HTCR HeartCore Enterprises Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): August 14, 2024

 

HEARTCORE ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		001-41272		87-0913420
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

1-2-33, Higashigotanda, Shinagawa-ku, Tokyo, Japan

(Address of principal executive offices)

 

+81-3-6409-6966

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions.

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HTCR		Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On August 14, 2024, HeartCore Enterprises, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2024. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in any website is not a part of this Current Report on Form 8-K.

 

The information included in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press release of the registrant dated August 14, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	HEARTCORE ENTERPRISES, INC.
Dated: August 14, 2024	By:	/s/ Sumitaka Yamamoto
	Name:	Sumitaka Yamamoto
	Title:	Chief Executive Officer

 

 

 

Exhibit 99.1

 

 

HeartCore Reports Second Quarter 2024 Financial Results

 

NEW YORK and TOKYO, August 14, 2024 (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 ended June 30, 2024.

 

Second Quarter 2024 and Recent Operational Highlights

 

	●	Partnered with INCUDATA Corp. to enhance corporate digital marketing strategies
	●	Announced Go IPO Client, BloomZ, began trading on the Nasdaq Stock Exchange
	●	Authorized second dividend payment of $0.02 per share
	●	Partnered with Hitachi Systems, Ltd. to offer combined package of HeartCore CMS and GRED Web Security Assessment Cloud
	●	Announced and hosted seminar on U.S. exchange listing strategies for Japanese companies with Akerman LLP and Gateway Group
	●	Sold a Go IPO Client Warrant for $9 million that will be recognized as revenue when the client becomes a publicly listed company, which is expected to occur in Fall 2024
	●	Disbursed first dividend payment of $0.02 per share on May 3, 2024
	●	Expanded partnership with Heart-Tech Health
	●	Engaged with Onside Content to develop AI-based content marketing evaluation and reporting index solution
	●	Signed 14th Go IPO Client
	●	Formed an Artificial Intelligence Software Development Division

 

Management Commentary

 

“We achieved significant strides in our Go IPO business, highlighted by the successful listing of one of our clients on the Nasdaq, which is the first Japanese IPO since September 2023 and the third IPO since the inception of this business,” said HeartCore CEO Sumitaka Kanno Yamamoto. “We are hopeful that this milestone marks the genesis of a second wave of Japanese IPOs, as the Go IPO pipeline continues to show promising developments. Currently, we have three to four clients scheduled to go public by the end of the year. These Go IPO deals are expected to be instrumental in our second-half performance, and with an optimistic outlook on the resurgence of Japanese IPOs, we anticipate that our Go IPO business will play a key role in driving profitable returns in the upcoming quarter.”

 

“With 20% organic growth this quarter, and 30% organic growth expected for 2024, our software division continues to remain a stable growth engine and reliable source of cash flow, serving as the lifeblood of HeartCore’s business operations. In addition, our strategic partnerships with Hitachi Systems and INCUDATA Corp., two prominent Japanese IT companies, will further enhance and innovate our software offerings, which will play a vital role in maintaining our 90% plus customer retention rate and separating ourselves from competitors. I am very encouraged by every arm within our software umbrella, as each one is projected to be profitable and has proven to deliver immense value to clients. The next few quarters look extremely bright for HeartCore; we look forward to sharing additional positive news around our Go IPO initiatives and other general operational updates.”

 

 

 

Second Quarter 2024 Financial Results

 

Revenues were $4.1 million compared to $5.1 million in the same period last year. The decrease was primarily due to an approximate 10% depreciation on the Japanese yen and a decrease in maintenance and supporting services, as the Company entered into a significant maintenance service contract with an important customer in 2023. Additionally, although the organic software business has grown by more than 20%, the Company’s subsidiary, Sigmaways recognized losses within its business, and one of the Company’s GO IPO clients has returned its fees after discovering that it could not go public.

 

Gross profit decreased to $0.8 million compared to $1.5 million in the same period last year. The decrease was primarily due to the aforementioned reasons above.

 

Operating expenses decreased to $2.3 million compared to $3.0 million in the same period last year. The improvement was primarily due to lower selling and general and administrative expenses.

 

Net loss was about $2.2 million or $(0.09) per diluted share compared to a net loss of $1.0 million or $(0.04) per diluted share, in the same period last year.

 

As of June 30, 2024, the Company had cash and cash equivalents of $3.8 million compared to $1.0 million on December 31, 2023.

 

Six-Months 2024 Financial Results

 

Revenues were $9.1 million compared to $13.8 million in the same period last year. The decrease was primarily due to decreased revenues from Go IPO consulting services, as the Company received warrants from two IPO consulting customers who successfully listed on the Nasdaq in the same period last year, and a decrease in maintenance and supporting services, as the Company entered into a significant maintenance service contract with an important customer in 2023. Additionally, although the organic software business has grown by more than 20%, the Company’s subsidiary, Sigmaways recognized losses within its business, and one of the Company’s GO IPO clients has returned its fees after discovering that it could not go public.

 

Gross profit was $2.8 million compared to $7.1 million in the same period last year. The decrease was primarily due to the aforementioned reasons above.

 

Operating expenses decreased to $5.0 million compared to $6.3 million in the same period last year. The decrease was primarily due to lower selling and general and administrative expenses.

 

Net loss was about $3.7 million or $(0.16) per diluted share compared to a net income of $0.8 million or $0.05 per diluted share, 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 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/.

 

 

 

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

 

		June 30,				December 31,
		2024				2023
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	3,806,349			$	1,012,479
Accounts receivable			2,440,872				2,623,682
Investments in marketable securities			435,498				642,348
Investment in equity securities			-				300,000
Prepaid expenses			3,877,454				536,865
Current portion of long-term note receivable			100,000				100,000
Due from related party			40,495				44,758
Other current assets			199,221				234,761
Total current assets			10,899,889				5,494,893
Non-current assets:
Accounts receivable, non-current			640,197				-
Property and equipment, net			640,787				763,730
Operating lease right-of-use assets			2,106,466				2,467,889
Intangible asset, net			4,196,875				4,515,625
Goodwill			3,276,441				3,276,441
Long-term investment in SAFE			350,000				-
Long-term investment in equity securities			300,000				-
Long-term investment in warrants			543,120				2,004,308
Long-term note receivable			200,000				200,000
Deferred tax assets			395,743				369,436
Security deposits			310,833				348,428
Long-term loan receivable from related party			145,274				182,946
Other non-current assets			70,309				71
Total non-current assets			13,176,045				14,128,874
			-
Total assets		$	24,075,934			$	19,623,767
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	1,757,545			$	1,757,038
Accounts payable and accrued expenses - related party			21,579				-
Accrued payroll and other employee costs			628,136				723,305
Due to related party			140				1,476
Short-term debt			-				135,937
Current portion of long-term debts			508,729				371,783
Insurance premium financing			112,488				-
Factoring liability			320,759				562,767
Operating lease liabilities, current			358,377				396,535
Finance lease liabilities, current			15,992				17,445
Income tax payables			1,142				162,689
Deferred revenue			2,207,420				2,166,175
Other current liabilities			9,261,012				216,405
Total current liabilities			15,193,319				6,511,555
Non-current liabilities:
Long-term debts			1,403,569				1,770,352
Operating lease liabilities, non-current			1,804,967				2,135,160
Finance lease liabilities, non-current			52,055				66,779
Deferred tax liabilities			1,175,125				1,264,375
Other non-current liabilities			685,364				208,732
Total non-current liabilities			5,121,080				5,445,398
Total liabilities			20,314,399				11,956,953
Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023)			-				-
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,864,144 and 20,842,690 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)			2,085				2,083
Additional paid-in capital			19,325,270				19,594,801
Accumulated deficit			(18,047,919	)			(14,763,469	)
Accumulated other comprehensive income			325,857				331,881
Total HeartCore Enterprises, Inc. shareholders’ equity			1,605,293				5,165,296
Non-controlling interests			2,156,242				2,501,518
Total shareholders’ equity			3,761,535				7,666,814
Total liabilities and shareholders’ equity		$	24,075,934			$	19,623,767

 

 

 

HeartCore Enterprises, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)

 

		For the six months ended June 30,
		2024				2023
Revenues		$	9,113,120			$	13,829,523
Cost of revenues			6,275,050				6,688,004
Gross profit			2,838,070				7,141,519
Operating expenses:
Selling expenses			399,115				1,056,704
General and administrative expenses			4,428,712				5,133,094
Research and development expenses			200,402				119,232
Total operating expenses			5,028,229				6,309,030
Income (loss) from operations			(2,190,159	)			832,489
Other income (expenses):
Changes in fair value of investments in marketable securities			(430,331	)			(229,022	)
Changes in fair value of investments in warrants			(1,237,707	)			166,107
Interest income			4,624				50,270
Interest expenses			(73,701	)			(82,454	)
Other income			134,874				124,001
Other expenses			(49,050	)			(36,754	)
Total other expenses			(1,651,291	)			(7,852	)
Income (loss) before income tax provision			(3,841,450	)			824,637
Income tax expense (benefit)			(152,330	)			39,446
Net income (loss)			(3,689,120	)			785,191
Less: net loss attributable to non-controlling interests			(404,670	)			(185,298	)
Net income (loss) attributable to HeartCore Enterprises, Inc.		$	(3,284,450	)		$	970,489
Other comprehensive income (loss):
Foreign currency translation adjustment			(13,825	)			5,499
Total comprehensive income (loss)			(3,702,945	)			790,690
Less: comprehensive loss attributable to non-controlling interests			(412,471	)			(187,258	)
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.		$	(3,290,474	)		$	977,948
Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Basic		$	(0.16	)		$	0.05
Diluted		$	(0.16	)		$	0.05
Weighted average common shares outstanding
Basic			20,859,429				19,959,333
Diluted			20,859,429				19,959,333

 

 

 

HeartCore Enterprises, Inc.

Unaudited Consolidated Statements of Cash Flows

 

		For the six months ended June 30,
		2024				2023
Cash flows from operating activities
Net income (loss)		$	(3,689,120	)		$	785,191
Adjustments to reconcile net income (loss) to net cash flows used in operating activities:
Depreciation and amortization expenses			374,946				306,097
Amortization of debt issuance costs			2,296				1,316
Non-cash lease expense			182,546				155,301
Gain on termination of lease			(469	)			-
Deferred income taxes			(153,531	)			(75,240	)
Stock-based compensation			147,754				1,094,393
Warrants received as noncash consideration			-				(4,009,335	)
Changes in fair value of investments in marketable securities			430,331				229,022
Changes in fair value of investment in warrants			1,237,707				(166,107	)
Loss on disposal of property and equipment			1,894				-
Changes in assets and liabilities:
Accounts receivable			(548,402	)			(596,312	)
Prepaid expenses			158,110				1,245
Other assets			(7,526	)			23,277
Accounts payable and accrued expenses			272,375				(8,359	)
Accounts payable and accrued expenses - related party			21,956				-
Accrued payroll and other employee costs			(278,361	)			124
Due to related party			(1,246	)			4,214
Operating lease liabilities			(183,047	)			(147,035	)
Income tax payables			(152,697	)			106,625
Deferred revenue			165,073				810,639
Other liabilities			558,667				116,382
Net cash flows used in operating activities			(1,460,744	)			(1,368,562	)
Cash flows from investing activities
Purchases of property and equipment			(4,134	)			(180,451	)
Prepayment for property and equipment			(35,209	)			-
Advance on note receivable			-				(300,000	)
Purchase of long-term investment in SAFE			(350,000	)			-
Net proceeds from sale of warrants			5,640,000
Repayment of loan provided to related party			21,166				23,715
Payment for acquisition of subsidiary, net of cash acquired			-				(724,910	)
Net cash flows provided by (used in) investing activities			5,271,823				(1,181,646	)
Cash flows from financing activities
Payments for finance leases			(8,526	)			(11,243	)
Proceeds from short-term debt			68,138				-
Repayment of short-term and long-term debts			(281,451	)			(411,923	)
Repayment of insurance premium financing			(60,201	)			(149,250	)
Net proceeds from factoring arrangement			-				328,967
Net repayment of factoring arrangement			(242,008	)			-
Payments for debt issuance costs			-				(448	)
Distribution of dividends			(417,283	)
Capital contribution from non-controlling shareholder			67,195				-
Net cash flows used in financing activities			(874,136	)			(243,897	)
Effect of exchange rate changes			(143,073	)			(144,480	)
Net change in cash and cash equivalents			2,793,870				(2,938,585	)
Cash and cash equivalents - beginning of the period			1,012,479				7,177,326
Cash and cash equivalents - end of the period		$	3,806,349			$	4,238,741
Supplemental cash flow disclosures:
Interest paid		$	74,063			$	40,083
Income taxes paid		$	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		$	172,689			$	389,035
Liabilities assumed in connection with purchase of property and equipment		$	-			$	2,199
Common shares issued for acquisition of subsidiary		$	-			$	3,150,000
Warrants converted to marketable securities		$	223,481			$	1,257,868

 

 

v3.24.2.u1

Cover	Aug. 14, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 14, 2024
Entity File Number	001-41272
Entity Registrant Name	HEARTCORE ENTERPRISES, INC.
Entity Central Index Key	0001892322
Entity Tax Identification Number	87-0913420
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1-2-33
Entity Address, Address Line Two	Higashigotanda
Entity Address, Address Line Three	Shinagawa-ku
Entity Address, City or Town	Tokyo
Entity Address, Country	JP
City Area Code	+81
Local Phone Number	3-6409-6966
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	HTCR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

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