NEW YORK and TOKYO, Sept. 25, 2025 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or the “Company”), a leading enterprise software and IPO consulting services company based in Tokyo, announced the upcoming launch of HeartCore CMS Version 13, a major update that combines intuitive usability with powerful AI-driven marketing capabilities. The HeartCore CMS Version 13, scheduled to launch on September 30, 2025, focuses on two key priorities: Simplified User Experience – A redesigne ...

Momentum investing is essentially an exception to the idea of "buying low and selling high." Investors following this style of investing are usually not interested in betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time.Who doesn't like betting on fast-moving trending stocks? But determining the right entry point isn't easy. Often, these stocks lose momentum once their valuation moves ahead ...

Core Insights - HeartCore Enterprises, Inc. has regained compliance with Nasdaq's minimum stockholders' equity requirement of $2,500,000 as of August 19, 2025 [1][2] - The company's reported stockholders' equity as of June 30, 2025, was $3,559,017, confirming its compliance status [2] Company Overview - HeartCore is headquartered in Tokyo, Japan, with additional offices in New York and San Francisco, CA [3] - The company specializes in enterprise software and consulting services, offering Software as a Service (SaaS) solutions and data analytics services [3] - HeartCore's customer experience management platform includes various tools for marketing, sales, service, and content management [4] - The company also provides digital transformation services, including robotics process automation and process mining [4] Consulting Services - HeartCore offers a Go IPOSM consulting service aimed at assisting Japanese-based companies in going public in the U.S. [5]

Core Insights - Momentum investing focuses on following a stock's recent price trends, with the aim of buying high and selling higher, capitalizing on established price movements [1] - HeartCore Enterprises, Inc. (HTCR) currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - HTCR has a Zacks Rank of 1 (Strong Buy), suggesting it is expected to outperform the market [3] Price Performance - HTCR shares have increased by 41.33% over the past week, significantly outperforming the Zacks Internet - Software and Services industry, which rose by 1.21% [5] - Over the past month, HTCR's price has surged by 172.92%, while the industry only saw a 1.41% increase [5] - In the last quarter, HTCR shares rose by 112.63%, and over the past year, they increased by 91.04%, compared to the S&P 500's gains of 11.26% and 15.64%, respectively [6] Trading Volume - HTCR's average 20-day trading volume is 2,000,799 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, one earnings estimate for HTCR has been revised upward, while none have been lowered, improving the consensus estimate from -$0.31 to -$0.07 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions during the same period [9] Conclusion - Given the strong momentum indicators and positive earnings outlook, HTCR is positioned as a promising investment opportunity with a Momentum Score of A and a Zacks Rank of 1 (Strong Buy) [11]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" strategy, aiming for quicker profits [1] Group 1: Momentum Investing Strategy - Investors are attracted to fast-moving stocks, but determining the right entry point can be challenging, as stocks may lose momentum if future growth does not justify their high valuations [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify promising candidates [3] Group 2: HeartCore Enterprises, Inc. (HTCR) Analysis - HTCR has shown a significant price increase of 47.9% over the past four weeks, indicating growing investor interest [4] - The stock has gained 9.9% over the past 12 weeks, with a beta of 1.89, suggesting it moves 89% more than the market in either direction [5] - HTCR has a Momentum Score of A, indicating a favorable time to invest based on momentum [6] - The stock has received a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which typically attract more investors [7] - HTCR is trading at a Price-to-Sales ratio of 0.57, suggesting it is undervalued, as investors pay only 57 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides HTCR, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Core Viewpoint - HeartCore Enterprises, Inc. (HTCR) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which significantly influences stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based on the Zacks Consensus Estimate, which reflects EPS estimates from sell-side analysts for the current and following years [2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, making the Zacks rating system valuable for investors [3][5]. Impact of Institutional Investors - Institutional investors utilize earnings estimates to calculate the fair value of stocks, leading to buying or selling actions that affect stock prices [5]. - Rising earnings estimates for HeartCore Enterprises indicate an improvement in the company's underlying business, likely resulting in higher stock prices [6]. Importance of Earnings Estimate Revisions - Empirical research shows a strong correlation between earnings estimate revisions and near-term stock movements, highlighting the importance of tracking these revisions for investment decisions [7]. - The Zacks Rank system effectively harnesses the power of earnings estimate revisions, classifying stocks into five groups based on four related factors [8]. Current Earnings Estimates for HeartCore Enterprises - HeartCore Enterprises is expected to earn -$0.07 per share for the fiscal year ending December 2025, with no year-over-year change [9]. - Over the past three months, the Zacks Consensus Estimate for HeartCore has increased by 77.4% [9]. Zacks Rating System Overview - The Zacks rating system maintains a balanced proportion of "buy" and "sell" ratings across over 4,000 stocks, with only the top 5% receiving a "Strong Buy" rating [10]. - The upgrade of HeartCore Enterprises to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating a strong potential for near-term price increases [11].

Core Insights - HeartCore Enterprises, Inc. has successfully assisted its client rYojbaba Co., Ltd. in listing on the Nasdaq Capital Market under the symbol "RYOJ" [1][3] - The company received $500,000 in initial fees and warrants to acquire 3% of rYojbaba's common stock, valued at approximately $1.35 million as of August 14, 2025 [1] - HeartCore's Go IPO consulting service is aimed at helping Japanese companies go public in the U.S., and the company has signed two new Go IPO clients this year [3][6] Company Operations - HeartCore is headquartered in Tokyo, Japan, with additional offices in New York and San Francisco, providing enterprise software and IPO consulting services [4] - The company offers Software as a Service (SaaS) solutions and data analytics services to enhance customer experience for enterprise clients [4][5] - HeartCore's customer experience management platform includes various systems for marketing, sales, service, and content management [5] Future Outlook - The successful listing of rYojbaba is seen as a positive indicator for broader IPO activity, particularly in the micro- and small-cap sectors [3] - HeartCore anticipates that the warrants received from rYojbaba will contribute significantly to its third quarter revenue [3] - The company is focused on expanding its client base and supporting other Go IPO clients in their journey towards U.S. listings [3]

Company Performance - HeartCore Enterprises, Inc. (HTCR) reported quarterly earnings of $0.04 per share, exceeding the Zacks Consensus Estimate of a loss of $0.08 per share, and improved from a loss of $0.09 per share a year ago, representing an earnings surprise of +150.00% [1] - The company posted revenues of $4.74 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.72%, compared to revenues of $4.07 million in the same quarter last year [2] - Over the last four quarters, HeartCore Enterprises has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - HeartCore Enterprises shares have declined approximately 73.8% since the beginning of the year, while the S&P 500 has gained 9.6% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $4.64 million, and for the current fiscal year, it is -$0.36 on revenues of $17.19 million [7] Industry Outlook - The Zacks Industry Rank for Internet - Software and Services is currently in the top 33% of over 250 Zacks industries, indicating that the industry is performing relatively well [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, changes in shareholders' equity, and cash flows, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial line items for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets](index=3&type=section&id=HEARTCORE%20ENTERPRISES,%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheets | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------------ | | **ASSETS** | | | | Total current assets | $8,927,238 | $9,417,365 | | Total non-current assets | $4,598,082 | $4,547,669 | | **Total assets** | **$13,525,320** | **$13,965,034** | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Total current liabilities | $7,093,842 | $7,421,722 | | Total non-current liabilities | $2,872,461 | $3,081,297 | | **Total liabilities** | **$9,966,303** | **$10,503,019** | | Total shareholders' equity | $3,559,017 | $3,462,015 | - Total assets decreased by approximately **$439.7K** from December 31, 2024, to June 30, 2025, primarily due to a decrease in current assets, notably investments in marketable securities[9](index=9&type=chunk) - Total liabilities decreased by approximately **$536.7K**, driven by reductions in both current and non-current liabilities[9](index=9&type=chunk) [Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=HEARTCORE%20ENTERPRISES,%20INC.%20UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)) Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $4,744,246 | $4,066,388 | $8,331,272 | $9,113,120 | | Gross profit | $2,217,595 | $805,881 | $3,317,879 | $2,838,070 | | Income (loss) from operations | $107,465 | $(1,507,204) | $(1,136,692) | $(2,190,159) | | Net income (loss) | $1,061,506 | $(2,211,118) | $(2,075,875) | $(3,689,120) | | Net income (loss) attributable to common shareholders | $1,099,291 | $(1,951,100) | $(1,987,701) | $(3,284,450) | | Basic EPS | $0.05 | $(0.09) | $(0.09) | $(0.16) | | Diluted EPS | $0.04 | $(0.09) | $(0.09) | $(0.16) | - For the three months ended June 30, 2025, the company reported a net income of **$1,061,506**, a significant improvement from a net loss of **$2,211,118** in the prior year period[10](index=10&type=chunk) - For the six months ended June 30, 2025, the net loss decreased by **43.7%** to **$2,075,875** compared to **$3,689,120** in the same period last year[10](index=10&type=chunk) [Unaudited Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=HEARTCORE%20ENTERPRISES,%20INC.%20UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY) - Total shareholders' equity increased from **$3,462,015** as of December 31, 2024, to **$3,559,017** as of June 30, 2025[13](index=13&type=chunk) - Key changes include the issuance of Series A convertible preferred shares (**$1,360,586**), issuance of common shares related to securities purchase agreement (**$203,273**), and issuance of common shares related to equity purchase agreement (**$250,000**) in the six months ended June 30, 2025[13](index=13&type=chunk) - Accumulated deficit increased from **$(16,244,843)** at December 31, 2024, to **$(18,231,933)** at June 30, 2025, reflecting the net loss for the period[13](index=13&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=7&type=section&id=HEARTCORE%20ENTERPRISES,%20INC.%20UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Unaudited Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows used in operating activities | $(2,674,892) | $(1,735,744) | | Net cash flows provided by investing activities | $1,091,636 | $5,546,823 | | Net cash flows provided by (used in) financing activities | $1,770,767 | $(874,136) | | Net change in cash and cash equivalents | $226,533 | $2,793,870 | | Cash and cash equivalents – end of period | $2,347,622 | $3,806,349 | - Net cash used in operating activities increased to **$2,674,892** for the six months ended June 30, 2025, from **$1,735,744** in the prior year, primarily due to increased accounts receivable and decreased deferred revenue[16](index=16&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - Net cash provided by financing activities significantly improved to **$1,770,767** in 2025, compared to net cash used of **$874,136** in 2024, driven by proceeds from Series A convertible preferred stock and common shares issuance[16](index=16&type=chunk)[240](index=240&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=HEARTCORE%20ENTERPRISES,%20INC.%20NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS](index=8&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) - HeartCore Enterprises, Inc. (HeartCore USA) was incorporated in Delaware on May 18, 2021, and operates primarily through its wholly-owned subsidiary, HeartCore Japan, which develops and sells comprehensive software[18](index=18&type=chunk)[21](index=21&type=chunk) - The company expanded its operations by acquiring **51%** of Sigmaways, Inc. in February 2023, establishing HeartCore Financial, Inc. in January 2023 for financial consulting, and forming HeartCore Luvina Vietnam Company Limited in November 2023 for software development[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - Since early 2022, HeartCore USA also provides consulting services to Japanese companies seeking to go public in the U.S. capital market[21](index=21&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The financial statements are prepared in accordance with U.S. GAAP for interim financial information, consolidating all subsidiaries with significant intercompany transactions eliminated[27](index=27&type=chunk) - Revenue is recognized under ASC Topic 606, disaggregated by product/service types including on-premise software, maintenance and support, SaaS, software development, customized software development, and consulting services[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) - The company measures investments in warrants and marketable securities at fair value, with changes recognized in other income (expenses); derivative liability from Series A convertible preferred shares is also measured at fair value[34](index=34&type=chunk)[35](index=35&type=chunk)[60](index=60&type=chunk) [NOTE 3 – ACCOUNTS RECEIVABLE](index=16&type=section&id=NOTE%203%20%E2%80%93%20ACCOUNTS%20RECEIVABLE) Accounts Receivable | Accounts Receivable Type | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :------------------ | | Accounts receivable – non-factored | $3,811,489 | $2,485,417 | | Accounts receivable – factored with recourse | $247,387 | $217,563 | | Total accounts receivable, gross | $4,058,876 | $2,702,980 | | Accounts receivable, non-current | $1,058,539 | $752,930 | - Total accounts receivable, gross, increased by approximately **$1.36 million** from December 31, 2024, to June 30, 2025[67](index=67&type=chunk) [NOTE 4 – PREPAID EXPENSES](index=16&type=section&id=NOTE%204%20%E2%80%93%20PREPAID%20EXPENSES) Prepaid Expenses | Prepaid Expense Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Prepayments to software and consulting services vendors | $150,811 | $188,528 | | Prepaid marketing fees | $45,563 | $32,129 | | Prepaid subscription fees | $73,611 | $115,593 | | Prepaid insurance premium | $140,585 | $44,023 | | Others | $92,601 | $78,566 | | Total prepaid expenses | $503,171 | $458,839 | - Total prepaid expenses increased by **$44,332**, or **9.66%**, from December 31, 2024, to June 30, 2025, primarily driven by a significant increase in prepaid insurance premiums[68](index=68&type=chunk) [NOTE 5 – RELATED PARTY TRANSACTIONS](index=16&type=section&id=NOTE%205%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) - The Company has various transactions with related parties, including its CEO, non-controlling shareholder of HeartCore Luvina (Luvina Software), and a company controlled by the CEO (HeartCore Technology Inc.)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - As of June 30, 2025, the Company had a loan receivable of **$158,378** from HeartCore Technology Inc. and a short-term debt of **$75,000** to Prakash Sadasivam (CEO of Sigmaways and CSO of the Company)[71](index=71&type=chunk)[72](index=72&type=chunk) - Software development and other support services from Luvina Software amounted to **$85,571** for the six months ended June 30, 2025, an increase from **$31,590** in the prior year period[70](index=70&type=chunk) [NOTE 6 – INVESTMENTS](index=17&type=section&id=NOTE%206%20%E2%80%93%20INVESTMENTS) Investments | Investment Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Fair value of investment in warrants at beginning of period | $577,786 | $2,004,308 | | Changes in fair value of investment in warrants | $72,660 | $(1,237,707) | | Fair value of investment in warrants at end of period | $650,446 | $543,120 | | Fair value of investments in marketable securities at beginning of period | $4,495,703 | $642,348 | | Changes in fair value of investments in marketable securities | $(928,955) | $(430,331) | | Marketable securities sold | $(1,071,732) | - | | Fair value of investments in marketable securities at end of period | $2,495,016 | $435,498 | - The fair value of investment in warrants increased by **$72,660** for the six months ended June 30, 2025, a positive change compared to a decrease of **$1,237,707** in the prior year[75](index=75&type=chunk) - Investments in marketable securities decreased by **$2,000,687** for the six months ended June 30, 2025, primarily due to sales of marketable securities totaling **$1,071,732** and negative fair value changes of **$928,955**[77](index=77&type=chunk) [NOTE 7 – LONG-TERM NOTE RECEIVABLE](index=17&type=section&id=NOTE%207%20%E2%80%93%20LONG-TERM%20NOTE%20RECEIVABLE) - The Company holds a **$300,000** promissory note from a non-related company, bearing a **4%** annual interest rate and maturing on September 2, 2026[78](index=78&type=chunk) - The Company forgave the first annual payment of **$100,000** on December 31, 2024, recognizing a loss on forgiveness[78](index=78&type=chunk) [NOTE 8 – PROPERTY AND EQUIPMENT, NET](index=18&type=section&id=NOTE%208%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT,%20NET) Property and Equipment, Net | Asset Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Leasehold improvements | $269,258 | $440,333 | | Machinery and equipment | $690,635 | $646,252 | | Vehicle | $88,634 | $80,586 | | Software | $148,580 | $135,089 | | Subtotal | $1,197,107 | $1,302,260 | | Less: accumulated depreciation | $(754,632) | $(717,406) | | Total property and equipment, net | $442,475 | $584,854 | - Total property and equipment, net, decreased by **$142,379**, or **24.35%**, from December 31, 2024, to June 30, 2025, primarily due to a decrease in leasehold improvements and an increase in accumulated depreciation[79](index=79&type=chunk) - Depreciation expenses for the six months ended June 30, 2025, were **$42,437**, a decrease from **$56,196** in the prior year period[79](index=79&type=chunk) [NOTE 9 – LEASES](index=18&type=section&id=NOTE%209%20%E2%80%93%20LEASES) - The Company has operating leases for office space (**2-15 years**) and finance leases for office equipment and vehicles (**5 years**)[80](index=80&type=chunk) Lease Terms and Discount Rates | Lease Type | Weighted Average Remaining Lease Term (Years) - June 30, 2025 | Weighted Average Discount Rate (per annum) - June 30, 2025 | | :---------------- | :------------------------------------------------------ | :------------------------------------------------------- | | Finance leases | 3.2 | 1.32% | | Operating leases | 6.7 | 1.35% | Lease Liabilities | Lease Liabilities | June 30, 2025 | | :-------------------------- | :------------ | | Total finance lease liabilities | $56,751 | | Total operating lease liabilities | $1,904,264 | | Non-current finance lease liabilities | $39,085 | | Non-current operating lease liabilities | $1,613,378 | [NOTE 10 – OTHER CURRENT LIABILITIES](index=19&type=section&id=NOTE%2010%20%E2%80%93%20OTHER%20CURRENT%20LIABILITIES) Other Current Liabilities | Other Current Liability Type | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :------------------ | | Accrued consumption taxes | $197,291 | $277,593 | | Customer refund liability | $500,000 | $500,000 | | Others | $124,567 | $129,487 | | Total other current liabilities | $821,858 | $907,080 | - Total other current liabilities decreased by **$85,222**, or **9.39%**, from December 31, 2024, to June 30, 2025, mainly due to a decrease in accrued consumption taxes[84](index=84&type=chunk) - A customer refund liability of **$500,000**, related to a terminated consulting services agreement, is due in August 2025[84](index=84&type=chunk) [NOTE 11 – FACTORING LIABILITY](index=19&type=section&id=NOTE%2011%20%E2%80%93%20FACTORING%20LIABILITY) - Sigmaways has a factoring agreement with The Southern Bank Company, factoring certain accounts receivable with recourse, meaning Sigmaways is required to reimburse the Factor for unpaid Purchased Receivables[85](index=85&type=chunk)[88](index=88&type=chunk) - As of June 30, 2025, **$226,212** was borrowed and outstanding under the Factoring Agreement, an increase from **$172,394** at December 31, 2024[91](index=91&type=chunk) - Interest expenses related to the Factoring Agreement were **$24,599** for the six months ended June 30, 2025, a decrease from **$30,786** in the prior year period[91](index=91&type=chunk) [NOTE 12 – INSURANCE PREMIUM FINANCING](index=20&type=section&id=NOTE%2012%20%E2%80%93%20INSURANCE%20PREMIUM%20FINANCING) - The Company entered into an insurance premium financing agreement in January 2025 for **$139,500** at **13.9%** annual interest, payable over eleven months[92](index=92&type=chunk) - As of June 30, 2025, the balance of insurance premium financing was **$90,869**, compared to **$16,626** at December 31, 2024[94](index=94&type=chunk) - Interest expenses for insurance premium financing were **$5,874** for the six months ended June 30, 2025, a decrease from **$7,044** in the prior year period[94](index=94&type=chunk) [NOTE 13 – LONG-TERM DEBTS](index=21&type=section&id=NOTE%2013%20%E2%80%93%20LONG-TERM%20DEBTS) Long-Term Debts | Debt Type | Balance as of June 30, 2025 | Balance as of December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------------------------ | | Aggregate outstanding principal balances | $1,490,664 | $1,652,068 | | Non-current portion | $1,097,263 | $1,238,813 | - Total long-term debts decreased by **$161,404**, or **9.77%**, from December 31, 2024, to June 30, 2025[96](index=96&type=chunk) - Interest expenses related to long-term debts were **$24,447** for the six months ended June 30, 2025, a decrease from **$32,942** in the prior year period[98](index=98&type=chunk) [NOTE 14 – INCOME TAXES](index=22&type=section&id=NOTE%2014%20%E2%80%93%20INCOME%20TAXES) - The Company operates in multiple jurisdictions, including the United States (**21%** federal tax rate), Netherlands (**19%-25.80%**), Canada (**15%** federal, **2%-12%** provincial), Vietnam (**20%**), and Japan (approx. **34.59%**)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) Income Tax Expense (Benefit) | Income Tax | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Current | $12,362 | $588 | $25,066 | $1,201 | | Deferred | $(15,924) | $(72,751) | $28,008 | $(153,531) | | Income tax expense (benefit) | $(3,562) | $(72,163) | $53,074 | $(152,330) | - For the six months ended June 30, 2025, the Company recorded an income tax expense of **$53,074**, a significant increase from an income tax benefit of **$152,330** in the prior year, mainly due to the full impairment of intangible assets in Q4 2024[106](index=106&type=chunk)[229](index=229&type=chunk) [NOTE 15 – STOCK-BASED COMPENSATION](index=23&type=section&id=NOTE%2015%20%E2%80%93%20STOCK-BASED%20COMPENSATION) - The Company has two equity incentive plans (2021 Plan and 2023 Plan) authorizing the issuance of common shares for stock options and Restricted Stock Units (RSUs)[107](index=107&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk) Stock Options Activity | Stock Options Activity | As of June 30, 2025 | As of June 30, 2024 | | :--------------------- | :------------------ | :------------------ | | Number of Stock Options | 1,400,000 | 1,512,000 | | Weighted Average Exercise Price | $2.50 | $2.41 | | Vested and exercisable | 1,053,625 | N/A | RSUs Activity | RSUs Activity | Unvested as of June 30, 2025 | Unvested as of June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Number of RSUs | 19,190 | 42,912 | | Weighted Average Grant Date Fair Value Per Share | $4.95 | $4.95 | - Stock-based compensation related to stock options decreased to **$52,682** for the six months ended June 30, 2025, from **$111,044** in the prior year; RSU-related compensation also decreased to **$7,522** from **$36,710**[111](index=111&type=chunk)[114](index=114&type=chunk) [NOTE 16 – SHAREHOLDERS' EQUITY](index=24&type=section&id=NOTE%2016%20%E2%80%93%20SHAREHOLDERS'%20EQUITY) - The Company is authorized to issue **200,000,000** common shares and **20,000,000** preferred shares[115](index=115&type=chunk) - On June 30, 2025, the Company entered into an Equity Purchase Agreement with Crom Structured Opportunities Fund I, LP, committing to purchase up to **$25 million** in common shares, and issued **485,437** common shares as a commitment fee[116](index=116&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Also on June 30, 2025, the Company issued **2,000** shares of Series A convertible preferred shares for **$2,000,000** and **750,000** common shares to Crom Structured, with the preferred shares having a **10%** annual dividend and conversion rights[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[130](index=130&type=chunk) - As of June 30, 2025, there were **23,310,770** common shares and **2,000** Series A convertible preferred shares issued and outstanding[129](index=129&type=chunk) [NOTE 17 – NET INCOME (LOSS) PER SHARE](index=27&type=section&id=NOTE%2017%20%E2%80%93%20NET%20INCOME%20(LOSS)%20PER%20SHARE) Net Income (Loss) Per Share | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic Net income (loss) per share | $0.05 | $(0.09) | $(0.09) | $(0.16) | | Diluted Net income (loss) per share | $0.04 | $(0.09) | $(0.09) | $(0.16) | | Basic Weighted average common shares outstanding | 22,088,909 | 20,864,144 | 22,072,324 | 20,859,429 | | Diluted Weighted average common shares outstanding | 27,079,975 | 20,864,144 | 22,072,324 | 20,859,429 | - Basic EPS improved to **$0.05** for the three months ended June 30, 2025, from **$(0.09)** in the prior year, reflecting the net income for the quarter[132](index=132&type=chunk) - Diluted EPS for the six months ended June 30, 2025, remained at **$(0.09)**, consistent with the basic EPS due to anti-dilutive effects of potential common shares[131](index=131&type=chunk)[132](index=132&type=chunk) [NOTE 18 – SEGMENT AND GEOGRAPHIC INFORMATION](index=27&type=section&id=NOTE%2018%20%E2%80%93%20SEGMENT%20AND%20GEOGRAPHIC%20INFORMATION) - The Company operates as a single operating and reportable segment, with the CEO acting as the chief operating decision maker[133](index=133&type=chunk) Geographic Revenue | Geographic Revenue | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Japan | $2,953,180 | $1,940,248 | $4,692,336 | $4,809,387 | | United States | $1,664,429 | $2,045,780 | $3,400,447 | $4,066,060 | | International | $126,637 | $80,360 | $238,489 | $237,673 | | Total revenues | $4,744,246 | $4,066,388 | $8,331,272 | $9,113,120 | - Revenues from Japan increased significantly by **52.2%** for the three months ended June 30, 2025, while U.S. revenues decreased by **18.6%**; for the six months, Japan revenues slightly decreased, and U.S. revenues decreased by **16.4%**[135](index=135&type=chunk) [NOTE 19 – SUBSEQUENT EVENT](index=28&type=section&id=NOTE%2019%20%E2%80%93%20SUBSEQUENT%20EVENT) - On July 1, 2025, the Company converted a portion of customer warrants into marketable securities[136](index=136&type=chunk) - On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (OBBBA), which includes changes to corporate income tax, allowing immediate expensing of R&D and permanent extensions of certain Tax Cuts and Jobs Act provisions; the Company is evaluating its impact[137](index=137&type=chunk) - On July 24, 2025, the Board approved a non-binding letter of intent to sell **100%** of HeartCore Japan for approximately **$12 million** in cash, subject to price adjustment[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting key business activities, recent developments, and a detailed comparison of operating results for the three and six months ended June 30, 2025 and 2024; it also discusses liquidity, capital resources, and critical accounting policies [Business Overview](index=29&type=section&id=Business%20Overview) - HeartCore Enterprises, Inc. is a Tokyo-based software development company with two main business units: CX division (customer experience management platform) and DX division (digital transformation services like RPA, process mining, task mining)[142](index=142&type=chunk)[143](index=143&type=chunk) - The company also operates a 'GO IPO' business, supporting Japanese companies in listing on Nasdaq and NYSE, having entered into consulting agreements with **16** companies as of June 30, 2025[144](index=144&type=chunk) - Recent expansions include the acquisition of Sigmaways (U.S. software development), formation of HeartCore Financial (financial consulting), and HeartCore Luvina Vietnam (software development)[146](index=146&type=chunk)[147](index=147&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) - The Company received Nasdaq notices regarding non-compliance with the **$1.00** minimum bid price requirement (May 6, 2025) and the **$2,500,000** minimum stockholders' equity requirement (May 24, 2025); an extension until September 30, 2025, was granted for the latter[150](index=150&type=chunk)[151](index=151&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - New consulting agreements were signed with tmsuk Co., Ltd. (May 30, 2025) and Cipher Core Co., Ltd. (June 30, 2025) for IPO support services, including cash fees and warrants[158](index=158&type=chunk)[159](index=159&type=chunk)[165](index=165&type=chunk) - An OEM Sales Agreement was signed with Silver Egg Technology CO. Ltd. (June 23, 2025) for AI recommendation services, with a **two-year** term and automatic renewals[161](index=161&type=chunk)[163](index=163&type=chunk) - The Company entered into an Equity Purchase Agreement and a Securities Purchase Agreement with Crom Structured Opportunities Fund I, LP on June 30, 2025, for up to **$25 million** in common stock purchases and the issuance of Series A Convertible Preferred Stock and common shares[169](index=169&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - Stockholders approved a **20%** issuance of common stock and a reverse stock split (**1-for-2** to **1-for-30**) on June 30, 2025, to address Nasdaq listing requirements[172](index=172&type=chunk)[193](index=193&type=chunk) [Financial Overview](index=35&type=section&id=Financial%20Overview) Financial Overview | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $4,744,246 | $4,066,388 | $8,331,272 | $9,113,120 | | Net income (loss) | $1,061,506 | $(2,211,118) | $(2,075,875) | $(3,689,120) | | Cash flows used in operating activities | N/A | N/A | $(2,674,892) | $(1,735,744) | - The Company reported a net income of **$1,061,506** for the three months ended June 30, 2025, a significant turnaround from a net loss of **$2,211,118** in the prior year period[195](index=195&type=chunk) - For the six months ended June 30, 2025, the net loss decreased by **43.7%** to **$2,075,875**, and cash flows used in operating activities increased to **$2,674,892**[196](index=196&type=chunk) - As of June 30, 2025, the Company had an accumulated deficit of **$18,231,933**[196](index=196&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) [Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=36&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) Three Months Ended June 30, 2025 and 2024 Operating Results | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Variance ($) | Variance (%) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :----------- | | Revenues | $4,744,246 | $4,066,388 | $677,858 | 16.7% | | Cost of revenues | $2,526,651 | $3,260,507 | $(733,856) | -22.5% | | Gross profit | $2,217,595 | $805,881 | $1,411,714 | 175.2% | | Total operating expenses | $2,110,130 | $2,313,085 | $(202,955) | -8.8% | | Income (loss) from operations | $107,465 | $(1,507,204) | $1,614,669 | 107.1% | | Net income (loss) attributable to common shareholders | $1,099,291 | $(1,951,100) | $3,050,391 | 156.3% | - Total revenues increased by **16.7%** to **$4,744,246**, primarily due to a **$1,155,548** increase from on-premise software sales and a **$134,571** increase from SaaS, partially offset by decreases in customized software development and other services[199](index=199&type=chunk) - Gross profit surged by **175.2%** to **$2,217,595**, driven by increased on-premise software sales and reduced outsourcing costs in customized software development and IPO consulting services[201](index=201&type=chunk) - Operating expenses decreased by **8.8%**, mainly due to a **$459,382** reduction in general and administrative expenses (impairment of intangible assets and lower consultant fees), despite a **114.9%** increase in selling expenses due to employee restructuring[203](index=203&type=chunk)[205](index=205&type=chunk) [Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=38&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Six Months Ended June 30, 2025 and 2024 Operating Results | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variance ($) | Variance (%) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :----------- | | Revenues | $8,331,272 | $9,113,120 | $(781,848) | -8.6% | | Cost of revenues | $5,013,393 | $6,275,050 | $(1,261,657) | -20.1% | | Gross profit | $3,317,879 | $2,838,070 | $479,809 | 16.9% | | Total operating expenses | $4,454,571 | $5,028,229 | $(573,658) | -11.4% | | Loss from operations | $(1,136,692) | $(2,190,159) | $(1,053,467) | -48.1% | | Net loss attributable to common shareholders | $(1,987,701) | $(3,284,450) | $(1,296,749) | -39.5% | - Total revenues decreased by **8.6%** to **$8,331,272**, mainly due to declines in customized software development and services, GO IPO consulting, and other software development services, partially offset by increased on-premise software sales[218](index=218&type=chunk) - Gross profit increased by **16.9%** to **$3,317,879**, primarily from higher on-premise software sales and reduced outsourcing costs in customized software development, despite a decrease in software development and other services[220](index=220&type=chunk) - Operating expenses decreased by **11.4%**, driven by reductions in general and administrative expenses (employee restructuring, intangible asset impairment, lower consultant fees), while selling and R&D expenses increased[222](index=222&type=chunk)[224](index=224&type=chunk)[226](index=226&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the Company had **$2,347,622** in cash and cash equivalents and **$3,000,337** in accounts receivable[235](index=235&type=chunk) Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows used in operating activities | $(2,674,892) | $(1,735,744) | | Net cash flows provided by investing activities | $1,091,636 | $5,546,823 | | Net cash flows provided by (used in) financing activities | $1,770,767 | $(874,136) | | Net change in cash and cash equivalents | $226,533 | $2,793,870 | - Net cash used in operating activities increased due to higher accounts receivable and lower deferred revenue; net cash provided by investing activities decreased significantly due to the absence of large warrant sales seen in the prior year; net cash from financing activities improved substantially due to proceeds from Series A preferred stock and common share issuances[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) [Contractual Obligations](index=42&type=section&id=Contractual%20Obligations) Contractual Obligations | Year Ended December 31, | Finance Lease Payments | Operating Lease Payments | Long-Term Debt Principal Payments | | :---------------------- | :--------------------- | :----------------------- | :-------------------------------- | | Remaining of 2025 | $9,151 | $165,586 | $168,363 | | 2026 | $18,302 | $293,770 | $388,783 | | 2027 | $18,302 | $293,770 | $416,931 | | 2028 | $12,201 | $287,511 | $183,938 | | 2029 | - | $285,425 | $27,926 | | Thereafter | - | $663,320 | $304,723 | | Total | $57,956 | $1,989,382 | $1,490,664 | - The Company has significant future obligations under operating leases, totaling **$1,989,382** in payments, and long-term debts, totaling **$1,490,664** in principal payments[242](index=242&type=chunk)[244](index=244&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of June 30, 2025, the Company did not have any off-balance sheet arrangements[246](index=246&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The Company's financial statements rely on estimates and assumptions in accordance with U.S. GAAP, but management believes there are no critical accounting policies and estimates for the six months ended June 30, 2025[247](index=247&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the reporting period - The Company states that this item is not applicable[248](index=248&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, for reasons previously disclosed; no material changes in internal control over financial reporting occurred during the quarter - As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures were not effective, consistent with prior disclosures[249](index=249&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[250](index=250&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings that are expected to have a material effect on its business, financial position, or results of operations - No legal proceedings are currently pending or threatened that would have a material effect on the Company's business, financial position, or results of operations[252](index=252&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the Company is not required to disclose material changes to its risk factors in this quarterly report, referring instead to its Annual Report on Form 10-K - As a smaller reporting company, the Company is not required to disclose material changes to risk factors in this Form 10-Q, referring to its Annual Report on Form 10-K for the year ended December 31, 2024[253](index=253&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On June 30, 2025, the Company issued **485,437** common shares as commitment fees and **2,000** Series A convertible preferred shares along with **750,000** common shares to Crom Structured Opportunities Fund I, LP, all through unregistered sales under Section 4(a)(2) of the Securities Act and Regulation D - On June 30, 2025, the Company issued **485,437** common shares as ELOC Commitment Shares to Crom Structured Opportunities Fund I, LP[254](index=254&type=chunk) - On the same date, the Company issued **2,000** Series A convertible preferred shares for **$2,000,000** and **750,000** common shares (SPA Commitment Shares) to Crom Structured[254](index=254&type=chunk)[255](index=255&type=chunk) - These shares were issued to an accredited investor without registration under the Securities Act, relying on exemptions under Section 4(a)(2) and Regulation D[255](index=255&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There have been no material defaults on any senior securities during the reporting period - No material defaults upon senior securities occurred during the covered period[256](index=256&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - The Company states that this item is not applicable[257](index=257&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This section confirms no material changes to director nominee recommendation procedures and no Rule 10b5-1 trading arrangements adopted or terminated by directors or officers during the quarter - There have been no material changes to the procedures for security holders to recommend Board nominees[258](index=258&type=chunk) - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[259](index=259&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certificates of designations, various agreements (consulting, OEM sales, equity purchase, securities purchase, registration rights), and certifications - Key exhibits include the Certificate of Designations for Series A Convertible Preferred Stock, Consulting and Services Agreements (tmsuk, Cipher Core), OEM Sales Agreement (Silver Egg), Equity Purchase Agreement, Securities Purchase Agreement, and associated Registration Rights Agreements with Crom Structured Opportunities Fund I, LP[260](index=260&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (Rule 13a-14(a) and 18 U.S.C. Section 1350) are also filed[260](index=260&type=chunk) [Signatures](index=46&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of HeartCore Enterprises, Inc. by its Chief Executive Officer and President, Sumitaka Yamamoto, and Chief Financial Officer, Qizhi Gao - The report was signed on August 13, 2025, by Sumitaka Yamamoto, Chief Executive Officer and President, and Qizhi Gao, Chief Financial Officer[265](index=265&type=chunk)[266](index=266&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) [Management Commentary](index=1&type=section&id=Management%20Commentary) The company returned to profitability in the second quarter, driven by a significant software deal, and anticipates further growth from its 'Go IPO' business - The company **returned to profitability in Q2 2025**, a result attributed to the resilience of the software business and a significant deal with a major infrastructure company[3](index=3&type=chunk) - An existing **'Go IPO' client is expected to list on the Nasdaq Stock Market** in the near-term, which is anticipated to strengthen Q3 2025 financial results[3](index=3&type=chunk) - The company signed its **15th and 16th 'Go IPO' contracts** and plans to host an event in Korea to expand its presence in that market[3](index=3&type=chunk) [Second Quarter 2025 Financial & Operational Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20%26%20Operational%20Results) The company achieved a significant turnaround in Q2 2025, returning to profitability with strong revenue and gross profit growth while regaining Nasdaq compliance Q2 2025 Financial Performance vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $4.7 million | $4.1 million | +16.7% | | Gross Profit | $2.2 million | $0.8 million | +175.2% | | Operating Expenses | $2.1 million | $2.3 million | -8.7% | | Net Income (Loss) | $1.1 million | ($2.2 million) | N/A | | Adjusted EBITDA | $0.1 million | ($1.2 million) | N/A | - Revenue growth was primarily driven by increased sales of **on-premise CMS licenses** and expansion of the traditional SaaS business in Japan[4](index=4&type=chunk) - **Gross profit margin expanded significantly** due to high-margin, independently developed software sales and reduced outsourcing costs in the customized software segment[6](index=6&type=chunk) - As of June 30, 2025, total shareholders' equity was **$3.5 million**, satisfying the Nasdaq's **$2.5 million minimum requirement**[5](index=5&type=chunk) - Key operational achievements include signing **two new 'Go IPO' contracts** and forming strategic partnerships with Silver Egg Technology and NEC Solutions Innovators[5](index=5&type=chunk) [Six Months Ended June 30, 2025 Financial Results](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Financial%20Results) For the first half of 2025, revenues declined, but gross profit increased and the net loss narrowed due to improved cost management and a strategic shift Six Months 2025 Financial Performance vs. Six Months 2024 | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $8.3 million | $9.1 million | -8.8% | | Gross Profit | $3.3 million | $2.8 million | +16.9% | | Operating Expenses | $4.4 million | $5.0 million | -12.0% | | Net Loss | ($2.1 million) | ($3.7 million) | +43.2% | | Adjusted EBITDA | ($1.1 million) | ($1.6 million) | +31.3% | - The revenue decline was primarily caused by a slowdown in the **Sigmaways customized software business** and decreased Go IPO consulting services revenue[10](index=10&type=chunk) - Gross profit increased due to a strategic focus on **higher-margin on-premise software** and cost reductions from ending cooperation with costly vendors[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of Net Loss to Adjusted EBITDA](index=3&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) The company's Adjusted EBITDA showed significant improvement for both the second quarter and the first six months of 2025 compared to the prior year Q2 Adjusted EBITDA Reconciliation (in millions) | Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $1.1 | ($2.2) | | Adjustments | ($1.0) | $1.0 | | **Adjusted EBITDA** | **$0.1** | **($1.2)** | Six Months Adjusted EBITDA Reconciliation (in millions) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net loss | ($2.1) | ($3.7) | | Adjustments | $1.0 | $2.1 | | **Adjusted EBITDA** | **($1.1)** | **($1.6)** | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The company's balance sheet as of June 30, 2025, shows total assets of $13.5 million and an increase in shareholders' equity Key Balance Sheet Items | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,347,622 | $2,121,089 | | Total Assets | $13,525,320 | $13,965,034 | | Total Liabilities | $9,966,303 | $10,503,019 | | Total Shareholders' Equity | $3,559,017 | $3,462,015 | [Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the first six months of 2025, the company reported an improved net loss per share compared to the prior-year period Six Months Statement of Operations Highlights | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $8,331,272 | $9,113,120 | | Gross Profit | $3,317,879 | $2,838,070 | | Loss from operations | ($1,136,692) | ($2,190,159) | | Net loss attributable to common shareholders | ($1,987,701) | ($3,284,450) | | Net loss per share (Basic & Diluted) | ($0.09) | ($0.16) | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net increase in cash for the first six months of 2025, driven by investing and financing activities Six Months Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 | | :--- | :--- | | Net cash used in operating activities | ($2,674,892) | | Net cash provided by investing activities | $1,091,636 | | Net cash provided by financing activities | $1,770,767 | | **Net change in cash and cash equivalents** | **$226,533** | | **Cash and cash equivalents - end of period** | **$2,347,622** | [About the Company & Other Information](index=3&type=section&id=About%20the%20Company%20%26%20Other%20Information) [About HeartCore Enterprises, Inc.](index=3&type=section&id=About%20HeartCore%20Enterprises%2C%20Inc.) HeartCore Enterprises is a Tokyo-based software and consulting firm specializing in SaaS, CXM, and 'GO IPO' services for Japanese companies - Offers **SaaS solutions, a CXM Platform, and data analytics services** to enterprise customers[14](index=14&type=chunk) - Operates a digital transformation business utilizing **robotics process automation (RPA)**[14](index=14&type=chunk) - Provides **'GO IPO' consulting services** to help Japanese companies go public in the U.S[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements that are subject to risks and uncertainties and are not guarantees of future performance - The report includes **forward-looking statements** subject to risks, uncertainties, and other factors that could cause actual results to differ materially[20](index=20&type=chunk) - Investors are cautioned **not to place undue reliance** on these statements as they are based on current views and are not a guarantee of future performance[20](index=20&type=chunk)