What changed in this filing

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Item 1. Financial Statements

2023-05-22 compared with 2022-11-14 · 762 added, 559 removed, 237 unchanged (85% of the section changed)

3 unchanged sentences

Current assets:

Cash and cash

Accounts receivable, net

Cash and cash equivalents

Accounts receivable

Short-term investment in warrants

Prepaid expenses

Due from related party

Loan receivable from employee

current assets

Other current assets

Total current assets

Non-current assets:

Property and equipment,

Operating lease right-of-use

Property and equipment, net

Operating lease right-of-use assets

Intangible asset, net

Long-term investment in warrants

Deferred tax assets

Security deposits

Long-term loan receivable

from related party

Loan receivable from employee,

non-current assets

LIABILITIES AND SHAREHOLDERS’

EQUITY (DEFICIT)

Long-term loan receivable from related party

Other non-current assets

Total non-current assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued

Accrued payroll and other

employee costs

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Current portion of long-term

Current portion of long-term debts

Insurance premium financing

Operating lease liabilities,

Finance lease liabilities,

Factoring liability

Operating lease liabilities, current

Finance lease liabilities, current

Income tax payables

Deferred revenue

Mandatorily redeemable

financial interest

current liabilities

Other current liabilities

Total current liabilities

Non-current liabilities:

Long-term debts

Operating lease liabilities,

Finance lease liabilities,

non-current liabilities

Operating lease liabilities, non-current

Finance lease liabilities, non-current

Deferred tax liabilities

Other non-current liabilities

Total non-current liabilities

Total 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;

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

and December 31, 2021, respectively)

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively)

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

20,842,690 and 17,649,886 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively)

Additional paid-in capital

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

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

( 3,500,000 )

Accumulated deficit

1 unchanged sentence

( 10,573,579 )

other comprehensive income (loss)

shareholders’ equity (deficit)

liabilities and shareholders’ equity (deficit)

Accumulated other comprehensive income

Total HeartCore Enterprises, Inc.

shareholders’ equity

Non-controlling interest

Total shareholders’ equity

Total liabilities and shareholders’ equity

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

the Three Months

September 30,

the Nine Months

September 30,

For the Three Months Ended

Cost of revenues

2 unchanged sentences

General and administrative expenses

Research and development

operating expenses

(loss) from operations

( 2,013,579 )

Research and development expenses

Total operating expenses

Income (loss) from operations

( 1,562,465 )

Other income (expenses):

Changes in fair value of investments in warrants

Interest income

Interest expense

Interest expenses

Other expenses

Total other income (expenses)

Income (loss) before income

tax provision

( 1,990,003 )

Income (loss) before income tax provision

( 1,579,267 )

2 unchanged sentences

( 1,578,451 )

( 5,253,026 )

net income attributable to non-controlling interest

income (loss) attributable to HeartCore Enterprises, Inc.

$ ( 1,970,934 )

$ ( 5,253,026 )

Other comprehensive income

Foreign currency translation

Total comprehensive income

( 1,842,229 )

net loss attributable to non-controlling interest

Net income (loss) attributable to HeartCore Enterprises,

$ ( 1,578,451 )

comprehensive income attributable to non-controlling interest

Comprehensive

income (loss) attributable to HeartCore Enterprises, Inc.

Other comprehensive income (loss):

Foreign currency translation adjustment

Total comprehensive income (loss)

( 1,498,398 )

comprehensive loss attributable to non-controlling interest

Comprehensive income (loss) attributable to HeartCore

Enterprises, Inc.

$ ( 1,498,398 )

Net earnings (loss) per

common share attributable to HeartCore Enterprises, Inc.

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

Weighted average common shares outstanding

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

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

Enterprises, Inc.

THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

comprehensive

1 unchanged sentence

shareholders’

December 31, 2020 *

$ 2,735,315 -

$ ( 3,557,957 )

$ ( 136,890 )

$ ( 958,008 )

$ ( 604,183 )

Foreign currency translation

Balance, March 31, 2021 *

( 3,741,206 )

( 1,046,319 )

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 -

$ ( 3,154,243 )

$ ( 568,978 )

* Retrospectively

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

shareholders’

Common shares

Accumulated other

Total HeartCore

Enterprises, Inc.

comprehensive

income (loss)

shareholders’

equity (deficit)

shareholders’

equity (deficit)

Balance, December 31, 2021

3 unchanged sentences

( 1,578,451 )

Foreign currency translation adjustment

1 unchanged sentence

Issuance of common shares from exercise of share options

Share-based compensation

Stock-based compensation

Balance, March 31, 2022

$ ( 5,474,564 )

( 1,703,641 )

Foreign currency translation adjustment

Share-based compensation

Repurchase of common shares

( 1,336,762 )

Balance, June 30, 2022

( 1,336,762 )

( 7,178,205 )

( 1,970,934 )

income (loss)

Common shares

Accumulated other

Total HeartCore

Enterprises, Inc.

comprehensive income

shareholders’ equity

Balance, December 31, 2022

$ ( 10,573,579 )

Beginning balance

$ ( 10,573,579 )

Net income (loss)

Foreign currency translation adjustment

Share-based compensation

Repurchase of common shares

( 2,163,238 )

Balance, September

( 1,349,390 )

Issuance of common shares for acquisition of subsidiary

Non-controlling interests arising from acquisition of subsidiary

Stock-based compensation

Balance, March 31, 2023

$ ( 8,691,290 )

Ending balance

$ ( 8,691,290 )

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

the Nine Months Ended

September 30,

Cash flows from operating

For the Three Months Ended

Cash flows from operating activities:

Net income (loss)

$ ( 1,578,451 )

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

Depreciation expenses

Amortization of debt issuance

Adjustments to reconcile net income (loss) to net cash used in

operating activities:

Depreciation and amortization expenses

Amortization of debt issuance costs

Non-cash lease expense

Deferred income taxes

Share-based compensation

in assets and liabilities:

Accounts receivable, net

Stock-based compensation

Warrants received as noncash consideration

( 4,009,335 )

Changes in fair value of investments in warrants

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses

Accounts payable and accrued

Accrued payroll and other

employee costs

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

3 unchanged sentences

Deferred revenue

cash flows provided by (used in) operating activities

( 4,206,370 )

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

( 3,500,000 )

Other liabilities

Net cash flows used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Advance and loan provided to related party

Repayment of loan provided to related party

Payment for acquisition of subsidiary, net of cash acquired

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

Payments for finance leases

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

Proceeds from long-term debt

Repayment of long-term debts

Repayment of insurance premium financing

Repayment to related party

Net proceeds from factoring arrangement

Payments for debt issuance costs

Payment for mandatorily redeemable financial interest

Net cash flows provided by (used in) financing

Effect of exchange rate changes

Net change in cash and cash equivalents

Cash and cash equivalents

- beginning of the period

and cash equivalents - end of the period

( 1,967,411 )

Cash and cash equivalents - beginning of the period

Cash and cash equivalents - end of the period

Supplemental cash flow disclosure:

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

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

Share repurchase liability settled by issuance of common shares

Deferred offering costs recognized against the proceeds from the offering

Insurance premium financing

Liabilities assumed in connection with purchase of property and equipment

Common shares issued for acquisition of subsidiary

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

5 unchanged sentences

State of Delaware on May 18, 2021.

July 16, 2021, the Company executed a Share Exchange Agreement with certain shareholders of HeartCore Co.

July 16, 2021, the Company executed a Share Exchange Agreement with certain shareholders of HeartCore Co., Ltd.

(“HeartCore Japan”),

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

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

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

2 unchanged sentences

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

As a result, HeartCore Japan became a wholly

owned operating subsidiary of the Company .

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

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

2 unchanged sentences

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

earliest period presented in the accompanying unaudited consolidated financial statements .

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

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 %

earliest period presented in the accompanying consolidated financial statements.

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

comprehensive software.

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

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

On September 6, 2022, HeartCore USA entered into a share exchange and purchase

agreement (“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.

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

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

Sigmaways Technologies Ltd.

(“Sigmaways Technologies”).

Sigmaways B.V.

was incorporated in Netherlands in November 2019.

Sigmaways Technologies

was incorporated in Canada in August 2020.

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

of developing and sales of software in the United States.

The acquisition was closed on February 1, 2023.

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

(“HeartCore Financial”), under

the laws of the State of Delaware.

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

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

(“HeartCore Capital Advisors”),

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

USA, HeartCore Japan, Sigmaways, Sigmaways B.V., Sigmaways Technologies, HeartCore Financial and HeartCore Capital Advisors are hereafter

referred to as the Company.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and Principles of Consolidation

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

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

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

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

The unaudited consolidated financial statements include the accounts of

the Company and its subsidiary.

Prior to February 24, 2022, ownership interest of non-controlling party is presented as mandatorily redeemable

financial interest or non-controlling interest as applicable.

All significant intercompany accounts and transactions have been eliminated.

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

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

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

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

The unaudited consolidated financial statements include

the accounts of the Company and its subsidiaries.

All significant intercompany accounts and transactions have been

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

4 unchanged sentences

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

The unaudited interim consolidated financial statements

should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2021.

preparing the consolidated financial statements in conformity U.S.

GAAP, the management is required to make certain estimates and assumptions

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

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

These estimates are based on information available

as of the date of the consolidated financial statements.

Significant estimates required to be made by management include, but are not

limited to, the allowance for doubtful accounts, useful lives of property and equipment, the impairment of long-lived assets, valuation

of share-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and financing leases, valuation

of asset retirement obligations and revenue recognition.

The unaudited consolidated financial statements should

be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022.

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

GAAP, the management is required to make certain estimates

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

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

These estimates are based

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

Significant estimates required to be made

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

of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest

rate of operating and financing leases, valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition

and purchase price allocation with respect to business combination.

Actual results could differ from those estimates.

the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such

as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects

of the pandemic continue to be unknown.

The Company may experience customer losses, including due to bankruptcy or customers ceasing

operations, which may result in delays in collections or an inability to collect accounts receivable from these customers.

to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain

uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance

that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities.

These estimates may change, as new events occur and additional information is obtained, which will be recognized in the consolidated

financial statements as soon as they become known.

Actual results could differ from those estimates, and any such differences may be

material to the Company’s financial statements.

the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time,

such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the

lasting effects of the pandemic continue to be unknown.

The Company may experience customer losses, including due to bankruptcy or

customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these

The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or

liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of

any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value

of the Company’s assets or liabilities.

These estimates may change, as new events occur and additional information is

obtained, which will be recognized in the unaudited consolidated financial statements as soon as they become known.

Actual results

could differ from those estimates, and any such differences may be material to the Company’s unaudited consolidated financial

Retirement Obligations

2 unchanged sentences

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

non-current liabilities in the consolidated balance sheets, in accordance with Accounting Standards Codification (“ASC”)

410, “Asset Retirement Obligation Accounting”.

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

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

The Company capitalizes the associated asset retirement cost by increasing

1 unchanged sentence

The following table presents changes in asset retirement obligations:

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

Beginning balance

Accretion expense

Foreign currency translation

Foreign currency translation adjustment

Ending balance

8 unchanged sentences

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

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

respectively.

the three months ended March 31, 2023 and 2022, software development costs expensed as incurred amounted to $ 79,624 and $ 108,259 , respectively.

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

of Long-Lived Assets

assets with finite lives, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate

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

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

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

There were no

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

Investments in Warrants

Investments in warrants represent stock warrants of

its consulting service customers and are not registered for public sale.

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

value are recognized in other income (expenses).

Investment in warrants is classified as short-term if the maturity is within one year,

and as long-term if the maturity is over one year.

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

The acquired intangible asset is recognized and measured

at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective

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

of Long-Lived Assets Other Than Goodwill

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

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

If the estimated

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

to be impaired and written down to its fair value.

There were no impairments of these assets during the three months ended March 31,

2023 and 2022.

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

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

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

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

Currency Translation

Company maintains its books and record in its local currency, Japanese YEN (“JPY”), which is a functional currency as being

the primary currency of the economic environment in which its operation is conducted.

Transactions denominated in currencies other than

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

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

using the applicable exchange rates at the balance sheet dates.

The resulting exchange differences are recorded in the statements of

reporting currency of the Company is the United States Dollars (“US$”), and the accompanying unaudited consolidated financial

statements have been expressed in US$.

In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets

and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet

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

The gains and losses resulting from the translation

of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the statements of

changes in shareholders’ equity (deficit).

of amounts from the local currency of the Company into US$1 has been made at the following exchange rates:

SCHEDULE OF FOREIGN CURRENCY TRANSLATION

US$1 exchange rate

Company recognizes revenue under ASC Topic 606, “Revenue from Contracts with customers”.

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

(i) identify the contract(s)

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

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

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

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

government levies.

The Consumption Tax on sales is calculated at 10% of gross sales.

Company currently generates its revenue from the following main sources:

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

The functional currency

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

The functional currency of Sigmaways

is the Euro (“EUR”).

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

denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing

at the dates of the transaction.

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

into the functional currency using the applicable exchange rates at the balance sheet dates.

The resulting exchange differences are recorded

in the unaudited consolidated statements of operations.

The reporting currency of the Company is the

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

In accordance with ASC Topic 830-30,

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

into US$, using the exchange rate on the balance sheet date.

Revenues and expenses are translated at average rates prevailing during the

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

other comprehensive income (loss) within the statements of changes in shareholders’ equity.

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

To determine revenue recognition for contracts

with customers, the Company performs the following five steps:

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

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

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

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

Revenue amount represents the invoiced

value, net of value-added taxes and applicable local government levies.

Company currently generates its revenues from the following main sources:

from On-Premise Software

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

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

for a specified term.

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

to the customer.

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

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

software and maintenance and support service.

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

when those services are sold on a standalone basis.

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

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

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

or other observable evidence.

from Maintenance and Support Service

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

software updates when and if available during the subscription.

Revenues from maintenance and support services are recognized over time

as such services are performed.

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

by the customers.

Licenses for on-premise software provide the customer

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

The Company provides on-premise software in the form

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

Revenues from on-premise

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

Licenses for on-premise software

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

Revenues under the bundled arrangements are allocated

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

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

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

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

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

from Maintenance and Support Services

Maintenance and support services provided with software

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

the subscription.

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

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

from Software as a Service (“SaaS”)

6 unchanged sentences

from Software Development and Other Miscellaneous Services

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

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

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

3 unchanged sentences

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

from Consulting Service

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

which primarily include communicating with intermediary parties, preparing required documents and supporting the listing process.

from consulting services are recognized over time as such services are performed.

The consulting service contracts are generally less

than one year in length.

from Customized Software Development and Services

The Company’s customized software development

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

The contract pricing is at stated billing rates per hour.

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

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

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

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

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

from Consulting Services

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

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

public offering and supporting the listing process.

The consulting service contracts are generally less than one year in length and

normally include both cash and noncash consideration.

Cash consideration is paid in installment payments and is recognized in

revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation.

Noncash consideration is in the form of warrants of the customers and is measured at fair value at contract inception.

consideration that is variable for reasons other than only the form of the consideration is included in the transaction price, but

is subject to the constraint on variable consideration.

The Company assesses the estimated amount of the variable noncash

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

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

variable consideration is subsequently resolved.

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

can variable consideration be included in revenues.

Based on evaluation of likelihood and magnitude of a reversal in applying the

constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been

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

The Company records a contract asset, which is

included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing.

The Company records

deferred revenues on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice.

revenues are reported net of related uncollected deferred revenues in the consolidated balance sheets.

The amount of revenues recognized

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.

The Company has determined that its contracts

do not include a significant financing component.

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

consolidated balance sheets, when revenue is recognized prior to invoicing.

The Company factors certain accounts receivable upon or after

the performance obligation is being met.

The Company records deferred revenue on 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, 2023 and 2022 that were included in the opening

deferred revenues balance was approximately $ 0.9 million and $ 0.8 million, respectively.

Disaggregation

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

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

The Company’s disaggregation of revenues by type

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

SCHEDULE OF DISAGGREGATION OF REVENUES

the Three Months

the Nine Months

Revenue from On-Premise Software

Revenue from Maintenance and Support Service

Revenue from Software as a Service (“SaaS”)

Revenue from Software Development and other

Miscellaneous Services

Revenue from Consulting

Total Revenue

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

The Company’s disaggregation of revenues for the

three months ended March 31, 2023 and 2022 is as following:

OF DISAGGREGATION OF REVENUES

For the Three Months Ended

Revenues from On-Premise Software

Revenues from Maintenance and Support Services

Revenues from Software as a Service (“SaaS”)

Revenues from Software Development and Other Miscellaneous Services

Revenues from Customized Software Development and Services

Revenues from Consulting Services

Total Revenues

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

the Three Months

the Nine Months

Revenue from Customer Experience

Management Platform

Revenue from Process Mining

Revenue from Robotic Process Automation

Revenue from Task Mining

Revenue from Consulting Service

Revenue from Others

Total Revenue

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.

For the Three Months Ended

Revenues from Customer Experience Management Platform

Revenues from Process Mining

Revenues from Robotic Process Automation

Revenues from Task Mining

Revenues from Customized Software Development and Services

Revenues from Consulting Services

Revenues from Others

Total Revenues

As of March 31, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and the majority of revenues generated were attributed to the Company’s operation in

Concentration

1 unchanged sentence

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

The Company does

not require collateral or other security to support these receivables.

The Company usually

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

The Company conducts periodic reviews of the financial condition

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

the nine months ended September 30, 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.

For the three months ended March 31, 2023, customer B and C represent 28.9 % and 18.8 % , respectively, of the Company’s total revenues.

For the three months

ended March 31, 2022, customer A represents 13.3 % of the Company’s total revenues.

For the three months ended March 31, 2023, vendor

A, B and D represent 38.5 % ,

respectively, of the Company’s total purchases.

For the three months ended March 31, 2022, vendor A, B and C represent 36.1 % ,

respectively, of the Company’s total purchases.

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

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

consolidated statements of operations 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 — ACCOUNTS RECEIVABLE, NET

receivable consists of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

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

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

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

The excess of the purchase price over those fair values

is recorded as goodwill.

Acquisition-related expenses are expensed as incurred.

Consideration

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

Where the consideration in an acquisition

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

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

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

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

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

statements of operations and comprehensive income (loss).

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

determined using Level 2 inputs and Level 3 inputs.

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

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

Value Measurements

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

Fair value is defined as the price that would be received

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

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

inputs when measuring fair value.

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

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

ASC Topic 820 establishes three levels of inputs that may

be used to measure fair value:

quoted prices in active markets for identical assets or liabilities;

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

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

or liabilities.

of March 31, 2023 and December 31, 2022, the carrying values of current assets, except for short-term investment in warrants, and current

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

The Company received warrants from its

customers as noncash consideration from consulting services.

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

fair value at contract inception.

The Company’s investments in warrants are measured on a recurring basis and are

carried on the balance sheet at an estimated fair value at the end of the period.

The valuation of investments in warrants was

determined using a Black-Scholes model of value based upon the stock price, exercise price, expected volatility, time to maturity,

and a risk-free interest rate for the term of the warrants exercise.

Such valuations are classified within Level 3 of the fair

value hierarchy.

following table summarizes the Company’s investments in warrants activity for the three months ended March 31, 2023 and 2022:

OF INVESTMENTS IN WARRANTS

For the Three Months Ended

Fair value of investments in warrants at beginning of the period

Warrants received as noncash consideration

Changes in fair value of investments in warrants

Investments in warrants converted to securities

Fair value of investments in warrants at end of the period

Accounting Pronouncements

Accounting Pronouncements Recently Adopted

June 2016, the FASB issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic

326), Measurement of Credit Losses on Financial Instruments.

2016-13 was further amended in November 2020 by ASU No.

Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).

As a result, ASC

Topic 326, “Financial Instruments – Credit Losses” is effective for public companies for annual reporting periods,

and interim periods within those years beginning after December 15, 2020.

For all other entities, it is effective for fiscal years beginning

after December 15, 2022, including interim periods within those fiscal years.

As the Company is an “emerging growth company”

and elects to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU

2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial

October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers.

This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract

liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”.

is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date

of and after a business combination.

The new guidance is effective for fiscal years beginning after December 15, 2022, including interim

periods within those fiscal years.

The Company adopted ASU No.

2021-08 on January 1, 2023 and the adoption did not have a material impact

on the Company’s unaudited consolidated financial statements.

Accounting Pronouncements Not Yet Effective

Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected

to have a material impact on the Company’s unaudited consolidated financial statements.

3 — ACCOUNTS RECEIVABLE

allowance for

doubtful accounts

receivable consists of the following:

OF ACCOUNTS RECEIVABLE NET

Accounts receivable – non-factored

receivable – factored with recourse

receivable, gross

allowance for credit losses

Accounts receivable

1 unchanged sentence

expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

OF PREPAID EXPENSES

Prepayments to software vendors

Prepaid selling expenses

Prepaid marketing and consulting fees

Prepaid subscription fees

Deferred offering expenses

Prepaid insurance premium

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 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

As of March 31, 2023 and December 31, 2022, the

Company has a due to related

party balance of $ 2,923 and $ 402 ,

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

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

During the three months ended March 31, 2023, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $ 2,544 .

During the three months ended March 31, 2022, the Company advanced $ 25,480

to the related party and the related party paid expenses of $ 25,480

on behalf of the Company.

The Company also repaid $ 903

to the related party during the same period.

As of March 31, 2023 and December 31, 2022, the Company has a loan receivable

balance of $ 277,491 and $ 294,919 , 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 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 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.

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

of common shares at a purchase price of $ 2.50 per share to the officers of the Company for an aggregate amount of $ 75,000 .

the three months ended March 31, 2023 and 2022, the Company received repayments of $ 11,955 and $ 9,102 , respectively, from this related

During the period from January 1, 2022 through

January 13, 2022, the Company completed a private placement, in which it issued 30,000 shares of common shares at a

purchase price of $ 2.50 per share to the officers of the Company for an aggregate amount of $ 75,000 .

6 — PROPERTY AND EQUIPMENT, NET

and equipment consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

Leasehold improvement

and equipment, net consist of the following:

OF PROPERTY AND EQUIPMENT NET

Leasehold improvements

Machinery and equipment

accumulated depreciation

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.

Property and equipment, net

expenses were $ 17,062 and $ 24,889 for the three months ended March 31, 2023 and 2022, respectively.

7 — INTANGIBLE ASSET, NET

Intangible asset, net is as follows:

OF INTANGIBLE ASSETS

accumulated amortization

of March 31, 2023, the future estimated amortization cost for intangible asset is as follows:

OF AMORTIZATION INTANGIBLE ASSET

Year Ended December 31,

Remaining of 2023

Company has entered into three 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

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.

Right-of-use assets of these finance leases in the amount of $ 12,497

are included in property and equipment, net as

of March 31, 2023 and December 31, 2022, respectively.

components of lease costs are as follows:

SCHEDULE OF LEASE COSTS

OF LEASE COSTS

For the Three Months Ended

Finance lease costs

of right-of-use assets

on lease liabilities

Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease costs

2 unchanged sentences

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

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY'S LEASES

OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES

For the Three 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)

1 unchanged sentence

Operating leases

Weighted-average discount rate:

Weighted average discount rate (per annum)

Finance leases

Operating leases

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

ending December 31,

of March 31, 2023, the future maturity of lease liabilities is as follows:

OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES

Year Ended December 31,

Finance Lease

Operating Lease

Remaining of 2023

6 unchanged sentences

The security deposits amounted to $ 367,981 and

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

$ 244,395 as of March 31, 2023 and December 31, 2022, respectively.

9 — FACTORING LIABILITY

the newly acquired subsidiary of the Company, entered into a Factoring and Security Agreement ( the

“Factoring Agreement”) with The Southern Bank Company, an unrelated factor (the “Factor”), in 2017, for

the purpose of factoring certain accounts receivable.

Under the terms of the Factoring Agreement, the Company may offer for sale, and

the Factor may purchase in its sole discretion, certain accounts receivable of the Company (the “Purchased Receivable”).

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

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

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

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

Under the terms of the recourse

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

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

Sigmaways and Chief Strategy Officer (“CSO”) of the Company, and secured by all Sigmaways’ now owned and

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

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

terminated pursuant to the terms of the Factoring Agreement.

The Company may terminate the Factoring Agreement with sixty days’

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

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

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

of March 31, 2023, there was $ 173,582 borrowed and outstanding under the Factoring Agreement .

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

three months ended March 31, 2023, the Company recorded approximately $ 22,695 in interest expense related to the Factoring

10 — INSURANCE PREMIUM FINANCING

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

at an annual interest rate of 16.04 %

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

February 2022, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 388,538

at an annual interest rate of 12.80 %

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

As of March 31, 2023 and December 31, 2022, the balance of the insurance

premium financing was $ 352,518 and nil , respectively.

During the three months ended March 31, 2023 and 2022, the interest incurred was

$ 5,304 and $ 4,255 , respectively.

11 — LONG-TERM DEBTS

2 unchanged sentences

SCHEDULE OF LONG-TERM DEBTS

of Financial Institutions

Amount Borrowed (JPY)

Loan Duration

Name of Financial Institutions

Original Amount Borrowed

Interest Rate

September 30,

December 31, 2021

Corporate bond issued through Resona

100,000,000 (a)(b)

Loans with banks and other

financial institutions

Resona Bank, Limited.

30,000,000 (a)

Balance as of

Corporate bond issued through Resona Bank, Limited

JPY 100,000,000

1/10/2019—1/10/2024

Loans with banks and other financial institutions

Resona Bank, Limited

50,000,000 (a)(b)

JPY 50,000,000

12/29/2017—12/29/2024

Resona Bank, Limited

10,000,000 (a)(b)

JPY 10,000,000

9/30/2020—9/30/2027

Resona Bank, Limited

40,000,000 (a)(b)

JPY 40,000,000

9/30/2020—9/30/2027

Resona Bank, Limited

20,000,000 (a)(b)

JPY 20,000,000

11/13/2020—10/31/2027

Sumitomo Mitsui Banking Corporation

JPY 100,000,000 (a)

12/28/2018—12/28/2023

Sumitomo Mitsui Banking Corporation

10,000,000 (b)

JPY 10,000,000 (a)(b)

12/30/2019—12/30/2026

The Shoko Chukin Bank, Ltd.

JPY 30,000,000

9/28/2018—8/31/2023

The Shoko Chukin Bank, Ltd.

Japan Finance Corporation

JPY 50,000,000

7/27/2020—6/30/2027

Japan Finance Corporation

JPY 80,000,000

11/17/2020—11/30/2027

Higashi-Nippon Bank

30,000,000 (a)

JPY 30,000,000 (a)

3/31/2022—3/31/2025

First Home Bank

$ 350,000 (d)

4/18/2019—4/18/2029

Wall Street Journal U.S.

Prime Rate + 2.750 %

Small Business Administration

$ 350,000 (d)

5/30/2020—5/30/2050

Aggregate outstanding principal balances

3 unchanged sentences

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

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

March 2022, the Company entered into a loan agreement with Higashi-Nippon Bank with a term of three years payable monthly.

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

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:

debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee

expenses for these debts.

The bond is guaranteed by Resona Bank, Limited.

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

expense for long-term debts was $ 11,841 and $ 7,016 for the three months ended March 31, 2023 and 2022, respectively.

of March 31, 2023, future minimum loan payments are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

Year ending December 31,

Year Ended December 31,

Remaining of 2023

9 — INSURANCE PREMIUM FINANCING

February 2022, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 388,538 at an annual

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

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

States (U.S.)

USA is a holding company registered in the State of Delaware incorporated in May 2021.

federal income tax rate is 21 %.

for income taxes in the U.S.

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

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.

As a result of its business activities, the

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

Income taxes in Japan applicable to the Company

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

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:

NOTE 12 — INCOME

HeartCore USA, Sigmaways and HeartCore Financial, incorporated in the United

States, are subject to federal income tax at 21 % statutory tax

rate with respect to the profit generated from the United States.

is a company incorporated in Amsterdam in Netherlands in November 2019.

The first EUR200,000 of taxable income will be taxed at

19% and the remaining taxable income will be taxed at statutory tax rate of 25.80%.

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

It is subject to income tax on income arising in,

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

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

28 % after federal tax abatement.

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

The provincial and territorial lower and higher tax rates in British Columbia are 2 %

respectively.

The Company conducts its major businesses in Japan and is subject to tax

in this jurisdiction.

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

tax authority.

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

in the aggregate resulted in an effective statutory tax rate of approximately 34.59 % and 30.62 % for the three months ended March 31, 2023 and 2022, respectively.

the three months ended March 31, 2023 and 2022, the Company’s income tax expense (benefit) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Three Months Ended

Income tax expense (benefit)

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

effective tax rate was 26.78 % and 0.05 % for the three months ended March 31, 2023 and 2022, respectively.

13 – STOCK-BASED COMPENSATION

May 2016, the Company granted 507 units stock options to its employees each to acquire one share of common shares of HeartCore Japan

(an equivalent of approximately 1,494 shares of common shares of HeartCore USA) at JPY 10 each (approximately $ 0.09 ).

All options are

exercisable upon issuance with a repurchase provision before the completion of the Company’s initial public offering, which serves

as a vesting condition.

All employees that were granted these stock options had early exercised their stock options in 2016 prior to

the vesting of the related stock options.

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.

consideration received for the remaining early exercised options were recorded by the Company as a share repurchase liability included

in other current liabilities in the consolidated balance sheets with JPY 1,830 (approximately $ 16 ) as of December 31, 2021.

May 2016, the Company granted 507

units stock options to its employees each to acquire one share of common shares of HeartCore Japan (an equivalent of approximately 1,494

shares of common shares of HeartCore USA) at JPY 10

(approximately $ 0.09 )

All options are exercisable upon issuance with a repurchase provision before the completion of the Company’s initial public

offering, which serves as a vesting condition.

All employees that were granted these stock options had early exercised their stock

options in 2016 prior to the vesting of the related stock options.

As of November 3, 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, the Company redeemed 484,056

shares (equivalent to 324

shares of common shares of HeartCore Japan) from the CEO of the Company.

consideration received for the remaining early exercised options was recorded by the Company as a share repurchase liability included

in other current liabilities in the consolidated balance sheet with JPY 1,830 (approximately $ 16 ) as of December 31, 2021.

issued related to the early exercise of the above-mentioned stock options were not considered outstanding as of December 31, 2021.

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 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:

the Company recognized stock-based compensation of $ 11,005 during the three months ended March 31, 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 table summarizes the Company’s stock option activity for the stock options issued in 2016 for the three months ended

March 31, 2022:

SCHEDULE OF UNVESTED STOCK OPTION

stock options

Issued and unvested as of January 1, 2022

Vested and exercised

Issued and unvested as of September 30,

Issued and unvested as of January 1, 2022

Vested and exercised

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 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

Issued and unvested as of March 31, 2022

August 6, 2021, the Board of directors and stockholders of the Company approved a 2021 Equity Incentive Plan (the “2021

Plan”), under which 2,400,000

shares of common shares are authorized for issuance.

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 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

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 August

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 are fully vested and exercisable on the grant date, with the expiration

date on August

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:

February 3, 2023, the Company awarded options to purchase 100,000 shares

of common shares at an exercise price of $ 1.17

per share to an employee of the Company .

The options vest 50 %

on the grant date and February 1, 2024, respectively, with the expiration date on February 3, 2033.

following table summarizes the stock options activity and related information for the three months ended March 31, 2023 and 2022:

SCHEDULE OF STOCK OPTION ACTIVITY

As of January 1, 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 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 $ 1,289,747 (which will be recognized through August 2026) as of September 30, 2022.

As of March 31, 2022

As of January 1, 2023

As of March 31, 2023

Vested and exercisable as of March 31, 2023

The Company calculated the fair value of options granted

in the three months ended March 31, 2023 using the Black-Scholes model.

Significant assumptions used in the valuation include expected

volatility, risk-free interest rate, dividend yield and expected exercise term.

For the three months ended March 31, 2023 and 2022,

the Company recognized stock-based compensation related to options of $ 184,335 and $ 292,812 , respectively.

The outstanding unamortized stock-based

compensation related to options was $ 881,378 (which will be recognized through August 2026) as of March 31, 2023.

Stock Units (“RSUs”)

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

2021 Equity Incentive Plan.

The RSUs vest on each annual anniversary of the date of the employment agreement, in an amount equal to 25 %

of the applicable shares of common shares.

The RSUs vest on each annual anniversary of the date of the employment agreement, in an amount equal to 25 % of the applicable

shares of common shares.

The fair value of the RSUs at grant date was $ 424,809 .

February 25, 2022, the Company entered into a service agreement with a marketing company to purchase 6-month marketing services and granted

February 25, 2022, the Company entered into a service agreement with a marketing company to purchase 6-month marketing services and

granted 83,333

The RSUs were issued and vested on May 15, 2022.

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

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

OF RESTRICTED STOCK UNITS

On March 22, 2023, the Company entered into

agreements with employees and service providers of Sigmaways and granted 671,350

RSUs pursuant to the 2021 Plan.

The RSUs were fully vested upon issuance.

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

following table summarizes the RSUs activity for the three months ended March 31, 2023 and 2022:

SCHEDULE OF RESTRICTED STOCK UNITS

Number of RSUs

Weighted Average

Grant Date Fair

1 unchanged sentence

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 ,

Unvested as of March 31, 2022

Unvested as of January 1, 2023

Unvested as of March 31, 2023

the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation related to RSUs of $ 730,893 and $ 129,352 ,

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)

The outstanding unamortized stock-based compensation related to RSUs was $ 187,794 (which will be recognized through February

2026) as of March 31, 2023.

14 – SHAREHOLDERS’ EQUITY

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

shares, par value of $ 0.0001 per share.

the period from January 1, 2022 through January 13, 2022, the Company issued 96,000 shares of common shares at a purchase price of $ 2.50

per share for an aggregate net proceeds of $ 220,572 in a private placement, including 30,000 shares of common shares issued to the officers

of the Company.

February 14, 2022, the Company completed its initial public offering on the NASDAQ Capital Market under the symbol of “HTCR”.

The Company offered 3,000,000 common shares at $ 5.00 per share.

Net proceeds raised by the Company from the initial public offering amounted

to $ 13,724,167 after deducting underwriting discounts and commissions and other offering expenses.

The Company has deferred costs of

$ 300,460 directly attributed to the offering, among which $ 178,847 offering costs were paid and deferred as of December 31, 2021.

costs were also charged against the proceeds from the offering.

February 14, 2022, 273,489 shares of common shares were issued from exercise of stock options by settling share repurchase liability

of $ 16 (also see NOTE 11).

May 15, 2022, 83,333 shares of restricted shares were issued to a marketing company as compensation of services received (also see NOTE

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.

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 September 30, 2022 and December 31, 2021.

13 – MANDATORILY REDEEMABLE FINANCIAL INTEREST

August 10, 2021, the Company and Dentsu Digital Investment Limited (“Dentsu Digital”), a non-controlling shareholder of HeartCore

Japan, entered into a stock purchase agreement, pursuant to which the Company has agreed to purchase the 278 shares of HeartCore Japan

held by Dentsu Digital in accordance with certain terms and conditions in the stock purchase agreement for JPY 50,040,000 on the earlier

of the (i) the date the SEC declares effective a registration statement on Form S-1, for a firm commitment underwritten initial public

offering of common shares, filed by the Company with the SEC or (ii) December 20, 2022.

The Company has determined such shares to be

a mandatorily redeemable financial instrument and is recorded as a liability of JPY 50,040,000 (approximately $ 448,000 ) in the consolidated

balance sheet as of December 31, 2021.

On February 24, 2022, the Company purchased the 278 shares of HeartCore Japan from Dentsu Digital

for JPY 50,040,000 (approximately $ 430,000 ).

As a result, HeartCore Japan became a wholly-owned subsidiary of the Company.

14 – EARNINGS (LOSS) PER SHARE

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

Diluted earnings (loss) per share

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

stock unit awards and other dilutive securities.

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

During the period from January 1, 2022 through

January 13, 2022, the Company issued 96,000

shares of common shares at a purchase price of $ 2.50

per share for aggregate net proceeds of $ 220,572

in a private placement, including 30,000

shares of common shares issued to the officers of the Company.

On February 14, 2022, the Company completed

its initial public offering on the NASDAQ Capital Market under the symbol of “HTCR”.

The Company offered 3,000,000

common shares at $ 5.00 per share.

Net proceeds raised by the Company from the initial public offering amounted to

$ 13,724,167 after deducting underwriting discounts and commissions and other offering expenses.

The Company has deferred costs

of $ 300,460 directly attributed to the offering, among which $ 178,847 offering costs were paid and deferred as of

December 31, 2021.

Those costs were charged against the proceeds from the offering.

On February 14, 2022, 273,489

shares of common shares were issued from exercise of stock options by settling share repurchase liability of $ 16

(also see NOTE 13).

On February 1, 2023, 2,500,000

shares of common shares were issued for the acquisition of 51 %

of the outstanding shares of Sigmaways and its subsidiaries with fair value of $ 3,150,000

(also see NOTE 16).

As of March 31, 2023 and December 31, 2022,

there were 20,842,690

and 17,649,886

shares of common shares issued and outstanding, respectively.

preferred shares were issued and outstanding as of March 31, 2023 and December 31, 2022.

15 – 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 computed on the basis of basic weighted

average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and other dilutive securities.

Common shares

equivalents are determined by applying the treasury stock method to the assumed conversion of share repurchase liability to common shares

related to the early exercised stock options and unvested RSUs, and are not included in the calculation of diluted income (loss) per share

if their effect would be anti-dilutive.

computation of basic and diluted net income (loss) per share for the three months ended March 31, 2023 and 2022 is as follows:

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

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 )

For the Three Months Ended

Net income (loss) per share - basic and diluted:

Allocation of net income (loss) attributable to HeartCore Enterprises, Inc.

common shareholders used in calculating net income

(loss) per common share

$ ( 1,578,451 )

1 unchanged sentence

( 1,578,451 )

( 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

Earnings (loss) per share — basic

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 )

$ ( 5,253,026 )

Net income (loss) attributable to common shareholders

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

Denominator used for net income (loss) per share

Net income (loss) per share - basic and diluted

For the three months ended March 31, 2023 and 2022,

the weighted average common shares outstanding are the same for basic and diluted net income (loss) per share calculations, as the inclusion

of common share equivalents would have an anti-dilutive effect.

16 – BUSINESS COMBINATION

September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51 %

of the outstanding shares of Sigmaways, Inc.

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

California, and its subsidiaries.

The Sigmaways Agreement was further amended on December 23, 2022 and February 1, 2023,

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

Sigmaways and its

subsidiaries are primarily engaged in the business of developing and sales of software in the United States.

The Company aimed to

expand the business of software development and sales in the United States through this acquisition.

The purchase consideration was

$ 4,150,000 , consisted of $ 1,000,000 in

cash and 2,500,000 shares

of common shares of the Company with fair value of $ 3,150,000 at

the closing date.

The total purchase price

was allocated to the tangible and identifiable intangible assets acquired and liabilities and non-controlling interest based on their

estimated fair values as of the acquisition date.

The excess of the purchase price over those fair values is recorded as goodwill.

recorded in the business combination may change during the measurement period, which is a period not to exceed one year from the date

of acquisition, as additional information about conditions existing at the acquisition date becomes available.

The purchase price was allocated on the acquisition date as follows:

OF BUSINESS PURCHASE PRICE ALLOCATION

intangible asset

tax liabilities

( 1,428,000 )

Non-controlling

( 3,190,000 )

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

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.

purchase consideration

The results of operations, financial position and

cash flows of Sigmaways and its subsidiaries have been included in the Company’s unaudited consolidated financial statements since

the date of acquisition.

Sigmaways and its subsidiaries contributed revenues and net loss of $ 1,631,619 and $ 151,534 , respectively, to

the Company from February 1, 2023 to March 31, 2023.

Pro forma results of operations for the business combination

have not been presented because they are not material to the unaudited consolidated statements of operations and comprehensive income

(loss) for the three months ended March 31, 2023 and 2022.

The Company’s policy is to perform its annual

impairment testing on goodwill for its reporting unit on December 31 of each fiscal year or more frequently if events or changes in circumstances

indicate that an impairment may exist.

The Company did not recognize any impairment loss on goodwill during the three months ended March

17 - SUBSEQUENT EVENTS

On May 2, 2023, the Company entered into a

promissory note with a third party in the amount of $ 300,000 .

Pursuant to the terms of the note, the note is bearing interest at 8 %

per annum, unsecured and due 180 days from the date of issuance.

Upon default, the note is bearing default interest at 12 %

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