HeartCore Reports Financial Results for Second Quarter and Six Months Ended June 30, 2025

NEW YORK and TOKYO, Aug. 13, 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 second quarter and six months ended June 30, 2025. Second Quarter 2025 and Recent Operational & Financial Highlights As of June 30, 2025, HeartCore’s total shareholders’ equity totaled $3.5 million. The Company believes that it is now in compliance with the $2.5 million minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b) for continued listing on the Nasdaq Capital Market.Partnered with Silver Egg Technology CO., Ltd. to integrate new recommendation engine into its CMS platform.Signed 15th and 16th Go IPO Contract.Announced strategic partnership with NEC Solutions Innovators, Ltd. to enhance CMS implementation process. Management Commentary“I am pleased to report a strong second quarter, marked by our return to profitability,” said HeartCore CEO Sumitaka Kanno. “These results reflect the resilience of our software business, which was bolstered by a significant deal with a major infrastructure company that was closed during the quarter. Our second quarter results were particularly encouraging, especially during a period without any Go IPO client listings. We signed our 15th and 16th Go IPO contract wins late in the second quarter and early in the third quarter, but more notably, we expect one of our existing Go IPO clients to successfully list on the Nasdaq Stock Market in the near-term. This is expected to further strengthen our results in the third quarter. In the broader IPO market, there were several other APAC-based companies outside of our pipeline that successfully listed in 2025, which we view as a positive indicator for our Go IPO business. Looking ahead, we are excited to host our Go IPO Korea event next month, which we hope will mark the beginning of a stronger presence in the Korean market. With encouraging signs from the general IPO landscape, we remain focused on expanding our reach to APAC companies seeking to list on U.S. exchanges, while continuing to guide our existing clients throughout the listing process and ultimately, across the finish line as a publicly traded company.” Second Quarter 2025 Financial ResultsRevenues increased by 16.7% to $4.7 million, compared to $4.1 million in the same period last year. The increase was primarily due to (i) the increased sale of on-premise software mainly from multiple large orders of CMS licenses in the second quarter of 2025, compared to the same period last year, (ii) increased software-as-a-service (“SaaS”) revenue due to the Company putting more efforts into expanding and promoting its traditional SaaS business in Japan, and (iii) obtaining more orders, partially offset by (iv) a decrease in customized software development and services revenue in connection with the intense competition of the software market in the U.S., and a decrease in software development and other services, mainly as the Company shifted its business strategies to focus more on development and expansion its on-premise software revenue and SaaS revenue. Gross profit increased 175.2% to $2.2 million, compared to $0.8 million in the same period last year. The increase was primarily due to (i) an increase in gross profit from sales of on-premise software as the sale increased dramatically while there was not much change in the corresponding costs as the product was developed independently and fixed costs which were not proportional to sales, (ii) an increase in gross profit from customized software development and services as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors, resulting in costs that decreased more dramatically than revenue did, and (iii) an increase in gross profit from the Company’s IPO consulting services. Operating expenses decreased to $2.1 million, compared to $2.3 million in the same period last year. The decrease was primarily due to a decrease in general and administrative expenses. Net income was $1.1 million, compared to a net loss of $2.2 million in the same period last year, as a result of the aforementioned increases in revenue and gross profit. Adjusted EBITDA was $0.1 million for the second quarter of 2025, compared to $(1.2) million in the same period last year. As of June 30, 2025, the Company had cash and cash equivalents of $2.3 million, compared to $2.1 million on December 31, 2024. Six Months Ended June 30, 2025 Financial ResultsRevenues were $8.3 million, compared to $9.1 million in the same period last year. The decrease was primarily due to (i) a decrease in customized software development and services revenue in connection with a slowdown in Sigmaways revenue, driven by intensified competition in the U.S. software market, (ii) decreased Go IPO consulting services revenue mainly due to fewer ongoing IPO consulting projects, (iii) decreased software development and other services revenue mainly as the Company shifted its business strategies to focus more on development and expansion of its on-premise software and SaaS revenue in the second quarter of 2025, resulting in fewer resources and efforts dedicated to software development and other services, partially offset by (iv) an increase in on-premise software revenue due to the Company obtaining several large CMS license orders in the current period. Gross profit increased 16.9% to $3.3 million, compared to $2.8 million in the same period last year. The increase was primarily due to (i) an increase in gross profit from the sale of on-premise software, as sales rose significantly while related costs remained largely unchanged since the product was independently developed with fixed costs not proportional to sales, and (ii) increased gross profit from customized software development and services, as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors in the current period. Operating expenses decreased to $4.4 million, compared to $5.0 million in the same period last year. The improvement was primarily due to a decrease in general and administrative expenses. Net loss improved to $2.1 million, compared to a loss of $3.7 million in the same period last year, as a result of the aforementioned increase in gross profit during the period and increase in revenue in the second quarter. Adjusted EBITDA was $(1.1) million for the six months ended June 30, 2025, compared to $(1.6) million in the same period last year. 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 IPOSM 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 DisclaimerThis 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, changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income, and interest expenses. 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 accounting principles generally accepted in the U.S. (“GAAP”). Management believes that 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. For the three months ended June 30,Item20252024Net loss$1.1 million-$2.2 million(+) Depreciation and amortization expense$0.0 million$0.2 million(+) Changes in fair value of investments in marketable securities-$0.9 million$0.2 million(+) Changes in fair value of investment in warrants-$0.1 million$0.6 million(-) Interest income-$0.0 million-$0.0 million(+) Interest expenses$0.0 million$0.0 millionAdjusted EBITDA$0.1 million-$1.2 million For the six months ended June 30,Item20252024Net loss-$2.1 million-$3.7 million(+) Depreciation and amortization expense$0.0 million$0.4 million(+) Changes in fair value of investments in marketable securities$0.9 million$0.4 million(+) Changes in fair value of investment in warrants-$0.1 million$1.2 million(-) Interest income-$0.0 million-$0.0 million(+) Interest expenses$0.1 million$0.1 millionAdjusted EBITDA-$1.1 million-$1.6 million Forward-Looking StatementsThis 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 YiHTCR@gateway-grp.com(949) 574-3860 HeartCore Enterprises, Inc. Consolidated Balance Sheets June 30, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents$2,347,622 $2,121,089 Accounts receivable 3,000,337 1,950,050 Investments in marketable securities 2,495,016 4,495,703 Prepaid expenses 503,171 458,839 Current portion of long-term note receivable 100,000 100,000 Due from related party 44,148 40,139 Deferred offering costs 250,000 - Other current assets 186,944 251,545 Total current assets 8,927,238 9,417,365 Non-current assets: Accounts receivable, non-current 1,058,539 752,930 Property and equipment, net 442,475 584,854 Operating lease right-of-use assets 1,853,466 1,936,097 Long-term investment in warrants 650,446 577,786 Long-term note receivable 100,000 100,000 Deferred tax assets 138,263 152,300 Security deposits 225,649 307,996 Long-term loan receivable from related party 114,230 123,928 Other non-current assets 15,014 11,778 Total non-current assets 4,598,082 4,547,669 Total assets$13,525,320 $13,965,034 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses$1,758,084 $2,039,323 Accounts payable and accrued expenses - related party 22,924 47,199 Accrued payroll and other employee costs 752,787 675,502 Due to related parties 590 932 Short-term debt - related party 75,000 75,000 Current portion of long-term debts 382,494 401,255 Insurance premium financing 90,869 16,626 Factoring liability 226,212 172,394 Operating lease liabilities, current 290,886 371,951 Finance lease liabilities, current 17,666 15,956 Income tax payables 716,263 822,014 Deferred revenue 1,702,068 1,876,490 Derivative liability 236,141 - Other current liabilities 821,858 907,080 Total current liabilities 7,093,842 7,421,722 Non-current liabilities: Long-term debts 1,097,263 1,238,813 Operating lease liabilities, non-current 1,613,378 1,614,996 Finance lease liabilities, non-current 39,085 43,593 Asset retirement obligations 122,735 183,895 Total non-current liabilities 2,872,461 3,081,297 Total liabilities 9,966,303 10,503,019 Shareholders' equity: Preferred shares, $0.0001 par value, 20,000,000 shares authorized; Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of June 30, 2025 and December 31, 2024, respectively; aggregate liquidation preference of $2,200,611 and nil as of June 30, 2025 and December 31, 2024, respectively - - Common shares, $0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 2,331 2,193 Subscription receivable - (103,942) Additional paid-in capital 22,676,912 20,656,153 Accumulated deficit (18,231,933) (16,244,843) Accumulated other comprehensive income 393,124 343,936 Total HeartCore Enterprises, Inc. shareholders' equity 4,840,434 4,653,497 Non-controlling interests (1,281,417) (1,191,482) Total shareholders' equity 3,559,017 3,462,015 Total liabilities and shareholders' equity$13,525,320 $13,965,034 HeartCore Enterprises, Inc. Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) For the six months ended June 30, 2025 2024 Revenues$8,331,272 $9,113,120 Cost of revenues 5,013,393 6,275,050 Gross profit 3,317,879 2,838,070 Operating expenses: Selling expenses 676,782 399,115 General and administrative expenses 3,492,415 4,428,712 Research and development expenses 285,374 200,402 Total operating expenses 4,454,571 5,028,229 Income (loss) from operations (1,136,692) (2,190,159) Other income (expenses): Changes in fair value of investments in marketable securities (928,955) (430,331) Changes in fair value of investment in warrants 72,660 (1,237,707) Interest income 4,861 4,624 Interest expenses (61,798) (73,701) Other income 56,920 134,874 Other expenses (29,797) (49,050) Total other income (expenses) (886,109) (1,651,291) Income (loss) before income tax expense (benefit) (2,022,801) (3,841,450) Income tax expense (benefit) 53,074 (152,330) Net income (loss) (2,075,875) (3,689,120) Less: net loss attributable to non-controlling interests (88,785) (404,670) Net income (loss) attributable to HeartCore Enterprises, Inc. (1,987,090) (3,284,450) Dividends accrued on Series A convertible preferred shares (611) - Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders$(1,987,701) $(3,284,450) Other comprehensive income (loss): Foreign currency translation adjustment 48,038 (13,825) Total comprehensive income (loss) (2,027,837) (3,702,945) Less: comprehensive loss attributable to non-controlling interests (89,935) (412,471) Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.$(1,937,902) $(3,290,474) Net income (loss) per common share attributable to HeartCore Enterprises, Inc. Basic$(0.09) $(0.16) Diluted$(0.09) $(0.16) Weighted average common shares outstanding Basic 22,072,324 20,859,429 Diluted 22,072,324 20,859,429 HeartCore Enterprises, Inc. Unaudited Consolidated Statements of Cash Flows For the six months ended June 30, 2025 2024 Cash flows from operating activities: Net loss$(2,075,875)$(3,689,120) Adjustments to reconcile net loss to net cash flows used in operating activities: Depreciation and amortization expenses 42,437 374,946 Loss on disposal of property and equipment 117,305 1,894 Amortization of debt issuance costs 2,194 2,296 Non-cash lease expense 163,354 182,546 Gain on termination of lease (9,059) (469) Deferred income taxes 28,008 (153,531) Stock-based compensation 60,204 147,754 Changes in fair value of investments in marketable securities 928,955 430,331 Changes in fair value of investment in warrants (72,660) 1,237,707 Gain on settlement of asset retirement obligations (45,873) - Changes in assets and liabilities: Accounts receivable (1,145,166) (823,402) Prepaid expenses 126,001 158,110 Other assets 182,063 (7,526) Accounts payable and accrued expenses (320,566) 272,375 Accounts payable and accrued expenses - related party (23,386) 21,956 Accrued payroll and other employee costs 31,589 (278,361) Due to related parties (370) (1,246) Operating lease liabilities (159,030) (183,047) Income tax payables (108,943) (152,697) Deferred revenue (282,704) 165,073 Other liabilities (113,370) 558,667 Net cash flows used in operating activities (2,674,892) (1,735,744) Cash flows from investing activities: Purchases of property and equipment (1,235) (4,134) Prepayment for property and equipment - (35,209) Purchase of investment in SAFE - (75,000) Net proceeds from sale of warrants - 5,640,000 Proceeds from sale of marketable securities 1,071,732 - Repayment of loan provided to related party 21,139 21,166 Net cash flows provided by investing activities 1,091,636 5,546,823 Cash flows from financing activities: Payments for finance leases (8,375) (8,526) Proceeds from short-term debt 134,689 68,138 Repayment of short-term and long-term debts (395,495) (281,451) Repayment of insurance premium financing (65,257) (60,201) Net proceeds from factoring arrangement 53,818 - Net repayment of factoring arrangement - (242,008) Capital contribution from non-controlling shareholder - 67,195 Distribution of dividends - (417,283) Proceeds from issuance of common shares 30,445 - Proceeds from collection of subscription receivable 103,942 - Proceeds from exercise of stock options 117,000 - Proceeds from issuance of Series A convertible preferred shares and common shares related to securities purchase agreement, net of share issuance costs 1,800,000 - Net cash flows provided by (used in) financing activities 1,770,767 (874,136) Effect of exchange rate changes 39,022 (143,073) Net change in cash and cash equivalents 226,533 2,793,870 Cash and cash equivalents - beginning of the period 2,121,089 1,012,479 Cash and cash equivalents - end of the period$2,347,622 $3,806,349 - Supplemental cash flow disclosures: Interest paid$63,320 $74,063 Income taxes paid$131,118 $117,524 Non-cash investing and financing transactions: Operating lease right-of-use assets obtained in exchange for operating lease liabilities$23,495 $125,735 Insurance premium financing$139,500 $172,689 Warrants converted to marketable securities$- $223,481 Issuance of common shares related to equity purchase agreement$250,000 $- Dividends accrued on Series A convertible preferred shares$611 $-

HeartCore Reports Financial Results for Second Quarter and Six Months Ended June 30, 2025

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