Hearte Enterprises(HTCR) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, the company generated revenues of $17,850,411, a significant increase from $4,688,908 in the same period of 2023, representing a growth of approximately 280%[155] - The net income for the three months ended September 30, 2024, was $10,816,930, compared to a net loss of $2,541,133 in the same period of 2023, indicating a turnaround in financial performance[155] - For the nine months ended September 30, 2024, the company reported revenues of $26,963,531, up from $18,518,431 in 2023, reflecting a year-over-year increase of approximately 46%[156] - The net income for the nine months ended September 30, 2024, was $7,127,810, compared to a net loss of $1,755,942 in the same period of 2023, showcasing improved profitability[156] - Net income was $10,816,930 for the three months ended September 30, 2024, representing a $13,358,063, or 525.7%, increase from a net loss of $2,541,133 for the same period in 2023[170] - Net income attributable to HeartCore Enterprises, Inc. was $11,057,806 for the three months ended September 30, 2024, representing a $13,365,026, or 579.3%, increase from a net loss of $2,307,220 for the same period in 2023[172] - Total revenues increased by $8,445,100, or 45.6%, to $26,963,531 for the nine months ended September 30, 2024, from $18,518,431 for the same period in 2023[176] - Net income for the nine months ended September 30, 2024, was $7,127,810, representing an increase of $8,883,752, or 505.9%, from a loss of $1,755,942 in the prior year[189] - Net income attributable to HeartCore Enterprises, Inc. was $7,773,356 for the nine months ended September 30, 2024, a $9,110,087, or 681.5%, increase from a net loss of $1,336,731 in the same period of 2023[192] Revenue and Profitability Metrics - Total revenues increased by $13,161,503, or 280.7%, to $17,850,411 for the three months ended September 30, 2024, from $4,688,908 for the same period in 2023[159] - Gross profit increased by $13,588,720, or 1,639.8%, to $14,417,387 for the three months ended September 30, 2024, from $828,667 for the same period in 2023[161] - Gross profit margin increased by 63.1% to 80.8% for the three months ended September 30, 2024, from 17.7% for the same period in 2023[162] - Gross profit rose by $9,285,271, or 116.5%, to $17,255,457 for the nine months ended September 30, 2024, compared to $7,970,186 in the prior year[178] - Gross profit margin increased by 21.0% to 64.0% for the nine months ended September 30, 2024, from 43.0% in the same period of 2023[179] Expenses - Cost of revenues decreased by $427,217, or 11.1%, to $3,433,024 for the three months ended September 30, 2024, from $3,860,241 for the same period in 2023[160] - Selling expenses decreased by $30,933, or 11.3%, to $243,110 for the three months ended September 30, 2024, from $274,043 for the same period in 2023[163] - General and administrative expenses decreased by $205,581, or 9.5%, to $1,966,717 for the three months ended September 30, 2024, from $2,172,298 for the same period in 2023[165] - Research and development expenses decreased by $62,542, or 36.8%, to $107,529 for the three months ended September 30, 2024, from $170,071 for the same period in 2023[167] - Selling expenses decreased by $688,522, or 51.7%, to $642,225 for the nine months ended September 30, 2024, from $1,330,747 in the prior year[180] - General and administrative expenses decreased by $909,963, or 12.5%, to $6,395,429 for the nine months ended September 30, 2024, from $7,305,392 in the same period of 2023[183] Cash Flow and Financial Position - Net cash flows used in operating activities amounted to $3,499,514 for the nine months ended September 30, 2024[195] - Net cash flows provided by investing activities were $5,317,323 for the nine months ended September 30, 2024, primarily from the sale of warrants[196] - Cash and cash equivalents increased to $1,232,117 as of September 30, 2024, from $1,012,479 as of December 31, 2023[193] - As of September 30, 2024, total lease liabilities amount to $2,311,922, with $69,380 attributed to finance leases and $2,242,542 to operating leases[198] - Future minimum principal payments for long-term debts total $1,858,072, with $99,325 due in the remaining of 2024 and $434,474 due in 2025[199] - The Company has no off-balance sheet arrangements as of September 30, 2024[200] Revenue Recognition Policies - Revenues recognized during the nine months ended September 30, 2024, from deferred revenue amounted to approximately $1.8 million, compared to $1.5 million for the same period in 2023[212] - The Company recognizes revenues from on-premise software licenses upfront when made available to customers, with bundled maintenance and support services allocated based on standalone selling prices[204] - Subscription fees from Software as a Service (SaaS) are recognized over time on a ratable basis, typically for contracts of one year or less[206] - Revenues from maintenance and support services are recognized over time as the services are performed[205] - Customized software development revenues are recognized based on billable hours, with contracts generally not exceeding one year[209] - Consulting service revenues are recognized over the contract period, with cash and noncash considerations included in the transaction price[210] - The Company records reductions to revenues for estimated customer returns and allowances, based on historical rates and specific identification of outstanding returns[211] Compliance and Corporate Actions - The company entered into consulting agreements with 14 companies for IPO support, with consulting fees ranging from $380,000 to $900,000 per company[139] - On October 26, 2023, the company received a notice of noncompliance with Nasdaq's minimum bid price requirement of $1.00 per share[149] - The company regained compliance with the Nasdaq minimum bid price requirement on November 5, 2024, after demonstrating a closing bid price of at least $1.00 per share[155] - The company completed the sale of warrants for $9,000,000 in cash, recording a loss of $3,970,628 from this transaction[146]