What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-12 · 290 added, 259 removed, 506 unchanged (52% of the section changed)

3 unchanged sentences

Current assets:

Cash and cash equivalents

Cash and cash

Accounts receivable, net

2 unchanged sentences

Loan receivable from employee

Other current assets

Total current assets

current assets

Non-current assets:

Property and equipment, net

Operating lease right-of-use assets

Property and equipment,

Operating lease right-of-use

Deferred tax assets

Security deposits

Long-term loan receivable from related party

Loan receivable from employee, non-current

Other non-current assets

Total non-current assets

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Long-term loan receivable

from related party

Loan receivable from employee,

non-current assets

LIABILITIES AND SHAREHOLDERS’

EQUITY (DEFICIT)

Current liabilities:

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Accounts payable and accrued

Accrued payroll and other

employee costs

Due to related party

Current portion of long-term debts

Current portion of long-term

Insurance premium financing

Operating lease liabilities, current

Finance lease liabilities, current

Operating lease liabilities,

Finance lease liabilities,

Income tax payables

Deferred revenue

Mandatorily redeemable financial interest

Other current liabilities

Total current liabilities

Mandatorily redeemable

financial interest

current liabilities

Non-current liabilities:

Long-term debts

Operating lease liabilities, non-current

Finance lease liabilities, non-current

Other non-current liabilities

Total non-current liabilities

Total liabilities:

Shareholders’ equity (deficit):

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021)

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

Operating lease liabilities,

Finance lease liabilities,

non-current liabilities

Shareholders’ equity

Preferred shares ($ 0.0001 par value, 20,000,000

shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021)

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

shares authorized;

18,999,276 and 15,819,943 shares issued;

18,440,467 and 15,546,454 shares outstanding as of June 30, 2022 and December 31, 2021, respectively)

17,649,886 and 15,546,454 shares outstanding as of September 30, 2022

and December 31, 2021, respectively)

Additional paid-in capital

Treasury shares, at cost ( 558,809 and 0 shares as of June 30, 2022 and December 31, 2021, respectively)

Treasury shares, at cost ( 1,349,390 and 0

shares as of September 30, 2022 and December 31, 2021, respectively)

( 3,500,000 )

2 unchanged sentences

( 3,896,113 )

Accumulated other comprehensive income (loss)

Total shareholders’ equity (deficit)

Total liabilities and shareholders’ equity (deficit)

other comprehensive income (loss)

shareholders’ equity (deficit)

liabilities and shareholders’ equity (deficit)

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months

For the Six Months

the Three Months

September 30,

the Nine Months

September 30,

Cost of revenues

2 unchanged sentences

General and administrative expenses

Research and development expenses

Total operating expenses

Income (loss) from operations

Research and development

operating expenses

(loss) from operations

( 2,013,579 )

5 unchanged sentences

Total other income (expenses)

Income (loss) before income tax provision

Income (loss) before income

tax provision

( 1,990,003 )

( 5,263,932 )

Income tax expense

Income tax expense (benefit)

Net income (loss)

2 unchanged sentences

net income attributable to non-controlling interest

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

income (loss) attributable to HeartCore Enterprises, Inc.

$ ( 1,970,934 )

$ ( 5,253,026 )

Other comprehensive income (loss):

Foreign currency translation adjustment

Total comprehensive income (loss)

Other comprehensive income

Foreign currency translation

Total comprehensive income

( 1,842,229 )

1 unchanged sentence

comprehensive income attributable to non-controlling interest

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

Comprehensive

income (loss) attributable to HeartCore Enterprises, Inc.

$ ( 1,842,229 )

$ ( 4,824,908 )

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

Net earnings (loss) per

common share attributable to HeartCore Enterprises, Inc.

Weighted average common shares outstanding

Retrospectively restated for effect of share issuances on July 16, 2021.

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Common shares*

Accumulated other

Total HeartCore

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Enterprises, Inc.

2 unchanged sentences

shareholders’

Balance, December 31, 2020 *

December 31, 2020 *

$ 2,735,315 -

3 unchanged sentences

$ ( 604,183 )

Foreign currency translation adjustment

Foreign currency translation

Balance, March 31, 2021 *

1 unchanged sentence

( 1,046,319 )

Foreign currency translation adjustment

Foreign currency translation

Balance, June 30, 2021 *

( 3,340,416 )

Foreign currency translation adjustment

Reclassification of

non-controlling interest to mandatorily redeemable financial interest

Balance, September

$ 2,654,077 -

1 unchanged sentence

$ ( 568,978 )

Retrospectively restated for effect of share issuances on July 16, 2021.

Number of shares

comprehensive

income (loss)

equity (deficit)

Common shares

Treasury shares

Accumulated other

$ ( 568,978 )

* Retrospectively

restated for effect of share issuances on July 16, 2021.

shareholders’

Number of shares

comprehensive

income (loss)

equity (deficit)

Balance, December 31, 2021

20 unchanged sentences

( 1,970,934 )

income (loss)

( 1,970,934 )

Foreign currency translation adjustment

Share-based compensation

Repurchase of common shares

( 2,163,238 )

Balance, September

( 1,349,390 )

$ ( 3,500,000 )

$ ( 9,149,139 )

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

Cash flows from operating activities:

Net income (loss)

the Nine Months Ended

September 30,

Cash flows from operating

$ ( 5,253,026 )

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

to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation expenses

Amortization of debt issuance costs

Amortization of debt issuance

Non-cash lease expense

1 unchanged sentence

Share-based compensation

Changes in assets and liabilities:

in assets and liabilities:

Accounts receivable, net

Prepaid expenses

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Accounts payable and accrued

Accrued payroll and other

employee costs

Due to related party

3 unchanged sentences

Deferred revenue

Other liabilities

Net cash flows provided by (used in) operating activities

cash flows provided by (used in) operating activities

( 4,206,370 )

Cash flows from investing activities:

Purchases of property and equipment

Advance and loan provided to related parties

Repayment of loan provided to related party

Net cash flows used in investing activities

Cash flows from financing activities:

Proceeds from initial public offering, net of issuance cost

Proceeds from issuance of common shares prior to initial public offering

Cash flows from investing

Purchases of property and

Advance and loan provided

to related parties

of loan provided to related party

cash flows used in investing activities

Cash flows from financing

Proceeds from initial public

offering, net of issuance cost

Proceeds from issuance

of common shares prior to initial public offering

Repurchase of common shares

1 unchanged sentence

Payments for finance leases

Proceeds from long-term debt

Repayment of long-term debts

Repayment of insurance premium financing

Payments for debt issuance costs

Payment for mandatorily redeemable financial interest

Net cash flows provided by (used in) financing activities

Effect of exchange rate changes

Proceeds from long-term

Repayment of long-term

Repayment of insurance

premium financing

Payments for debt issuance

for mandatorily redeemable financial interest

cash flows provided by (used in) financing activities

Effect of exchange rate

Net change in cash and cash equivalents

Cash and cash equivalents - beginning of the period

Cash and cash equivalents - end of the period

Cash and cash equivalents

- beginning of the period

and cash equivalents - end of the period

Supplemental cash flow disclosure:

Interest paid

Income taxes paid

Non-cash investing and financing transactions

Payroll withheld as repayment of loan receivable from employees

Expense paid by related party on behalf of the Company

Liabilities assumed in connection with purchase of property and equipment

Share repurchase liability settled by issuance of common shares

Deferred offering costs recognized against the proceeds from the offering

Non-cash investing and financing

Remeasurement of the lease

liability and right-of-use asset due to lease modification

withheld as repayment of loan receivable from employees

paid by related party on behalf of the Company

Reclassification

of non-controlling interest to mandatorily redeemable financial interest

assumed in connection with purchase of property and equipment

repurchase liability settled by issuance of common shares

offering costs recognized against the proceeds from the offering

Insurance premium financing

8 unchanged sentences

(“HeartCore Japan”),

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

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

Pursuant to the terms of the Share Exchange Agreement, the Company issued

11 unchanged sentences

HeartCore USA and HeartCore Japan are hereafter referred to as the Company .

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

The consideration will be determined by the parties prior to the closing of the acquisition.

As of the date of this

filing, the transaction has not been closed.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

52 unchanged sentences

Accretion expense

Foreign currency translation adjustment

Foreign currency translation

Ending balance

8 unchanged sentences

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

the six months ended June 30, 2022 and 2021, software development costs expensed as incurred amounted to $ 525,487 and $ 132,171 , respectively.

the nine months ended September 30, 2022 and 2021, software development costs expensed as incurred amounted to $ 583,762 and $ 321,857 ,

respectively.

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

5 unchanged sentences

There were no

impairments of these assets during the six months ended June 30, 2022 and 2021.

impairments of these assets during the nine months ended September 30, 2022 and 2021.

Currency Translation

77 unchanged sentences

The amount of revenues recognized

during the six months ended June 30, 2022 and 2021 that were included in the opening deferred revenues balance was approximately $ 1.1

during the nine months ended September 30, 2022 and 2021 that were included in the opening deferred revenues balance was approximately

$ 1.2 million and $ 2.0 million, respectively.

3 unchanged sentences

The Company’s disaggregation of revenues by type

for the three and six months ended June 30, 2022 and 2021 is as following:

for the three and nine months ended September 30, 2022 and 2021 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Three Months

For the Six Months

the Three Months

the Nine Months

Revenue from On-Premise Software

1 unchanged sentence

Revenue from Software as a Service (“SaaS”)

Revenue from Software Development and other Miscellaneous Services

Revenue from Consulting Service

Revenue from Software Development and other

Miscellaneous Services

Revenue from Consulting

Total Revenue

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

For the Three Months

For the Six Months

Revenue from Customer Experience Management Platform

the Three Months

the Nine Months

Revenue from Customer Experience

Management Platform

Revenue from Process Mining

4 unchanged sentences

Total Revenue

of June 30, 2022 and 2021, and for the period then ended, all long-lived assets and the predominant portion of the revenue generated

of September 30, 2022 and 2021, and for the period then ended, all long-lived assets and the predominant portion of the revenue generated

are attributed to the Company’s operation in Japan.

6 unchanged sentences

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

the six months ended June 30, 2022, customer A and B represents 12.9 % and 10.4 %, respectively, of the Company’s total revenues.

For the six months ended June 30, 2021, customer B and C represents 11.5 % and 12.7 %, respectively, of the Company’s total revenues.

the six months ended June 30, 2022, vendor A and B represents 44.5 % and 29.8 %, respectively, of the Company’s total purchases.

For the six months ended June 30, 2021, vendor A, B, and C represents 40.2 %, 36.3 %, and 14.1 %, respectively, of the Company’s total

the nine months ended September 30, 2022, customer A represents 10.0 % of the Company’s total revenues.

For the nine months ended

September 30, 2021, customer B and C represent 18.5 % and 10.5 %, respectively, of the Company’s total revenues.

the nine months ended September 30, 2022, vendor A, B, C, and D represent 25.9 %, 19.7 %, 16.3 % and 15.5 %, respectively, of the Company’s

total purchases.

For the nine months ended September 30, 2021, vendor A, B, and D represents 30.7 %, 33.6 %, and 23.2 %, respectively, of

the Company’s total purchases.

Company accounts for share-based compensation awards in accordance with ASC 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 consolidated statements of operations 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 cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated

statements of operations 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.

3 unchanged sentences

Accounts receivable

allowance for doubtful accounts

Accounts receivable, net

allowance for

doubtful accounts

Accounts receivable,

4 — PREPAID EXPENSES

6 unchanged sentences

Prepaid insurance premium

offering expenses, consisting of legal fees and road show expenses relating to the Company’s planned initial public offering, are

capitalized and recorded on the balance sheet.

The deferred offering expenses were reclassified to shareholders’ equity and recorded

against the proceeds received upon the closing of our initial public offering on February 14, 2022.

offering expenses, consisting of legal fees and road show expenses relating to the Company’s initial public offering, are capitalized

and recorded on the balance sheet.

The deferred offering expenses were reclassified to shareholders’ equity and recorded against

the proceeds received upon the closing of the Company’s initial public offering on February 14, 2022.

5 — RELATED PARTY TRANSACTIONS

of June 30, 2022 and December 31, 2021, the Company has a due to related party balance of $ 5,885

and $ 1,110 ,

respectively, from Sumitaka Yamamoto, the CEO and major shareholder of the Company.

The balance is unsecured, non-interest bearing

and due on demand.

During the six months ended June 30, 2022, the related party paid operating expenses on behalf of the Company and

received the payments in a net amount of $ 5,448 .

During the six months ended June 30, 2021, the Company advanced $ 26,603

to this related party, and the related party paid expenses of $ 25,482

on behalf of the Company.

of June 30, 2022 and December 31, 2021, the Company has a loan receivable balance of $ 307,231 and $ 386,315 , respectively, from Heartcore

of September 30, 2022 and December 31, 2021, the Company has a due to related party balance of $ 3,622 and $ 1,110 , respectively, from

Sumitaka Yamamoto, the CEO and major shareholder of the Company.

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

the nine months ended September 30, 2022, the related party paid operating expenses on behalf of the Company and received the payments

in a net amount of $ 3,098 .

During the nine months ended September 30, 2021, the Company advanced $ 70,518 to this related party, and the

related party paid expenses of $ 93,310 on behalf of the Company.

of September 30, 2022 and December 31, 2021, the Company has a loan receivable balance of $ 278,216 and $ 386,315 , respectively, from Heartcore

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

1 unchanged sentence

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

the six months ended June 30, 2022 and 2021, the Company loaned nil and $ 57,195 , respectively, to this related party, and the related

the nine months ended September 30, 2022 and 2021, the Company loaned nil and $ 55,872 , respectively, to this related party, and the related

party paid expenses of nil and $ 13,868 , respectively, on behalf of the Company.

During the six months ended June 30, 2022 and 2021, the

Company received repayments of $ 21,508 and nil , respectively, from this related party.

During the nine months ended September 30, 2022 and 2021,

the Company received repayments of $ 33,042 and nil , respectively, from this related party.

June 2020, Suzuyo Shinwart Corporation became an over 10 % shareholder of the Company.

During the six months ended June 30, 2021, the

Company has revenue from this related party of $ 146,083 from software sales and incurred cost with this related party of $ 338,029 for

software development services provided.

As of June 30, 2021, the Company has deferred revenue with this related party of $ 57,593 .

July 2021, Suzuyo Shinwart Corporation sold all its shares of the Company to the Company’s CEO and ceased to be the Company’s

related party.

In July 2021, Suzuyo Shinwart Corporation sold

all its shares of the Company to the Company’s CEO and ceased to be the Company’s related party.

During the period from January

1, 2021 to July 2021, when Suzuyo Shinwart Corporation was a related party of the Company, the Company has revenue from this related

party of $ 159,677 from software sales and incurred cost with this related party of $ 336,645 for software development services provided.

the period from January 1, 2022 through January 13, 2022, the Company completed a private placement, in which, it issued 30,000 shares

6 unchanged sentences

Accumulated depreciation

Property and equipment, net

expense was $ 46,688 and $ 55,458 for the six months ended June 30, 2022 and 2021, respectively.

Property and equipment,

expense was $ 64,398 and $ 80,297 for the nine months ended September 30, 2022 and 2021, respectively.

Company has entered into two leases for its office space, which were classified as operating leases.

It has also entered into two leases

for office equipment, one of which was terminated in June 2022, and a lease for a vehicle, and these leases were

classified as finance leases.

Right-of-use assets of these finance leases in the amount of $ 28,487 and $ 57,167 are included in property

and equipment as of June 30, 2022 and December 31, 2021, respectively.

for office equipment, one of which was terminated in June 2022, and a lease for a vehicle, and these leases were classified as finance

Right-of-use assets of these finance leases in the amount of $ 21,741 and $ 57,167 are included in property and equipment as of

September 30, 2022 and December 31, 2021, respectively.

components of lease costs are as follows:

SCHEDULE OF LEASE COSTS

For the Six Months Ended

Finance lease costs

Amortization of right-of-use assets

Interest on lease liabilities

of right-of-use assets

on lease liabilities

Total finance lease costs

3 unchanged sentences

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY'S LEASES

For the Six Months Ended

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

Operating cash flows from finance leases

Operating cash flows from operating leases

Financing cash flows from finance leases

Operating cash

flows from finance leases

Operating cash flows from

operating leases

Financing cash flows from

finance leases

Weighted average remaining lease term (years)

4 unchanged sentences

Operating leases

of June 30, 2022, the future maturity of lease liabilities is as follows:

of September 30, 2022, the future maturity of lease liabilities is as follows:

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

Year ending December 31,

ending December 31,

Remaining of 2022

6 unchanged sentences

The security deposits amounted to $ 221,460 and

$ 278,237 as of June 30, 2022 and December 31, 2021, respectively.

$ 278,237 as of September 30, 2022 and December 31, 2021, respectively.

8 — LONG-TERM DEBTS

2 unchanged sentences

SCHEDULE OF LONG-TERM DEBTS

Name of Financial Institutions

Original Amount Borrowed (JPY)

of Financial Institutions

Amount Borrowed (JPY)

Loan Duration

Interest Rate

September 30,

December 31, 2021

Corporate bond issued through Resona Bank

Corporate bond issued through Resona

100,000,000 (a)(b)

1/10/2019—1/10/2024

Loans with banks and other financial institutions

Loans with banks and other

financial institutions

Resona Bank, Limited.

30,000,000 (a)

12/29/2017—12/30/2022

Resona Bank, Limited.

50,000,000 (a)(b)

12/29/2017—12/29/2024

Resona Bank, Limited.

10,000,000 (a)(b)

9/30/2020—9/30/2027

Resona Bank, Limited.

40,000,000 (a)(b)

9/30//2020—9/30/2027

Resona Bank, Limited.

20,000,000 (a)(b)

11/13/2020—10/31/2027

Sumitomo Mitsui Banking Corporation

12/28/2018—12/28/2023

Sumitomo Mitsui Banking Corporation

10,000,000 (b)

12/30/2019—12/30/2026

The Shoko Chukin Bank, Ltd.

9/28/2018—8/31/2023

The Shoko Chukin Bank, Ltd.

7/27/2020—6/30/2027

Japan Finance Corporation

12/15/2017—11/30/2022

Japan Finance Corporation

11/17/2020—11/30/2027

Higashi-Nippon Bank

30,000,000 (a)

3/31/2022—3/31/2025

Aggregate outstanding principal balances

6 unchanged sentences

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

expense for long-term debts was $ 14,676 and $ 23,232 for the six months ended June 30, 2022 and 2021, respectively.

of June 30, 2022, future minimum loan payments are as follows:

expense for long-term debts was $ 19,502 and $ 24,909 for the nine months ended September 30, 2022 and 2021, respectively.

of September 30, 2022, future minimum loan payments are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

4 unchanged sentences

interest rate of 12.80 % for nine months from February 1, 2022, payable in nine monthly installments of principal and interest.

June 30, 2022, the balance of the insurance premium financing was $ 220,583 .

During the six months ended June 30, 2022, the interest incurred

was $ 14,185 .

September 30, 2022, the balance of the insurance premium financing was $ 89,652 .

During the nine months ended September 30, 2022, the

interest incurred was $ 19,859 .

10 — INCOME TAXES

4 unchanged sentences

has been made as the Company has no U.S.

taxable income for the six months ended June 30, 2022 and 2021.

taxable income for the nine months ended September 30, 2022 and

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

3 unchanged sentences

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

30.62 % for the six months ended June 30, 2022 and 2021.

the six months ended June 30, 2022 and 2021, the Company’s income tax expenses are as follows:

34.59 % and 30.62 %, respectively, for the nine months ended September 30, 2022 and 2021.

the nine months ended September 30, 2022 and 2021, the Company’s income tax expenses (benefits) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Six Months Ended

Income tax expense

effective tax rate was ( 0.25 )% and 27.30 % for the six months ended June 30, 2022 and 2021, respectively.

Income tax expense (benefit)

effective tax rate was 0.21 % and 19.02 % for the nine months ended September 30, 2022 and 2021, respectively.

11 – STOCK BASED COMPENSATION

6 unchanged sentences

the vesting of the related stock options.

As of June 30, 2021, 324 units of the options were forfeited, and the CEO of the Company has

repurchased and held the shares issued related to the early exercise of such stock options on behalf of the Company.

On November 3, 2021,

As of September 30, 2021, 324 units of the options were forfeited, and the CEO of the Company

has repurchased and held the shares issued related to the early exercise of such stock options on behalf of the Company.

3, 2021, the Company redeemed 484,056 shares (equivalent to 324 shares of common shares of HeartCore Japan) from the CEO of the Company.

3 unchanged sentences

February 14, 2022, the 183 units of stock options were vested upon the completion of the Company’s initial public offering and

the Company recognized share-based compensation of $ 11,005 during the six months ended June 30, 2022.

In the same period, the share repurchase

liability of $ 16 was settled by issuance of 273,489 shares of common shares (equivalent to 183 shares of common shares of HeartCore Japan)

from exercise of stock options.

following summarized the Company’s stock options activity for the stock option issued in 2016 for the six months ended June 30,

the Company recognized share-based compensation of $ 11,005 during the nine months ended September 30, 2022.

In the same period, the share

repurchase liability of $ 16 was settled by issuance of 273,489 shares of common shares (equivalent to 183 shares of common shares of

HeartCore Japan) from exercise of stock options.

following summarized the Company’s stock options activity for the stock option issued in 2016 for the nine months ended September

30, 2022 and 2021:

3 unchanged sentences

Vested and exercised

Issued and unvested as of June 30, 2021

Issued and unvested as of September 30,

Issued and unvested as of January 1, 2022

Vested and exercised

Exercisable as of June 30, 2022

On December 25, 2021, the Company awarded options

to purchase 1,534,500 shares of common shares at an exercise price of $ 2.50 per share to various officers, directors, employees and consultants

Exercisable as of September 30, 2022

December 25, 2021, the Company awarded options to purchase 1,534,500 shares of common shares at an exercise price of $ 2.50 per share

to various officers, directors, employees and consultants 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 December 25, 2031 .

August 2, 2022, the Company awarded options to purchase 2,000 shares of common shares at an exercise price of $ 2.94 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 December 25, 2031 .

following table summarizes the share options activity and related information for the six months ended June 30, 2022:

of common shares, with the expiration date on August 2, 2032 .

August 9, 2022, the Company awarded 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.

The options were fully vested and exercisable on the grant date, with the expiration

date on August 9, 2026 .

As of September 30, 2022, none of the options were exercised.

following table summarizes the share options activity and related information for the nine months ended September 30, 2022:

SCHEDULE OF STOCK OPTION ACTIVITY

As of January 1, 2022

As of June 30, 2022

Vested and exercisable as of June 30, 2022

As of September 30, 2022

Vested and exercisable as of September

granted historically were valued using the binomial model with the assistance of an independent valuation specialist.

The Company calculated

the fair value of options granted in the nine months ended September 30, 2022 using the Black-Scholes model.

Significant assumptions

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

the three and six months ended June 30, 2022, share-based compensation related to the options totaled $ 284,938 and $ 577,750 , respectively.

For the three and six months ended June 30, 2021, share-based compensation related to the options was nil .

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

the three and nine months ended September 30, 2022, share-based compensation related to the options totaled $ 280,883 and $ 858,633 , respectively.

For the three and nine months ended September 30, 2021, share-based compensation related to the options was nil .

The outstanding unamortized

share-based compensation related to options was $ 1,608,803 (which will be recognized through December 2025) as of June 30, 2022.

share-based compensation related to options was $ 1,289,747 (which will be recognized through August 2026) as of September 30, 2022.

Stock Units (“RSUs”)

following table summarizes the RSUs activity for the six months ended June 30, 2022:

OF RESTRICTED STOCK UNITS

Number of RSUs

Weighted Average

Grant Date Fair

Value per Share

Unvested as of January 1, 2022

Unvested as of June 30, 2022

February 9, 2022, the Company entered into executive employment agreements with five executives and granted 85,820 RSUs pursuant to the

6 unchanged sentences

The fair value of the RSUs at grant date was $ 224,999 .

the three and six months ended June 30, 2022, the Company recognized RSU-related share-based compensation of $ 181,724 and $ 311,076 , respectively.

The outstanding unamortized share-based compensation related to RSUs was $ 338,732 (which will through February 2026) as of June 30, 2022.

following table summarizes the RSUs activity for the nine months ended September 30, 2022:

OF RESTRICTED STOCK UNITS

Grant Date Fair

Value per Share

Unvested as of January 1, 2022

Unvested as of September 30, 2022

the three and nine months ended September 30, 2022, the Company recognized RSU-related share-based compensation of $ 55,768 and $ 366,844 ,

respectively.

The outstanding unamortized share-based compensation related to RSUs was $ 282,964 (which will be recognized through February

2026) as of September 30, 2022.

12 – SHAREHOLDERS’ EQUITY (DEFICIT)

15 unchanged sentences

Repurchase Program

June 1, 2022, the Board of Directors approved a share repurchase program (“2022 Share Repurchase Program”), pursuant to

which the Company is authorized to repurchase up to $ 3.5

million of its outstanding common shares.

The timing and amount of repurchases under the program are determined by the

Company’s management based on its evaluation of market conditions and other factors.

This program has no set termination date

and may be suspended or discontinued by at any time.

the period from June 1, 2022 through June 30, 2022, the Company repurchased 558,809 shares of common shares at an average price of $ 2.39

per share totaling approximately $ 1.3 million (including commissions) under the 2022 Share Repurchase Program.

As of June 30, 2022, approximately

$ 2.2 million remained available under the 2022 Share Repurchase Program.

of June 30, 2022 and December 31, 2021, there were 18,999,276 and 15,819,943 shares, respectively, of common shares issued;

and 18,440,467

June 1, 2022, the Board of Directors approved a share repurchase program (“2022 Share Repurchase Program”), pursuant to which

the Company is authorized to repurchase up to $ 3.5 million of its outstanding common shares.

The timing and amount of repurchases under

the program are determined by the Company’s management based on its evaluation of market conditions and other factors.

has no set termination date and may be suspended or discontinued by at any time.

the period from June 1, 2022 through September 30, 2022, the Company repurchased 1,349,390 shares of common shares at an average price

of $ 2.59 per share totaling approximately $ 3.5 million (including commissions) under the 2022 Share Repurchase Program.

As of September

30, 2022, the Company has used up the entire balance authorized under the 2022 Share Repurchase Program.

of September 30, 2022 and December 31, 2021, there were 18,999,276 and 15,819,943 shares, respectively, of common shares issued;

17,649,886 and 15,546,454 shares, respectively, of common shares outstanding.

preferred shares were issued and outstanding as of June 30, 2022 and December 31, 2021.

preferred shares were issued and outstanding as of September 30, 2022 and December 31, 2021.

13 – MANDATORILY REDEEMABLE FINANCIAL INTEREST

15 unchanged sentences

stock unit awards and other dilutive securities.

computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2022 and 2021 is as follows:

computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2022 and 2021 is as follows:

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

For the Three Months

For the Six Months

Earnings (loss) per share – basic Numerator:

Allocation of net income (loss) attributable to HeartCore

Enterprises, Inc.’s common shareholders used in calculating earnings (loss) per common share — basic

the Three Months

the Nine Months

Earnings (loss) per share

– basic Numerator:

of net income (loss) attributable to HeartCore Enterprises, Inc.’s common shareholders used in calculating earnings (loss)

per common share — basic

$ ( 1,970,934 )

3 unchanged sentences

( 5,253,026 )

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

Denominator used for earnings (loss) per share

Weighted average number

of common shares outstanding used in calculating basic earnings (loss) per share

Denominator used for

earnings (loss) per share

Earnings (loss) per share — basic

For the Three Months

For the Six Months

Earnings (loss) per share – diluted Numerator:

Allocation of net income (loss) attributable to HeartCore

Enterprises, Inc.’s common shareholders used in calculating earnings (loss) per common share — diluted

the Three Months

the Nine Months

Earnings (loss) per share

– diluted Numerator:

of net income (loss) attributable to HeartCore Enterprises, Inc.’s common shareholders used in calculating earnings (loss)

per common share — diluted

$ ( 1,970,934 )

3 unchanged sentences

( 5,253,026 )

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

Conversion of share repurchase liability to common shares *

Denominator used for earnings (loss) per share

Weighted average number of common shares outstanding

used in calculating diluted earnings (loss) per share

of share repurchase liability to common shares *

Denominator used for

earnings (loss) per share

Earnings (loss) per share — diluted

The share repurchase liability is related to the early exercised

stock options that are issued and unvested as of June 30, 2021, see NOTE 11.

Each option is convertible into one share of common stock

of HeartCore Japan, which is an equivalent of approximately 1,494 shares of common shares of the Company.

the three and six months ended June 30, 2022, the weighted average shares outstanding are the same for basic and diluted loss per share

calculations, as the inclusion of common shares equivalents of 1,620,320 would have an anti-dilutive effect.

15 - SUBSEQUENT EVENTS

the period from July 1, 2022 through August 9, 2022, the Company paid approximately $ 1.9 million

(including commissions) in connection with the repurchase of 651,251 shares

of its common shares under the 2022 Share Repurchase Program.

As of the filing date of this report, approximately $ 0.3 million

remained available under the 2022 Share Repurchase Program.

share repurchase liability is related to the early exercised stock options that are issued and unvested as of September 30, 2021,

Each option is convertible into one share of common stock of HeartCore Japan, which is an equivalent of approximately

1,494 shares of common shares of the Company.

The liability was settled by issuance of common shares on February 14, 2022.

the three and nine months ended September 30, 2022, the weighted average shares outstanding are the same for basic and diluted loss

per share calculations, as the inclusion of common shares equivalents of 1,636,820

would have an anti-dilutive effect.

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