AI and Software Companies Report Q2 2024 Financial Results: Zapata AI and HeartCore Enterprises

Zapata AI Announces Second Quarter 2024 Financial Results and Provides Business Update - Zapata Computing Holdings (NASDAQ:ZPTA)

BOSTON, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Zapata Computing Holdings Inc. ("Zapata AI" or "the Company") ZPTA, a leading provider of industrial-grade software for enterprise AI, today announced its financial results for the second quarter of 2024 and provided a business update. Business Highlights Significantly expanded partnership with D-Wave Quantum Inc. to accelerate the development and delivery of integrated quantum and generative AI solutions in D‑Wave's Leap cloud platformSuccessfully collaborated with KPMG on a project to streamline the compliance models of a leading global insurance firmAlongside its project collaborators, published select research findings from its participation in Phase II of the Defense Advanced Research Projects Agency (DARPA) Quantum Benchmarking program, a critical milestone in the project's initiativeAnnounced a strategic collaboration with Tech Mahindra that leverages Zapata AI's quantum-based generative AI to improve network operations and customer service for Tech Mahindra's global telecom customersBolstered the senior leadership team with the additions of Sumit Kapur, an accomplished technology industry finance leader, as Chief Financial Officer, and Derron Blakely, who brings a strong legal background at fast-growing public companies in the AI and defense industries, as General CounselSubsequent to Q2 2024-end, announced a Cooperative Research and Development Agreement with the U.S. Department of Defense's ("DOD") U.S. Special Operations Command ("USSOCOM") to collaborate on real-time intelligence Financial highlights Revenue of $2.00 million in Q2 2024 versus $1.43 million in Q2 2023Gross margin of 36.0% in Q2 2024 versus 19.7% in Q2 2023Operating loss of $7.37 million in Q2 2024 versus $4.14 million in Q2 2023Net cash used by operating activities of $6.11 million in Q2 2024 versus $3.61 million in Q2 2023Cash and cash equivalents of $7.16 million, excluding $0.14 million of restricted cash, as of June 30, 2024 versus $7.25 million, excluding $0.14 million, at March 31, 2024$6.06 million in net cash provided from financing activities during Q2 2024Qualified pipeline of more than $30 million1 Executive Commentary "Zapata AI is solving AI's biggest challenges, which include addressing the deficiencies of Large Language Models (LLMs), the cost burden and accessibility challenges of AI compute, and the inherent risks posed to data privacy and security from AI platforms today, through our ensembles of small, quantum-inspired, highly tailored AI models," said Christopher Savoie, CEO and Co-founder of Zapata AI. "This message has been well received by the market, and we made strong progress during the second quarter in building awareness and appreciation for our technology, evolving our partnerships, and growing our qualified pipeline of customers, which today stands at more than $30 million and spans across several focus industries." "During the second quarter, we expanded our commercial partnership with D-Wave to speed up the development and delivery of advanced AI systems that combine traditional and quantum computing. D-Wave is a complimentary partner for us, and we believe this expansion of our collaborative engagement demonstrates the value of our AI offering, and specifically how we are able to bolster the capability of their cloud service to create more efficient and powerful AI models. In insurance, we collaborated with KPMG to significantly improve a leading global insurance firm's risk and compliance modeling. By using advanced AI and optimization techniques, we managed to reduce the time needed to run complex models by more than 1,000 times while still maintaining accuracy. Defense remains a compelling market for our technology, and we were proud to publish our research findings from the second phase of Defense Advanced Research Projects Agency ("DARPA") Quantum Benchmarking program. Alongside our project partners, we demonstrated how quantum computing can bring significant economic benefits by solving complex industrial problems faster and more efficiently. Further, our expertise in rapidly deploying AI solutions in challenging environments helped us to deepen our work with the DOD through the agreement we announced this week with USSOCOM to collaborate on AI-driven solutions that can enhance situational awareness, real-time decision-making and operational readiness. In telecom, our partnership with Tech Mahindra is enabling us to have conversations with their portfolio of service providers as we demonstrate how we can more accurately anticipate, predict, and respond to service disruptions and high-traffic events while optimizing network and operations management." "As we look ahead, we are excited by the robust level of dialogue we are having with prospective customers. We have seen significant growth in customer interest since the beginning of the year and especially in Q2, as evidenced by strong growth in our qualified pipeline in our target verticals. We are optimistic about an acceleration in our business and converting on this pipeline as we go through the second half of 2024 and beyond," concluded Savoie. Financial and Operating Results Revenues in Q2 2024 were $2.00 million, which compares to revenues of $1.43 million in Q2 2023. The period over period improvement primarily reflects an increase in software license deliveries. Gross margin of 36.0% in Q2 2024 compares with 19.7% in Q2 2023 as the Company continues to see advances in its ability to drive profitability with increases in scale. Operating loss of $7.37 million in Q2 2024 compares to an operating loss of $4.14 million in Q2 2023 as general and administrative expenses increased by $3.01 million. A significant portion of this change is due to one-time fees that resulted from the Company's Nasdaq public markets listing and the filing of a registration statement on Form S-1 in connection with the Company's equity line of credit ("ELOC"), which drove higher professional services fees. Net loss in Q2 2024 was $15.58 million versus $4.72 million in Q2 2023. Q2 2024 net loss was impacted by a non-cash charge of $8.23 million loss related to the fair value change of a forward purchase agreement derivative liability. Net cash used by operating activities in Q2 2024 was $6.11 million, which included $0.89 million in cash from working capital, and compares with $3.61 million used in Q2 2023. As of June 30, 2024, cash and cash equivalents stood at $7.16 million, excluding restricted cash of $0.14 million. This compares with $7.25 million, excluding restricted cash of $0.14 million, at March 31, 2024. Zapata AI generated $6.06 million in cash from financing activities during Q2 2024, which was primarily comprised of $5.30 million raised via the issuance of common stock from the ELOC. Subsequent to Q2 2024-end, the company entered into an additional purchase agreement with Lincoln Park Capital Fund, LLC pursuant to which Lincoln Park has elected to purchase from the company, at the company's option, up to $10 million of shares of common stock subject to certain conditions. Conference call information Zapata AI will host a conference call today, August 14, 2024 at 8:30am ET to discuss its financial results and provide a business update. The conference call will be accessible live via a webcast on Zapata AI's investor relations site, which can be found at ir.zapata.ai, and a replay of the webcast will be made available shortly after the event's conclusion for one year. 1 Qualified pipeline figures are based on opportunities that 1) have a clearly identified budget, authority, need and timeline, 2) have progressed beyond the initial discovery stage and are typically in the proposal stage or later, and 3) are expected to close within the next 12 months. About Zapata AI Zapata AI ZPTA helps large enterprise and government agencies unlock the promise of AI with industrial-grade enterprise AI solutions powered by Orquestra®, a proprietary software platform that speeds up the Model Development Lifecycle (MDLC). We use ensembles of specialized models and innovative quantum mathematics to deliver real-time, actionable insights across industries such as defense, manufacturing, automotive and finance. Our solutions excel in high-stakes scenarios where immediate, accurate decision-making is crucial, ensuring our clients maintain a competitive edge in rapidly changing environments. Founded in 2017 and headquartered in Boston, Massachusetts, with offices worldwide, Zapata AI holds one of the largest patent libraries for enterprise AI and quantum computing. For more information on Zapata AI, visit our website or follow us on LinkedIn or X. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally are accompanied by words such as "believe," "may," "will," "intend," "evolve," "expect," "should," "would," "plan," "predict," "potential," "progress," "seem," "seek," "future," "outlook," and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding anticipated interest in our offerings by potential customers, our ability to progress new opportunities across industries and other statements that are not historical facts. These statements are based on the current expectations of Zapata AI's management and are not predictions of actual performance. The inclusion of forward-looking statements should not be regarded as a representation that such plans, estimates and expectations will be achieved. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Risks and uncertainties that could cause our actual results to materially differ from those described in the forward-looking statements include, but are not limited to, (i) our ability to enter into agreements with potential customers identified in our pipeline; (ii) a decline in the price of our securities if we fail to meet the expectations of investors or securities analysts; (iii) our ability to attract new customers, retain existing customers, and grow; competition in the generative AI industry; (iv) our ability to raise additional capital on non-dilutive terms or at all, including through our purchase agreements with Lincoln Park Capital Fund, LLC; (v) our ability to improve our operational, financial and management controls; (vi) failure to maintain and enhance awareness of our brand; (vii) increased costs associated with operating as a public company; (viii) protection of proprietary rights; intellectual property infringement, data protection and other losses; and (ix) other risks and uncertainties described in our filings with the Securities and Exchange Commission. ZAPATA COMPUTING HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $7,164 $3,332 Accounts receivable ($2,235 and $829 from related parties, respectively) 2,505 1,938 Prepaid expenses and other current assets 1,344 323 Total current assets 11,013 5,593 Property and equipment, net 106 156 Operating lease right-of-use assets 68 238 Deferred offering costs - 1,943 Other non-current assets - 137 Total assets $11,187 $8,067 Liabilities, Convertible Preferred Stock and Stockholders' Deficit Current liabilities: Accounts payable ($4,083 and $1,500 to related parties, respectively) $11,575 $6,452 Accrued expenses and other current liabilities 5,255 1,945 Deferred revenue 736 744 Deferred legal fees 2,953 - Operating lease liability, current 75 252 Note payable - related party, current 2,305 - Total current liabilities 22,899 9,393 Forward purchase agreement derivative liability 13,163 - Senior secured notes 2,081 8,900 Total liabilities 38,143 18,293 Commitments and contingencies (Note 16) Convertible preferred stock (Series Seed, A, B-1 and B-2), $0.0001 par value; 0 and 14,647,823 shares authorized at June 30, 2024 and December 31, 2023, respectively; 0 and 13,001,114 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively - 64,716 Stockholders' deficit: Common stock, $0.0001 par value; 600,000,000 and 23,500,000 shares authorized at June 30, 2024 and December 31, 2023, respectively; 35,255,013 and 4,678,950 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 4 - Additional paid-in capital 100,545 14,633 Accumulated other comprehensive loss (83) (49) Accumulated deficit (127,422) (89,526) Total stockholders' deficit (26,956) (74,942) Total liabilities, convertible preferred stock and stockholders' deficit $11,187 $8,067 ZAPATA COMPUTING HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue ($1,168, $494, $1,601 and $989 from related parties, respectively)$2,001 $1,432 $3,219 $2,944 Cost of revenue 1,280 1,150 2,328 2,456 Gross profit 721 282 891 488 Operating expenses: Sales and marketing ($696, $696, $1,391 and $1,391 from related parties, respectively) 2,193 1,648 3,841 3,349 Research and development 1,593 1,470 3,007 3,599 General and administrative 4,307 1,299 6,489 2,768 Total operating expenses 8,093 4,417 13,337 9,716 Loss from operations (7,372) (4,135) (12,446) (9,228) Other income (expense): Interest expense (77) - (862) - Loss on issuance of forward purchase agreement derivative liability - - (4,935) - Change in fair value of forward purchase agreement derivative liability (8,228) - (8,228) - Loss on issuance of senior secured notes - - (9,776) - Other income (expense), net 108 (558) (1,636) (529) Total other expense, net (8,197) (558) (25,437) (529) Net loss before income taxes (15,569) (4,693) (37,883) (9,757) Provision for income taxes (7) (23) (13) (27) Net loss $(15,576) $(4,716) $(37,896) $(9,784) Net loss per share attributable to common stockholders, basic and diluted$(0.48) $(1.01) $(2.06) $(2.10) Weighted-average common shares outstanding, basic and diluted 32,182,440 4,661,226 18,383,203 4,659,238 Net loss $(15,576) $(4,716) $(37,896) $(9,784) Foreign currency translation adjustment (19) (6) (34) (7) Comprehensive loss$(15,595) $(4,722) $(37,930) $(9,791) ZAPATA COMPUTING HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) June 30, 2024 2023 Cash flows from operating activities: Net loss $(37,896) $(9,784) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 75 86 Non-cash interest expense 761 - Non-cash vendor payments 150 - Loss on issuance of senior secured notes 9,776 - Loss on issuance of forward purchase agreement derivative liability 4,935 - Change in fair value of senior notes - 570 Change in fair value of forward purchase agreement derivative liability 8,228 - Stock-based compensation 420 207 Non-cash lease expense 170 173 Equity line of credit commitment expense 1,688 - Changes in operating assets and liabilities: Accounts receivable (($1,405) and ($88) from related parties, respectively) (568) 280 Prepaid expenses and other current assets (881) (482) Accounts payable ($2,583 and $758 from related parties, respectively) 5,457 1,721 Accrued expenses and other current liabilities and other non-current liabilities (5) (1,250) Deferred revenue (8) (279) Deferred legal fees (378) - Operating lease liabilities (178) (179) Net cash used in operating activities (8,254) (8,937) Cash flows from investing activities: Purchases of property and equipment (26) (2) Net cash used in investing activities (26) (2) Cash flows from financing activities: Payment of deferred offering costs (2,929) - Proceeds from the exercise of stock options 68 9 Issuances of common stock under equity line of credit 5,300 - Proceeds from the reverse recapitalization 12,636 - Proceeds from the partial early termination of the forward purchase agreement 2,500 - Payment of note payable - related party (315) - Prepayment for forward purchase agreement (10,986) - Proceeds from senior and senior secured notes 5,878 4,875 Net cash provided by financing activities 12,152 4,884 Effect of exchange rate changes on cash and cash equivalents (40) (22) Net increase (decrease) in cash and cash equivalents 3,832 (4,077) Cash and cash equivalents and restricted cash at beginning of period 3,469 10,210 Cash and cash equivalents and restricted cash at end of period$7,301 $6,133 Contacts Zapata AI Media: [email protected] Investors: [email protected] Market News and Data brought to you by Benzinga APIs

HeartCore Reports Second Quarter 2024 Financial Results - HeartCore Enterprises (NASDAQ:HTCR)

NEW YORK and TOKYO, Aug. 14, 2024 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc. HTCR ("HeartCore" or "the Company"), a leading enterprise software and consulting services company based in Tokyo, reported financial results for the second quarter ended June 30, 2024. Second Quarter 2024 and Recent Operational Highlights Partnered with INCUDATA Corp. to enhance corporate digital marketing strategiesAnnounced Go IPO Client, BloomZ, began trading on the Nasdaq Stock ExchangeAuthorized second dividend payment of $0.02 per sharePartnered with Hitachi Systems, Ltd. to offer combined package of HeartCore CMS and GRED Web Security Assessment CloudAnnounced and hosted seminar on U.S. exchange listing strategies for Japanese companies with Akerman LLP and Gateway GroupSold a Go IPO Client Warrant for $9 million that will be recognized as revenue when the client becomes a publicly listed company, which is expected to occur in Fall 2024Disbursed first dividend payment of $0.02 per share on May 3, 2024Expanded partnership with Heart-Tech HealthEngaged with Onside Content to develop AI-based content marketing evaluation and reporting index solutionSigned 14th Go IPO ClientFormed an Artificial Intelligence Software Development Division Management Commentary "We achieved significant strides in our Go IPO business, highlighted by the successful listing of one of our clients on the Nasdaq, which is the first Japanese IPO since September 2023 and the third IPO since the inception of this business," said HeartCore CEO Sumitaka Kanno Yamamoto. "We are hopeful that this milestone marks the genesis of a second wave of Japanese IPOs, as the Go IPO pipeline continues to show promising developments. Currently, we have three to four clients scheduled to go public by the end of the year. These Go IPO deals are expected to be instrumental in our second-half performance, and with an optimistic outlook on the resurgence of Japanese IPOs, we anticipate that our Go IPO business will play a key role in driving profitable returns in the upcoming quarter." "With 20% organic growth this quarter, and 30% organic growth expected for 2024, our software division continues to remain a stable growth engine and reliable source of cash flow, serving as the lifeblood of HeartCore's business operations. In addition, our strategic partnerships with Hitachi Systems and INCUDATA Corp., two prominent Japanese IT companies, will further enhance and innovate our software offerings, which will play a vital role in maintaining our 90% plus customer retention rate and separating ourselves from competitors. I am very encouraged by every arm within our software umbrella, as each one is projected to be profitable and has proven to deliver immense value to clients. The next few quarters look extremely bright for HeartCore; we look forward to sharing additional positive news around our Go IPO initiatives and other general operational updates." Second Quarter 2024 Financial Results Revenues were $4.1 million compared to $5.1 million in the same period last year. The decrease was primarily due to an approximate 10% depreciation on the Japanese yen and a decrease in maintenance and supporting services, as the Company entered into a significant maintenance service contract with an important customer in 2023. Additionally, although the organic software business has grown by more than 20%, the Company's subsidiary, Sigmaways recognized losses within its business, and one of the Company's GO IPO clients has returned its fees after discovering that it could not go public. Gross profit decreased to $0.8 million compared to $1.5 million in the same period last year. The decrease was primarily due to the aforementioned reasons above. Operating expenses decreased to $2.3 million compared to $3.0 million in the same period last year. The improvement was primarily due to lower selling and general and administrative expenses. Net loss was about $2.2 million or $(0.09) per diluted share compared to a net loss of $1.0 million or $(0.04) per diluted share, in the same period last year. As of June 30, 2024, the Company had cash and cash equivalents of $3.8 million compared to $1.0 million on December 31, 2023. Six-Months 2024 Financial Results Revenues were $9.1 million compared to $13.8 million in the same period last year. The decrease was primarily due to decreased revenues from Go IPO consulting services, as the Company received warrants from two IPO consulting customers who successfully listed on the Nasdaq in the same period last year, and a decrease in maintenance and supporting services, as the Company entered into a significant maintenance service contract with an important customer in 2023. Additionally, although the organic software business has grown by more than 20%, the Company's subsidiary, Sigmaways recognized losses within its business, and one of the Company's GO IPO clients has returned its fees after discovering that it could not go public. Gross profit was $2.8 million compared to $7.1 million in the same period last year. The decrease was primarily due to the aforementioned reasons above. Operating expenses decreased to $5.0 million compared to $6.3 million in the same period last year. The decrease was primarily due to lower selling and general and administrative expenses. Net loss was about $3.7 million or $(0.16) per diluted share compared to a net income of $0.8 million or $0.05 per diluted share, in the same period last year. About HeartCore Enterprises, Inc. Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore's customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore's GO IPOSM consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company's products and services is available at and https://heartcore-enterprises.com/. 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 Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond HeartCore's control which could, and likely will materially affect actual results, and levels of activity, performance, or achievements. Any forward-looking statement reflects HeartCore's current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. HeartCore assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein. HeartCore Investor Relations Contact: Gateway Group, Inc. Matt Glover and John Yi [email protected] (949) 574-3860 HeartCore Enterprises, Inc. Consolidated Balance Sheets June 30, December 31, 2024 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents$3,806,349 $1,012,479 Accounts receivable 2,440,872 2,623,682 Investments in marketable securities 435,498 642,348 Investment in equity securities - 300,000 Prepaid expenses 3,877,454 536,865 Current portion of long-term note receivable 100,000 100,000 Due from related party 40,495 44,758 Other current assets 199,221 234,761 Total current assets 10,899,889 5,494,893 Non-current assets: Accounts receivable, non-current 640,197 - Property and equipment, net 640,787 763,730 Operating lease right-of-use assets 2,106,466 2,467,889 Intangible asset, net 4,196,875 4,515,625 Goodwill 3,276,441 3,276,441 Long-term investment in SAFE 350,000 - Long-term investment in equity securities 300,000 - Long-term investment in warrants 543,120 2,004,308 Long-term note receivable 200,000 200,000 Deferred tax assets 395,743 369,436 Security deposits 310,833 348,428 Long-term loan receivable from related party 145,274 182,946 Other non-current assets 70,309 71 Total non-current assets 13,176,045 14,128,874 - Total assets$24,075,934 $19,623,767 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses$1,757,545 $1,757,038 Accounts payable and accrued expenses - related party 21,579 - Accrued payroll and other employee costs 628,136 723,305 Due to related party 140 1,476 Short-term debt - 135,937 Current portion of long-term debts 508,729 371,783 Insurance premium financing 112,488 - Factoring liability 320,759 562,767 Operating lease liabilities, current 358,377 396,535 Finance lease liabilities, current 15,992 17,445 Income tax payables 1,142 162,689 Deferred revenue 2,207,420 2,166,175 Other current liabilities 9,261,012 216,405 Total current liabilities 15,193,319 6,511,555 Non-current liabilities: Long-term debts 1,403,569 1,770,352 Operating lease liabilities, non-current 1,804,967 2,135,160 Finance lease liabilities, non-current 52,055 66,779 Deferred tax liabilities 1,175,125 1,264,375 Other non-current liabilities 685,364 208,732 Total non-current liabilities 5,121,080 5,445,398 Total liabilities 20,314,399 11,956,953 Shareholders' equity: Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023) - - Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,864,144 and 20,842,690 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively) 2,085 2,083 Additional paid-in capital 19,325,270 19,594,801 Accumulated deficit (18,047,919) (14,763,469) Accumulated other comprehensive income 325,857 331,881 Total HeartCore Enterprises, Inc. shareholders' equity 1,605,293 5,165,296 Non-controlling interests 2,156,242 2,501,518 Total shareholders' equity 3,761,535 7,666,814 Total liabilities and shareholders' equity$24,075,934 $19,623,767 HeartCore Enterprises, Inc. Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) For the six months ended June 30, 2024 2023 Revenues$9,113,120 $13,829,523 Cost of revenues 6,275,050 6,688,004 Gross profit 2,838,070 7,141,519 Operating expenses: Selling expenses 399,115 1,056,704 General and administrative expenses 4,428,712 5,133,094 Research and development expenses 200,402 119,232 Total operating expenses 5,028,229 6,309,030 Income (loss) from operations (2,190,159) 832,489 Other income (expenses): Changes in fair value of investments in marketable securities (430,331) (229,022) Changes in fair value of investments in warrants (1,237,707) 166,107 Interest income 4,624 50,270 Interest expenses (73,701) (82,454) Other income 134,874 124,001 Other expenses (49,050) (36,754) Total other expenses (1,651,291) (7,852) Income (loss) before income tax provision (3,841,450) 824,637 Income tax expense (benefit) (152,330) 39,446 Net income (loss) (3,689,120) 785,191 Less: net loss attributable to non-controlling interests (404,670) (185,298) Net income (loss) attributable to HeartCore Enterprises, Inc.$(3,284,450)$970,489 Other comprehensive income (loss): Foreign currency translation adjustment (13,825) 5,499 Total comprehensive income (loss) (3,702,945) 790,690 Less: comprehensive loss attributable to non-controlling interests (412,471) (187,258) Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.$(3,290,474)$977,948 Net income (loss) per common share attributable to HeartCore Enterprises, Inc. Basic$(0.16)$0.05 Diluted$(0.16)$0.05 Weighted average common shares outstanding Basic 20,859,429 19,959,333 Diluted 20,859,429 19,959,333 HeartCore Enterprises, Inc. Unaudited Consolidated Statements of Cash Flows For the six months ended June 30, 2024 2023 Cash flows from operating activities Net income (loss)$(3,689,120)$785,191 Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Depreciation and amortization expenses 374,946 306,097 Amortization of debt issuance costs 2,296 1,316 Non-cash lease expense 182,546 155,301 Gain on termination of lease (469) - Deferred income taxes (153,531) (75,240) Stock-based compensation 147,754 1,094,393 Warrants received as noncash consideration - (4,009,335) Changes in fair value of investments in marketable securities 430,331 229,022 Changes in fair value of investment in warrants 1,237,707 (166,107) Loss on disposal of property and equipment 1,894 - Changes in assets and liabilities: Accounts receivable (548,402) (596,312) Prepaid expenses 158,110 1,245 Other assets (7,526) 23,277 Accounts payable and accrued expenses 272,375 (8,359) Accounts payable and accrued expenses - related party 21,956 - Accrued payroll and other employee costs (278,361) 124 Due to related party (1,246) 4,214 Operating lease liabilities (183,047) (147,035) Income tax payables (152,697) 106,625 Deferred revenue 165,073 810,639 Other liabilities 558,667 116,382 Net cash flows used in operating activities (1,460,744) (1,368,562) Cash flows from investing activities Purchases of property and equipment (4,134) (180,451) Prepayment for property and equipment (35,209) - Advance on note receivable - (300,000) Purchase of long-term investment in SAFE (350,000) - Net proceeds from sale of warrants 5,640,000 Repayment of loan provided to related party 21,166 23,715 Payment for acquisition of subsidiary, net of cash acquired - (724,910) Net cash flows provided by (used in) investing activities 5,271,823 (1,181,646) Cash flows from financing activities Payments for finance leases (8,526) (11,243) Proceeds from short-term debt 68,138 - Repayment of short-term and long-term debts (281,451) (411,923) Repayment of insurance premium financing (60,201) (149,250) Net proceeds from factoring arrangement - 328,967 Net repayment of factoring arrangement (242,008) - Payments for debt issuance costs - (448) Distribution of dividends (417,283) Capital contribution from non-controlling shareholder 67,195 - Net cash flows used in financing activities (874,136) (243,897) Effect of exchange rate changes (143,073) (144,480) Net change in cash and cash equivalents 2,793,870 (2,938,585) Cash and cash equivalents - beginning of the period 1,012,479 7,177,326 Cash and cash equivalents - end of the period$3,806,349 $4,238,741 Supplemental cash flow disclosures: Interest paid$74,063 $40,083 Income taxes paid$117,524 $- Non-cash investing and financing transactions Operating lease right-of-use assets obtained in exchange for operating lease liabilities$125,735 $- Insurance premium financing$172,689 $389,035 Liabilities assumed in connection with purchase of property and equipment$- $2,199 Common shares issued for acquisition of subsidiary$- $3,150,000 Warrants converted to marketable securities$223,481 $1,257,868 Market News and Data brought to you by Benzinga APIs