HeartCore Reports First Quarter 2022 Results
May 16 2022 - 4:05PM
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 ResultsRevenues
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 StatementsAll 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 YiHTCR@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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