Fourth Quarter 2023 and Recent Operational Highlights
- Full year 2023 revenue of
$21.8 million , up 148% compared to full year 2022 - Strong growth from enterprise software business
- Formed Artificial Intelligence (AI) Software Development Division
- Authorized a dividend payment
- Signed 13th Go IPO contract and signed 12th Go IPO contract
- Announced the sale of Go IPO client warrant for
$9 million - Established
HeartCore Luvina Vietnam Co., Ltd. as part of its global sales expansion initiative - Signed
Toshiba Elevator and Building Systems Corporation to implement its CMS platform - Extended partnership with TOPPAN Inc. to jointly promote Dashiwake platform
- Implemented new function to enhance its flagship HeartCore CMS platform
- Announced its subsidiary Sigmaways signed binding MOU with Actiquest
- Announced its subsidiary Sigmaways launched Psyche60s VR experience
- Announced its subsidiary Sigmaways signed
Heart-Tech Health andCoherent Health - Launched Dashiwake platform into the
U.S. and Japanese markets - Awarded 8th consecutive top market share for its CMS platform
Full Year 2023 Financial Results
Revenues increased 147.7% to
Gross profit increased 140.7% to
Operating expenses increased to
Net loss was about
As of
Management Commentary
“Over the past year, our operational footprint has extended beyond
“On the Go IPO front, we have signed and engaged with 10 new clients, with additional companies in the pipeline, showcasing the robust demand among Japanese companies seeking listings on major
Full Year 2024 Strategic Priorities
- Maintain improved cost structure from synergies with the recently established HeartCore Luvina Vietnam, a high-quality and low-cost IT outsourcing provider
- Capitalize on strong organic growth opportunities within the enterprise software business through newly established Artificial Intelligence Software Division
- Expand upon the Go IPO business with the
U.S. IPO markets expected to improve in 2024 - Sustain market share as the number one CMS provider in
Japan while fueling global expansion
Full Year 2024 Outlook
In anticipation of a robust 2024,
Successful client listings through the Go IPO business have proven to be a lucrative venture, with the first quarter of 2023 witnessing two successful listings yielding over
“We find ourselves amidst a transformative phase,” added Yamamoto. “The outset of 2024 demonstrates significant promise, bolstered by a resilient balance sheet derived from our two-pronged business model and ongoing global expansion of the HeartCore brand. Our adept cash management strategies have led us to authorize our inaugural dividend payment, with plans for additional quarterly payments, contingent upon macro-economic factors and the financial standing of the Company. Building upon the growth momentum seen this past year, we eagerly anticipate sharing strong first-quarter results ahead.”
About
Headquartered in
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
HeartCore Investor Relations Contact:
HTCR@gateway-grp.com
(949) 574-3860
CONSOLIDATED BALANCE SHEETS | ||||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,012,479 | $ | 7,177,326 | ||||
Accounts receivable | 2,623,682 | 551,064 | ||||||
Investments in marketable securities | 642,348 | - | ||||||
Investment in equity securities | 300,000 | - | ||||||
Prepaid expenses | 536,865 | 538,230 | ||||||
Current portion of long-term note receivable | 100,000 | - | ||||||
Due from related party | 44,758 | 48,447 | ||||||
Other current assets | 234,761 | 220,070 | ||||||
Total current assets | 5,494,893 | 8,535,137 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 763,730 | 203,627 | ||||||
Operating lease right-of-use assets | 2,467,889 | 2,644,957 | ||||||
Intangible asset, net | 4,515,625 | - | ||||||
3,276,441 | - | |||||||
Long-term investment in warrants | 2,004,308 | - | ||||||
Long-term note receivable | 200,000 | - | ||||||
Deferred tax assets | 369,436 | 263,339 | ||||||
Security deposits | 348,428 | 244,395 | ||||||
Long-term loan receivable from related party | 182,946 | 246,472 | ||||||
Other non-current assets | 71 | 661 | ||||||
Total non-current assets | 14,128,874 | 3,603,451 | ||||||
Total assets | $ | 19,623,767 | $ | 12,138,588 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 1,757,038 | $ | 497,742 | ||||
Accrued payroll and other employee costs | 723,305 | 360,222 | ||||||
Due to related party | 1,476 | 402 | ||||||
Short-term debt | 135,937 | - | ||||||
Current portion of long-term debts | 371,783 | 697,877 | ||||||
Factoring liability | 562,767 | - | ||||||
Operating lease liabilities, current | 396,535 | 291,863 | ||||||
Finance lease liabilities, current | 17,445 | 19,294 | ||||||
Income tax payables | 162,689 | 2,747 | ||||||
Deferred revenue | 2,166,175 | 1,724,519 | ||||||
Other current liabilities | 216,405 | 53,027 | ||||||
Total current liabilities | 6,511,555 | 3,647,693 | ||||||
Non-current liabilities: | ||||||||
Long-term debts | 1,770,352 | 1,123,735 | ||||||
Operating lease liabilities, non-current | 2,135,160 | 2,421,054 | ||||||
Finance lease liabilities, non-current | 66,779 | 459 | ||||||
Deferred tax liabilities | 1,264,375 | - | ||||||
Other non-current liabilities | 208,732 | 138,018 | ||||||
Total non-current liabilities | 5,445,398 | 3,683,266 | ||||||
Total liabilities | 11,956,953 | 7,330,959 | ||||||
Shareholders’ equity: | ||||||||
Preferred shares ( | - | - | ||||||
Common shares ( | 2,083 | 1,764 | ||||||
Additional paid-in capital | 19,594,801 | 15,014,607 | ||||||
Accumulated deficit | (14,763,469 | ) | (10,573,579 | ) | ||||
Accumulated other comprehensive income | 331,881 | 364,837 | ||||||
5,165,296 | 4,807,629 | |||||||
Non-controlling interest | 2,501,518 | - | ||||||
Total shareholders’ equity | 7,666,814 | 4,807,629 | ||||||
Total liabilities and shareholders’ equity | $ | 19,623,767 | $ | 12,138,588 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||
For the Years Ended | ||||||||
2023 | 2022 | |||||||
Revenues | $ | 21,845,830 | $ | 8,818,312 | ||||
Cost of revenues | 13,778,416 | 5,467,017 | ||||||
Gross profit | 8,067,414 | 3,351,295 | ||||||
Operating expenses: | ||||||||
Selling expenses | 1,516,247 | 2,826,615 | ||||||
General and administrative expenses | 9,651,381 | 6,579,734 | ||||||
Research and development expenses | 1,019,141 | 641,025 | ||||||
Total operating expenses | 12,186,769 | 10,047,374 | ||||||
Loss from operations | (4,119,355 | ) | (6,696,079 | ) | ||||
Other income (expenses): | ||||||||
Changes in fair value of investments in marketable securities | (615,520 | ) | - | |||||
Changes in fair value of investments in warrants | (501,445 | ) | - | |||||
Interest income | 70,624 | 66,963 | ||||||
Interest expenses | (162,968 | ) | (41,800 | ) | ||||
Government grants | 76,612 | - | ||||||
Other income | 366,283 | 57,268 | ||||||
Other expenses | (124,595 | ) | (69,736 | ) | ||||
Total other income (expenses) | (891,009 | ) | 12,695 | |||||
Loss before income tax provision | (5,010,364 | ) | (6,683,384 | ) | ||||
Income tax benefit | (133,664 | ) | (5,918 | ) | ||||
Net loss | (4,876,700 | ) | (6,677,466 | ) | ||||
Less: net loss attributable to non-controlling interest | (686,810 | ) | - | |||||
Net loss attributable to | $ | (4,189,890 | ) | $ | (6,677,466 | ) | ||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | (34,628 | ) | 380,009 | |||||
Total comprehensive loss | (4,911,328 | ) | (6,297,457 | ) | ||||
Less: comprehensive loss attributable to non-controlling interest | (688,482 | ) | - | |||||
Comprehensive loss attributable to | $ | (4,222,846 | ) | $ | (6,297,457 | ) | ||
Net loss per common share attributable to | ||||||||
Basic | $ | (0.21 | ) | $ | (0.37 | ) | ||
Diluted | $ | (0.21 | ) | $ | (0.37 | ) | ||
Weighted average common shares outstanding | ||||||||
Basic | 20,404,642 | 17,922,585 | ||||||
Diluted | 20,404,642 | 17,922,585 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
For the Years Ended | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (4,876,700 | ) | $ | (6,677,466 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization expenses | 683,019 | 83,333 | ||||||
Gain on disposal of property and equipment | (4,514 | ) | - | |||||
Amortization of debt issuance costs | 3,733 | 4,546 | ||||||
Non-cash lease expense | 346,070 | 273,836 | ||||||
Loss on termination of lease | 76 | - | ||||||
Deferred income taxes | (291,596 | ) | (1,610 | ) | ||||
Stock-based compensation | 1,430,513 | 1,519,743 | ||||||
Warrants received as noncash consideration | (3,763,621 | ) | - | |||||
Changes in fair value of investments in marketable securities | 615,520 | - | ||||||
Changes in fair value of investments in warrants | 501,445 | - | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (338,312 | ) | 296,835 | |||||
Prepaid expenses | 359,310 | 62,195 | ||||||
Other assets | (133,550 | ) | (201,226 | ) | ||||
Accounts payable and accrued expenses | 532,790 | (70,525 | ) | |||||
Accrued payroll and other employee costs | 152,101 | 149,617 | ||||||
Due to related party | 1,123 | (575 | ) | |||||
Operating lease liabilities | (327,877 | ) | (283,921 | ) | ||||
Finance lease liabilities | - | (440 | ) | |||||
Income tax payables | 162,045 | (6,915 | ) | |||||
Deferred revenue | 553,130 | 239,129 | ||||||
Other liabilities | 64,086 | (195,103 | ) | |||||
Net cash flows used in operating activities | (4,331,209 | ) | (4,808,547 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (526,260 | ) | (57,071 | ) | ||||
Proceeds from disposal of property and equipment | 24,814 | - | ||||||
Advances on notes receivable | (600,000 | ) | - | |||||
Repayment of loan provided to related party | 45,404 | 44,871 | ||||||
Payment for acquisition of subsidiary, net of cash acquired | (724,910 | ) | - | |||||
Net cash flows used in investing activities | (1,780,952 | ) | (12,200 | ) | ||||
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 | ||||||
Repurchase of common shares | - | (3,500,000 | ) | |||||
Payments for finance leases | (22,422 | ) | (34,465 | ) | ||||
Proceeds from short-term and long-term debts | 710,107 | 258,087 | ||||||
Repayment of long-term debts | (711,395 | ) | (810,750 | ) | ||||
Repayment of insurance premium financing | (389,035 | ) | (388,538 | ) | ||||
Net proceeds from factoring arrangement | 562,767 | - | ||||||
Payments for debt issuance costs | (13,828 | ) | (1,630 | ) | ||||
Payment for mandatorily redeemable financial interest | - | (430,489 | ) | |||||
Net cash flows provided by financing activities | 136,194 | 8,915,341 | ||||||
Effect of exchange rate changes | (188,880 | ) | (54,107 | ) | ||||
Net change in cash and cash equivalents | (6,164,847 | ) | 4,040,487 | |||||
Cash and cash equivalents - beginning of the year | 7,177,326 | 3,136,839 | ||||||
Cash and cash equivalents - end of the year | $ | 1,012,479 | $ | 7,177,326 | ||||
Supplemental cash flow disclosure: | ||||||||
Interest paid | $ | 85,634 | $ | 41,848 | ||||
Income taxes paid | $ | 91,707 | $ | 3,013 | ||||
Non-cash investing and financing transactions: | ||||||||
Payroll withheld as repayment of loan receivable from employees | $ | - | $ | 12,034 | ||||
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 | ||||
Common shares issued for acquisition of subsidiary | $ | 3,150,000 | $ | - | ||||
Investments in warrants converted to marketable securities | $ | 1,257,868 | $ | - | ||||
Finance lease right-of-use asset obtained in exchange for finance lease liability | $ | 93,217 | $ | - | ||||
Operating lease right-of-use asset obtained in exchange for operating lease liability | $ | 317,040 | $ | - | ||||
Remeasurement of operating lease liability and right-of-use asset due to lease modification | $ | 30,186 | $ | - | ||||
Note receivable converted to investment in equity securities | $ | 300,000 | $ | - |
Source:
2024 GlobeNewswire, Inc., source