Sumitaka Yamamoto
About Sumitaka Yamamoto
Sumitaka Yamamoto, age 60, is Chairman of the Board (since Aug 16, 2021) and Chief Executive Officer/President (since May 18, 2021) of HeartCore Enterprises (HTCR); he founded HeartCore Co. and has been its CEO and director since June 2009, and holds a bachelor’s degree in Spanish from Kansai Gaidai University in Tokyo, Japan . Under his tenure, HTCR’s revenue grew from $8.8m in FY 2022 to $30.4m in FY 2024, while EBITDA improved from -$6.6m to +$8.0m in FY 2024*; he retained a significant ownership stake (48.5% as of Dec 31, 2024), aligning incentives but historically giving him effective control until 2025 .
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| HeartCore Enterprises, Inc. | Chairman; CEO/President; Director | Chairman since 2021-08-16; CEO/President and Director since 2021-05-18 | Led public company formation and growth initiatives; consolidated leadership across Chair/CEO roles . |
| HeartCore Co., Ltd. | Founder; CEO; Director | CEO/Director since 2009-06 | Product and go-to-market leadership in CMS/DCX; provides operating expertise to parent . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Other public company boards | — | — | Company discloses Mr. Yamamoto has not held directorships in other reporting companies . |
Fixed Compensation
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Base Salary ($) | 387,025 | 508,390 (amended to $450,000 effective 2022-11-01) | 525,102 | 505,714 |
| Cash Bonus ($) | — | 138,803 (Board approved 18,000,000 JPY bonus effective 2022-02-22) | — | — |
| Stock Awards ($) | — | — | — | 34,917 |
| Pension/Deferred Comp | None disclosed (no defined benefit or nonqualified deferred comp) | — | — | — |
Notes: Executive Employment Agreement dated 2022-02-09 set salary at $381,000 and RSU grant; eligible for Board-determined bonuses (no disclosed target %) .
Performance Compensation
- Design: Long-term incentives primarily time-based restricted stock under equity plans; no disclosed formulaic annual bonus targets, weightings, or performance-vested PSUs for Mr. Yamamoto .
- 2022 discretionary award: Board/Audit Committee approved 18,000,000 JPY (~$156,800) performance-linked bonus effective 2022-02-22 for prior performance .
| Incentive | Metric/Structure | Weighting | Target | Actual/Payout | Vesting |
|---|---|---|---|---|---|
| Annual Cash Bonus (2022) | Discretionary, performance-linked (Board-approved) | N/A | N/A | 18,000,000 JPY (~$156.8k) | N/A |
| RSU/Restricted Stock (grant) | Time-based RSUs; 45,720 shares granted 2022-02-09 | N/A | N/A | Grant made; value not disclosed in SCT at grant year | 25% on each of 2023-02-09, 2024-02-09, 2025-02-09, 2026-02-09 |
Equity Ownership & Alignment
- Beneficial ownership: High insider ownership; control diminished below 50% by end-2024 as outstanding shares rose, but Mr. Yamamoto remains largest shareholder .
- Hedging/pledging: Company policy prohibits hedging and pledging/margin transactions for directors, officers, employees, and controlled entities; mitigates forced-sale/hedging misalignment risk .
- Reporting compliance: Company disclosed Mr. Yamamoto filed two Form 4s late in 2024 (timeliness issue) .
| Date (Record) | Shares Beneficially Owned | % Outstanding |
|---|---|---|
| 2022-03-31 | 10,984,539 | 58.07% |
| 2023-12-31 | 10,607,159 | 50.9% |
| 2024-12-31 | 10,647,393 | 48.5% |
| RSU/Restricted Stock Status (as of 2024-12-31) | Shares | Notes |
|---|---|---|
| Unvested | 22,860 | Remaining 50% of 45,720 grant; scheduled to vest 11,430 on 2025-02-09 and 11,430 on 2026-02-09 . |
| Market Value per Share (proxy in table) | $1.815 | Per award table; for reference only. |
Policy and Guidelines:
- Anti-hedging policy in place; zero-cost collars and forward sale contracts prohibited .
- Pledging/margin prohibited: may not purchase on margin, borrow against accounts holding Company securities, or pledge Company stock as loan collateral .
- No stock ownership guidelines disclosed for executives (not referenced in filings provided).
Employment Terms
- Agreement: Executive Employment Agreement dated 2022-02-09; at-will employment with automatic one-year renewals unless 30 days’ non-renewal notice; initial salary $381,000; 45,720 RSUs granted under 2021 Plan, 25% vest annually over 4 years; eligible for discretionary bonus .
- Amendment: Salary increased to $450,000 effective 2022-11-01 .
- Termination/Severance: If terminated without Cause or resigns for Good Reason, company pays (i) accrued compensation/benefits and expenses; (ii) lump sum equal to base salary for remainder of current term; and (iii) unvested equity under the agreement vests (to the extent not already vested) .
- Definitions: Good Reason includes, among other items, post-Change-of-Control material diminution of comp/benefits, salary/bonus reduction not across-the-board, >50 mile relocation, or uncured material breach; Cause includes listed misconduct, felony conviction, gross negligence, and specified performance failures after cure notice .
- Change of Control: Standard 50%+ voting power transfer, certain mergers/asset sales; agreements include 280G excise tax gross-up to make executive whole on parachute excise taxes (shareholder-unfriendly) .
- Restrictive Covenants: Non-solicitation during term and for 3 years after; enforcement subject to state law, with “blue pencil” provisions; Delaware law; Santa Clara County, CA forum; arbitration clause included .
Board Service & Governance
- Board history: Director since 2021-05-18; Chairman since 2021-08-16; combined CEO/Chair structure. The Board states combined roles provide focused leadership, with independent director oversight and executive sessions mitigating risks; leadership structure is reviewed periodically .
- Controlled company status: HTCR operated as a Nasdaq “controlled company” through 2024 due to Mr. Yamamoto’s majority voting control, availing exemptions from having compensation and nominating/governance committees; status ended in 2025 as his voting power fell below 50% (driven by share issuances under ATM), and HTCR formed independent Compensation and Nominating/Governance committees on 2025-02-14 .
- Committee roles: Audit Committee comprises independent directors (Groenewald—Chair, Neville, Sato); Compensation Committee (formed Feb 2025) independent directors (Neville—Chair, Groenewald, Sato); Nominating/Corporate Governance Committee (formed Feb 2025) independent directors (Sato—Chair, Neville, Groenewald); Mr. Yamamoto is not listed as a member of these committees .
- Meeting attendance: In 2024, Board held 12 meetings; Audit Committee held one; each director attended >75% of combined meetings of the Board/committees on which they served .
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($) | 8,818,312 | 21,845,830 | 30,407,229 |
| EBITDA ($) | -6,612,746* | -3,436,336* | 7,968,970* |
Notes: Revenue nearly quadrupled from 2022 to 2024; EBITDA turned positive in 2024*, indicating improved operating leverage.
*Values retrieved from S&P Global.
Achievements and Risks:
- Achievements: Revenue growth and EBITDA inflection in 2024*, along with strategic partnerships and business transitions disclosed elsewhere in filings .
- Governance/risk: Related-party loan receivable from a company controlled by the CEO (balance $164,067 at 12/31/2024) and late Section 16 filings (two Form 4s for Mr. Yamamoto) are governance watch-items .
- Control/independence: Formerly a “controlled company”; committees now formed but Board majority independence remains in phase-in period, while CEO retains significant influence as largest shareholder .
Related Party Transactions
- Loan receivable to an entity controlled by the CEO: $164,067 outstanding at 12/31/2024 (1.475% interest; unsecured; amortizing since Feb 2022) .
- Short-term debt from CSO (not Yamamoto) also disclosed for context ($75,000 at 12/31/2024) .
Equity Award Vesting and Potential Selling Pressure
- Scheduled vesting from 2022 RSU grant: 11,430 shares on 2025-02-09 and 11,430 on 2026-02-09, which may add incremental supply around vest dates; insider trading policy and trading windows apply .
- Pledging/hedging prohibited, reducing forced-sale/derivative monetization risks .
Compliance, Clawback, and Policies
- Insider trading policy filed as Exhibit 19.1 (FY 2024 10-K), including trading window guidance; anti-hedging; and anti-pledging/margin provisions .
- No specific executive compensation clawback policy disclosure located in provided sections; Code of Ethics in place .
Investment Implications
- Alignment: Very high insider ownership (48.5% at 2024 year-end) strongly aligns CEO with equity value; policy prohibits pledging/hedging, improving alignment quality .
- Pay-for-performance: Incentive mix skews to time-vested equity and discretionary cash bonuses; limited disclosure of objective, formulaic performance metrics or PSUs reduces visibility on pay-for-performance rigor .
- Governance risk: Combined CEO/Chair role, past “controlled company” exemptions, related-party loan, and 280G excise tax gross-up create governance overhang; formation of independent committees in 2025 modestly improves oversight but majority-independent board remains in phase-in .
- Execution signal: Revenue scale-up and 2024 EBITDA inflection* support a constructive fundamental view; near-term insider supply from RSU vesting is modest (22,860 total remaining) but should be monitored around vest dates .
- Trading watch-items: Late Form 4s (two for Mr. Yamamoto) point to process risk; monitor Section 16 filings and 8-K 5.02 events for leadership transitions/comp changes .