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HeartCore Reports Strong First Quarter 2023 Financial


-Company’s Q1 2023 Revenue Nearly Exceeds its Full Year 2022 Revenue
-Company’s Q1 2023 Net Income Exceeds its Full Year 2022 Net Income

NEW YORK and TOKYO, May 22, 2023 (GLOBE NEWSWIRE) — HeartCore Enterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or “the Company”), a leading software development company offering Customer Experience Management Platform (“CXM Platform”) and Digital Transformation (“DX”), reported financial results for the first quarter ended March 31, 2023.

First Quarter 2023 and Recent Operational Highlights

Grew total number of global enterprise customers to 916 as of March 31, 2023.Signed tenth Go IPO consulting service agreement with rYojbaba Inc.Integrated ChatGPT, a natural language artificial intelligence model, with HeartCore CMS to support automatic content creation for websites.Partnered with Works Applications and AIM Consulting to improve their respective digital auditing solutions through its DX suite of offerings.Signed eighth and ninth Go IPO clients by engaging Libera Gaming Operations and ICheck Co.Acquired a 51% majority stake in Sigmaways Inc., a software engineering service provider delivering IT solutions.Announced that HeartCore’s Content Management System (“CMS”) was introduced by Subaru Group to its centralized management platform for approximately 100 Subaru websites.

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Management Commentary
“The first quarter was impressive in several ways, namely behind our record revenue and net income figures,” said CEO Sumitaka Yamamoto. “Our core software division drove robust operating results stemming from newly adopted marketing techniques and customer acquisition methods that were implemented last year; these changes led to profitability within this sector of our company. We are seeing this encouraging trend continue to persist which is why we are confident our software division will have a strong 2023. Additionally, our recently acquired subsidiary, Sigmaways, has been seamlessly integrated within our core operations and we’ve begun to manifest the synergies and capitalize on all joint projects.

“A significant contributing factor to our record-breaking quarter relates to our Go IPO business. Following the completion of two IPOs this past quarter, we’ve been able to reap the benefits from the warrants we received as part of the deal consummation. As I’ve previously shared, we have just scratched the tip of the iceberg with our Go IPO business line, as we expect to benefit from the closing of another six deals for the remainder of this year, including our biggest one yet around SBC Medical Group, which will add approximately $32.4 million to our top line. With our two-pronged growth strategy going into full effect, I am very confident in our team’s ability to make 2023 the strongest year for HeartCore across several measures.”

First Quarter 2023 Financial Results
Revenues increased 284% to $8.7 million compared to $2.3 million in the same period last year. The increase was primarily due to the expansion of the Go IPO business, as a growing number of Japanese venture companies continue to express interest in going public on the Nasdaq, in addition to the acquisition of Sigmaways and its subsidiaries.

Gross profit increased 361% to $5.6 million (gross margin of 64%) from $1.2 million (gross margin of 54%) in the same period last year. The increase was primarily due to the aforementioned expansion of the Company’s Go IPO business.

Operating expenses increased to $3.3 million from $2.8 million in the same period last year. The increase was primarily due to increased selling expenses, as well as increased general and administrative expenses.

Net income was $1.8 million, or $0.10 per diluted share, compared to net loss of approximately $1.6 million or $(0.09) per diluted share last year. The increase in net income was primarily due to the aforementioned expansion of the Company’s Go IPO business in addition to relatively stable operating expenses.

As of March 31, 2023, the Company had cash and cash equivalents of $5.2 million compared to $7.2 million as of December 31, 2022.

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. Furthermore, HeartCore offers “Go IPO,” a consulting service where it assists private companies with uplisting onto the Nasdaq Stock Market. Additional information about the Company’s products and services is available at and

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, 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
(949) 574-3860

 HeartCore Enterprises, Inc.Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)              For the three months
ended March 31,   For the three months
ended March 31,  2023   2022       Revenues$8,734,150  $2,276,001 Cost of revenues 3,101,066   1,055,356 Gross profit 5,633,084   1,220,645       Operating expenses:     Selling expenses 568,642   205,918 General and administrative expenses 2,685,207   2,468,933 Research and development expenses 79,624   108,259 Total operating expenses 3,333,473   2,783,110       Income (loss) from operations 2,299,611   (1,562,465)      Other income (expenses):     Changes in fair value of investments in warrants 193,365   – Interest income 31,605   1,458 Interest expenses (39,840)  (11,271)Other income 14,201   16,673 Other expenses (29,457)  (23,662)Total other income (expenses) 169,874   (16,802)      Income (loss) before income tax provision 2,469,485   (1,579,267)      Income tax expense (benefit) 661,448   (816)      Net income (loss) 1,808,037   (1,578,451)Less: net loss attributable to non-controlling interest (74,252)  – Net income (loss) attributable to HeartCore Enterprises, Inc.$1,882,289  $(1,578,451)      Other comprehensive income (loss):     Foreign currency translation adjustment (25,034)  80,053       Total comprehensive income (loss) 1,783,003   (1,498,398)Less: comprehensive loss attributable to non-controlling interest (76,542)  – Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.$1,859,545  $(1,498,398)      Net income (loss) per common share attributable to HeartCore Enterprises, Inc.       Basic$0.10  $(0.09)    Diluted$0.10  $(0.09)      Weighted average common shares outstanding         Basic 19,066,160   17,265,332     Diluted 19,066,160   17,265,332                   HeartCore Enterprises, Inc.Condensed Consolidated Balance Sheets       March 31, December 31,  2023  2022   (Unaudited)  ASSETS     Current assets:    Cash and cash equivalents$5,209,915 $7,177,326 Accounts receivable 2,380,128  551,064 Short-term investment in warrants 437,812  – Prepaid expenses 919,916  538,230 Due from related party 47,536  48,447 Other current assets 31,534  220,070 Total current assets 9,026,841  8,535,137      Non-current assets:    Property and equipment, net 214,566  203,627 Operating lease right-of-use assets 2,549,834  2,644,957 Intangible asset, net 4,993,750  – Goodwill 3,276,441  – Long-term investment in warrants 3,764,888  – Deferred tax assets 245,997  263,339 Security deposits 367,981  244,395 Long-term loan receivable from related party 229,955  246,472 Other non-current assets 75  661 Total non-current assets 15,643,487  3,603,451      Total assets$24,670,328 $12,138,588      LIABILITIES AND SHAREHOLDERS’ EQUITY     Current liabilities:    Accounts payable and accrued expenses$1,160,309 $497,742 Accrued payroll and other employee costs 416,779  360,222 Due to related party 2,923  402 Current portion of long-term debts 640,534  697,877 Insurance premium financing 352,518  – Factoring liability 173,582  – Operating lease liabilities, current 288,081  291,863 Finance lease liabilities, current 13,663  19,294 Income tax payables 681,830  2,747 Deferred revenue 1,530,472  1,724,519 Other current liabilities 225,167  53,027 Total current liabilities 5,485,858  3,647,693      Non-current liabilities:    Long term debts 1,490,664  1,123,735 Operating lease liabilities, non-current 2,314,160  2,421,054 Finance lease liabilities, non-current –  459 Deferred tax liabilities 1,398,250  – Other non-current liabilities 135,536  138,018 Total non-current liabilities 5,338,610  3,683,266      Total liabilities 10,824,468  7,330,959      Shareholders’ equity:    Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively) –  – Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,842,690 and 17,649,886 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively) 2,083  1,764 Additional paid-in capital 19,079,516  15,014,607 Accumulated deficit (8,691,290) (10,573,579)Accumulated other comprehensive income 342,093  364,837 Total HeartCore Enterprises, Inc. shareholders’ equity 10,732,402  4,807,629 Non-controlling interest 3,113,458  – Total shareholders’ equity 13,845,860  4,807,629      Total liabilities and shareholders’ equity$24,670,328 $12,138,588             HeartCore Enterprises, Inc.Unaudited Condensed Consolidated Statements of Cash Flows       For the three months ended March 31, For the three months ended March 31,  2023  2022      Cash flows from operating activities    Net income (loss)$1,808,037 $(1,578,451)Adjustments to reconcile net income (loss) to net cash     used in operating activities:    Depreciation and amortization expenses 123,312  24,889 Amortization of debt issuance costs 758  866 Non-cash lease expense 76,017  75,986 Deferred income taxes (17,284) 6,311 Stock-based compensation 915,228  422,164 Warrants received as noncash consideration (4,009,335) – Changes in fair value of investments in warrants (193,365) – Changes in assets and liabilities:    Accounts receivable (66,833) (217,638)Prepaid expenses (45) (488,970)Other assets 78,241  (34,896)Accounts payable and accrued expenses (94,363) (79,982)Accrued payroll and other employee costs (178,733) (27,492)Due to related party 2,544  – Operating lease liabilities (73,147) (78,226)Finance lease liabilities (53) (174)Income tax payables 678,725  (10,037)Deferred revenue (167,873) (295,176)Other liabilities 70,110  (113,027)Net cash flows used in operating activities (1,048,059) (2,393,853)     Cash flows from investing activities    Purchases of property and equipment (9,409) (18,903)Advance and loan provided to related party –  (25,480)Repayment of loan provided to related party 11,955  9,102 Payment for acquisition of subsidiary, net of cash acquired (724,910) – Net cash flows used in investing activities (722,364) (35,281)     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 (5,658) (14,916)Proceeds from long-term debt –  258,087 Repayment of long-term debts (265,255) (308,121)Repayment of insurance premium financing (36,517) (41,280)Repayment to related party –  (903)Net proceeds from factoring arrangement 173,582  – Payments for debt issuance costs (448) (1,030)Payment for mandatorily redeemable financial interest –  (430,489)Net cash flows provided by (used in) financing activities (134,296) 13,284,474      Effect of exchange rate changes (62,692) (78,293)     Net change in cash and cash equivalents (1,967,411) 10,777,047      Cash and cash equivalents – beginning of the period 7,177,326  3,136,839      Cash and cash equivalents – end of the period$5,209,915 $13,913,886      Supplemental cash flow disclosures:    Interest paid$16,968 $13,262 Income taxes paid$- $1,489      Non-cash investing and financing transactions    Payroll withheld as repayment of loan receivable from employees$- $2,065 Expense paid by related party on behalf of the Company$- $25,480 Share repurchase liability settled by issuance of common shares$- $16 Deferred offering costs recognized against the proceeds from the offering$- $178,847 Insurance premium financing$389,035 $388,538 Liabilities assumed in connection with purchase of property and equipment$6,288 $- Common shares issued for acquisition of subsidiary$3,150,000 $-           

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