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 ended March 31,			For the three months 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 ended March 31,			For the three months 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

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