to intercompany | 3,067 | |
Prepaid expenses and other current assets | 40,000 | |
Net cash used in operating activities | (862,825) | (283,149) |
Investing Activities | ||
Loans to third parties | (11,260,542) | |
Repayment from third-party loans | 8,830,933 | |
Purchases of held-to-maturity investments | (11,000,000) | |
Redemption of held-to-maturity investments | 7,159,018 | |
Net cash used in investing activities | (6,270,591) | |
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 | 8,009,486 | (283,149) |
Cash and equivalents at beginning of year | 226,578 | 509,727 |
Cash and equivalents at end of year | $ 8,236,064 | $ 226,578 |