Hearte Enterprises(HTCR) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, the company generated revenues of $4,066,388, a decrease of 20.1% compared to $5,095,373 for the same period in 2023[123]. - For the six months ended June 30, 2024, the company reported revenues of $9,113,120, down 34.1% from $13,829,523 in the prior year[123]. - The net loss for the three months ended June 30, 2024, was $2,211,118, compared to a net loss of $1,022,846 for the same period in 2023, representing a 116.5% increase in losses[123]. - The accumulated deficit as of June 30, 2024, stood at $18,047,919[123]. - Net loss for the three months ended June 30, 2024, was $2,211,118, representing a $1,188,272, or 116.2%, increase from a net loss of $1,022,846 for the same period in 2023[132]. - Net loss of $3,689,120 for the six months ended June 30, 2024, representing a $4,474,311, or 569.8%, decrease from a net income of $785,191 for the same period in 2023[147]. Revenue Recognition - Revenues from Maintenance and Support Services are recognized over time as services are performed, with consumption-based services recognized as they are accepted by customers[163]. - Subscription fees from Software as a Service (SaaS) are recognized ratably over the customer agreement term, typically one year or less[164]. - Revenues from Customized Software Development and Services are recognized based on billable hours, with contracts generally not exceeding one year in duration[165]. - Consulting services related to public listings include both cash and noncash considerations, with revenues recognized based on progress toward performance obligations[167]. - The Company estimates customer returns and allowances based on historical rates, with adjustments made if actual returns differ significantly from estimates[168]. - Revenues recognized during the six months ended June 30, 2024, included approximately $1.5 million from the opening deferred revenue balance, compared to $1.3 million for the same period in 2023[169]. Expenses - Gross profit decreased by $702,554, or 46.6%, to $805,881 for the three months ended June 30, 2024, from $1,508,435 for the same period in 2023[126]. - Total operating expenses decreased by $662,472, or 22.3%, to $2,313,085 for the three months ended June 30, 2024, from $2,975,557 for the same period in 2023[126]. - Selling expenses decreased by $308,654, or 63.2%, to $179,408 for the three months ended June 30, 2024, from $488,062 for the same period in 2023[128]. - General and administrative expenses decreased by $425,478, or 17.4%, to $2,022,409 for the three months ended June 30, 2024, from $2,447,887 for the same period in 2023[129]. - Research and development expenses increased by $71,660, or 180.9%, to $111,268 for the three months ended June 30, 2024, primarily due to increased outsourcing expenses[130]. - Selling expenses decreased by $657,589, or 62.2%, to $399,115 for the six months ended June 30, 2024, from $1,056,704 in the same period of 2023[141]. - General and administrative expenses decreased by $704,382, or 13.7%, to $4,428,712 for the six months ended June 30, 2024, from $5,133,094 for the same period in 2023[142]. - Research and development expenses increased by $81,170, or 68.1%, to $200,402 for the six months ended June 30, 2024, from $119,232 for the same period in 2023[144]. Cash Flow and Assets - Cash and cash equivalents increased to $3,806,349 as of June 30, 2024, compared to $1,012,479 as of December 31, 2023[150]. - Net cash flows provided by investing activities amounted to $5,271,823 for the six months ended June 30, 2024, primarily from the sale of unearned warrants[152]. - Future minimum lease payments under non-cancelable lease agreements total $2,270,179 as of June 30, 2024[154]. Business Developments - The company declared a cash dividend of $0.02 per share on July 22, 2024, to be paid on August 26, 2024, totaling $417,283[119]. - The company entered into consulting agreements with 14 companies for its GO IPO business, with consulting fees ranging from $380,000 to $900,000 per company[114]. - BloomZ Inc., a client of the GO IPO business, successfully began trading on The Nasdaq Capital Market in July 2024, indicating potential growth in IPO activities[115]. - The company received $9,000,000 from a warrants transfer agreement during the six months ended June 30, 2024, recorded as other current liabilities[115]. - The company is currently under a compliance review by Nasdaq due to not meeting the $1.00 minimum bid price requirement, with a 180-day period granted to regain compliance[120]. - The company formed HeartCore Financial and HeartCore Capital Advisors as part of its GO IPO consulting business, expanding its operational footprint[117]. Profitability Metrics - The overall gross profit margin decreased by 9.8% to 19.8% for the three months ended June 30, 2024, from 29.6% for the same period in 2023[127]. - Gross profit decreased by $4,303,449, or 60.3%, to $2,838,070 for the six months ended June 30, 2024, from $7,141,519 for the same period in 2023[139]. - Overall gross profit margin decreased by 20.5% to 31.1% for the six months ended June 30, 2024, from 51.6% in the same period of 2023[140]. - Other expenses increased by $598,351, or 336.7%, to $776,077 for the three months ended June 30, 2024, primarily due to losses on fair value changes in investments[131]. - Net loss attributable to HeartCore Enterprises, Inc. was $1,951,100 for the three months ended June 30, 2024, representing a $1,039,300, or 114.0%, increase from a net loss of $911,800 for the same period in 2023[134].