What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-15 · 478 added, 261 removed, 739 unchanged (50% of the section changed)

9 unchanged sentences

Due from related party

Deferred offering costs

Other current assets

17 unchanged sentences

Due to related parties

Short-term debt

Short-term debt – related party

6 unchanged sentences

Deferred revenue

Derivative liability

Other current liabilities

8 unchanged sentences

Shareholders’ equity:

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;

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

Preferred shares, $ 0.0001 par value, 20,000,000 shares authorized;

Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of June 30, 2025 and December 31, 2024, respectively;

aggregate liquidation preference of $ 2,200,611 and nil as of June 30, 2025 and December 31, 2024, respectively

Common shares, $ 0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Subscription receivable

1 unchanged sentence

Accumulated deficit

( 18,231,933 )

( 16,244,843 )

Accumulated other comprehensive income

2 unchanged sentences

Non-controlling interests

( 1,281,417 )

( 1,191,482 )

Total shareholders’ equity

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

AND COMPREHENSIVE INCOME (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)

For the Six Months Ended

Cost of revenues (including cost of revenues resulting from transactions with a related party of $ 31,328 and $ 56,523 for the three and six months ended June 30, 2025, respectively, and of $ 25,117 and $ 25,117 for the three and six months ended June 30, 2024, respectively)

Operating expenses:

Selling 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)

General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of $ 11,433 and $ 29,048 for the three and six months ended June 30, 2025, respectively, and of $ 6,473 and $ 6,473 for the three and six months ended June 30, 2024, respectively)

Research and development expenses

Total operating expenses

Loss from operations

Income (loss) from operations

( 1,507,204 )

( 1,136,692 )

( 2,190,159 )

Other income (expenses):

1 unchanged sentence

Changes in fair value of investment in warrants

( 1,237,707 )

Interest income

1 unchanged sentence

Other expenses

Total other expenses

Loss before income tax expense (benefit)

Total other income (expenses)

( 1,651,291 )

Income (loss) before income tax expense (benefit)

( 2,283,281 )

( 2,022,801 )

( 3,841,450 )

Income tax expense (benefit)

Net income (loss)

( 2,211,118 )

( 2,075,875 )

( 3,689,120 )

net loss attributable to non-controlling interests

Net loss attributable to HeartCore Enterprises, Inc.

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

( 1,951,100 )

( 1,987,090 )

( 3,284,450 )

Dividends accrued on Series A convertible preferred shares

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

common shareholders

$ ( 1,951,100 )

$ ( 1,987,701 )

$ ( 3,284,450 )

Other comprehensive income (loss):

Foreign currency translation adjustment

Total comprehensive loss

Total comprehensive income (loss)

( 2,235,238 )

( 2,027,837 )

( 3,702,945 )

comprehensive loss attributable to non-controlling interests

Comprehensive loss attributable to HeartCore Enterprises, Inc.

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

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

$ ( 1,972,330 )

$ ( 1,937,902 )

$ ( 3,290,474 )

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

Weighted average common shares outstanding

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

1 unchanged sentence

IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2025 AND 2024

Preferred Shares

Common Shares

Accumulated Other

Total HeartCore

Enterprises, Inc.

Number of Shares

Accumulated Deficit

Comprehensive Income

Shareholders’ Equity

controlling Interests

Shareholders’ Equity

Comprehensive

Shareholders’

Balance, December 31, 2024

13 unchanged sentences

( 1,240,634 )

Common Shares

Accumulated Other

Total HeartCore

Enterprises, Inc.

Net income (loss)

Foreign currency translation adjustment

Issuance of Series A convertible preferred shares

Issuance of common shares related to securities purchase agreement

Issuance of common shares related to equity purchase agreement

Dividends accrued on Series A convertible preferred shares

Stock-based compensation

Balance, June 30, 2025

$ ( 18,231,933 )

$ ( 1,281,417 )

Comprehensive

Shareholders’

Non-controlling

Shareholders’

Balance, December 31, 2023

December 31, 2023

$ ( 14,763,469 )

2 unchanged sentences

( 1,478,002 )

Foreign currency translation adjustment

Capital contribution from non-controlling shareholder

Stock-based compensation

Balance, March 31, 2024

currency translation adjustment

contribution from non-controlling shareholder

March 31, 2024

( 16,096,819 )

( 1,951,100 )

( 2,211,118 )

currency translation adjustment

June 30, 2024

$ ( 18,047,919 )

The accompanying notes are an integral part of

2 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

1 unchanged sentence

$ ( 3,689,120 )

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

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

Depreciation and amortization expenses

10 unchanged sentences

Accounts receivable

( 1,145,166 )

Prepaid expenses

9 unchanged sentences

( 2,674,892 )

( 1,735,744 )

Cash flows from investing activities:

Purchases of property and equipment

Prepayment for property and equipment

Purchase of investment in SAFE

Net proceeds from sale of warrants

7 unchanged sentences

Repayment of insurance premium financing

Net proceeds from factoring arrangement

Net repayment of factoring arrangement

Capital contribution from non-controlling shareholder

Distribution of dividends

Proceeds from issuance of common shares

1 unchanged sentence

Proceeds from exercise of stock options

Proceeds from issuance of Series A convertible preferred shares and common shares related to securities purchase agreement, net of share issuance costs

Net cash flows provided by (used in) financing activities

1 unchanged sentence

Net change in cash and cash equivalents

( 1,382,105 )

Cash and cash equivalents – beginning of the period

6 unchanged sentences

Insurance premium financing

Warrants converted to marketable securities

Issuance of common shares related to equity purchase agreement

Dividends accrued on Series A

convertible preferred shares

The accompanying notes are an integral part of

84 unchanged sentences

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

of investment in warrants, revenue recognition with respect to allocation of transaction price and valuation of derivative liability.

Actual results could differ from those estimates.

Asset Retirement Obligations

2 unchanged sentences

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

an obligation related to these restorations as asset retirement obligations 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 obligations:

Beginning balance

12 unchanged sentences

all software development costs have been expensed as incurred.

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

In the three and six months ended June 30, 2025,

software development costs expensed as incurred amounted to $ 161,481 and $ 285,374 , respectively.

These software development costs were

included in the research and development expenses.

In the three and six months ended June

30, 2024, software development costs expensed as incurred amounted to $ 111,268 and $ 200,402 , respectively.

These software development

costs were included in the research and development expenses.

Investment in Warrants

16 unchanged sentences

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.

were no impairments of these assets during the three and six months ended June 30, 2025 and 2024.

Foreign Currency Translation

14 unchanged sentences

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

income (loss).

The reporting currency of the Company is the US$,

14 unchanged sentences

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.

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

Revenues amount represents the invoiced

83 unchanged sentences

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.

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

The amount of revenues recognized during the six months ended June 30, 2025 and 2024 that were included in the opening deferred

revenue balance are approximately $ 1.3 million and $ 1.5 million, respectively.

Disaggregation of Revenues

2 unchanged sentences

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

The Company’s disaggregation of revenues

by revenue stream for the three and six months ended June 30, 2025 and 2024 is as follows:

For the Three Months

For the Six Months

Revenues from on-premise software

6 unchanged sentences

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

by product/service for the three and six months ended June 30, 2025 and 2024 is as follows:

For the Three Months

For the Six Months

Revenues from customer experience management platform

13 unchanged sentences

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.

For the three and six months ended June 30, 2025

and 2024, customers account for 10% or more of the Company’s total revenues are as follows:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

As of June 30, 2025 and December 31, 2024, customers

account for 10% or more of the Company’s total accounts receivable are as follows:

For the three and six months ended June 30, 2025

and 2024, no vendor accounts for more than 10% of the Company’s total purchases.

As of June 30, 2025 and December 31, 2024, vendor

accounts for 10% or more of the Company’s total accounts payable and accrued expenses is as follows:

* Less than 10%.

Segment Reporting

11 unchanged sentences

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.

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 occur.

Series A Convertible Preferred Shares and Derivative

When the Company issues Series A convertible preferred

shares (see NOTE 16), it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether

the instrument should be classified as a liability under ASC Topic 480, “Distinguishing Liabilities from Equity”, and second

whether the conversion feature should be accounted for separately from the host instrument.

A conversion feature of the Series A convertible

preferred shares would be separated from the convertible instrument and classified as a derivative liability if the conversion feature,

as a standalone instrument, meets the definition of an embedded derivative under ASC Topic 815, “Derivatives and Hedging”.

Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the

Company’s equity, as defined in ASC Topic 815-40, or when it must be settled either in cash or by issuing equity shares that are

readily convertible to cash.

The Company assesses the Series A convertible

preferred shares as a whole and determines it does not meet the liability classification pursuant to ASC Topic 480 and the Company classifies

the host instrument as permanent equity because no features provide for redemption by the holders of the Series A convertible preferred

shares or conditional redemption, which is not solely within the Company’s control, and there are no unconditional obligations in

that (1) the Company must or may settle in a variable number of its equity shares, and (2) the monetary value is predominantly fixed,

varying with something other than the fair value of the Company’s equity shares or varying inversely in relation to the Company’s

equity shares.

The Company assesses the conversion feature of

the Series A convertible preferred shares for derivative accounting consideration and determines it meets the definition of an embedded

derivative, which is separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheets

at fair value, with any changes in its fair value recognized in the unaudited consolidated statements of operations and comprehensive

income (loss).

The Company values the fair value of derivative liability using the income approach with the discounted cash flow valuation

method with the assistance of a third-party valuation appraiser.

The determination of fair value requires management to make significant

estimates and assumptions related to forecasted cash flows and discount rate.

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:

accordance with ASC Topic 820, “Fair Value Measurements and Disclosures”.

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.

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:

quoted prices in active markets for identical assets or liabilities;

1 unchanged sentence

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

As of June 30, 2025 and December 31, 2024, the

carrying values of current assets, except for investments in marketable securities, and current liabilities, except for derivative liability,

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

Assets and liabilities measured at fair value

on a recurring basis as of June 30, 2025 and December 31, 2024 are summarized below (also see NOTE 6 for investments):

Fair Value Measurements as of June 30, 2025

Quoted Prices

Markets for Identical

Significant Other

Fair Value at

Investments in marketable securities

Long-term investment in warrants

Derivative liability

Fair Value Measurements as of December 31, 2024

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Unobservable Inputs

Value at December 31,

Quoted Prices

Markets for Identical

Significant Other

Fair Value at

Investments in marketable securities

Long-term investment in warrants

Derivative liability

Recent Accounting Pronouncements

38 unchanged sentences

NOTE 5 – RELATED PARTY TRANSACTIONS

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

As of June 30, 2025 and December 31, 2024, the

Company had a due to related parties balance of $ 590 and $ 47 , respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”)

1 unchanged sentence

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

During the six months ended June

30, 2025, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $ 514 .

the six months ended June 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 $ 1,246 .

As of June 30, 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”),

1 unchanged sentence

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

During the six

months ended June 30, 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 June 30, 2025 and December 31, 2024, the Company had an accounts payable

and accrued expenses balance of $ 22,924 and $ 47,199 , respectively, to Luvina Software.

During the three and six months ended June 30,

2025, the Company engaged the related party for software development and other support services in the amount of $ 42,761 and $ 85,571 ,

respectively.

During the three and six months ended June 30, 2024, the Company engaged the related party for software development and

other support services in the amount of $ 31,590 and $ 31,590 , respectively.

As of June 30, 2025 and December 31, 2024, the

Company had a loan receivable balance of $ 158,378 and $ 164,067 , respectively, from HeartCore Technology Inc., a company controlled by

3 unchanged sentences

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

During the six months ended June 30, 2025 and 2024, the

Company received repayments of $ 21,139 and $ 21,166 , respectively, from this related party.

As of June 30, 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”)

2 unchanged sentences

The balance is unsecured, bears an annual interest

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

of 7.5 % and due on demand.

NOTE 6 – INVESTMENTS

10 unchanged sentences

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

investment in warrants activities for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

Fair value of investment in warrants at beginning of the period

Changes in fair value of investment in warrants

( 1,237,707 )

Warrants converted to marketable securities

Fair value of investment in warrants at end of the period

5 unchanged sentences

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

The following table summarizes the Company’s

investments in marketable securities activities for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

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

Marketable securities converted from warrants

Changes in fair value of investments in marketable securities

( 1,781,664 )

Marketable securities sold

( 1,071,732 )

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

16 unchanged sentences

Total property and equipment, net

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

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

For the three and six months ended June 30, 2025,

the Company recognized depreciation expenses of $ 15,530 and $ 42,437 , respectively.

For the three and six months ended June 30, 2024, the

Company recognized depreciation expenses of $ 27,486 and $ 56,196 , respectively.

NOTE 9 – LEASES

2 unchanged sentences

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.

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

consolidated financial statements.

Right-of-use assets of finance leases of $ 57,612 and $ 60,440 are included in property and equipment,

net as of June 30, 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.

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

the expected life of the leased assets, and interest expense, which is 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

The components of lease costs for the three and

six months ended June 30, 2025 and 2024 are as follows:

For the Three Months

For the Six Months

Finance lease costs

Amortization of right-of-use assets

Interest on lease liabilities

Amortization of finance lease right-of-use assets

Interest on finance lease liabilities

Total finance lease costs

2 unchanged sentences

The following table presents supplemental information

related to the Company’s leases:

For the Three Months Ended

related to the Company’s leases for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

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

9 unchanged sentences

Operating leases 1.35 % 1.37 %

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

As of June 30, 2025, the future maturity of lease

liabilities is as follows:

8 unchanged sentences

Company made security deposits to the lessors.

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

The security deposits amounted to $ 225,649 and $ 307,996 as of June 30, 2025 and December

31, 2024, respectively.

4 unchanged sentences

Total other current liabilities

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.

* On 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

1 unchanged sentence

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”).

an unrelated factor (“Factor”), in February 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.

17 unchanged sentences

for agreements of this type.

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

As of June 30, 2025 and December 31, 2024, there

were $ 226,212 and $ 172,394 borrowed and outstanding under the Factoring Agreement, respectively.

1 unchanged sentence

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.

During the three and six months ended June 30, 2025,

the Company recorded $ 15,698 and $ 24,599 in interest expenses related to Factoring Agreement, respectively.

During the three and six months

ended June 30, 2024, the Company recorded $ 14,678 and $ 30,786 in interest expenses related to Factoring Agreement, respectively.

NOTE 12 – INSURANCE PREMIUM FINANCING

5 unchanged sentences

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

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

As of June 30, 2025 and December 31, 2024, the

balances of the insurance premium financing were $ 90,869 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

Institution Original

Borrowed Loan

Duration Monthly

Interest Rate Balance as of

2025 Balance as of

PMG Co., Ltd.

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

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

Long-term Debts

During the three and six months ended June 30, 2025,

the Company recorded $ 4,042 and $ 5,874 in interest expenses related to insurance premium financing, respectively.

During the three and

six months ended June 30, 2024, the Company recorded $ 5,005 and $ 7,044 in interest expenses related to insurance premium financing, respectively.

NOTE 13 – 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

Name of Banks/Financial Institutions Original Amount

Borrowed Loan

Duration Annual

Interest Rate Balance as of

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

Resona Bank, Limited JPY 10,000,000 (a)(b) 9/30/2020 – 9/30/2027 1.000 % $ 25,711 $ 29,440

Resona Bank, Limited JPY 40,000,000 (a)(b) 9/30/2020 – 9/30/2027 1.000 % 102,844 117,762

Resona Bank, Limited JPY 20,000,000 (a)(b) 11/13/2020 – 10/31/2027 1.600 % 53,077 60,386

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 12/30/2019 – 12/30/2026 1.975 % 17,720 22,441

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 10/4/2023 – 9/30/2028 0.600 % 50,407 54,062

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 10/4/2023 – 9/30/2028 0.000 % 50,407 54,062

The Shoko Chukin Bank, Ltd.

3 unchanged sentences

Japan Finance Corporation JPY 80,000,000 11/17/2020 – 11/30/2027 0.210 % 235,900 256,971

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.

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

Higashi-Nippon Bank JPY 30,000,000 (a)(b) 10/11/2023 – 9/30/2028 1.600 % 156,478 164,401

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

Prime Rate + 2.750 % 177,331 195,766

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

Small Business Administration $ 350,000 (c) 5/30/2020 – 5/30/2050 3.750 % 345,875 349,322

Aggregate outstanding principal balances 1,490,664 1,652,068

2 unchanged sentences

Non-current portion $ 1,097,263 $ 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

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

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

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

During the three and six months ended June 30,

2025, the Company recorded $ 12,925 and $ 24,447 in interest expenses related to long-term debts, respectively.

During the three and six

months ended June 30, 2024, the Company recorded $ 17,056 and $ 32,942 in interest expenses related to long-term debts, respectively.

As of June 30, 2025, future minimum principal

payments for long-term debts are as follows:

27 unchanged sentences

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

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

June 30, 2025 and 2024.

For the three and six months ended June 30, 2025

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

For the Three Months

For the Six Months

Ended June 30,

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.

$ ( 152,330 )

For the three and six months ended June 30, 2025, the effective tax

rate was ( 0.34 )% and 2.62 %, respectively.

For the three and six months ended June 30, 2024, the effective tax rate was ( 3.16 )% and ( 3.97 )%,

respectively.

NOTE 15 – STOCK-BASED COMPENSATION

9 unchanged sentences

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

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

Company approved a 2023 Equity Incentive Plan, under which 2,000,000 shares of common shares are authorized for issuance.

On August 25, 2023, the Company awarded stock

2 unchanged sentences

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:

activities and related information for the six months ended June 30, 2025 and 2024:

Stock Options Weighted

3 unchanged sentences

Forfeited ( 35,000 ) 2.42 - -

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

As of June 30, 2024 1,512,000 $ 2.41 7.51 $ -

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

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.

Forfeited ( 6,500 ) 2.50 - -

As of June 30, 2025 1,400,000 $ 2.50 6.43 $ -

Vested and exercisable as of June 30, 2025 1,053,625 $ 2.50 6.42 $ -

For the three and six months ended June 30, 2025,

the Company recognized stock-based compensation related to stock options of $ 22,006 and $ 52,682 , respectively.

For the three and six months

ended June 30, 2024, the Company recognized stock-based compensation related to stock options of $ 40,597 and $ 111,044 , respectively.

outstanding unamortized stock-based compensation related to stock options was $ 59,573 (which will be recognized through December 2025)

as of June 30, 2025.

Restricted Stock Units (“RSUs”)

6 unchanged sentences

The following table summarizes the RSUs activities

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

Grant Date Fair

Value Per Share

and related information for the six months ended June 30, 2025 and 2024:

Unvested as of January 1, 2024

Unvested as of March 31, 2024

Unvested as of June 30, 2024

Unvested as of January 1, 2025

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.

Unvested as of June 30, 2025

For the three and six months ended June 30, 2025,

the Company recognized stock-based compensation related to RSUs of $ 5,918 and $ 7,522 , respectively.

For the three and six months ended

June 30, 2024, the Company recognized stock-based compensation related to RSUs of $ 15,445 and $ 36,710 , 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.

stock-based compensation related to RSUs was $ 14,420 (which will be recognized through February 2026) as of June 30, 2025.

16 – SHAREHOLDERS’ EQUITY

1 unchanged sentence

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.

Purchase Agreement

30, 2025, the Company entered into an equity purchase agreement and a registration rights agreement with Crom Structured Opportunities

Fund I, LP (“Crom Structured”), pursuant to which Crom Structured has committed to purchase up to $ 25 million in shares of

the Company’s common shares, subject to certain limitations and conditions set forth in the equity purchase agreement.

shall not issue or sell any shares of common shares under the equity purchase agreement which, when aggregated with all purchases of common

shares made by Crom Structured pursuant to the equity purchase agreement, would result in beneficial ownership of more than 4.99 % of the

Company’s outstanding shares of common shares.

terms of the equity purchase agreement, the Company has the right, but not the obligation, to sell to Crom Structured, shares of common

shares over the period commencing on the date of the equity purchase agreement and ending on the earlier of (i) the date on which Crom

Structured shall have purchased common shares pursuant to the equity purchase agreement equal to $ 25 million, (ii) June 30, 2027, (iii)

written notice of termination by the Company to Crom Structured, (iv) the registration statement is no longer effective after the initial

effective date of the registration statement, or (v) the date that the Company commences a voluntary bankruptcy case, a bankruptcy proceeding

is commenced against the Company, a custodian is appointed for the Company or for all or substantially all of its property, or the Company

makes a general assignment for the benefit of its creditors.

The purchase price will be calculated as 96 % of the volume weighted average

price (“VWAP”) of the Company’s common shares on the trading day immediately preceding the respective common shares

purchase notice delivery date.

Concurrently with the signing

of the equity purchase agreement, the Company issued 485,437 shares of common shares to Crom Structured as a commitment fee.

fair value of the shares issued for the commitment fee of $ 250,000 was recorded as deferred offering costs in the consolidated balance

six months ended June 30, 2025, no common shares were sold under the terms of the equity purchase agreement.

of Series A Convertible Preferred Shares and Securities Purchase Agreement

30, 2025, the Company filed a certificate of designations of preferences and rights of Series A convertible preferred shares (“Series

A COD”) with the Secretary of State of the State of Delaware to set forth the terms of the Series A convertible preferred shares.

Pursuant to the Series A COD, the Company designated 2,000 shares of preferred shares as Series A convertible preferred shares and each

share of Series A convertible preferred shares has a stated value of $ 1,100 .

The following summarizes the material terms of the Series

A convertible preferred shares:

● Dividends – Each Series A convertible preferred shares holder

(“Holder”) shall be entitled to receive dividends of 10 % per annum on the stated value of each share of Series A convertible

preferred shares.

● Liquidation – In the event of any voluntary or involuntary

liquidation, dissolution or winding up of the Company, the Holders shall be entitled to receive, prior and in preference to any distribution

of any of the assets or surplus funds of the Company to the holders of common shares and any other class or series of equity shares of

the Company, an amount per share equal to the greater of (i) the stated value plus all accrued and unpaid dividends thereon or (ii) the

amount that such Holder would receive if such Holder converts all of its shares of Series A convertible preferred shares into common shares

immediately prior to such liquidation, dissolution or winding up.

If, upon any such liquidation, dissolution or winding up, the assets

and funds available for distribution among the Holders shall be insufficient to permit the payment to such Holders of the full preferential

amount aforesaid, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among

the Holders in proportion to the amount that each such Holder is entitled to receive.

After the payment of the full amount of the liquidation

preference to which they are entitled, the Holders shall have no right or claim to any of the remaining assets of the Company.

● Voting – The Series A convertible preferred shares shall have

no voting rights.

However, as long as any shares of Series A convertible preferred shares are outstanding, the Company shall not, without

the affirmative vote of the Holders of a majority of the outstanding shares of Series A convertible preferred shares, and with each share

of Series A convertible preferred shares having one vote on (i) alter or change adversely the powers, preferences or rights given to the

Series A convertible preferred shares or alter or amend the Series A COD, (ii) issue additional shares of Series A convertible preferred

shares or increase or decrease (other than by conversion) the number of authorized shares of Series A convertible preferred shares, or

(iii) enter into any agreement with respect to any of the foregoing.

● Conversion – Each Holder shall have the right, at such Holder’s

opinion, to convert any or all of the Series A convertible preferred shares held by such Holder into fully paid and nonassessable shares

of common shares.

The number of shares of common shares issuable upon conversion of each share of Series A convertible preferred shares

shall be equal to the quotient obtained by dividing (i) the stated value plus all accrued and unpaid dividends thereon by (ii) 90 % of

the average of the two lowest VWAP of the Company’s common shares for the five trading days immediately preceding the respective

common shares conversion notice delivery date.

● Redemption – No share of Series A convertible preferred shares

shall be redeemable under any circumstances.

30, 2025, the Company entered into a securities purchase agreement and a registration rights agreement with Crom Structured, pursuant

to which the Company closed, issued and sold to Crom Structured an aggregate of 2,000 shares of the Company’s designated Series

A convertible preferred shares for an aggregate purchase price of $ 2,000,000 .

Concurrently with the signing of the securities purchase

agreement, the Company issued 750,000 shares of common shares (“ 750,000 Common Shares”) to Crom Structured for no consideration.

The Company received net proceeds of $ 1,800,000 from the securities purchase agreement after deducting share issuance transaction fees.

The net proceeds from the securities purchase agreement were allocated to Series A convertible preferred shares and 750,000 Common Shares

based on their relative fair values.

six months ended June 30, 2025, no shares of Series A convertible preferred shares were converted into common shares.

Dividends accrued on Series A convertible preferred shares amounted to $ 611 in the six months ended June 30,

the Market Offering Agreement (“ATM Agreement”)

23, 2023, the Company entered into a 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 six months ended June 30,

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.

Contribution for Non-controlling Shareholder

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

1 unchanged sentence

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

of Dividends on Common Shares

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.

Issued and Outstanding

30, 2025 and December 31, 2024, there were 23,310,770 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.

30, 2025 and December 31, 2024, there were 2,000 and no shares of preferred shares (designated as Series A convertible preferred shares)

issued and outstanding, respectively.

NOTE 17 – NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated

on the basis of weighted average outstanding common shares.

Diluted net income (loss) per share is calculated on the basis of basic weighted

average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and Series A convertible preferred shares.

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.

Potentially dilutive common shares issuable upon conversion

of the Series A convertible preferred shares are determined by applying the if-converted method.

Potentially dilutive common shares are

not included in the calculation of diluted net income (loss) per share if their effect would be anti-dilutive.

The computation of basic and diluted net income

(loss) per share for the three and six months ended June 30, 2025 and 2024 is as follows:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Net income (loss) per share – basic

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

common shareholders

1 unchanged sentence

$ ( 1,987,701 )

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.

$ ( 3,284,450 )

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

Net income (loss) per share – basic

Net income (loss) per share – diluted

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

common shareholders

$ ( 1,951,100 )

$ ( 1,987,701 )

$ ( 3,284,450 )

Dividends accrued on Series A convertible preferred shares

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

( 1,951,100 )

( 1,987,090 )

( 3,284,450 )

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

Dilutive effect of stock options, RSUs and Series A convertible preferred shares

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

Net income (loss) per share – diluted

NOTE 18 – SEGMENT AND GEOGRAPHIC INFORMATION

9 unchanged sentences

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

information with respect to the Company’s single operating segment and reportable segment for the three and six months ended June

30, 2025 and 2024:

For the Three Months

For the Six Months

Software related cost of revenues

3 unchanged sentences

Research and development expenses

Loss from operations

Income (loss) from operations

( 1,507,204 )

Total other expenses

( 1,136,692 )

Loss before income tax expense (benefit)

( 2,190,159 )

Total other income (expenses)

( 1,651,291 )

Income (loss) before income tax expense (benefit)

( 2,283,281 )

( 2,022,801 )

( 3,841,450 )

Income tax expense (benefit)

Net income (loss)

$ ( 2,211,118 )

$ ( 2,075,875 )

$ ( 3,689,120 )

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

revenues by geography for the three and six months ended June 30, 2025 and 2024:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

United States

2 unchanged sentences

The following table summarizes the breakdown of

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

long-lived assets by geography as of June 30, 2025 and December 31, 2024:

United States

1 unchanged sentence

Total long-lived assets

NOTE 19 – SUBSEQUENT EVENTS

During the subsequent period, the Company sold

marketable securities for proceeds of approximately $ 270,000 .

NOTE 19 – SUBSEQUENT EVENT

On July 1, 2025, the Company converted partial

of the warrants it received from a customer as noncash consideration from consulting services into marketable securities.

On July 4, 2025, the U.S.

government enacted

the One Big Beautiful Bill Act (“OBBBA”) which includes, among other provisions, changes to the U.S.

corporate income tax

system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain

provisions within the Tax Cuts and Jobs Act.

The Company is currently evaluating the impact of OBBBA on its unaudited consolidated financial

statements and related disclosures.

On July 24, 2025, the Board of Directors of the

Company approved to enter into a non-binding letter of intent to sell 100 % of the outstanding shares of HeartCore Japan to a non-related

company for a cash consideration of approximately $ 12 million, subject to price adjustment.

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