HeartCore Reports First Quarter 2025 Financial Results
NEW YORK and TOKYO, May 15, 2025 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc. (Nasdaq: HTCR) ("HeartCore" or the "Company"), a leading enterprise software and consulting services company based in Tokyo, reported financial results for the first quarter ended March 31, 2025.
First Quarter 2025 and Recent Operational & Financial Highlights
-- Announced strategic partnership with NEC Solutions Innovators, Ltd. to
enhance CMS implementation process
-- Established new business development team aimed at strengthening customer
success across HeartCore's CMS business
-- Announced plans to expand the Go IPO consulting business into South
Korea. The Company adjusted its scheduled South Korea IPO seminar event
to September 2025
Management Commentary
HeartCore CEO Sumitaka Kanno commented: "We continued to make meaningful strategic advancements across our software business this quarter, the cornerstone of HeartCore Enterprises. Building on the foundational improvements implemented last year, we launched a dedicated business development team this past quarter focused on strengthening customer success initiatives to better serve our CMS customers and maintain our strong retention rate. Our subsidiary Sigmaways has also made encouraging progress in reducing costs and has narrowed its losses compared to the same period last year. We will continue to closely monitor and prudently manage costs across Sigmaways' operations. The deficit on our balance sheet this quarter does not directly reflect the performance of our core business but is rather attributable to the SBC Medical Group shares we hold. The subsequent decline in their stock price has ultimately reduced the value of the assets held by HeartCore. Nevertheless, these shares continue to offer additional liquidity options if needed. Furthermore, a few of our Go IPO clients are expected to begin trading in 2025, which will in turn provide us with additional equity in these companies following their listings. With our upcoming South Korea IPO seminar scheduled for September, we are preparing our efforts to expand our footprint beyond Japan into new APAC regions. We look forward to announcing incremental updates across both businesses throughout the rest of the year."
First Quarter 2025 Financial Results
Revenues were $3.6 million compared to $5.0 million in the same period last year. The decrease was primarily due to decreased on-premise software revenue, decreased customized software development and services revenue attributed to the business slowdown of Sigmaways, and decreased Go IPO consulting services revenue as no new IPO consulting orders were entered this quarter.
Gross profit was $1.1 million compared to $2.0 million in the same period last year. The decrease was primarily due to a decrease of gross profit from on-premises software and Go IPO consulting services.
Operating expenses decreased 14% to $2.3 million, compared to $2.7 million in the same period last year. The improvement was primarily due to a decrease in general and administrative expenses.
Net loss was $3.1 million, compared to $1.5 million in the same period last year, as a result of the aforementioned decrease in revenue and gross profit for the quarter.
Adjusted EBITDA for the year totaled a loss of $1.3 million, compared to a loss of $0.3 million in the same period last year.
As of March 31, 2025, the Company had cash and cash equivalents of $0.7 million, compared to $2.1 million on December 31, 2024.
About HeartCore Enterprises, Inc.
Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore's customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore's GO IPO$(SM)$ consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company's products and services is available at and https://heartcore-enterprises.com/.
Non-GAAP Financial Measures Disclaimer
This document includes references to adjusted EBITDA, which is a non-GAAP financial measure. For the purposes of this presentation, adjusted EBITDA is calculated by adjusting net loss to exclude depreciation and amortization, impairment of intangible asset, and impairment of goodwill.
This measure is presented as supplemental information and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.
Management believes that this adjusted EBITDA provides useful information to investors by highlighting the company's core operational performance, excluding non-cash and non-recurring items. However, non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
Item FY25 Q1 FY24 Q1
------------------------------------------------ ------------- -------------
Net Loss -$3.1 million -$1.5 million
------------------------------------------------ ------------- -------------
(+) Depreciation and amortization expense $0.0 million $0.2 million
------------------------------------------------ ------------- -------------
(+) Changes in fair value of investments in
marketable securities $1.8 million $0.2 million
------------------------------------------------ ------------- -------------
(+) Changes in fair value of investment in
warrants $0.1 million $0.7 million
------------------------------------------------ ------------- -------------
(+) Interest income $0.0 million $0.0 million
------------------------------------------------ ------------- -------------
(+) Interest expenses $0.0 million $0.0 million
------------------------------------------------ ------------- -------------
Adjusted EBITDA -$1.3 million -$0.3 million
------------------------------------------------ ------------- -------------
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, or the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "believed," "intend," "expect," "anticipate," "plan," "potential," "continue," or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks, and uncertainties are discussed in HeartCore's filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond HeartCore's control which could, and likely will materially affect actual results, and levels of activity, performance, or achievements. Any forward-looking statement reflects HeartCore's current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. HeartCore assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein.
HeartCore Investor Relations Contact:
Gateway Group, Inc.
Matt Glover and John Yi
HTCR@gateway-grp.com
(949) 574-3860
HeartCore Enterprises, Inc.
Consolidated Balance Sheets
March 31, December 31,
2025 2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 738,984 $ 2,121,089
Accounts receivable 2,114,655 1,950,050
Investments in marketable
securities 2,251,276 4,495,703
Prepaid expenses 537,970 458,839
Current portion of long-term note
receivable 100,000 100,000
Due from related party 42,453 40,139
Other current assets 278,961 251,545
Total current assets 6,064,299 9,417,365
Non-current assets:
Accounts receivable, non-current 694,302 752,930
Property and equipment, net 438,243 584,854
Operating lease right-of-use assets 1,830,486 1,936,097
Long-term investment in warrants 526,165 577,786
Long-term note receivable 100,000 100,000
Deferred tax assets 115,802 152,300
Security deposits 325,441 307,996
Long-term loan receivable from
related party 120,459 123,928
Other non-current assets 7,810 11,778
Total non-current assets 4,158,708 4,547,669
Total assets $ 10,223,007 $ 13,965,034
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 1,839,759 $ 2,039,323
Accounts payable and accrued
expenses - related party 22,814 47,199
Accrued payroll and other employee
costs 517,436 675,502
Due to related parties 239 932
Short-term debt 134,689 -
Short-term debt - related party 75,000 75,000
Current portion of long-term debts 367,871 401,255
Insurance premium financing 127,567 16,626
Factoring liability 127,053 172,394
Operating lease liabilities,
current 279,840 371,951
Finance lease liabilities, current 16,932 15,956
Income tax payables 739,450 822,014
Deferred revenue 1,437,248 1,876,490
Other current liabilities 1,009,373 907,080
Total current liabilities 6,695,271 7,421,722
Non-current liabilities:
Long-term debts 1,166,678 1,238,813
Operating lease liabilities,
non-current 1,600,977 1,614,996
Finance lease liabilities,
non-current 41,854 43,593
Other non-current liabilities 117,940 183,895
Total non-current liabilities 2,927,449 3,081,297
----------- -----------
Total liabilities 9,622,720 10,503,019
----------- -----------
Shareholders' equity:
Preferred shares ($0.0001 par
value, 20,000,000 shares
authorized, no shares issued and
outstanding as of March 31, 2025
and December 31, 2024) - -
Common shares ($0.0001 par value,
200,000,000 shares authorized;
22,075,333 and 21,937,987 shares
issued and outstanding as of March
31, 2025 and December 31, 2024,
respectively) 2,207 2,193
Subscription receivable - (103,942)
Additional paid-in capital 20,835,864 20,656,153
Accumulated deficit (19,331,835) (16,244,843)
Accumulated other comprehensive
income 334,685 343,936
Total HeartCore Enterprises, Inc.
shareholders' equity 1,840,921 4,653,497
Non-controlling interests (1,240,634) (1,191,482)
Total shareholders' equity 600,287 3,462,015
----------- -----------
Total liabilities and
shareholders' equity $ 10,223,007 $ 13,965,034
=========== ===========
HeartCore Enterprises, Inc.
Unaudited Consolidated Statements of Operations and
Comprehensive Loss
For the three months For the three months
ended March 31, ended March 31,
2025 2024
---------------------- ----------------------
Revenues $ 3,587,026 $ 5,046,732
Cost of revenues 2,486,742 3,014,543
----------------- --- ----------------- ---
Gross profit 1,100,284 2,032,189
Operating
expenses:
Selling
expenses 291,160 219,707
General and
administrative
expenses 1,929,388 2,406,303
Research and
development
expenses 123,893 89,134
Total
operating
expenses 2,344,441 2,715,144
----------------- --- ----------------- ---
Loss from
operations (1,244,157) (682,955)
----------------- -----------------
Other income
(expenses):
Changes in fair
value of
investments in
marketable
securities (1,781,664) (234,082)
Changes in fair
value of
investment in
warrants (51,621) (678,887)
Interest income 3,020 2,594
Interest
expenses (29,133) (36,661)
Other income 35,359 97,016
Other expenses (12,549) (25,194)
----------------- -----------------
Total other
expenses (1,836,588) (875,214)
Loss before
income tax
expense
(benefit) (3,080,745) (1,558,169)
Income tax
expense
(benefit) 56,636 (80,167)
----------------- --- -----------------
Net loss (3,137,381) (1,478,002)
Less: net loss
attributable to
non-controlling
interests (50,389) (144,652)
----------------- -----------------
Net loss
attributable to
HeartCore
Enterprises,
Inc. $ (3,086,992) $ (1,333,350)
================= =================
Other
comprehensive
income (loss):
Foreign
currency
translation
adjustment (8,014) 10,295
----------------- ----------------- ---
Total
comprehensive
loss (3,145,395) (1,467,707)
Less:
comprehensive
loss
attributable to
non-controlling
interests (49,152) (149,563)
----------------- -----------------
Comprehensive
loss
attributable to
HeartCore
Enterprises,
Inc. $ (3,096,243) $ (1,318,144)
================= =================
Net loss per
common share
attributable to
HeartCore
Enterprises, Inc.
Basic $ (0.14) $ (0.06)
================= =================
Diluted $ (0.14) $ (0.06)
================= =================
Weighted average
common shares
outstanding
Basic 22,054,029 20,854,714
================= === ================= ===
Diluted 22,054,029 20,854,714
================= === ================= ===
HeartCore Enterprises, Inc.
Unaudited Consolidated Statements of Cash Flows
For the three months For the three months
ended March 31, ended March 31,
2025 2024
---------------------- -----------------------
Cash flows from
operating
activities:
Net loss $ (3,137,381) $ (1,478,002)
Adjustments to
reconcile net loss
to net cash flows
used in operating
activities:
Depreciation and
amortization
expenses 26,907 188,085
Loss on disposal
of property and
equipment 117,305 -
Amortization of
debt issuance
costs 1,222 1,173
Non-cash lease
expense 90,508 93,133
Gain on
termination of
lease (9,059) (469)
Deferred income
taxes 43,932 (80,780)
Stock-based
compensation 32,280 91,712
Changes in fair
value of
investments in
marketable
securities 1,781,664 234,082
Changes in fair
value of
investment in
warrants 51,621 678,887
Gain on
settlement of
asset
retirement
obligations (45,873) -
Changes in assets
and liabilities:
Accounts
receivable (14,678) (523,110)
Prepaid expenses 78,792 102,028
Other assets (13,759) (18,618)
Accounts payable
and accrued
expenses (219,830) 295,799
Accounts payable
and accrued
expenses -
related party (24,224) -
Accrued payroll
and other
employee costs (178,339) (149,603)
Due to related
parties (702) (1,161)
Operating lease
liabilities (84,948) (90,035)
Income tax
payables (84,284) (2,387)
Deferred revenue (496,079) (300,011)
Other
liabilities 84,134 60,658
Net cash flows
used in operating
activities (2,000,791) (898,619)
Cash flows from
investing
activities:
Net proceeds from
sale of warrants - 1,640,000
Proceeds from sale
of marketable
securities 462,763 -
Repayment of loan
provided to
related party 10,298 10,814
Net cash flows
provided by
investing
activities 473,061 1,650,814
Cash flows from
financing
activities:
Payments for
finance leases (4,071) (4,474)
Proceeds from
short-term debt 134,689 68,138
Repayment of
short-term and
long-term debts (165,165) (207,486)
Repayment of
insurance premium
financing (28,559) (14,772)
Net repayment of
factoring
arrangement (45,341) (383,353)
Capital
contribution from
non-controlling
shareholder - 67,195
Proceeds from
issuance of
common shares 30,445 -
Proceeds from
collection of
subscription
receivable 103,942 -
Proceeds from
exercise of stock
options 117,000 -
Net cash flows
provide by (used
in) financing
activities 142,940 (474,752)
Effect of exchange
rate changes 2,685 (70,671)
Net change in cash
and cash
equivalents (1,382,105) 206,772
Cash and cash
equivalents -
beginning of the
period 2,121,089 1,012,479
Cash and cash
equivalents - end
of the period $ 738,984 $ 1,219,251
================= === ================== ===
-
Supplemental cash
flow disclosures:
Interest paid $ 22,857 $ 37,098
================= === ================== ===
Income taxes paid $ 93,586 $ 117,524
================= === ================== ===
Non-cash investing
and financing
transactions
Operating lease
right-of-use
assets obtained
in exchange for
operating lease
liabilities $ - $ 125,735
================= === ================== ===
Insurance premium
financing $ 139,500 $ 172,689
================= === ================== ===
(END) Dow Jones Newswires
May 15, 2025 08:30 ET (12:30 GMT)
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