What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 764 added, 877 removed, 236 unchanged (87% of the section changed)

FINANCIAL STATEMENTS

ENTERPRISES, INC.

BALANCE SHEETS

September 30,

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

Current assets:

2 unchanged sentences

Investments in marketable securities

Investment in equity securities

Prepaid expenses

7 unchanged sentences

Operating lease right-of-use assets

Intangible asset, net

Long-term investment in SAFE

Long-term investment in equity securities

Long-term investment in warrants

3 unchanged sentences

Long-term loan receivable from related party

Long-term loan receivable

Other non-current assets

4 unchanged sentences

Accounts payable and accrued expenses – related party

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Due to related parties

Short-term debt

Short-term debt – related party

Current portion of long-term debts

11 unchanged sentences

Finance lease liabilities, non-current

Deferred tax liabilities

Other non-current liabilities

Asset retirement obligations

Total non-current liabilities

1 unchanged sentence

Shareholders’ equity:

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023)

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024)

Common shares ($ 0.0001 par value, 200,000,000 shares authorized;

20,864,144 and 20,842,690 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively)

22,075,333 and 21,937,987 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

Subscription receivable

Additional paid-in capital

Accumulated deficit

( 6,990,113 )

( 14,763,469 )

Accumulated other comprehensive income

4 unchanged sentences

Total liabilities and shareholders’ equity

accompanying notes are an integral part of these unaudited consolidated financial statements.

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Cost of revenues

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

Cost of revenues (including cost of revenues resulting from transactions with a related party of $ 25,195 and nil for the three months ended March 31, 2025 and 2024, respectively)

Operating expenses:

Selling expenses

General and administrative expenses

General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of $ 17,615 and nil for the three months ended March 31, 2025 and 2024, respectively)

Research and development expenses

Total operating expenses

Income (loss) from operations

( 1,787,745 )

Loss from operations

Other income (expenses):

1 unchanged sentence

Changes in fair value of investment in warrants

Loss on sale of warrants

( 3,970,628 )

Interest income

2 unchanged sentences

Total other expenses

( 1,057,826 )

( 2,709,117 )

Income (loss) before income tax provision

( 2,521,720 )

( 1,697,083 )

Income tax expense

Net income (loss)

( 2,541,133 )

( 1,755,942 )

Loss before income tax expense (benefit)

Income tax expense (benefit)

net loss attributable to non-controlling interests

Net income (loss) attributable to HeartCore Enterprises, Inc.

$ ( 2,307,220 )

$ ( 1,336,731 )

Net loss attributable to HeartCore Enterprises, Inc.

Other comprehensive income (loss):

Foreign currency translation adjustment

Total comprehensive income (loss)

( 2,631,876 )

( 1,841,186 )

Total comprehensive loss

comprehensive loss attributable to non-controlling interests

Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.

$ ( 2,396,782 )

$ ( 1,418,834 )

Net income (loss) per common share attributable to HeartCore Enterprises, Inc.

Comprehensive loss attributable to HeartCore Enterprises, Inc.

Net loss per common share attributable to HeartCore Enterprises, Inc.

Weighted average common shares outstanding

accompanying notes are an integral part of these unaudited consolidated financial statements.

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Comprehensive

Shareholders’

Non-controlling

Shareholders’

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

Common Shares

Comprehensive

Shareholders’

Non-controlling

Shareholders’

Accumulated Other

Total HeartCore

Enterprises, Inc.

Number of Shares

Accumulated Deficit

Comprehensive Income

Shareholders’ Equity

controlling Interests

Shareholders’ Equity

Balance, December 31, 2024

3 unchanged sentences

( 3,086,992 )

Foreign currency translation adjustment

Capital contribution from non-controlling shareholder

Stock-based compensation

Balance, March 31, 2024

( 3,086,992 )

( 3,137,381 )

( 1,951,100 )

( 2,211,118 )

Foreign currency translation adjustment

Distribution of dividends

Issuance of common shares

Collection of subscription receivable

Exercise of stock options

Stock-based compensation

Balance, June 30, 2024

Balance, March 31, 2025

$ ( 19,331,835 )

Net income (loss)

Foreign currency translation adjustment

Distribution of dividends

Stock-based compensation

Balance, September 30, 2024

$ ( 1,240,634 )

Common Shares

Accumulated Other

Total HeartCore

Enterprises, Inc.

Comprehensive

Shareholders’

Non-controlling

Shareholders’

1 unchanged sentence

$ ( 14,763,469 )

Net income (loss)

Foreign currency translation adjustment

Issuance of common shares for acquisition of subsidiary

Non-controlling interest arising from acquisition of subsidiary

Stock-based compensation

Balance, March 31, 2023

( 1,333,350 )

Foreign currency translation adjustment

Stock-based compensation

Balance, June 30, 2023

( 1,478,002 )

( 9,603,090 )

( 2,307,220 )

( 2,541,133 )

Net income (loss)

( 2,307,220 )

( 2,541,133 )

Foreign currency translation adjustment

Capital contribution from non-controlling shareholder

Stock-based compensation

Balance, September 30, 2023

$ ( 11,910,310 )

Balance, March 31, 2024

$ ( 16,096,819 )

accompanying notes are an integral part of these unaudited consolidated financial statements.

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months

Ended September 30,

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

Cash flows from operating activities:

Net income (loss)

$ ( 3,137,381 )

Adjustments to reconcile net income (loss) to net cash flows used in operating activities:

$ ( 1,478,002 )

Adjustments to reconcile net loss to net cash flows used in operating activities:

Depreciation and amortization expenses

Loss (gain) on disposal of property and equipment

Loss on disposal of property and equipment

Amortization of debt issuance costs

Non-cash lease expense

Loss (gain) on termination of lease

Gain on termination of lease

Deferred income taxes

Stock-based compensation

Marketable securities received as noncash consideration

Warrants received as noncash consideration

( 12,969,683 )

( 4,009,335 )

Changes in fair value of investments in marketable securities

Changes in fair value of investment in warrants

( 1,631,700 )

Loss on sale of warrants

Gain on settlement of asset retirement obligations

Changes in assets and liabilities:

3 unchanged sentences

Accounts payable and accrued expenses – related party

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Due to related parties

Operating lease liabilities

4 unchanged sentences

( 2,000,791 )

( 2,457,661 )

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from disposal of property and equipment

Advance on note receivable

Purchase of long-term investment in SAFE

Net proceeds from sale of warrants

Proceeds from sale of marketable securities

Repayment of loan provided to related party

Payment for acquisition of subsidiary, net of cash acquired

Net cash flows provided by (used in) investing activities

( 1,781,810 )

Net cash flows provided by investing activities

Cash flows from financing activities:

Payments for finance leases

Proceeds from short-term and long-term debts

Proceeds from short-term debt

Repayment of short-term and long-term debts

Repayment of insurance premium financing

Net proceeds from factoring arrangement

Net repayment of factoring arrangement

Payments for debt issuance costs

Distribution of dividends

Capital contribution from non-controlling shareholder

Net cash flows used in financing activities

( 1,529,441 )

Proceeds from issuance of common shares

Proceeds from collection of subscription receivable

Proceeds from exercise of stock options

Net cash flows provided by (used in) financing activities

Effect of exchange rate changes

7 unchanged sentences

Non-cash investing and financing transactions:

Finance lease right-of-use assets obtained in exchange for finance lease liabilities

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

Remeasurement of operating lease liabilities and right-of-use assets due to lease modification

Liabilities assumed in connection with purchase of property and equipment

Insurance premium financing

Common shares issued for acquisition of subsidiary

Warrants converted to marketable securities

accompanying notes are an integral part of these unaudited consolidated financial statements.

ENTERPRISES, INC.

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Enterprises, Inc.

(“HeartCore USA” or the “Company”), a holding company, was incorporated under the laws of the

State of Delaware on May 18, 2021.

July 16, 2021, the Company executed a share exchange agreement with certain shareholders of HeartCore Co., Ltd.

(“HeartCore Japan”),

a company that was incorporated in Japan on June 12, 2009.

Pursuant to the terms of the share exchange agreement, the Company issued

15,999,994 shares of its common shares to the shareholders of HeartCore Japan in exchange for 10,706 shares out of 10,984 shares of common

shares issued by HeartCore Japan, representing approximately 97.5 % of HeartCore Japan’s outstanding common shares.

24, 2022, the Company purchased the remaining 278 shares of common shares of HeartCore Japan.

As a result, HeartCore Japan became a wholly-owned

operating subsidiary of the Company.

share exchange on July 16, 2021 has been accounted for as a recapitalization between entities under common control since the same controlling

shareholders controlled these two entities before and after the transaction.

The consolidation of the Company and its subsidiary has

been accounted for at historical cost and prepared on the basis as if the transaction had become effective as of the beginning of the

earliest period presented in the accompanying unaudited consolidated financial statements.

Company, via its wholly-owned operating subsidiary, HeartCore Japan, is mainly engaged in the business of developing and sales of comprehensive

Beginning from early 2022, HeartCore USA is engaged in the business of providing consulting services to Japanese companies

with intention to go public in the United States capital market.

September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire

51 % of the outstanding shares of Sigmaways, Inc.

(“Sigmaways”), a company incorporated under the laws of the State of California

in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V.

and Sigmaways Technologies Ltd.

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION

HeartCore Enterprises, Inc.

USA”), a holding company, was incorporated under the laws of the State of Delaware on May 18, 2021 .

On July 16, 2021, HeartCore USA executed a share

exchange agreement with certain shareholders of HeartCore Co., Ltd.

(“HeartCore Japan”), a company that was incorporated in

Japan on June 12, 2009.

Pursuant to the terms of the share exchange agreement, HeartCore USA issued 15,999,994 shares of its common shares

to the shareholders of HeartCore Japan in exchange for 10,706 shares out of 10,984 shares of common shares issued by HeartCore Japan,

representing approximately 97.5 % of HeartCore Japan’s outstanding common shares.

On February 24, 2022, HeartCore USA purchased the

remaining 278 shares of common shares of HeartCore Japan.

As a result, HeartCore Japan became a wholly-owned operating subsidiary of HeartCore

The share exchange on July 16, 2021 has been accounted

for as a recapitalization between entities under common control since the same controlling shareholders controlled these two entities

before and after the transaction.

The consolidation of HeartCore USA and its subsidiary has been accounted for at historical cost and

prepared on the basis as if the transaction had become effective as of the beginning of the earliest period presented in the accompanying

unaudited consolidated financial statements.

HeartCore USA, via its wholly-owned operating

subsidiary, HeartCore Japan, is mainly engaged in the business of developing and sales of comprehensive software.

Beginning from early

2022, HeartCore USA is engaged in the business of providing consulting services to Japanese companies with intention to go public in the

United States capital market.

On September 6, 2022, HeartCore USA entered into

a share exchange and purchase agreement to acquire 51 % of the outstanding shares of Sigmaways, Inc.

(“Sigmaways”), a company

incorporated under the laws of the State of California in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V.

and Sigmaways

Technologies Ltd.

(“Sigmaways Technologies”).

1 unchanged sentence

was incorporated in Netherlands in November 2019.

Sigmaways Technologies was incorporated in Canada in August 2020.

and its wholly-owned subsidiaries are primarily engaged in the business of developing and sales of software in the United States.

acquisition was closed on February 1, 2023.

January 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Financial, Inc.

(“HeartCore Financial”), under

the laws of the State of Delaware.

HeartCore Financial is engaged in the business of providing financial consulting services.

February 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Capital Advisors, Inc.

(“HeartCore Capital Advisors”),

HeartCore Capital Advisors is engaged in the business of providing financial consulting services to Japanese companies.

November 2023, HeartCore Japan established a 51 % owned subsidiary in Vietnam, HeartCore Luvina Vietnam Company Limited (“HeartCore

Luvina”), which is engaged in the business of providing software development and other services.

HeartCore Luvina started its operations

from February 2024.

November 17, 2023, HeartCore Japan and HeartCore Capital Advisors entered into a merger agreement to merge the two entities into one

with HeartCore Japan being the surviving entity.

On January 1, 2024, the merger was completed and HeartCore Capital Advisors transferred

all of its assets and liabilities to HeartCore Japan.

The merger has been accounted for as a recapitalization between entities under

common control since the same controlling shareholders controlled the two entities before and after the transaction.

April 2024, HeartCore Financial incorporated a branch office, HeartCore Financial, Inc.

– Japan Branch Office (“HeartCore

Financial – Japan”), in Japan.

HeartCore Financial – Japan is engaged in the business of providing financial consulting

USA, HeartCore Japan, Sigmaways, Sigmaways B.V., Sigmaways Technologies, HeartCore Financial, HeartCore Capital Advisors, HeartCore Luvina

and HeartCore Financial – Japan are hereafter referred to as the Company.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and Principles of Consolidation

accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to the rules and regulations

of the Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of

the Company and its subsidiaries.

All significant intercompany accounts and transactions have been eliminated.

unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S.

complete financial statements.

Interim results are not necessarily indicative of results for a full year.

In the opinion of management,

all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the

results of operations and cash flows for the interim periods have been included.

The unaudited consolidated financial statements should

be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2023.

preparing the unaudited consolidated financial statements in conformity U.S.

GAAP, the management is required to make certain estimates

and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

These estimates are based on information available as of the date of the unaudited consolidated financial statements.

Significant estimates

required to be made by management include, but are not limited to, the allowance for credit losses, useful lives of property and equipment

and intangible asset, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of

deferred tax assets, implicit interest rate of operating and finance leases, valuation of asset retirement obligations, valuation of

investment in warrants, revenue recognition and purchase price allocation with respect to business combination.

Actual results could

differ from those estimates.

Retirement Obligations

to the lease agreements for the office space, the Company is responsible to restore these spaces back to its original statute at the

time of leaving.

The Company recognizes an obligation related to these restorations as asset retirement obligation included in other

non-current liabilities in the consolidated balance sheets, in accordance with the Financial Accounting Standards Board’s (the

“FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset Retirement Obligation Accounting”.

The Company capitalizes the associated asset retirement cost by increasing the carrying amount of the related property and equipment.

The following table presents changes in asset retirement obligations:

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

September 30,

Sigmaways Technologies

was incorporated in Canada in August 2020.

Sigmaways and its wholly-owned subsidiaries are primarily engaged in the business of developing

and sales of software in the United States.

The acquisition was closed on February 1, 2023.

In January 2023, HeartCore USA incorporated a

wholly-owned subsidiary, HeartCore Financial, Inc.

(“HeartCore Financial”), under the laws of the State of Delaware.

Financial is engaged in the business of providing financial consulting services.

In November 2023, HeartCore Japan established

a 51 % owned subsidiary in Vietnam, HeartCore Luvina Vietnam Company Limited (“HeartCore Luvina”), which is engaged in the

business of providing software development and other services.

HeartCore Luvina started its operations from February 2024.

In April 2024, HeartCore Financial incorporated

a branch office, HeartCore Financial, Inc.

– Japan Branch Office (“HeartCore Financial – Japan”), in Japan.

Financial – Japan is engaged in the business of providing financial consulting services.

HeartCore USA, HeartCore Japan, Sigmaways, Sigmaways

B.V., Sigmaways Technologies, HeartCore Financial, HeartCore Luvina and HeartCore Financial – Japan are hereafter referred to as

the “Company”.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries.

All significant intercompany

accounts and transactions have been eliminated.

These unaudited interim consolidated financial

statements do not include all of the information and disclosure required by the U.S.

GAAP for complete financial statements.

Interim results

are not necessarily indicative of results for a full year.

In the opinion of management, all adjustments consisting of normal recurring

nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim

periods have been included.

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated

financial statements and related notes for the year ended December 31, 2024.

Use of Estimates

In preparing the unaudited consolidated financial

statements in conformity U.S.

GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements

and the reported amounts of revenues and expenses during the reporting period.

These estimates are based on information available as of

the date of the unaudited consolidated financial statements.

Significant estimates required to be made by management include, but are

not limited to, useful life of property and equipment, impairment of long-lived assets, valuation of stock-based compensation, valuation

allowance of deferred tax assets, implicit interest rate of operating and finance leases, valuation of asset retirement obligations, valuation

of investment in warrants and revenue recognition with respect to allocation of transaction price.

Actual results could differ from those

Asset Retirement Obligations

Pursuant to the lease agreements for the office

space, the Company is responsible to restore these spaces back to its original statute at the time of leaving.

The Company recognizes

an obligation related to these restorations as asset retirement obligations included in other non-current liabilities in the consolidated

balance sheets, in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification

(“ASC”) Topic 410, “Asset Retirement Obligation Accounting”.

The Company capitalizes the associated asset retirement

cost by increasing the carrying amount of the related property and equipment.

The following table presents changes in asset retirement

Beginning balance

Liabilities incurred

Accretion expense

2 unchanged sentences

Ending balance

Development Costs

development costs are expensed as incurred until the point the Company establishes technological feasibility.

Technological feasibility

is established upon completion of a detailed program design or the completion of a working model.

Costs incurred by the Company between

establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized

over the economic life of the related products.

The Company’s software development costs incurred subsequent to achieving technological

feasibility have not been significant and all software development costs have been expensed as incurred.

the nine months ended September 30, 2024 and 2023, software development costs expensed as incurred amounted to $ 307,931 and $ 289,303 ,

respectively.

These software development costs were included in the research and development expenses.

in warrants represents stock warrants of its consulting service customers.

The warrants are measured at fair value and any changes in

fair value are recognized in other income (expenses).

Investment in warrants is classified as long-term if the warrants are exercisable

over one year after the date of receipt.

in Marketable Securities

in marketable securities represent equity securities registered for public sale with readily determinable fair value.

The marketable

securities were obtained through stocks of its customers as noncash consideration from consulting services and through exercise of stock

warrants of its consulting service customers and measured at fair value with changes in fair value recognized in other income (expenses).

in Equity Securities

in equity securities represents investment in a privately held entity that does not have a readily determinable fair value or report

net asset value.

Investment in equity securities is accounted for using a measurement alternative, under which this investment is measured

at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses).

Investment in equity

securities is classified as long-term if the Company anticipates to dispose of the investment over one year after the date of receipt

based on information available as of the date the unaudited consolidated financial statements are issued.

The Company did not recognize

any impairment loss on investment in equity securities for the nine months ended September 30, 2024.

in SAFE represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value

through a simple agreement for future equity (“SAFE”).

Investment in SAFE is accounted for using a measurement alternative,

under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other

income (expenses).

Investment in SAFE is classified as long-term if the Company anticipates the equity financing or dissolution or liquidity

event prescribed in the SAFE to take place over one year after the date of receipt based on information available as of the date the

unaudited consolidated financial statements are issued.

The Company did not recognize any impairment loss on investment in SAFE for the

nine months ended September 30, 2024.

asset represents the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries.

The acquired intangible

asset is recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated

economic useful life of the respective asset.

The estimated useful life of the customer relationship is 8 years .

of Long-Lived Assets Other Than Goodwill

assets with finite lives, primarily property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If the estimated

cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed

to be impaired and written down to its fair value.

There were no impairments of these assets during the nine months ended September 30,

2024 and 2023.

represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination.

accordance with ASC Topic 350, “Intangibles – Goodwill and Others”, goodwill is subject to at least an annual assessment

for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value

Fair value is generally determined using a discounted cash flow analysis.

Currency Translation

functional currency of HeartCore Japan, HeartCore Capital Advisors and HeartCore Financial – Japan is the Japanese Yen (“JPY”).

The functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”).

The functional

currency of Sigmaways B.V.

Software Development Costs

Software development costs are expensed as incurred

until the point the Company establishes technological feasibility.

Technological feasibility is established upon completion of a detailed

program design or the completion of a working model.

Costs incurred by the Company between establishment of technological feasibility

and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products.

The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and

all software development costs have been expensed as incurred.

In the three months ended March 31, 2025 and 2024,

software development costs expensed as incurred amounted to $ 123,893 and $ 89,134 , respectively.

These software development costs were

included in the research and development expenses.

Investment in Warrants

Investment in warrants represents stock warrants

earned from its consulting service customers.

The warrants are measured at fair value and any changes in fair value are recognized in

other income (expenses).

Investment in warrants is classified as long-term if the warrants are exercisable over one year after the date

Investments in Marketable Securities

Investments in marketable securities represent

equity securities registered for public sale with readily determinable fair value.

The marketable securities are obtained through stocks

of its customers received as noncash consideration from consulting services and through exercise of stock warrants of its consulting service

customers and measured at fair value with changes in fair value recognized in other income (expenses).

Impairment of Long-Lived Assets

Long-lived assets with finite lives, primarily

property and equipment and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances

indicate that the carrying amount of an asset may not be recoverable.

If the estimated cash flows from the use of the asset and its eventual

disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.

were no impairments of these assets during the three months ended March 31, 2025 and 2024.

Foreign Currency Translation

The functional currency of HeartCore Japan and

HeartCore Financial – Japan is the Japanese Yen (“JPY”).

The functional currency of HeartCore USA, HeartCore Financial

and Sigmaways is the United States Dollar (“US$”).

The functional currency of Sigmaways B.V.

is the Euro (“EUR”).

The functional currency of Sigmaways Technologies is the Canada Dollar (“CAD”).

The functional currency of HeartCore Luvina is the Vietnam Dong (“VND”).

Transactions denominated in currencies other than

the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency

using the applicable exchange rates at the balance sheet dates.

The resulting exchange differences are recorded in the unaudited consolidated

statements of operations and comprehensive income (loss).

reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in

In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose

functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date.

Revenues and expenses are

translated at average rates prevailing during the period.

The gains and losses resulting from the translation of financial statements

are recorded as a separate component of accumulated other comprehensive income within the unaudited consolidated statements of changes

in shareholders’ equity.

Company recognizes revenues under ASC Topic 606, “Revenue from Contracts with Customers”.

determine revenue recognition for contracts with customers, the Company performs the following five steps:

(i) identify the contract(s)

with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable

consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price

to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance

Revenues amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local

government levies.

The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada,

21% of gross sales in Netherlands and nil of gross sales in the United States.

Company currently generates its revenue from the following main sources:

from On-premise Software

for on-premise software provide the customers with a right to use the software as it exists when made available to the customers.

Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the

right for a specified term.

Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available

to the customers.

Licenses for on-premise software are typically sold to the customers with maintenance and support services in a bundle.

Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise

software and maintenance and support service.

The SSP for maintenance and support services is estimated based upon observable transactions

when those services are sold on a standalone basis.

The SSP of on-premise software is typically estimated using the residual approach

as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for

a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions

or other observable evidence.

from Maintenance and Support Services

and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified

software updates when and if available during the subscription.

Revenues from maintenance and support services are recognized over time

as such services are performed.

Revenues for consumption-based services are generally recognized as the services are performed and accepted

by the customers.

from Software as a Service (“SaaS”)

Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing

the rights of the software to the customers.

Subscription fees from these applications are recognized over time on a ratable basis over

the customer agreement term beginning on the date the Company’s solution is made available to the customers.

The subscription contracts

are generally one year or less in length.

from Software Development and Other Miscellaneous Services

Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose

of consulting, integration, training, custom application, and workflow development.

The Company also provides other miscellaneous services,

such as 3D Space photography.

The Company generally recognizes revenues at a point in time when control is transferred to the customers

and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers.

from Customized Software Development and Services

Company’s customized software development and services revenues primarily include revenues from providing software development

solutions and other support services to its customers.

The functional currency of HeartCore Luvina

is the Vietnam Dong (“VND”).

Transactions denominated in currencies other than the functional currency are translated into

the functional currency at the exchange rates prevailing at the dates of the transaction.

Monetary assets and liabilities denominated

in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the

balance sheet dates.

The resulting exchange differences are recorded in the unaudited consolidated statements of operations and comprehensive

The reporting currency of the Company is the US$,

and the accompanying unaudited consolidated financial statements have been expressed in US$.

In accordance with ASC Topic 830-30, “Translation

of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using

the exchange rate on the balance sheet date.

Revenues and expenses are translated at average rate prevailing during the period.

and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive

income within the unaudited consolidated statements of changes in shareholders’ equity.

Revenue Recognition

The Company recognizes revenues under ASC Topic

606, “Revenue from Contracts with Customers”.

To determine revenue recognition for contracts

with customers, the Company performs the following five steps:

(i) identify the contract(s) with the customer, (ii) identify the performance

obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable

that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the

contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

Revenues amount represents the invoiced

value, net of a value-added tax (“Consumption Tax”) and applicable local government levies.

The Consumption Tax on sales are

calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross

sales in the United States.

The Company currently generates its revenues from

the following main sources:

Revenues from On-premise Software

Licenses for on-premise software provide the customers

with a right to use the software as it exists when made available to the customers.

The Company provides on-premise software in the form

of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term.

Revenues from on-premise

licenses are recognized upfront at the point in time when the software is made available to the customers.

Licenses for on-premise software

are typically sold to the customers with maintenance and support services in a bundle.

Revenues under the bundled arrangements are allocated

based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support services.

for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis.

The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise

licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly

variable) and a representative SSP is not discernible from past transactions or other observable evidence.

Revenues from Maintenance and Support Services

Maintenance and support services provided with

software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available

during the subscription.

Revenues from maintenance and support services are recognized over time as such services are performed.

for consumption-based services are generally recognized as the services are performed and accepted by the customers.

Revenues from Software as a Service (“SaaS”)

The Company’s software is available for

use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers.

Subscription fees from these applications are recognized over time on a ratable basis over the customer contract term beginning on the

date the Company’s solution is made available to the customers.

The subscription contracts are generally one year or less in length.

Revenues from Software Development and Other

Miscellaneous Services

The Company provides customers with software development

and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application,

and workflow development.

The Company also provides other miscellaneous services, such as 3D Space photography.

The Company generally

recognizes revenues at a point in time when control is transferred to the customers and the Company is entitled to the payment, which

is when the promised services are delivered and accepted by the customers.

Revenues from Customized Software Development

The Company’s customized software development

and services revenues primarily include revenues from providing software development solutions and other support services to its customers.

The contract pricing is at stated billing rates per hour.

These contracts are

generally short-term in nature and not longer than one year in duration.

For services provided under the contracts that result in the

transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create

an asset with an alternative use to the Company.

The Company recognizes revenues on rate per hour contracts based on the amount billable

to the customers, as the Company has the right to invoice the customers in an amount that directly corresponds with the value to the

customers of the Company’s performance to date.

from Consulting Services

Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts,

which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering

and supporting the listing process.

The consulting service contracts normally include both cash and noncash considerations.

Cash consideration

is paid in installment payments and is recognized in revenues over the period of the contract by reference to progress toward complete

satisfaction of that performance obligation.

Noncash consideration is in the form of warrants of the customers and is measured at fair

value at contract inception.

Noncash consideration that is variable for reasons other than only the form of the consideration is included

in the transaction price, but is subject to the constraint on variable consideration.

The Company assesses the estimated amount of the

variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant

reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration

is subsequently resolved.

Only when the significant revenues reversal is concluded probable of not occurring can variable consideration

be included in revenues.

Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash

consideration is recognized in revenues until the underlying uncertainties have been resolved.

Company records reduction to revenues for estimated customer returns and allowances.

The Company bases its estimates on historical rates

of customer returns and allowances as well as the specific identification of outstanding returns.

The actual amount of customer returns

and allowances, which is inherently uncertain, may differ from the Company’s estimates.

If the Company determines that actual or

expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase,

as appropriate, to revenues in the period in which it makes such a determination.

Reserves for customer refunds are included within other

current liabilities on the consolidated balance sheets.

At a minimum, the Company reviews and refines these estimates on a quarterly

timing of revenue recognition may differ from the timing of invoicing to the customers.

The Company has determined that its contracts

do not include a significant financing component.

The Company records a contract asset, which is included in accounts receivable, current

or non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing.

The Company factors certain accounts

receivable upon or after the performance obligation is being met.

The Company records deferred revenue in the consolidated balance sheets

when revenues are recognized subsequent to cash collection for an invoice.

Deferred revenue is reported net of related uncollected deferred

revenue in the consolidated balance sheets.

The amount of revenues recognized during the nine months ended September 30, 2024 and 2023

that were included in the opening deferred revenue balance was approximately $ 1.8 million and $ 1.5 million, respectively.

Disaggregation

Company disaggregates its revenues from contracts by product/service types, as the Company believes it best depicts how the nature, amount,

timing and uncertainty of the revenues and cash flows are affected by economic factors.

The Company’s disaggregation of revenues

by revenue stream for the three and nine months ended September 30, 2024 and 2023 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

These contracts are generally short-term in nature and not longer than one year

For services provided under the contracts that result in the transfer of control over time, the underlying deliverable in

the contracts is owned and controlled by the customers and does not create an asset with an alternative use to the Company.

recognizes revenues on rate per hour contracts based on the amount billable to the customers, as the Company has the right to invoice

the customers in an amount that directly corresponds with the value to the customers of the Company’s performance to date.

Revenues from Consulting

The Company provides

public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily

include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the

listing process.

The consulting services contracts normally include both cash and noncash considerations.

Cash consideration is paid in

installment payments and is recognized in revenues over the period of the contract by reference to progress toward complete satisfaction

of that performance obligation.

Noncash consideration is in the form of stocks and warrants of the customers and is measured at fair value

at contract inception.

Noncash consideration that is variable for reasons other than only the form of the consideration is included in

the transaction price, but is subject to the constraint on variable consideration.

The Company assesses the estimated amount of the variable

noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal

in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently

Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in

Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration

is recognized in revenues until the underlying uncertainties have been resolved.

Sales Returns and

The Company records reduction

to revenues for estimated customer returns and allowances.

The Company bases its estimates on historical rates of customer returns and

allowances as well as the specific identification of outstanding returns.

The actual amount of customer returns and allowances, which

is inherently uncertain, may differ from the Company’s estimates.

If the Company determines that actual or expected returns or allowances

are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues

in the period in which it makes such a determination.

Reserves for customer refunds are included within other current liabilities on the

consolidated balance sheets.

At a minimum, the Company reviews and refines these estimates on a quarterly basis.

Contract Balances

The timing of revenue recognition may differ from

the timing of invoicing to the customers.

The Company determines that its contracts do not include a significant financing component.

The Company records a contract asset, which is included in accounts receivable, current or non-current, in the consolidated balance sheets,

when revenues are recognized prior to invoicing.

The Company factors certain accounts receivable upon or after the performance obligation

is being met.

The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash

collection for an invoice.

Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets.

The amount of revenues recognized during the three months ended March 31, 2025 and 2024 that were included in the opening deferred revenue

balance are approximately $ 0.8 million and $ 1.0 million, respectively.

Disaggregation of Revenues

The Company disaggregates its revenues from contracts

by product/service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash

flows are affected by economic factors.

The Company’s disaggregation of revenues by revenue stream for the three months ended March

31, 2025 and 2024 is as follows:

For the Three Months Ended

Revenues from on-premise software

5 unchanged sentences

Total revenues

Company’s disaggregation of revenues by product/service is as following:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

The Company’s disaggregation of revenues

by product/service for the three months ended March 31, 2025 and 2024 is as follows:

For the Three Months Ended

Revenues from customer experience management platform

6 unchanged sentences

Total revenues

of September 30, 2024 and 2023, and for the periods then ended, the majority of the long-lived assets (excluding intangible asset) and

revenues generated were attributed to the Company’s operation in Japan.

Concentration

of Credit Risk

instruments that potentially subject the Company to credit risk consist primarily of accounts receivable, note receivable and other receivable.

The Company usually does not require collateral or other security to support these receivables.

The Company conducts periodic reviews

of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

the nine months ended September 30, 2024, customer A represents 49.3 % of the Company’s total revenues.

For the nine months ended

September 30, 2023, customer B and C represent 14.2 % and 13.6 %, respectively, of the Company’s total revenues.

the nine months ended September 30, 2024, no vendor accounts for more than 10% of the Company’s total purchases.

For the nine months

ended September 30, 2023, vendor A, B, C and D represent 26.4 %, 26.2 %, 22.1 % and 15.9 %, respectively, of the Company’s total purchases.

Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”.

The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited

consolidated statements of operations and comprehensive income (loss) based on the estimated fair value of those awards on the grant

date and amortized on a straight-line basis over the requisite service period or vesting period.

The Company records forfeitures as they

Company accounts its business combinations using the acquisition method of accounting in accordance with ASC Topic 805.

price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible asset acquired and non-controlling

interests, if any, based on their estimated fair values as of the acquisition date.

The excess of the purchase price over those fair

values is recorded as goodwill.

Acquisition-related expenses are expensed as incurred.

Consideration

transferred in a business combination is measured at the fair value as of the date of acquisition.

Where the consideration in an acquisition

includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition,

the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability.

is subsequently carried at fair value with changes in fair value reflected in earnings.

a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before

obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated

statements of operations and comprehensive income (loss).

value is determined based upon the guidance of ASC Topic 820, “Fair Value Measurements and Disclosures”, and generally are

determined using Level 2 inputs and Level 3 inputs.

The determination of fair value involves the use of significant judgments and estimates.

The Company utilizes the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition.

Value Measurements

Company performs fair value measurements in accordance with ASC Topic 820.

Fair value is defined as the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable

inputs when measuring fair value.

An asset’s or a liability’s categorization within the fair value hierarchy is based upon

the lowest level of input that is significant to the fair value measurement.

ASC Topic 820 establishes three levels of inputs that may

be used to measure fair value:

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to credit risk consist primarily of accounts receivable, note receivable and other receivable.

The Company usually does not

require collateral or other security to support these receivables.

The Company conducts periodic reviews of the financial condition and

payment practices of its customers to minimize collection risk on accounts receivable.

For the three months ended March 31, 2025, customer

B represents 18.7 % of the Company’s total revenues.

For the three months ended March 31, 2024, customer A and B represent 13.4 %

and 13.0 %, respectively, of the Company’s total revenues.

As of March 31, 2025 and December 31, 2024, customer A represents 17.9 %

and 17.6 %, respectively, of the Company’s total accounts receivable.

For the three months ended March 31, 2025, vendor

A represents 12.5 % of the Company’s total purchases.

For the three months ended March 31, 2024, no vendor accounts for more than

10% of the Company’s total purchases.

As of March 31, 2025, no vendor accounts for more than 10% of the Company’s

total accounts payable and accrued expenses.

As of December 31, 2024, vendor B represents 10.6 % of the Company’s total accounts

payable and accrued expenses.

Segment Reporting

ASC Topic 280, “Segment Reporting”,

requires use of the management approach model for segment reporting.

The management approach model is based on the way a company’s

chief operating decision maker (“CODM”) organizes segments within the Company for making operating decisions assessing performance

and allocating resources.

Reportable segments are based on products and services, geography, legal structure, management structure, or

any other manner in which management disaggregates a company (see NOTE 18).

Stock-based Compensation

The Company accounts for stock-based compensation

awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”.

The cost of services received from employees

and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations and

comprehensive loss based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the

requisite service period or vesting period.

The Company records forfeitures as they occur.

Fair Value Measurements

The Company performs fair value measurements in

accordance with ASC Topic 820.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date.

ASC Topic 820 establishes a fair value hierarchy that requires

an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the

fair value measurement.

ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:

quoted prices in active markets for identical assets or liabilities;

inputs other than Level 1 that are observable, either directly or indirectly;

unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets

or liabilities.

of September 30, 2024 and December 31, 2023, the carrying values of current assets, except for investments in marketable securities,

and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of

these instruments.

measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are summarized below (also see NOTE 6):

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Fair Value Measurements as of September 30, 2024

Quoted Prices in Active Markets for Identical

Assets (Level 1)

Significant Other

Fair Value at

September 30,

unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

As of March 31, 2025 and December 31, 2024, the

carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values

reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Assets measured at fair value on a recurring basis

as of March 31, 2025 and December 31, 2024 are summarized below (also see NOTE 6).

Fair Value Measurements as of March 31, 2025

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Unobservable Inputs

Fair Value at March 31, 2025

Investments in marketable securities

1 unchanged sentence

Fair Value Measurements as of December 31, 2024

Quoted Prices in Active Markets for Identical

Assets (Level 1)

Significant Other

Fair Value at

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Unobservable Inputs

Value at December 31,

Investments in marketable securities

Long-term investment in warrants

Accounting Pronouncements

November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through

enhanced disclosures about significant segment expenses.

2023-07 is effective for public companies for annual reporting periods

beginning after December 15, 2023, on a retrospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact

of this ASU on its unaudited consolidated financial statements and related disclosures.

December 2023, the FASB issued ASU No.

Recent Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards

Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, to enhance the transparency

and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

Improvement to Income Tax Disclosures, to enhance the transparency and

decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis.

For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis.

adoption is permitted.

The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements

and related disclosures.

3 – ACCOUNTS RECEIVABLE

receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

September 30,

all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis.

Early adoption

is permitted.

The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related

In November 2024, the FASB issued ASU No.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of

Income Statement Expenses, requiring public companies to disclose additional information about specific expense categories in the notes

to the consolidated financial statements on an annual and interim basis.

2024-03 is effective for fiscal years beginning after

December 15, 2026, and for interim periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating

the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

Accounts receivable – non-factored

7 unchanged sentences

Accounts receivable, non-current

4 – PREPAID EXPENSES

expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

September 30,

NOTE 4 – PREPAID EXPENSES

Prepaid expenses consist of the following:

Prepayments to software and consulting services vendors

Prepaid marketing and consulting fees

Prepaid marketing fees

Prepaid subscription fees

Prepaid insurance premium

5 – RELATED PARTY TRANSACTIONS

of September 30, 2024 and December 31, 2023, the Company has a due to related party balance of $ 1,438 and $ 1,476 , respectively, from

Sumitaka Yamamoto, the Chief Executive Officer (“CEO”) and major shareholder of the Company.

The balance is unsecured, non-interest

bearing and due on demand.

During the nine months ended September 30, 2024, the Company repaid to the related party for operating expenses

the related party paid on behalf of the Company in a net amount of $ 7 .

During the nine months ended September 30, 2023, the related party

paid operating expenses on behalf of the Company and received the payments in a net amount of $ 7,562 .

of September 30, 2024 and December 31, 2023, the Company has a loan receivable balance of $ 190,206 and $ 227,704 , respectively, from Heartcore

Technology Inc., a company controlled by the CEO of the Company.

The loan was made to the related party to support its operation.

balance is unsecured, bears an annual interest of 1.475 %, and requires repayments in installments starting from February 2022.

the nine months ended September 30, 2024 and 2023, the Company received repayments of $ 31,457 and $ 34,823 , respectively, from this related

the nine months ended September 30, 2024, the Company engaged Luvina Software Joint Stock Company, the non-controlling interest shareholder

of HeartCore Luvina, for software development and other support services in the amount of $ 150,516 .

As of September 30, 2024 and December

31, 2023, the Company has an accounts payable and accrued expenses balance of $ 28,772 and nil , respectively, to this related party.

6 – INVESTMENTS

April 17, 2024, the Company entered into a simple agreement for future equity (“SAFE”) for $ 350,000 with Heart-Tech Health,

(“Heart-Tech”), a non-related company, in exchange for the right to be issued certain shares of Heart-Tech’s preferred

stock in connection with Heart-Tech’s future equity financing, at a 15 % discount to the price per share of the preferred stock

sold in the equity financing, subject to a pre-determined valuation cap.

Alternatively, upon a dissolution or liquidity event such as

a change in control or an initial public offering, the Company is entitled to receive a portion of $ 350,000 .

As of September 30, 2024,

the Company recorded the investment of $ 350,000 as an investment in SAFE on the consolidated balance sheet.

in Equity Securities

May 2, 2023, the Company purchased a $ 300,000 promissory note from a non-related company.

The note bears an interest rate of 8 % per annum

and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $ 300,000 or more consummated

by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering on the Nasdaq Capital

Market or New York Stock Exchange, or 3) 180 days following the note issuance.

The interest rate would be 12 % per annum for any amount

that is unpaid when due.

On July 27, 2023, the Company entered into a note exchange agreement with the promissory note issuer to convert

all of the promissory note principal amount and accrued interest into 600,000 shares of common shares of the promissory note issuer.

Company received warrants from its customers as noncash consideration from consulting services.

The warrants are not registered for public

sale and are initially measured at fair value at contract inception.

The Company’s investment in warrants is measured on a recurring

basis and carried on the balance sheets at an estimated fair value at the end of the period.

The valuation of investment in warrants

is determined using the Black-Scholes model based on the stock price, exercise price, expected volatility, time to maturity, and a risk-free

interest rate for the term of the warrants exercise.

following table summarizes the Company’s investment in warrants activities for the nine months ended September 30, 2024 and 2023:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

For the Nine Months Ended

September 30,

Total prepaid expenses

NOTE 5 – RELATED PARTY TRANSACTIONS

As of March 31, 2025 and December 31, 2024, the

Company had a due to related parties balance of $ 239 and $ 47 , respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”)

and major shareholder of the Company.

The balance is unsecured, non-interest bearing and due on demand.

During the three months ended

March 31, 2025, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $ 182 .

During the three months ended March 31, 2024, the Company repaid to the related party for operating expenses the related party paid on

behalf of the Company in a net amount of $ 1,161 .

As of March 31, 2025 and December 31, 2024, the

Company had a due to related parties balance of nil and $ 885 , respectively, from Luvina Software Joint Stock Company (“Luvina Software”),

the non-controlling shareholder of HeartCore Luvina.

The balance is unsecured, non-interest bearing and due on demand.

During the three

months ended March 31, 2025 and 2024, the Company repaid to the related party for operating expenses the related party paid on behalf

of the Company in a net amount of $ 884 and nil , respectively.

As of March 31, 2025 and December 31, 2024, the Company had an accounts

payable and accrued expenses balance of $ 22,814 and $ 47,199 , respectively, to Luvina Software.

During the three months ended March 31,

2025 and 2024, the Company engaged the related party for software development and other support services in the amount of $ 42,810 and

nil , respectively.

As of March 31, 2025 and December 31, 2024, the

Company had a loan receivable balance of $ 162,912 and $ 164,067 , respectively, from Heartcore Technology Inc., a company controlled by

the CEO of the Company.

The loan is made to the related party to support its operation.

The balance is unsecured, bears an annual interest

of 1.475 %, and requires repayments in installments starting from February 2022.

During the three months ended March 31, 2025 and 2024,

the Company received repayments of $ 10,298 and $ 10,814 , respectively, from this related party.

As of March 31, 2025 and December 31, 2024, the

Company had a short-term debt balance of $ 75,000 to Prakash Sadasivam, the CEO of Sigmaways and Chief Strategy Officer (“CSO”)

of the Company.

The debt is borrowed from the related party for working capital purpose.

The balance is unsecured, bears an annual interest

of 7.5 %, and matures on June 30, 2025.

NOTE 6 – INVESTMENTS

Investment in Warrants

The Company received warrants from its customers

as noncash consideration from consulting services.

The warrants are not registered for public sale and are initially measured at fair

value at contract inception.

The Company’s investment in warrants is measured on a recurring basis and carried on the consolidated

balance sheets at an estimated fair value at the end of the period.

The valuation of investment in warrants is determined using the Black-Scholes

model based on the stock price, exercise price, expected volatility, time to maturity, and risk-free interest rate for the term of the

warrants exercise.

The following table summarizes the Company’s

investment in warrants activities for the three months ended March 31, 2025 and 2024:

For the Three Months Ended

Fair value of investment in warrants at beginning of the period

Warrants received as noncash consideration

Changes in fair value of investment in warrants

Warrants converted to marketable securities

( 6,443,276 )

( 1,257,868 )

Warrants sold *

( 9,610,628 )

Fair value of investment in warrants at end of the period

February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants

it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $ 9,000,000

The warrants to be transferred are exercisable only upon its Consulting Customer’s consummation of the Merger with a

special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the

Consulting Customer.

The Company completed its sale of warrants in September 2024 and recorded $ 3,970,628

in loss on sale of warrants from this transaction.

in Marketable Securities

Company’s investments in marketable securities represent stocks received from its customers as noncash consideration from consulting

services and stocks received upon the exercise of warrants described above.

They are registered for public sale with readily determinable

fair values, and are measured at quoted prices on a recurring basis at the end of the period.

The following table summarizes the Company’s

investments in marketable securities activities for the nine months ended September 30, 2024 and 2023:

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

For the Nine Months Ended

September 30,

Investments in Marketable Securities

The Company’s investments in marketable

securities represent stocks received from its customers as noncash consideration from consulting services and stocks received upon the

exercise of warrants described above.

They are registered for public sale with readily determinable fair values, and are measured at quoted

prices on a recurring basis at the end of the period.

The following table summarizes the Company’s investments in marketable securities

activities for the three months ended March 31, 2025 and 2024:

For the Three Months Ended

Fair value of investments in marketable securities at beginning of the period

Marketable securities received as noncash consideration

Warrants converted to marketable securities

Changes in fair value of investments in marketable securities

( 1,781,664 )

Marketable securities sold

Fair value of investments in marketable securities at end of the period

7 – LONG-TERM NOTE RECEIVABLE

September 1, 2023, the Company purchased a $ 300,000 promissory note from a non-related company.

The note bears an interest rate of 4 %

per annum and matures on September 2, 2026 .

On the first business day following each annual anniversary of September 1, 2023, the promissory

note issuer shall pay to the Company the sum of one-third of the total promissory note amount due and outstanding, including all accrued

and unpaid interest as of such time, unless such annual payment has been forgiven by the Company pursuant to certain conditions.

interest rate would be 10 % per annum for any amount that is unpaid when due.

As of the date of this report, the Company did not receive

the first annual payment from the promissory note issuer.

8 – PROPERTY AND EQUIPMENT, NET

and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

and equipment

NOTE 7 – LONG-TERM NOTE RECEIVABLE

On September 1, 2023, the Company purchased a

$ 300,000 promissory note from a non-related company.

The promissory note bears an interest rate of 4 % per annum and matures on September

On the first business day following each annual anniversary of September 1, 2023, the promissory note issuer shall pay to the

Company the sum of one-third of the total promissory note amount due and outstanding, including all accrued and unpaid interest as of

such time, unless such annual payment has been forgiven by the Company pursuant to certain conditions.

The interest rate would be 10 %

per annum for any amount that is unpaid when due.

The Company forgave the first annual payment of the promissory note and recognized loss

on forgiveness of long-term note receivable of $ 100,000 on December 31, 2024.

NOTE 8 – PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

Leasehold improvements

Machinery and equipment

accumulated depreciation

and equipment, net

expenses are $ 83,534 and $ 70,200 for the nine months ended September 30, 2024 and 2023, respectively.

9 – INTANGIBLE ASSET, NET

asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

September 30,

Customer relationship

accumulated amortization

( 1,062,500 )

Intangible asset, net

expenses are $ 478,125 and $ 425,000 for the nine months ended September 30, 2024 and 2023, respectively.

of September 30, 2024, the future estimated amortization cost for intangible asset is as follows:

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET

Year Ended December 31,

Remaining of 2024

Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases were classified

as operating leases.

The Company has also entered into a lease for office equipment and it was terminated in March 2024, and two leases

for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases.

Right-of-use assets

of these finance leases in the amount of $ 70,432 and $ 85,613 are included in property and equipment, net as of September 30, 2024 and

December 31, 2023, respectively.

lease expenses for lease payments are recognized on a straight-line basis over the lease term.

Finance lease costs include amortization,

which are recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized

following an effective interest rate method.

Leases with initial term of twelve months or less are not recorded in the consolidated balance

components of lease costs are as follows:

SCHEDULE OF LEASE COSTS

For the Nine Months Ended

September 30,

Total property and equipment, net

Depreciation expenses are $ 26,907 and $ 28,710

for the three months ended March 31, 2025 and 2024, respectively.

NOTE 9 – LEASES

The Company has entered into operating leases

for office space with terms ranging from two to fifteen years, and finance leases for office equipment and vehicle with terms of five

The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the

determination of the lease term and initial measurement of right-of-use assets and lease liabilities is included in the unaudited consolidated

financial statements.

Right-of-use assets of finance leases of $ 59,616 and $ 60,440 are included in property and equipment, net as of March

31, 2025 and December 31, 2024, respectively.

Operating lease costs for lease payments are recognized

on a straight-line basis over the lease term.

Finance lease costs include amortization, which are recognized on a straight-line basis

over the expected life of the leased assets, and interest expense, which are recognized following an effective interest rate method.

with initial term of twelve months or less are not recorded in the consolidated balance sheets.

The components of lease costs are as follows:

For the Three Months Ended

Finance lease costs

4 unchanged sentences

Total lease costs

following table presents supplemental information related to the Company’s leases:

OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY’S LEASES

For the Nine Months Ended

September 30,

The following table presents supplemental information

related to the Company’s leases:

For the Three Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Financing cash flows from finance leases 4,071 4,474

Finance lease right-of-use assets obtained in exchange for finance lease liabilities

Operating lease right-of-use assets obtained in exchange for operating lease liabilities -

Remeasurement of operating lease liabilities and right-of-use assets due to lease modification

Weighted average remaining lease term (years)

4 unchanged sentences

Operating leases 1.36 % 1.38 %

of September 30, 2024, the future maturity of lease liabilities is as follows:

SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES

As of March 31, 2025, the future maturity of lease

liabilities is as follows:

Year Ended December 31,

Finance Lease

Operating Lease

Remaining of 2025

4 unchanged sentences

Non-current lease liabilities

to the operating lease agreements, the Company made security deposits to the lessors.

The security deposits amount to $ 336,117 and $ 348,428

as of September 30, 2024 and December 31, 2023, respectively.

11 – OTHER CURRENT LIABILITIES

current liabilities consist of the following:

OF OTHER CURRENT LIABILITIES

September 30,

Pursuant to the operating lease agreements, the

Company made security deposits to the lessors.

The security deposits amounted to $ 325,441 and $ 307,996 as of March 31, 2025 and December

31, 2024, respectively.

NOTE 10 – OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

Accrued consumption taxes

1 unchanged sentence

Total other current liabilities

June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement

with the customer was terminated and the Company will refund $ 500,000 to the customer in August 2025.

12 – FACTORING LIABILITY

the subsidiary acquired by the Company in February 2023, entered into a factoring and security agreement (“Factoring Agreement”)

with The Southern Bank Company, an unrelated factor (the “Factor”), in 2017, for the purpose of factoring certain accounts

Under the terms of the Factoring Agreement, the Company may offer for sale, and the Factor may purchase in its sole discretion,

certain accounts receivable of the Company (the “Purchased Receivable”).

The Factoring Agreement provided for a maximum of

$ 850,000 in Purchased Receivable.

accounts receivable is submitted to the Factor, and the Company receives 90 % of the face value of the accounts receivable by wire transfer.

Upon payment by the customers, the remainder of the amount due is received from the Factor after deducting certain fees.

Factoring Agreement specifies that eligible accounts receivable is factored with recourse.

Under the terms of the recourse provision,

the Company is required to reimburse the Factor, upon demand, for Purchased Receivable that is not paid on time by the customers.

performance of all obligations and payments to the Factor is personally guaranteed by Prakash Sadasivam, CEO of Sigmaways and Chief Strategy

Officer (“CSO”) of the Company, and secured by all Sigmaways’ now owned and hereafter assets and any sums maintained

by the Factor that are identified as payable to the Company.

Factoring Agreement has an initial term of twelve months and automatically renews for successive twelve-month renewal periods unless

terminated pursuant to the terms of the Factoring Agreement.

The Company may terminate the Factoring Agreement with sixty days’

written notice to the Factor and is subject to certain early termination fee.

Factoring Agreement contained covenants that are customary for accounts receivable-based factoring agreements and also contained provisions

relating to events of default that are customary for agreements of this type.

of September 30, 2024 and December 31, 2023, there was $ 305,472 and $ 562,767 borrowed and outstanding under the Factoring Agreement,

respectively.

There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense.

During the nine months ended September 30, 2024 and 2023, the Company recorded $ 38,706 and $ 54,790 in interest expenses related to the

Factoring Agreement, respectively.

13 – INSURANCE PREMIUM FINANCING

January 2024, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 172,689 at an annual

interest rate of 13.9 % for eleven months from February 1, 2024, payable in eleven monthly installments of principal and interest.

January 2023, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 389,035 at an annual

interest rate of 16.04 % for ten months from February 1, 2023, payable in ten monthly installments of principal and interest.

of September 30, 2024 and December 31, 2023, the balances of the insurance premium financing were $ 65,392 and nil , respectively.

the nine months ended September 30, 2024 and 2023, the Company recorded $ 10,380 and $ 25,988 , respectively, in interest expenses related

to the insurance premium financing.

Company’s short-term debt represents a loan borrowed from a financial institution as follows:

SCHEDULE OF SHORT-TERM DEBTS

June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting services agreement with

the customer was terminated and the Company will refund $ 500,000 to the customer in August 2025.

NOTE 11 – FACTORING LIABILITY

Sigmaways, the subsidiary acquired by the Company

in February 2023, entered into a factoring and security agreement (“Factoring Agreement”) with The Southern Bank Company,

an unrelated factor (“Factor”), in 2017, for the purpose of factoring certain accounts receivable.

Under the terms of the

Factoring Agreement, Sigmaways may offer for sale, and the Factor may purchase in its sole discretion, certain accounts receivable of

Sigmaways (“Purchased Receivable”).

The Factoring Agreement provided for a maximum of $ 850,000 in Purchased Receivable.

Selected accounts receivable is submitted to the

Factor, and Sigmaways receives 90 % of the face value of the accounts receivable by wire transfer.

Upon payment by the customers, the remainder

of the amount due is received from the Factor after deducting certain fees.

The Factoring Agreement specifies that eligible

accounts receivable is factored with recourse.

Under the terms of the recourse provision, Sigmaways is required to reimburse the Factor,

upon demand, for Purchased Receivable that is not paid on time by the customers.

The performance of all obligations and payments to the

Factor is personally guaranteed by Prakash Sadasivam, the CEO of Sigmaways and CSO of the Company, and secured by all Sigmaways’

now owned and hereafter assets and any sums maintained by the Factor that are identified as payable to Sigmaways.

The Factoring Agreement has an initial term of

twelve months and automatically renews for successive twelve-month renewal periods unless terminated pursuant to the terms of the Factoring

Sigmaways may terminate the Factoring Agreement with sixty days’ written notice to the Factor and is subject to certain

early termination fee.

The Factoring Agreement contains covenants that

are customary for accounts receivable-based factoring agreements and also contains provisions relating to events of default that are customary

for agreements of this type.

As of March 31, 2025 and December 31, 2024, there

were $ 127,053 and $ 172,394 borrowed and outstanding under the Factoring Agreement, respectively.

There are various fees charged by the

Factor, including initial discount purchase fee, factoring fee and interest expense.

During the three months ended March 31, 2025 and

2024, the Company recorded $ 8,901 and $ 16,108 in interest expenses related to the Factoring Agreement, respectively.

NOTE 12 – INSURANCE PREMIUM FINANCING

In January 2025, the Company entered into an insurance

premium financing agreement with AFCO Direct, a division of AFCO Credit Corporation, for $ 139,500 at an annual interest rate of 13.9 %

for eleven months from February 1, 2025, payable in eleven monthly installments of principal and interest.

In January 2024, the Company entered into an insurance

premium financing agreement with BankDirect Capital Finance for $ 172,689 at an annual interest rate of 13.9 % for eleven months from February

1, 2024, payable in eleven monthly installments of principal and interest.

As of March 31, 2025 and December 31, 2024, the

balances of the insurance premium financing were $ 127,567 and $ 16,626 , respectively.

During the three months ended March 31, 2025 and

2024, the Company recorded $ 1,832 and $ 2,039 , respectively, in interest expenses related to the insurance premium financing.

NOTE 13 – DEBTS

Short-term Debt

The Company’s short-term debt represents

a loan borrowed from a financial institution as follows:

Name of Financial

Interest Rate

Balance as of

September 30, 2024

Institution Original

Borrowed Loan

Duration Monthly

Interest Rate Balance as of

2025 Balance as of

Biz Forward Co., Ltd.

PMG Co., Ltd.

JPY 20,140,000 (a) 3/27/2025 – 4/30/2025 4.511 % $ 134,689 $ -

12/26/2023 – 1/31/2024

loan is secured by accounts receivable of HeartCore Japan in the amount of JPY 23,882,562 .

Company’s long-term debts included bond payable and loans borrowed from banks and financial institutions, which consist of the

SCHEDULE OF LONG-TERM DEBTS

Banks/Financial

September 30, 2024

bond issued through Resona Bank, Limited

JPY 100,000,000 (b)(d)

with banks and financial institutions

Bank, Limited

JPY 50,000,000

Bank, Limited

JPY 10,000,000

Bank, Limited

JPY 40,000,000 (b)(c)

Bank, Limited

JPY 20,000,000 (b)(c)

Mitsui Banking Corporation

JPY 100,000,000

Mitsui Banking Corporation

JPY 10,000,000 (b)(c)

Mitsui Banking Corporation

JPY 10,000,000 (b)(c)

Mitsui Banking Corporation

JPY 10,000,000 (b)(c)

Shoko Chukin Bank, Ltd.

JPY 50,000,000

Shoko Chukin Bank, Ltd.

JPY 30,000,000

Interbank Offered Rate +

Finance Corporation

debt is secured by accounts receivable of HeartCore Japan in the amount of JPY 21,200,000 .

Long-term Debts

The Company’s long-term debts represent

loans borrowed from banks and financial institutions as follows:

Name of Banks/Financial

Institutions Original

Borrowed Loan

Duration Annual

Interest Rate Balance as of

2025 Balance as of

Resona Bank, Limited JPY 10,000,000 (b)(c) 9/30/2020 – 9/30/2027 1.000 % $ 27,473 $ 29,440

Resona Bank, Limited JPY 40,000,000 (b)(c) 9/30/2020 – 9/30/2027 1.000 % 109,891 117,762

Resona Bank, Limited JPY 20,000,000 (b)(c) 11/13/2020 – 10/31/2027 1.600 % 56,537 60,386

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (b)(c) 12/30/2019 – 12/30/2026 1.975 % 19,909 22,441

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (b)(c) 10/4/2023 – 9/30/2028 0.600 % 52,204 54,062

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (b)(c) 10/4/2023 – 9/30/2028 0.000 % 52,204 54,062

The Shoko Chukin Bank, Ltd.

JPY 50,000,000 7/27/2020 – 6/30/2027 1.290 % 133,752 141,638

Higashi-Nippon

JPY 30,000,000 (b)

Higashi-Nippon

JPY 30,000,000 (b)(c)

$ 350,000 (e)

Street Journal U.S.

Small Business Administration

$ 350,000 (e)

outstanding principal balances

The Shoko Chukin Bank, Ltd.

JPY 30,000,000 7/25/2023 – 6/30/2028 Tokyo Interbank Offered Rate + 1.950 % 152,879 154,220

Japan Finance Corporation JPY 80,000,000 11/17/2020 – 11/30/2027 0.210 % 246,104 256,971

Higashi-Nippon Bank JPY 30,000,000 (b) 3/31/2022 – 3/31/2025 1.550 % -

Higashi-Nippon Bank JPY 30,000,000 (b)(c) 10/11/2023 – 9/30/2028 1.600 % 160,503 164,401

First Home Bank $ 350,000 (d) 4/18/2019 – 4/18/2029 Wall Street Journal U.S.

Prime Rate + 2.750 % 186,627 195,766

Small Business Administration $ 350,000 (d) 5/30/2020 – 5/30/2050 3.750 % 347,900 349,322

Aggregate outstanding principal balances 1,545,983 1,652,068

unamortized debt issuance costs ( 11,434 ) ( 12,000 )

current portion ( 367,871 ) ( 401,255 )

debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder.

debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.

bond is guaranteed by Resona Bank, Limited.

debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.

expense for short-term debt and long-term debts was $ 3,245 and $ 52,763 , respectively, for the nine months ended September 30, 2024.

expense for short-term debt and long-term debts was nil and $ 44,295 , respectively, for the nine months ended September 30, 2023.

of September 30, 2024, future minimum principal payments for long-term debts are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

Non-current portion $ 1,166,678 $ 1,238,813

(b) These debts are guaranteed by Sumitaka Yamamoto, the CEO and major shareholder of the Company.

(c) These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.

(d) These debts are guaranteed by Prakash Sadasivam, the CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.

Interest expenses for short-term debt and long-term

debts are $ 6,878 and $ 11,522 , respectively, for the three months ended March 31, 2025.

Interest expenses for short-term debt and long-term

debts are $ 2,628 and $ 15,886 , respectively, for the three months ended March 31, 2024.

As of March 31, 2025, future minimum principal

payments for long-term debts are as follows:

Year Ended December 31,

Remaining of 2025

15 – INCOME TAXES

USA, Sigmaways and HeartCore Financial, incorporated in the United States, are subject to federal income tax at 21 % statutory tax rate

with respect to the profit generated from the United States.

is a company incorporated in Netherlands in November 2019.

The first EUR200,000 of taxable income is subject to a statutory tax

rate of 19 % and the remaining taxable income is subject to a statutory tax rate of 25.80 %.

Technologies is a company incorporated in British Columbia in Canada in August 2020.

It is subject to income tax on income arising in,

or derived from, the tax jurisdiction in British Columbia it operates.

The basic federal rate of Part I tax is 38 % of taxable income,

28 % after federal tax abatement.

After the general tax reduction, the net federal tax rate is 15 %.

The provincial and territorial lower

and higher tax rates in British Columbia are 2 % and 12 %, respectively.

Luvina is a company incorporated in Vietnam in November 2023.

It is subject to standard income tax rate at 20 % with respect to the taxable

Company conducts its major businesses in Japan and is subject to tax in this jurisdiction.

As a result of its business activities, the

Company files tax returns that are subject to examination by the local tax authority.

Income taxes in Japan applicable to the Company

are imposed by the national, prefectural and municipal governments, and in the aggregate result in an effective statutory tax rate of

approximately 34.59 % for the nine months ended September 30, 2024 and 2023.

the nine months ended September 30, 2024 and 2023, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Nine Months Ended

September 30,

Income tax expense

effective tax rate was 1.01 % and ( 3.47 )% for the nine months ended September 30, 2024 and 2023, respectively.

16 – STOCK-BASED COMPENSATION

August 6, 2021, the Board of Directors and shareholders of the Company approved a 2021 Equity Incentive Plan (the “2021 Plan”),

under which 2,400,000 shares of common shares are authorized for issuance.

February 3, 2023, the Company awarded options to purchase 100,000 shares of common shares pursuant to the 2021 Plan at an exercise price

of $ 1.17 per share to an employee of the Company.

The options vest 50 % on the grant date and February 1, 2024, respectively, with the

expiration date on February 3, 2033 .

On August 25, 2023, the Company awarded options to purchase 2,000 shares of common shares pursuant to the

2021 Plan at an exercise price of $ 1.10 per share to an employee of the Company.

The options vest on each annual anniversary of the

date of issuance, in an amount equal to 25 % of the applicable shares of common shares, with the expiration date on August 25,

August 1, 2023, the Board of Directors of the Company approved a 2023 Equity Incentive Plan (the “2023 Plan”), under which

2,000,000 shares of common shares are authorized for issuance.

No shares were issued pursuant to the 2023 Plan as of September 30, 2024.

following table summarizes the stock options activity and related information for the nine months ended September 30, 2024 and 2023:

SCHEDULE OF STOCK OPTION ACTIVITY

NOTE 14 – INCOME TAXES

United States

HeartCore USA, Sigmaways and HeartCore Financial,

incorporated in the United States, are subject to federal income tax at 21 % statutory tax rate with respect to the profit generated from

the United States.

Sigmaways B.V.

is a company incorporated in Netherlands

in November 2019.

The first EUR 200,000 of taxable income is subject to a statutory tax rate of 19 % and the remaining taxable income is

subject to a statutory tax rate of 25.80 %.

Sigmaways Technologies is a company incorporated

in British Columbia in Canada in August 2020.

It is subject to income tax on income arising in, or derived from, the tax jurisdiction

in British Columbia it operates.

The basic federal rate of Part I tax is 38 % of taxable income, 28 % after federal tax abatement.

the general tax reduction, the net federal tax rate is 15 %.

The provincial and territorial lower and higher tax rates in British Columbia

are 2 % and 12 %, respectively.

HeartCore Luvina is a company incorporated in

Vietnam in November 2023.

It is subject to standard income tax rate at 20 % with respect to the taxable income.

The Company conducts its major businesses in Japan

and is subject to tax in this jurisdiction.

As a result of its business activities, the Company files tax returns that are subject to

examination by the local tax authority.

Income taxes in Japan applicable to the Company are imposed by the national, prefectural and municipal

governments, and in the aggregate result in an effective statutory tax rate of approximately 34.59 % for the three months ended March 31,

2025 and 2024.

For the three months ended March 31, 2025 and

2024, the Company’s income tax expense (benefit) are as follows:

For the Three Months Ended

Income tax expense (benefit)

The effective tax rate was 1.84 % and ( 5.14 )% for the three months ended

March 31, 2025 and 2024, respectively.

NOTE 15 – STOCK-BASED COMPENSATION

Stock Options

On August 6, 2021, the Board of Directors and

shareholders of the Company approved a 2021 Equity Incentive Plan (“2021 Plan”), under which 2,400,000 shares of common shares

are authorized for issuance.

On August 9, 2022, the Company awarded stock options

to purchase 14,500 shares of common shares at an exercise price of $ 2.48 per share to three prior employees of the Company.

options are fully vested and exercisable on the grant date, with the expiration date on August 9, 2026 .

On February 3, 2023, the Company awarded stock

options to purchase 100,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $ 1.17 per share to an employee of

The stock options vest 50 % on the grant date and February 1, 2024, respectively, with the expiration date on February 3,

On August 25, 2023, the Company awarded stock

options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $ 1.10 per share to an employee of

The stock options vest on each annual anniversary of the date of issuance, in an amount equal to 25 % of the applicable shares

of common shares, with the expiration date on August 25, 2033 .

On August 1, 2023, the Board of Directors of the

Company approved a 2023 Equity Incentive Plan (“2023 Plan”), under which 2,000,000 shares of common shares are authorized

for issuance.

The following table summarizes the stock options

activities and related information for the three months ended March 31, 2025 and 2024:

Stock Options Weighted

Price Weighted

(Years) Intrinsic

As of January 1, 2024 1,547,000 $ 2.41 8.01 $ -

As of September 30, 2023

Forfeited ( 8,000 ) 2.15 - -

As of March 31, 2024 1,539,000 $ 2.41 7.76 $ -

As of January 1, 2025 1,506,500 $ 2.41 7.01 $ 64,500

As of September 30, 2024

Vested and exercisable as of September 30, 2024

Company calculated the fair value of options granted in the nine months ended September 30, 2023 using the Black-Scholes model.

assumptions used in the valuation include expected volatility, risk-free interest rate, dividend yield and expected exercise term.

the three and nine months ended September 30, 2024, the Company recognized stock-based compensation related to options of $ 73,457 and

$ 184,501 , respectively.

For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related

to options of $ 144,306 and $ 479,122 , respectively.

The outstanding unamortized stock-based compensation related to options was $ 192,773

(which will be recognized through December 2025) as of September 30, 2024.

Stock Units (“RSUs”)

March 22, 2023, the Company entered into agreements with employees and service providers of Sigmaways and granted 671,350 RSUs pursuant

to the 2021 Plan.

The RSUs were fully vested upon issuance.

The fair value of the RSUs at grant date was $ 691,491 .

following table summarizes the RSUs activity for the nine months ended September 30, 2024 and 2023:

SCHEDULE OF RESTRICTED STOCK UNITS

Weighted Average

Exercised ( 100,000 ) 1.17 - -

As of March 31, 2025 1,406,500 $ 2.50 6.68 $ -

Vested and exercisable as of March 31, 2025 1,058,500 $ 2.50 6.67 $ -

The Company recognized stock-based compensation

related to stock options of $ 30,676 and $ 70,447 during the three months ended March 31, 2025 and 2024, respectively.

The outstanding unamortized

stock-based compensation related to stock options was $ 90,874 (which will be recognized through December 2025) as of March 31, 2025.

Restricted Stock Units (“RSUs”)

On February 9, 2022, the Company entered into

executive employment agreements with five executives and granted 85,820 RSUs pursuant to the 2021 Plan.

The RSUs vest on each annual anniversary

of the date of the employment agreement, in an amount equal to 25 % of the applicable shares of common shares.

The fair value of the RSUs

at grant date is $ 424,809 .

The following table summarizes the RSUs activities

and related information for the three months ended March 31, 2025 and 2024:

Grant Date Fair

1 unchanged sentence

Unvested as of January 1, 2024

Unvested as of September 30, 2023

Unvested as of March 31, 2024

Unvested as of January 1, 2025

Unvested as of September 30, 2024

the three and nine months ended September 30, 2024, the Company recognized stock-based compensation related to RSUs of $ 15,615 and $ 52,325 ,

respectively.

For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to RSUs

of $ 29,000 and $ 788,577 , respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 48,785 (which will be

recognized through February 2026) as of September 30, 2024.

Unvested as of March 31, 2025

The Company recognized stock-based compensation

related to RSUs of $ 1,604 and $ 21,265 during the three months ended March 31, 2025 and 2024, respectively.

The outstanding unamortized

stock-based compensation related to RSUs was $ 20,338 (which will be recognized through February 2026) as of March 31, 2025.

16 – SHAREHOLDERS’ EQUITY

February 1, 2023, 2,500,000 shares of common shares were issued for the acquisition of 51 % of the outstanding shares of Sigmaways and

its subsidiaries with fair value of $ 3,150,000 (also see NOTE 19).

November 2023, the Company established a 51 % owned subsidiary in Vietnam.

On February 16, 2024, the Company received capital contribution

of VND 1,646.4 million in cash, equivalent to $ 67,195 , from the non-controlling shareholder of the subsidiary.

March 29, 2024, the Board of Directors approved a dividend declaration of $ 0.02 per share of common share for the shareholders of record

at the close of business on April 26, 2024.

The dividends in the amount of $ 417,283 were paid on May 3, 2024.

July 22, 2024, the Board of Directors approved a dividend declaration of $ 0.02 per share of common share for the shareholders of record

at the close of business on August 19, 2024.

The dividends in the amount of $ 417,283 were paid on August 26, 2024.

of September 30, 2024 and December 31, 2023, there were 20,864,144 and 20,842,690 shares of common shares issued and outstanding, respectively.

preferred shares were issued and outstanding as of September 30, 2024 and December 31, 2023.

18 – NET INCOME (LOSS) PER SHARE

net income (loss) per share is calculated on the basis of weighted average outstanding common shares.

Diluted net income (loss) per share

is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs

and other dilutive securities.

Common shares equivalents are determined by applying the treasury stock method to the assumed conversion

of share repurchase liability to common shares related to the early exercised stock options and unvested RSUs, and are not included in

the calculation of diluted income (loss) per share if their effect would be anti-dilutive.

computation of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2024 and 2023 is as follows:

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Net income (loss) per share – basic and diluted

Net income (loss) attributable to HeartCore Enterprises, Inc.

is authorized to issue 200,000,000 shares of common shares, par value of $ 0.0001 per share, and 20,000,000 shares of preferred shares,

par value of $ 0.0001 per share.

23, 2023, the Company entered into an at the market offering agreement (“ATM Agreement”) with H.C.

Wainwright & Co., LLC

(“Wainwright”), as sales agent, pursuant to which the Company may offer and sell, from time to time, through Wainwright, shares

of the Company’s common shares, par value of $ 0.0001 per share, having an aggregate offering price of up to approximately $ 2 million

(“ATM Shares”).

The Company pays commission fees of 4 % for each completed sale of ATM Shares under the terms of the ATM Agreement.

During the three months ended March 31, 2025 and 2024, the Company sold a total of 15,892 and nil shares of the ATM Shares for net proceeds

of $ 30,445 and nil after deducting commission fees and other transaction costs, respectively.

The subscription receivable of $103,942

related to ATM Shares sold on December 31, 2024 was collected in full on January 2, 2025.

2023, the Company established a 51 % owned subsidiary in Vietnam, HeartCore Luvina.

On February 16, 2024, the Company received capital

contribution of VND1, 646.4 million in cash, equivalent to $ 67,195 , from the non-controlling shareholder of the subsidiary.

31, 2025 and December 31, 2024, there were 22,075,333 and 21,937,987 shares of common shares issued and outstanding, respectively.

shares were issued and outstanding as of March 31, 2025 and December 31, 2024.

NOTE 17 – NET LOSS PER SHARE

Basic net loss per share is calculated on the

basis of weighted average outstanding common shares.

Diluted net loss per share is computed on the basis of basic weighted average outstanding

common shares adjusted for the dilutive effect of stock options and RSUs.

Potentially dilutive common shares are determined by applying

the treasury stock method to the assumed conversion of share repurchase liability to common shares related to the early exercised stock

options and unvested RSUs, and are not included in the calculation of diluted loss per share if their effect would be anti-dilutive.

The computation of basic and diluted net loss

per share for the three months ended March 31, 2025 and 2024 is as follows:

For the Three Months Ended

Net loss attributable to HeartCore Enterprises, Inc.

common shareholders

1 unchanged sentence

$ ( 1,333,350 )

Weighted average number of common shares outstanding used in calculating net income (loss) per share

Net income (loss) per share – basic and diluted

the three and nine months ended September 30, 2024 and 2023, the weighted average common shares outstanding are the same for basic and

diluted net income (loss) per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

19 – BUSINESS COMBINATION

September 6, 2022, HeartCore USA entered into the Sigmaways Agreement to acquire 51 % of the outstanding shares of Sigmaways, a company

incorporated under the laws of the State of California, and its subsidiaries.

The Sigmaways Agreement was further amended on December

23, 2022 and February 1, 2023, respectively, and the transaction was closed on February 1, 2023.

The purchase consideration is $ 4,150,000 ,

consisted of $ 1,000,000 in cash and 2,500,000 shares of common shares of the Company with fair value of $ 3,150,000 at the closing date.

total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed and non-controlling

interest based on their estimated fair values as of the acquisition date.

The excess of the purchase price over those fair values is

recorded as goodwill.

purchase price is allocated on the acquisition date as follows:

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION

Current assets

Acquired intangible asset

Non-current assets

Current liabilities

Weighted average number of common shares outstanding used in calculating net loss per share

Net loss per share – basic and diluted

For the three months ended March 31, 2025 and 2024, the weighted average

common shares outstanding are the same for basic and diluted net loss per share calculations, as the inclusion of potentially dilutive

common shares related to the early exercised stock options and unvested RSUs would have an anti-dilutive effect.

NOTE 18 – SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

Operating segments are defined as components of

an entity for which discrete financial information is available and is regularly reviewed by the CODM, the CEO of the Company, in making

decisions regarding resource allocation and performance assessment.

The Company determines its operations constitute a single operating

segment and reportable segment in accordance with ASC Topic 280.

The CODM assesses financial performance and decides how to allocate resources

based on consolidated net income (loss).

Segment assets are reported on the Company’s consolidated balance sheets.

The following table summarizes selected financial

information with respect to the Company’s single operating segment and reportable segment for the three months ended March 31, 2025

For the Three Months Ended

Software related cost of revenues

Consulting related cost of revenues

Selling expenses

General and administrative expenses

Research and development expenses

Loss from operations

( 1,244,157 )

Deferred tax liabilities

Total other expenses

( 1,836,588 )

Non-current liabilities

Non-controlling interest

Loss before income tax expense (benefit)

( 3,080,745 )

Total purchase consideration

results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s

unaudited consolidated financial statements since the date of acquisition.

forma results of operations for the business combination have not been presented because they are not material to the unaudited consolidated

statements of operations and comprehensive income (loss).

Company’s policy is to perform its annual impairment testing on goodwill for its reporting unit on December 31 of each fiscal year

or more frequently if events or changes in circumstances indicate that an impairment may exist.

The Company did not recognize any impairment

loss on goodwill for the nine months ended September 30, 2024 and 2023.

20 – SUBSEQUENT EVENTS

October 1, 2024, the Company granted 69,653 RSUs pursuant to the 2023 Plan to four executives of the Company.

The RSUs were fully vested

upon issuance.

October 8, 2024, the Company entered into share transfer agreements with multiple third parties to sell 2,304 stocks obtained

through exercise of stock warrants of a consulting service customer for approximately $ 400,000 .

( 1,558,169 )

Income tax expense (benefit)

$ ( 3,137,381 )

$ ( 1,478,002 )

Geographic Information

The following table summarizes the breakdown of

revenues by geography for the three months ended March 31, 2025 and 2024:

For the Three Months Ended

United States

International

Total revenues

The following table summarizes the breakdown of

long-lived assets by geography as of March 31, 2025 and December 31, 2024:

United States

International

Total long-lived assets

NOTE 19 – SUBSEQUENT EVENTS

During the subsequent period, the Company sold

marketable securities for proceeds of approximately $ 270,000 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements