• HeartCore Reports First Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 16 May 2022 16:05:01   America/New_York

    NEW YORK and TOKYO, May 16, 2022 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc., (“HeartCore” or “the Company”), a leading software development company, today reported financial results for the first quarter ended March 31, 2022.

    First Quarter 2022 and Recent Operational Highlights

    • Grew total number of global enterprise customers to 858.
    • Signed agreements with two private companies looking to go public on the Nasdaq Stock Market for the recently announced Go IPO consulting service.
    • Released a practical guide to the open source process mining tool Apromore titled "Starting with Open Source Process Mining. The Complete Guide to Apromore”.
    • Launched a revamped corporate digital marketing solution, Content Management System (“CMS”), a platform that streamlines website operations, allowing users to easily create, manage and modify content on websites without the need for specialized technical knowledge.
    • Announced the launch of Go IPO, an initial public offering consulting service for Japanese companies interested in listing on the Nasdaq Stock Market.
    • Closed initial public offering, for aggregate gross proceeds of $15.0 million.

    Management Commentary
    “The first quarter was an encouraging period for our company, as we closed a successful IPO, increased revenues year-over-year, and launched our newest ‘Go IPO’ offering,” said CEO Sumitaka Yamamoto. “Although we weren’t able to recognize the revenues from the two recent Go IPO consulting agreements, we expect that revenues generated from those deals, along with potentially several more in the pipeline, will be accounted for in the second quarter of 2022. Our Go IPO consulting service is gaining traction with private Japanese companies, and we anticipate that this segment of our business will continue to grow. Additionally, we expect to continue to deliver our highly reputable CMS and Digital Transformation solutions to our enterprise customers worldwide.”

    First Quarter 2022 Financial Results
    Revenues increased 8% to $2.3 million compared to $2.1 million in the same period last year. The increase was due to the increase in sales of on-premises software, offset by a decrease in software development revenues and a decrease from maintenance and support services revenues.

    Gross profit increased 74% to $1.2 million (gross margin of 54%) from $703,000 (gross margin of 33%) in the same period last year.

    Operating expenses increased to $2.8 million from $861,000 in the same period last year. The year-over-year increase was due to an increase in selling, general & administrative, and research & development expenses. Furthermore, the Company spent additional costs associated with its initial public offering and recognized the costs for its annual marketing fees in the first quarter.

    Net loss was $1.6 million, or $(0.09) loss per share, compared to a net loss of $188,000, or $(0.01) loss per share, in the same period last year. The year-over-year increase in net loss was primarily due to an increase in operating expenses.

    As of March 31, 2022, the Company had a cash balance of $13.9 million compared to $1.7 million in the same period last year.

    About HeartCore Enterprises, Inc.
    Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading software development company offering 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. Additional information about the Company’s products and services is available at www.heartcore.co.jp and https://heartcore-usa.com/.

    Forward-Looking Statements
    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 "believe," “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, 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@gatewayir.com
    (949) 574-3860

    HeartCore Enterprises, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)

      For the three months ended
    March 31,
      For the three months ended
    March 31,
     
      2022
      2021
     
           
    Revenues$2,276,001  $2,110,309  
    Cost of revenues 1,055,356   1,407,632  
    Gross profit 1,220,645   702,677  
           
    Operating expenses:      
    Selling expenses 205,918   46,341  
    General and administrative expenses 2,468,933   762,748  
    Research and development expenses 108,259   52,146  
    Total operating expenses 2,783,110   861,235  
           
    Loss from operations (1,562,465)  (158,558) 
           
    Other income (expenses):      
    Interest income 1,458   122  
    Interest expenses (11,271)  (10,828) 
    Other income 16,673   988  
    Other expenses (23,662)  (12,272) 
    Total other expenses (16,802)  (21,990) 
           
    Loss before income tax provision (1,579,267)  (180,548) 
           
    Income tax expense (benefit) (816)  7,689  
           
    Net loss (1,578,451)  (188,237) 
    Less: net loss attributable to non-controlling interest -   (4,988) 
    Net loss attributable to HeartCore Enterprises, Inc.$(1,578,451) $(183,249) 
           
    Other comprehensive income:      
    Foreign currency translation adjustment 80,053   97,522  
           
    Total comprehensive loss (1,498,398)  (90,715) 
    Less: comprehensive loss attributable to non-controlling interest -   (2,404) 
    Comprehensive loss attributable to HeartCore Enterprises, Inc.$(1,498,398) $(88,311) 
           
    Net loss per common share attributable to HeartCore Enterprises, Inc.*      
    Basic$(0.09) $(0.01) 
    Diluted$(0.09) $(0.01) 
           
    Weighted average common shares outstanding*      
    Basic 17,265,332   15,242,454  
    Diluted 17,265,332   15,242,454  
           
    *Retrospectively restated for effect of share issuances on July 16, 2021      
           

    HeartCore Enterprises, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited)

         
      March 31, December 31,
      2022 2021
         
    ASSETS
         
    Current assets:    
    Cash and cash equivalents$13,913,886 $3,136,839 
    Accounts receivable, net 1,116,254  960,964 
    Prepaid expenses 1,123,050  444,405 
    Due from related party 52,105  50,559 
    Loan receivable from employee 7,880  8,341 
    Other current assets 50,135  15,654 
    Total current assets 16,263,310  4,616,762 
         
    Non-current assets:    
    Property and equipment, net 238,787  261,414 
    Operating lease right-of-use assets 3,063,672  3,319,749 
    Deferred tax assets 275,490  297,990 
    Security deposits 262,851  278,237 
    Long-term loan receivable from related party 304,163  335,756 
    Loan receivable from employee, non-current 2,298  4,518 
    Other non-current assets 6,368  8,737 
    Total non-current assets 4,153,629  4,506,401 
         
    Total assets$20,416,939 $9,123,163 
         
    LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
         
    Current liabilities:    
    Accounts payable and accrued expenses$485,138 $646,425 
    Accrued payroll and other employee costs 239,710  255,082 
    Due to related party 185  1,110 
    Current portion of long-term debts 847,316  849,995 
    Insurance premium financing 347,258  - 
    Operating lease liabilities, current 313,737  332,277 
    Finance lease liabilities, current 29,272  37,459 
    Income tax payables 739  10,919 
    Deferred revenue 1,315,780  1,690,917 
    Mandatorily redeemable financial interest -  447,986 
    Other current liabilities 157,725  281,673 
    Total current liabilities 3,736,860  4,553,843 
         
    Non-current liabilities:    
    Long term debts 1,676,848  1,871,580 
    Operating lease liabilities, non-current 2,831,624  3,076,204 
    Finance lease liabilities, non-current 14,425  23,861 
    Other non-current liabilities 148,073  156,627 
    Total non-current liabilities 4,670,970  5,128,272 
         
    Total liabilities 8,407,830  9,682,115 
         
    Shareholders' equity (deficit):    
    Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021) -  - 
    Common shares ($0.0001 par value, 200,000,000 shares authorized; 18,915,943 and 15,819,943 shares issued; 18,915,943 and 15,546,454 shares outstanding as of March 31, 2022 and December 31, 2021, respectively) 1,891  1,554 
    Additional paid-in capital 17,416,901  3,350,779 
    Accumulated deficit (5,474,564) (3,896,113)
    Accumulated other comprehensive income (loss) 64,881  (15,172)
    Total shareholders' equity (deficit) 12,009,109  (558,952)
    Total liabilities and shareholders' equity (deficit)$20,416,939 $9,123,163 
         


    HeartCore Enterprises, Inc.
    Consolidated Statements of Cash Flows
    (Unaudited)

         
      For the three months ended March 31, For the three months ended March 31,
      2022 2021
         
    Cash flows from operating activities    
    Net loss$(1,578,451)$(188,237)
    Adjustments to reconcile net loss to net cash     
    used in operating activities:    
    Depreciation expenses 24,889  28,070 
    Amortization of debt issuance costs 866  949 
    Non-cash lease expense 75,986  87,247 
    Deferred income taxes 6,311  11,650 
    Share-based compensation 422,164  - 
    Changes in assets and liabilities:    
    Accounts receivable, net (217,638) (458,314)
    Prepaid expenses (488,970) (186,462)
    Other assets (34,896) (29,300)
    Accounts payable and accrued expenses (79,982) 319,323 
    Accrued payroll and other employee costs (27,492) (7,235)
    Operating lease liabilities (78,226) (89,749)
    Finance lease liabilities (174) (375)
    Income tax payables (10,037) (159,991)
    Deferred revenue (295,176) (233,170)
    Other liabilities (113,027) 54,782 
    Net cash flows used in operating activities (2,393,853) (850,812)
         
    Cash flows from investing activities    
    Purchases of property and equipment (18,903) (4,239)
    Advance and loan provided to related parties (25,480) (60,271)
    Repayment of loan provided to related party 9,102  - 
    Net cash flows used in investing activities (35,281) (64,510)
         
    Cash flows from financing activities    
    Proceeds from initial public offering, net of issuance cost 13,602,554  - 
    Proceeds from issuance of common shares prior to initial public offering 220,572  - 
    Payments for finance leases (14,916) (16,172)
    Proceeds from long-term debt 258,087  - 
    Repayment of long-term debts (308,121) (328,799)
    Repayment to related party (903) - 
    Repayment of insurance premium financing (41,280) - 
    Payments for debt issuance costs (1,030) (1,420)
    Payment for mandatorily redeemable financial interest (430,489) - 
    Net cash flows provided by (used in) financing activities 13,284,474  (346,391)
         
    Effects of exchange rate changes (78,293) (103,801)
         
    Net change in cash and cash equivalents 10,777,047  (1,365,514)
         
    Cash and cash equivalents - beginning of the period 3,136,839  3,058,175 
         
    Cash and cash equivalents - end of the period$13,913,886 $1,692,661 
      -  - 
    Supplemental cash flow disclosures:    
    Interest paid$13,262 $13,555 
    Income taxes paid$1,489 $6,605 
         
    Non-cash investing and financing transactions    
    Payroll withheld as repayment of loan receivable from employees$2,065 $3,679 
    Expense paid by related parties on behalf of the Company$25,480 $24,891 
    Share repurchase liability settled by issuance of common shares$16 $- 
    Deferred offering costs recognized against the proceeds from the offering$178,847 $- 
    Insurance premium financing$388,538 $- 
         

     



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