Hearte Enterprises(HTCR) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results Management Commentary and Operational Highlights HeartCore advanced core software, reduced subsidiary losses, and anticipates future equity from Go IPO clients - Launched a dedicated business development team to strengthen CMS customer success and maintain high retention rates[3][9] - Subsidiary Sigmaways has reduced costs and narrowed losses compared to the same period last year[3] - The balance sheet deficit is attributed to the decline in the stock price of held SBC Medical Group shares, which can be used for liquidity if needed[3] - Several Go IPO clients are expected to begin trading in 2025, which will provide HeartCore with additional equity[3] - Announced plans to expand the Go IPO consulting business into South Korea, with a seminar scheduled for September 2025[3][9] Financial Performance Summary HeartCore's Q1 2025 revenue and gross profit declined, resulting in a wider net loss despite reduced operating expenses Q1 2025 vs Q1 2024 Financial Highlights | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues ($) | $3.6 million | $5.0 million | -28.0% | | Gross Profit ($) | $1.1 million | $2.0 million | -45.0% | | Operating Expenses ($) | $2.3 million | $2.7 million | -14.0% | | Net Loss ($) | $3.1 million | $1.5 million | Increased by 106.7% | | Adjusted EBITDA ($) | -$1.3 million | -$0.3 million | Increased loss | - The decrease in revenue was primarily due to a slowdown in on-premise software sales, reduced customized software development revenue from Sigmaways, and a lack of new Go IPO consulting orders in the quarter[4] Cash Position | Date | Cash and Cash Equivalents ($) | | :--- | :--- | | March 31, 2025 | $0.7 million | | December 31, 2024 | $2.1 million | Non-GAAP Financial Measures HeartCore uses Adjusted EBITDA, a non-GAAP measure, to show core operational performance, reporting a widened loss in Q1 2025 - Adjusted EBITDA is a non-GAAP financial measure calculated by adjusting net loss to exclude depreciation and amortization, impairment of intangible assets, and impairment of goodwill[11] Adjusted EBITDA Reconciliation (in millions) | Item | FY25 Q1 | FY24 Q1 | | :--- | :--- | :--- | | Net Loss | -$3.1 million | -$1.5 million | | (+) Depreciation and amortization expense | $0.0 million | $0.2 million | | (+) Changes in fair value of investments in marketable securities | $1.8 million | $0.2 million | | (+) Changes in fair value of investment in warrants | $0.1 million | $0.7 million | | Adjusted EBITDA | -$1.3 million | -$0.3 million | Consolidated Financial Statements HeartCore's Q1 2025 consolidated statements show decreased assets and equity, declining revenue, and negative cash flow from operations Consolidated Balance Sheets HeartCore's balance sheet as of March 31, 2025, shows decreased total assets and a sharp decline in shareholders' equity Key Balance Sheet Items (As of) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents ($) | $738,984 | $2,121,089 | | Investments in marketable securities ($) | $2,251,276 | $4,495,703 | | Total Assets ($) | $10,223,007 | $13,965,034 | | Total Liabilities ($) | $9,622,720 | $10,503,019 | | Total Shareholders' Equity ($) | $600,287 | $3,462,015 | Consolidated Statements of Operations Q1 2025 statements of operations show decreased revenues and gross profit, leading to a significantly widened net loss of $3.1 million Consolidated Statement of Operations (For the three months ended March 31) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Revenues ($) | $3,587,026 | $5,046,732 | | Gross Profit ($) | $1,100,284 | $2,032,189 | | Loss from operations ($) | ($1,244,157) | ($682,955) | | Net loss ($) | ($3,137,381) | ($1,478,002) | | Net loss per share (Basic & Diluted) ($) | ($0.14) | ($0.06) | Consolidated Statements of Cash Flows Q1 2025 cash flows show increased net cash used in operations, resulting in a net decrease in cash and cash equivalents Consolidated Statement of Cash Flows (For the three months ended March 31) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows used in operating activities ($) | ($2,000,791) | ($898,619) | | Net cash flows provided by investing activities ($) | $473,061 | $1,650,814 | | Net cash flows provided by (used in) financing activities ($) | $142,940 | ($474,752) | | Net change in cash and cash equivalents ($) | ($1,382,105) | $206,772 | | Cash and cash equivalents - end of the period ($) | $738,984 | $1,219,251 |