What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-08-14 · 364 added, 361 removed, 233 unchanged (76% of the section changed)

39 unchanged sentences

that supports the narrow needs of large enterprise customers.

September 6, 2022, HeartCore Enterprises, Inc.

(the “Company”) entered into a share exchange and purchase agreement (“Sigmaways

Agreement”) to acquire 51% of the outstanding shares of Sigmaways, a company incorporated under the laws of the State of California

and is engaged in the business of developing and sales of software in the United States.

September 6, 2022, the Company 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 engaged in the business of developing and sales of software in the United States.

The acquisition closed on February 1, 2023.

2022, we started the GO IPO consulting business, which supports Japanese companies seeking to list on Nasdaq and NYSE in the United

As of August 14, 2023, we have entered into consulting agreements with 10 companies to assist them in their IPO process,

whereby we are entitled to receive from each company a consulting fee ranging from $350,000 to $900,000 and warrants or Japanese

acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at

an exercise price of $0.01 or JPY1 per share.

The revenue from the GO IPO business helped to

offset the decline in sales in the CX and DX divisions.

In the first quarter of 2023, we formed HeartCore Financial, Inc.

HeartCore Capital Advisors, Inc.

2022, we started the GO IPO consulting business, which supports Japanese companies seeking to list on Nasdaq and NYSE in the United States.

As of November 13, 2023, we have entered into consulting agreements with 11 companies to assist them in their IPO process, whereby we

are entitled to receive from each company a consulting fee ranging from $350,000 to $900,000 and warrants or Japanese acquisition rights

to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of

$0.01 or JPY1 per share.

The revenue from the GO IPO business helped to offset the decline in sales in the CX and DX divisions.

first quarter of 2023, we formed HeartCore Financial, Inc.

and HeartCore Capital Advisors, Inc.

as a part of our Go IPO consulting business.

have made significant investments in our sales and marketing efforts globally.

As of June 30, 2023, our sales and marketing organization

was comprised of 16 employees, including our field sales organization, which maintains a physical sales presence in the Japanese

software market.

As of September 30, 2023, our sales and marketing organization

was comprised of 16 employees, including our field sales organization, which maintains a physical sales presence in the Japanese software

Using our go-to-market strategy, we believe we have made significant contributions in Japan and have established a diversified

revenue and customer base.

As of June 30, 2023, our combined business units (customer experience management business unit and digital

As of September 30, 2023, our combined business units (customer experience management business unit and digital

transformation business unit) had 937 total customers in Japan.

Consulting Agreement

April 4, 2023 (the “rYojbaba Effective Date”), the Company entered into a Consulting and Services Agreement (the “rYojbaba

Consulting Agreement”) by and between the Company and rYojbaba Inc., a Japanese corporation (“rYojbaba”).

to the terms of the rYojbaba Consulting Agreement, the Company agreed to provide rYojbaba certain services, including the following (collectively,

the “rYojbaba Services”):

with the selection and negotiation of terms for a law firm, underwriter and auditing firm for rYojbaba;

in the preparation of documentation for internal controls required for an initial public offering of de-SPAC or other rYojbaba Fundamental

Transaction (as defined in the rYojbaba Consulting Agreement) by rYojbaba;

support services to remove problematic accounting accounts upon listing;

of requested documents into English;

and, if requested by rYojbaba, lead meetings with rYojbaba’s management and employees;

rYojbaba with support services related to rYojbaba’s NASDAQ listing;

of accounting data from Japanese standards to U.S.

for rYojbaba’s negotiations with the audit firm;

in the preparation of S-1 or F-1 filings;

of English web page;

an investor presentation/deck and executive summary of rYojbaba’s operations.

providing the rYojbaba Services, the Company will not render legal advice or perform accounting services, and will not act as an investment

Service Agreement

October 2, 2023 (the “GATES Effective Date”), the Company entered into a Service Agreement (the “GATES Agreement”)

by and between the Company and GATES GROUP Inc., a Japanese corporation (“GATES”).

Pursuant to the terms of the GATES Agreement,

GATES engaged the Company, on an exclusive basis, to render the following services for GATES (collectively, the “GATES Services”):

to hire human resources, if the Company deems necessary;

to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles, if the Company

deems necessary;

to remove problematic accounting account, if the Company deems necessary;

to translate accounting documents (i.e., financial statement, general ledger, journal entry), if the Company deems necessary;

to develop growth strategy after public listing;

to consider the listing structure, if the Company deems necessary.

for the selection and negotiation of terms for a law firm, underwriter and auditing firm for GATES, if the Company deems necessary;

for the preparation of documentation for internal controls required for an initial public offering or de-SPAC transaction by GATES;

for converting GATES’ financial statement based on United States generally accounting principles (US GAAP), if the Company

deems necessary;

of documents into English which the Company agrees to translate;

and, if requested by GATES and the Company deems necessary, leading, GATES’ meetings regarding the initial public offering;

GATES with support services related to GATES’ Nasdaq listing;

the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings, if the Company deems necessary;

for investor relations activities, if the Company deems necessary;

for preparing of investor presentation/deck and executive summary of GATES’ operation, if the Company deems necessary;

for investor relations activities, if the Company deems necessary.

providing the GATES Services, the Company will not render legal advice or perform accounting services, and will not act as an investment

advisor or broker/dealer.

Pursuant to the terms of the rYojbaba Consulting Agreement, the parties agreed that the Company will not provide

the following services, among others:

negotiation of the sale of rYojbaba’s securities;

participation in discussions between rYojbaba

and potential investors;

assisting in structuring any transactions involving the sale of rYojbaba’s securities;

pre-screening of

potential investors;

Pursuant to the terms of the GATES Agreement, the parties agreed that the Company will not provide the following

services, among others:

negotiation of the sale of GATES’ securities;

participation in discussions between GATES and potential

assisting in structuring any transactions involving the sale of GATES’ securities;

pre-screening of potential investors;

due diligence activities;

nor providing advice relating to valuation of or financial advisability of any investments

to the terms of the rYojbaba Consulting Agreement, rYojbaba agreed to compensate the Company as follows in return for the provision of

the rYojbaba Services during the eight-month term:

$500,000, to be paid as follows:

(i) $200,000 on the rYojbaba Effective Date;

(ii) $150,000 on the three-month anniversary of the rYojbaba

Effective Date;

and (iii) $150,000 on the date that rYojbaba first files a Form S-1, Form F-1, Form S-4, Form F-4 or any similar or replacement

form with the SEC with respect to any transaction which is reasonably expected to result in the rYojbaba Trigger Date (as defined in

the rYojbaba Warrant);

Issuance by rYojbaba to the Company of a warrant (the “rYojbaba Warrant”), deemed fully earned and vested as of the rYojbaba

Effective Date, to acquire a number of shares of capital stock of rYojbaba, to initially be equal to 3% of the fully diluted share capital

of rYojbaba as of the rYojbaba Effective Date, subject to adjustment as set forth in the rYojbaba Consulting Agreement and the rYojbaba

any services performed by the Company beyond the rYojbaba Term (as hereinafter defined), rYojbaba will compensate the Company for rYojbaba

Services at the rate of $150 per hour, based on the hours spent by personnel of the Company.

term of the rYojbaba Consulting Agreement will continue until eight months after the rYojbaba Effective Date, unless sooner terminated

in accordance with the terms of the rYojbaba Consulting Agreement (the “rYojbaba Term”).

The rYojbaba Consulting Agreement

may be terminated at any time by either party upon notice to the other party.

provided in the rYojbaba Consulting Agreement, on the rYojbaba Effective Date, rYojbaba issued the rYojbaba Warrant to the Company.

to the terms of the rYojbaba Warrant, the Company may, at any time (i) on or after the earlier of the date that either (a) rYojbaba completes

its first initial public offering of stock in the U.S.

resulting in any class of rYojbaba’s stock being listed for trading on any

tier of Nasdaq, the NYSE or the NYSE American;

(b) rYojbaba consummates a merger or other transaction with a SPAC wherein rYojbaba becomes

a subsidiary of the SPAC;

or (c) rYojbaba undertakes any other rYojbaba Fundamental Transaction (the “rYojbaba Trigger Date”);

and (ii) on or prior to the close of business on the tenth anniversary of the rYojbaba Trigger Date, exercise the rYojbaba Warrant to

purchase 3,000 shares of rYojbaba’s common stock, which represents 3% of rYojbaba’s issued and outstanding common stock as

of the rYojbaba Trigger Date, for an exercise price per share of $0.01, subject to adjustment as provided in the rYojbaba Warrant.

number of shares for which the rYojbaba Warrant will be exercisable will be automatically adjusted on the rYojbaba Trigger Date to be

3% of the fully diluted number and class of shares of capital stock of rYojbaba as of the rYojbaba Trigger Date, following completion

of the transactions which caused the rYojbaba Trigger Date to be achieved.

The rYojbaba Warrant contains a 9.99% equity blocker.

Note Purchase Agreement

May 2, 2023, the Company entered into a Note Purchase Agreement by and between the Company and ZEROSPO.

Pursuant to the terms

of the Note Purchase Agreement, ZEROSPO agreed to issue and sell to the Company, and the Company agreed to purchase, a promissory note

in the principal amount of $300,000 (the “ZEROSPO Note”).

to the terms of the ZEROSPO Note, ZEROSPO agreed to pay to the Company $300,000 and to pay interest on the outstanding principal amount

at the rate of 8% per annum.

To the extent not earlier paid, the principal amount and all accrued interest will be due and payable on

the ZEROSPO Maturity Date (as hereinafter defined) or earlier in the event of an event of default as provided in the ZEROSPO Note.

“ZEROSPO Maturity Date” means the earlier of:

The date of the closing of capital-raising transactions consummated by ZEROSPO via the issuance of any debt securities or equity securities

of ZEROSPO or any of its affiliates which results in gross proceeds to ZEROSPO or any of its affiliates of $300,000 or more;

The date on which ZEROSPO completes a transaction pursuant to which its ordinary shares are listed for trading on The Nasdaq Capital

Market, or any related exchange, including the NASDAQ Global Market, or on the New York Stock Exchange or any related securities exchange,

including the NYSE American;

The date which is 180 days following May 2, 2023.

may, at its sole option, prepay the ZEROSPO Note and any accrued interest thereunder in whole or in part at any time.

In the event that

any amount due under the ZEROSPO Note is not paid as and when due, such amounts will accrue interest at the rate of 12% per year, simple

interest, non-compounding, until paid.

May 29, 2023, the Company entered into a Common Stock Sales Agreement (the “Sutter Agreement”) by and between the

Company and Sutter Securities, Inc.

(the “Sales Agent”).

Pursuant to the terms of the Sutter Agreement, the parties agreed

that, from time to time during the term of the Sutter Agreement, the Company would issue and sell through the Sales Agent common stock

of the Company having an aggregate offering price of up to $5,000,000 (the “Placement Shares”).

The issuance and sale of

the Placement Shares to or through the Sales Agent will be effected pursuant to the Company’s effective shelf registration statement

333-270503), which was declared effective on April 12, 2023 (the “Registration Statement”).

The Company filed a

prospectus supplement to the Registration Statement relating to the offering of the Placement Shares pursuant to the Agreement.

notification by the Company that it wishes to issue and sell the Placement Shares through the Sales Agent, as provided in the Sutter

Agreement, the Sales Agent will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable

laws, rules and regulations, including rules of The Nasdaq Stock Market (“Nasdaq”), for the period specified in the notice,

to sell such shares up to the amount specified by the Company and otherwise in accordance with the terms of the notice.

Subject to the

terms of the notice, the Sales Agent may sell such shares by any method permitted by law deemed to be an “at the market”

offering as defined in Rule 415 under the Securities Act of 1933, as amended.

Sales Agent has the right by giving notice as specified in the Sutter Agreement at any time to terminate the Sutter Agreement if (i)

any Material Adverse Change (as defined in the Sutter Agreement), or any development that could reasonably be expected to result in a

Material Adverse Change has occurred that, in the reasonable judgment of the Sales Agent, may materially impair the ability of the Sales

Agent to sell the shares under the Sutter Agreement, (ii) the Company shall have failed, refused or been unable to perform any agreement

on its part to be performed hereunder;

provided, however, in the case of any failure of the Company to deliver (or cause another person

to deliver) certain certifications, opinions, or letters, the Sales Agent’s right to terminate shall not arise unless such failure

to deliver (or cause to be delivered) continues for more than 30 days from the date such delivery was required, (iii) any other condition

of the Sales Agent’s obligations under the Sutter Agreement is not fulfilled, or (iv) any suspension or limitation of trading in

the shares under the Sutter Agreement or in securities generally on Nasdaq shall have occurred (including automatic halt in trading pursuant

to market-decline triggers, other than those in which solely program trading is temporarily halted), or a major disruption of securities

settlements or clearing services in the United States shall have occurred, or minimum prices for trading have been fixed on Nasdaq.

addition, each of the Company and the Sales Agent has the right, by giving 10 days’ notice as specified in the Sutter Agreement,

to terminate the Sutter Agreement in its sole discretion at any time after the date of the Sutter Agreement.

earlier terminated, the Sutter Agreement will automatically terminate upon the earlier to occur of (i) issuance and sale of all of the

Placement Shares to or through the Sales Agent on the terms and subject to the conditions set forth in the Sutter Agreement, and (ii)

the expiration of the Registration Statement on the third anniversary of the initial effective date of the Registration Statement pursuant

to Rule 415(a)(5) under the Securities Act.

Sutter Agreement contains certain covenants, representations and warranties customary for an agreement of this type.

The Company has not received any fund from Sutter Agreement as of the date of this filing.

of Heather Neville as a Director

May 30, 2023, the Board of Directors (the “Board”) of HeartCore Enterprises, Inc.

(the “Company”) expanded

the size of the Board from eight persons to nine persons, and named Heather Marie Neville to serve as a member of the Board, to fill

the vacancy created by the increase in the size of the Board.

Director Agreement

June 1, 2023, the Company and Ms.

Neville entered into a Director Agreement.

The Director Agreement provides that Ms.

Neville will be

compensated as follows:

Neville will be paid the sum of $60,000 annually for her service as a director of the Company, to be paid $15,000 each calendar quarter,

payable within five business days of the end of each calendar quarter, and with such amount for any partial calendar quarter being

appropriately prorated.

the term of the Director Agreement, the Company will reimburse Ms.

Neville for all reasonable out-of-pocket expenses incurred by her

in attending any in-person meetings, provided that Ms.

Neville complies with the generally applicable policies, practices and procedures

of the Company for submission of expense reports, receipts or similar documentation of such expenses.

Any reimbursements for allocated

expenses (as compared to out-of-pocket expenses in excess of $500) must be approved in advance by the Company.

Director Agreement contains customary confidentiality provisions, and customary provisions related to Company ownership of intellectual

property conceived or made by Ms.

Neville in connection with the performance of her duties under the Director Agreement (i.e., a “work-made-for-hire”

Director Agreement provides that, during the term (which continues as long as Ms.

Neville is serving as a director of the Company), Ms.

Neville is entitled to indemnification and insurance coverage for officers’ liability, fiduciary liability and other liabilities

arising out of her position with the Company in any capacity, in an amount not less than the highest amount available to any other director,

and such coverage and protections, with respect to the various liabilities as to which Ms.

Neville has been customarily indemnified prior

to termination of employment, shall continue for at least six years following the end of the term.

Any indemnification agreement entered

into between the Company and Ms.

Neville will continue in full force and effect in accordance with its terms following the termination

of the applicable agreement.

Director Agreement contains customary representations and warranties by Ms.

Neville, relating to the Director Agreement, and contains

other customary miscellaneous provisions relating to waivers, assignments, third party rights, survival of provisions following termination,

severability, notices, waiver of jury trials and other provisions.

the three months ended June 30, 2023 and 2022, we generated revenues of $5,095,373 and $2,670,297, respectively, and reported net loss

of $1,022,846 and $1,703,641, respectively.

the six months ended June 30, 2023 and 2022, we generated revenues of $13,829,523 and $4,946,298, respectively, and reported net income

of $785,191 and net loss of $3,282,092, respectively, and cash flows used in operating activities of $1,368,562 and $2,093,867, respectively.

noted in our unaudited consolidated financial statements, as of June 30, 2023, we had an accumulated deficit of $9,603,090.

nor providing advice relating to valuation of or financial advisability of any investments in GATES.

exchange for providing the GATES Services for Phase 1 and Phase 2, GATES will pay to the Company $600,000 (the “Services Fee”)

of the Services Fee on the GATES Effective Date;

of the Services Fee four months after the GATES Effective Date;

of the Services Fee six months after the GATES Effective Date;

of the Services Fee eight months after the GATES Effective Date.

Phase 3, in return for GATES’ Nasdaq listing, GATES will issue and the Company will be entitled to receive, a warrant to acquire

a number of shares of capital stock of the entity designated by the Company from GATES and its affiliated company becoming a publicly

traded company.

The total amount of such shares will be an amount equal to 3% of the fully diluted share capital of GATES as of the GATES

Effective Date (subject to adjustment as set forth in the GATES Agreement).

term of the GATES Agreement will continue until the earlier of (i) three years from the GATES Effective Date;

and (ii) two years later

from the date on which the stock of GATES or any successor or resulting entity in the contemplated initial public offering of GATES’

stock in the U.S.

or a merger or other similar transaction with a special purpose acquisition company, or other transaction pursuant

to which GATES or its affiliated company becomes a public traded company in the U.S.

The term of the GATES Agreement may be renewed upon

the mutual written agreement of the parties to the GATES Agreement.

GATES Agreement may be terminated by either party upon one month’s written notice to the other party, with the payment set forth

in the GATES Agreement.

However, if either party engages in anti-social force activities, the other party will terminate the GATES Agreement

without written notice immediately, and the other party will pay the compensation as set forth in the GATES Agreement.

October 2, 2023, GATES issued to the Company a common stock purchase warrant (the “GATES Warrant”) to purchase 16 shares

of GATES capital stock, subject to adjustment as set forth in the GATES Warrant.

Pursuant to the terms of the GATES Warrant, the Company

may, at any time (i) on or after the earlier of the date that either (a) GATES completes its first listing on any tier of the Nasdaq

Stock Market, the new York Stock Exchange or the NYSE American;

(b) GATES consummates a merger or other transaction with a special purpose

acquisition company (“SPAC”) wherein GATES becomes a subsidiary of the SPAC;

or (c) GATES consummates any other GATES Fundamental

Transaction (as defined in the GATES Warrant) (the “GATES Trigger Date”);

and (ii) on or prior to the close of business on

the tenth anniversary of the GATES Trigger Date, exercise the GATES Warrant to purchase 16 shares of GATES’ capital stock (subject

to adjustment as provided in the GATES Warrant), which represents 3% of Gates’ issued and outstanding common stock as of the issuance

date of the GATES Warrant, for an exercise price per share of $0.01, subject to adjustment as provided in the GATES Warrant.

of shares for which the GATES Warrant will be exercisable will be automatically adjusted on the GATES Trigger Date to be 3% of the fully

diluted number and class of shares of capital stock of GATES as of the GATES Trigger Date, following completion of the transactions which

caused the GATES Trigger Date to be achieved.

The GATES Warrant contains a 9.99% equity blocker.

of May 2023 ATM Offering

October 12, 2023, the Company delivered written notice to Sutter Securities, Inc.

(“Sutter”) that the Company was terminating

the Common Stock Sales Agreement, dated May 29, 2023, by and between the Company and Sutter (the “Sales Agreement”), in accordance

with its terms, which termination will be effective on October 22, 2023.

to the Sales Agreement, the Company filed a prospectus supplement on May 31, 2023 (the “May 2023 ATM Prospectus Supplement”)

pursuant to which it may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $4,205,067

through Sutter as the sales agent (the “May 2023 ATM Offering”).

The Company did not sell any shares of common stock under

the May 2023 Prospectus Supplement.

The Company terminated the May 2023 ATM Prospectus Supplement and the May 2023 ATM Offering immediately

following October 22, 2023, the effective date of the termination of the Sales Agreement.

2023 ATM Offering

October 23, 2023, the Company entered into the At The Market Offering Agreement (the “October 2023 ATM Agreement”) by and

between the Company and H.C.

Wainwright & Co., LLC (the “Manager”), as sales agent.

Pursuant to the prospectus supplement

and accompanying base prospectus relating to the offering of the Shares (as hereinafter defined), and under terms of the October 2023

ATM Agreement and the prospectus supplement and the accompanying base prospectus, filed on October 23, 2023, the Company may, from time

to time, in transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act

issue and sell through or to the Manager, up to a maximum aggregate amount of $1,988,229 of shares of the Company’s common stock

(the “Shares”).

The issuance and sale of the Shares to or through the Manager from time to time will be effectuated pursuant

to the Company’s effective shelf registration statement on Form S-3, as amended (File No.

333-270503), which was declared effective

by the SEC on April 12, 2023 (the “Registration Statement”), and the related prospectus supplement and accompanying base

prospectus relating to the offering of the Shares.

to the terms of the October 2023 ATM Agreement, the Company may issue and sell the Shares from time to time through the Manager, acting

as sales agent or principal, and the Manager agrees to use its commercially reasonable efforts to sell, the Shares on the following terms:

(i) the Shares will be sold on a daily basis or otherwise as agreed to by the Company and the Manager on any day that (a) is a day on

which the Nasdaq Capital Market is open for trading, (b) the Company has instructed the Manager to make such sales, and (c) the Company

has satisfied its obligations as set forth in the October 2023 ATM Agreement.

The Company will designate the maximum amount of the Shares

to be sold by the Manager daily, if any (subject to the limitations set forth in the October 2023 ATM Agreement) and the minimum price

per Share at which such Shares, if any, may be sold.

The Company has no obligation to sell, and the Manager is not obligated to buy or

sell, any of the Shares under the October 2023 ATM Agreement and may at any time suspend offers under the October 2023 ATM Agreement

or terminate the October 2023 ATM Agreement.

The offering of the Shares pursuant to the prospectus supplement and the accompanying base

prospectus will terminate upon the earlier of (i) the sale of the Shares pursuant to such prospectus supplement and accompanying base

prospectus having an aggregate sales price of $1,988,229, and (ii) the termination by the Company or the Manager of the October 2023

ATM Agreement pursuant to its terms.

Manager may sell Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 under

the Securities Act.

The Manager may also sell Shares in privately negotiated transactions, with the Company’s prior written approval,

if so provided in the “Plan of Distribution” section of the prospectus supplement or a supplement thereto or in a new prospectus

supplement disclosing the terms of such privately negotiated transaction.

otherwise agreed between the Company and the Manager, settlement for sales of the Shares will occur on the second trading day (and on

and after May 28, 2024, on the first trading day or any such shorter settlement cycle as may be in effect under Rule 15c6-1 promulgated

under the Exchange Act, from time to time) following the date on which any sales are made.

Sales of the Shares will be settled through

the facilities of The Depository Trust Company or by such other means as the Company and the Manager may agree.

There is no arrangement

for funds to be received in an escrow, trust or similar arrangement.

Company will pay the Manager a cash commission of 4.0% of the gross sales price of the Shares sold by the Manager pursuant to the October

2023 ATM Agreement;

provided, however, that such compensation will not apply when the Manager acts as principal, in which case the Company

may sell Shares to the Manager as principal at a price agreed upon at the relevant applicable time and pursuant to a separate agreement

the Company will enter into with the Manager setting forth the applicable terms.

Pursuant to the terms of the October 2023 ATM Agreement,

the Company also agreed to reimburse the Manager for reasonable fees and expenses of the Manager’s counsel, not to exceed $75,000,

and additional amounts for due diligence update sessions conducted in connection with each such date the Company files its Quarterly

Reports on Form 10-Q or its Annual Report on Form 10-K, as applicable.

Company has the right, by giving written notice as specified in the October 2023 ATM Agreement, to terminate the October 2023 ATM Agreement

in its sole discretion at any time upon 10 business days’ prior written notice.

The Manager has the right, by giving written notice

as specified in the October 2023 ATM Agreement, to terminate the provisions of the October 2023 ATM Agreement relating to the solicitation

of offers to purchase the Shares in its sole discretion at any time.

October 2023 ATM Agreement contains certain covenants, representations and warranties customary for an agreement of this type.

agreed to provide indemnification and contribution to the Manager against certain liabilities, including liabilities under the Securities

Notice Regarding Minimum Bid Price Requirement

October 26, 2023, the Company received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualification Department

(the “Nasdaq Staff”) indicating that the Company is not in compliance with the $1.00 minimum bid price requirement set forth

in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on the Nasdaq Capital Market.

The notification of noncompliance has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq

Capital Market under the symbol “HTCR,” and the Company is currently monitoring the closing bid price of its common stock

and evaluating its alternatives, if appropriate, to resolve the deficiency and regain compliance with this rule.

Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price

for the last 30 consecutive business days, the Company no longer meets this requirement.

The Bid Price Notice indicated that the Company

will be provided 180 calendar days, or until April 23, 2024, in which to regain compliance.

If at any time during this period the closing

bid price of the Company’s common stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff

will provide the Company with written confirmation of compliance and the matter will be closed.

Alternatively,

if the Company fails to regain compliance with Rule 5550(a)(2) prior to the expiration of the 180 calendar day period, but meets the

continued listing requirement for market value of publicly held shares and all of the other applicable standards for initial listing

on the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provides written notice of its intention to

cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary, then the Company may be granted

an additional 180 calendar days to regain compliance with Rule 5550(a)(2).

can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement, even if it maintains compliance

with the other listing requirements.

The Company is considering actions that it may take in response to the Bid Price Notice in order

to regain compliance with the continued listing requirements, but no decisions regarding a response have been made at this time.

the three months ended September 30, 2023 and 2022, we generated revenues of $4,688,908 and $1,872,476, respectively, and reported net

loss of $2,541,133 and $1,970,934, respectively.

the nine months ended September 30, 2023 and 2022, we generated revenues of $18,518,431 and $6,818,774, respectively, and reported net

loss of $1,755,942 and $5,253,026, respectively, and cash flows used in operating activities of $2,457,661 and $4,206,370,

respectively.

of September 30, 2023, we had an accumulated deficit of $11,910,310.

of Operations

of Results of Operations for the Three Months Ended June 30, 2023 and 2022

following table summarizes our operating results as reflected in our unaudited statements of operations during the three months

ended June 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease)

during such periods.

For the Three Months Ended June 30,

of Results of Operations for the Three Months Ended September 30, 2023 and 2022

following table summarizes our operating results as reflected in our unaudited statements of operations for the three months ended September

30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

For the Three Months Ended September 30,

Cost of Revenues

5 unchanged sentences

Loss from operations

Other expenses

Other income (expenses)

Loss before income tax provision

3 unchanged sentences

$ (2,307,220 )

Our total revenues increased by $2,425,076, or 90.8%, to $5,095,373 for

the three months ended June 30, 2023 from $2,670,297 for the three months ended June 30, 2022, mainly attributable to (i) an increased

revenue of $2,294,953 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on

February 1, 2023;

(ii) an increased revenue of $189,088 from GO IPO consulting services as the Company obtained more IPO consulting customers

Our total costs of revenues increased by $2,249,642, or 168.2%, to $3,586,938

for the three months ended June 30, 2023 from $1,337,296 for the three months ended June 30, 2022, in light of the increase in sales in

GO IPO consulting services and customized software development and services.

total gross profit increased by $175,434, or 13.2%, to $1,508,435 for the three months ended June 30, 2023 from $1,333,001 for the three

months ended June 30, 2022, mainly attributable to (i) the increased gross profit of $336,870 from maintenance and support services,

as we terminated some subcontractors in supporting service, as part of our effect to reduce costs;

(ii) the increased gross profit of

$485,731 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1,

offset by (iii) the decreased gross profit of $387,651 from sales of on-premise software, as we incurred costs of approximately

$184,000 to purchase third-party software to be included in the CMS sale, per certain customers’ request in the current period;

and (iv) the decreased gross profit of $236,103 from GO IPO consulting

Our overall gross profit margin decreased by 20.3% to 29.6% for the three months ended June 30, 2023, from 49.9% for the three months

ended June 30, 2022.

selling expenses decreased by $240,774, or 33.0%, to $488,062 for the three months ended June 30, 2023 from $728,836 for the three

months ended June 30, 2022, primarily attributable to a decrease of $371,413 in advertising expense, as the company spent heavily on IR and

PR in the U.S.

$ (1,970,934 )

total revenues increased by $2,816,432, or 150.4%, to $4,688,908 for the three months ended September 30, 2023 from $1,872,476 for the

three months ended September 30, 2022, mainly attributable to (i) increased revenue of $2,405,907 from customized software development

and services as a result of the acquisition of Sigmaways and its subsidiaries on February 1, 2023;

(ii) increased revenue of $138,290

from GO IPO consulting services, as the Company obtained more IPO consulting customers in 2023.

total cost of revenues increased by $2,316,985, or 150.1%, to $3,860,241 for the three months ended September 30, 2023 from $1,543,256

for the three months ended September 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software

development and services.

total gross profit increased by $499,447, or 151.7%, to $828,667 for the three months ended September 30, 2023 from $329,220 for the

three months ended September 30, 2022, mainly attributable to (i) the increased gross profit of $113,685 from maintenance and

support services, as we terminated some subcontractors in supporting service, as part of our effect to reduce costs;

increased gross profit of $220,792 from customized software development and services as a result of acquisition of Sigmaways and its

subsidiaries on February 1, 2023;

(iii) the increased gross profit of $135,404 from GO IPO consulting services in light of the

increase in sale.

Our overall gross profit margin increased slightly by 0.1% to 17.7% for the three months ended September 30, 2023,

from 17.6% for the three months ended September 30, 2022.

selling expenses decreased by $497,453, or 64.5%, to $274,043 for the three months ended September 30, 2023 from $771,496 for the three

months ended September 30, 2022, primarily attributable to a decrease of $561,559 in advertising expense, as the Company spent heavily

on IR and PR in the U.S.

immediately after listing in Nasdaq in early 2022;

offset by an increase of $82,002 in stock-based compensation for

a percentage of revenues, our selling expenses accounted for 9.6% and 27.3% of our total revenues for the three months ended June 30,

offset by an increase of $80,291 in stock-based compensation

for sales staff.

a percentage of revenues, our selling expenses accounted for 5.9% and 41.2% of our total revenues for the three months ended September

30, 2023 and 2022, respectively.

and Administrative Expenses

Our general and administrative expenses increased by $597,572, or 32.3%,

to $2,447,887 for the three months ended June 30, 2023 from $1,850,315 for the three months ended June 30, 2022, primarily attributable

to (i) an increase of $546,302 in salaries and welfare due to a company-wide wage increase and additional staffs employed by Sigmaways

and its subsidiaries;

(ii) an increase of $114,129 in office, utility and other expenses, an increase of $154,542 in depreciation and

amortization expenses, and an increase of $65,125 in rent expenses, mostly due to the acquisition of Sigmaways and its subsidiaries as

well as the overall business expansion;

offset by (iii) a decrease of $383,879 in stock-based compensation as the Company awarded options

and RSUs to employees and service providers in early 2022 when the Company finished going public.

a percentage of revenues, general and administrative expenses were 48.0% and 69.3% of our revenues for the three months ended June 30,

general and administrative expenses increased by $659,720, or 43.6%, to $2,172,298 for the three months ended September 30, 2023 from

$1,513,028 for the three months ended September 30, 2022, primarily attributable to (i) an increase of $663,156 in salaries and welfare

due to a company-wide wage increase and additional staff employed by Sigmaways and its subsidiaries;

(ii) an increase of $169,154 in

depreciation and amortization expenses, and an increase of $70,952 in rent expenses, mostly due to the acquisition of Sigmaways and its

subsidiaries as well as the overall business expansion;

offset by (iii) a decrease of $257,475 in stock-based compensation as the Company

awarded options and RSUs to employees and service providers in early 2022 when the Company finished going public.

a percentage of revenues, general and administrative expenses were 46.3% and 80.8% of our revenues for the three months ended September

30, 2023 and 2022, respectively.

and Development Expenses

research and development expenses decreased by $377,620, or 90.5%, to $39,608 for the three months ended June 30, 2023 from $417,228

for the three months ended June 30, 2022, primarily attributable to the decrease in outsourcing expenses relating to the development

of a high quality 12K VR camera and related data compression system, which was completed in June 2022.

a percentage of revenues, research and development expenses were 0.8% and 15.6% of our revenues for the three months ended June 30, 2023

research and development expenses increased by $111,796, or 191.8%, to $170,071 for the three months ended September 30, 2023 from $58,275

for the three months ended September 30, 2022, primarily attributable to the increase in outsourcing expenses relating to the development

of new CMS management screen features in the current period.

a percentage of revenues, research and development expenses were 3.6% and 3.1% of our revenues for the three months ended September 30,

2023 and 2022, respectively.

Our other expenses primarily include changes in fair value of investments

in marketable securities, changes in fair value of investments in warrants, interest income generated from bank deposits, interest expense

for bank loans and bonds, other income, and other expenses.

Our other expenses increased by $146,442, or 468.1%, to $177,726 in the three

months ended June 30, 2023 from $31,284 in the three months ended June 30, 2022, primarily attributable to a decrease of $229,022 in changes

in fair value of investments in marketable securities and a decrease of $27,258 in changes in fair value of investments in warrants, offset

by an increase of $101,023 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government.

Income (Expenses)

other income (expenses) primarily include changes in fair value of investments in marketable securities, changes in fair value of

investments in warrants, interest income generated from bank deposits, interest expense for bank loans and bonds, other income, and

other expenses.

Our other income decreased by $757,551, or 3,213.2%, from other income of $23,576 in the three months ended

September 30, 2022 to other expenses of $733,975 in the three months ended September 30, 2023, primarily attributable to a decrease of $271,740 in changes in fair value of investments in

marketable securities and a decrease of $460,672 in changes in fair value of investments in warrants, offset by an increase of

$37,445 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government.

Tax Expense (Benefit)

income tax benefit was $622,002 in the three months ended June 30, 2023, as compared to the income tax expense of $8,979 in the

three months ended June 30, 2022, as the Company started to consider net operating losses carried forward from previous years in the

current period income tax calculation and recognized an income tax benefit in the current period to offset the income tax expense

recognized in the prior quarter.

a result of the foregoing, we reported a net loss of $1,022,846 for the three months ended June 30, 2023, representing a $680,795, or

40.0%, decreased from a net loss of $1,703,641 for the three months ended June 30, 2022.

income tax expense was $19,413 in the three months ended September 30, 2023, as compared to the income tax benefit of $19,069 in the

three months ended September 30, 2022, as one of the newly incorporated subsidiaries generated net income before income tax in the current period

while no entity generated taxable income in the prior period.

a result of the foregoing, we reported a net loss of $2,541,133 for the three months ended September 30, 2023, representing a $570,199,

or 28.9%, increase from a net loss of $1,970,934 for the three months ended September 30, 2022.

Loss Attributable to Non-controlling Interest

We owned 51% equity ownership interest of Sigmaways and its subsidiaries

as of June 30, 2023.

Accordingly, we recorded net loss attributable to the non-controlling interest of $111,046 in the three months ended

June 30, 2023.

owned 51% equity ownership interest of Sigmaways and its subsidiaries as of September 30, 2023.

Accordingly, we recorded net loss attributable

to the non-controlling interest of $233,913 in the three months ended September 30, 2023.

Loss Attributable to HeartCore Enterprises, Inc.

1 unchanged sentence

of $2,307,220 for the three months ended

June 30, 2023, representing a $791,841 or 46.5%, decreased from a net loss attributable to HeartCore Enterprises, Inc.

of $1,703,641

for the three months ended June 30, 2022.

of Results of Operations for the Six Months Ended June 30, 2023 and 2022

following table summarizes our operating results as reflected in our unaudited statements of operations during the six months ended

June 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease) during

September 30, 2023, representing a $336,286, or 17.1%, increase from $1,970,934

for the three months ended September 30, 2022.

of Results of Operations for the Nine Months Ended September 30, 2023 and 2022

following table summarizes our operating results as reflected in our unaudited statements of operations during the nine months ended

September 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease) during

such periods.

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cost of Revenues

4 unchanged sentences

Total operating expenses

Income (loss) from operations

Loss from operations

Other expenses

Income (loss) before income tax provision

Income tax expense

Net income (loss)

Loss before income tax provision

Income tax expense (benefit)

net loss attributable to non-controlling interest

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

Net loss attributable to HeartCore Enterprises, Inc.

$ (1,336,731 )

Our total revenues increased by $8,883,225, or 179.6%, to $13,829,523 for

the six months ended June 30, 2023 from $4,946,298 for the six months ended June 30, 2022, mainly attributable to (i) the increased revenue

of $5,381,839 from GO IPO consulting services as the Company obtained more IPO consulting customers in 2023 and received warrants from

its customers as noncash consideration from consulting services;

(ii) the increased revenue of $3,926,572 from customized software development

and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023;

offset by (iii) the decreased revenue of

$456,944 in revenue from sales of on-premise software, primarily due to the weak perform of a significant distributor in the current period.

total costs of revenues increased by $4,295,352, or 179.5%, to $6,688,004 for the six months ended June 30, 2023 from $2,392,652 for

the six months ended June 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software development

and services.

total gross profit increased by $4,587,873, or 179.7%, to $7,141,519 for the six months ended June 30, 2023 from $2,553,646 for the

six months ended June 30, 2022, mainly attributable to (i) the increased gross profit of $4,282,835 from GO IPO consulting services

$ (5,253,026 )

total revenues increased by $11,699,657, or 171.6%, to $18,518,431 for the nine months ended September 30, 2023 from $6,818,774 for the

nine months ended September 30, 2022, mainly attributable to (i) the increased revenue of $5,520,129 from GO IPO consulting services

as the Company obtained more IPO consulting customers in 2023 and received warrants from its customers as noncash consideration from

consulting services;

(ii) the increased gross profit of $709,607 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023;

offset by (iii) the decreased gross

profit of $914,590 from sales of on-premise software due to the overall market competition.

Our overall gross profit margin remained 51.6%

for the six months ended June 30, 2023 and 2022.

selling expenses increased by $121,950 or 13.0%, to $1,056,704 for the six months ended June 30, 2023 from $934,754 for the six

months ended June 30, 2022, primarily attributable to an increase of $403,378 in stock-based compensation for sales staff, offset by

the decrease of $340,712 in advertising expenses, as the company spent heavily on IR and PR in the U.S.

immediately after listing in Nasdaq in early 2022.

a percentage of revenues, our selling expenses accounted for 7.6% and 18.9% of our total revenues for the six months ended June 30, 2023

(ii) the increased revenue of $6,332,479 from customized software development and services as a result of acquisition

of Sigmaways and its subsidiaries on February 1, 2023;

offset by (iii) the decreased revenue of $317,418 in revenue from sales of on-premise

software, primarily due to the weak perform of a significant distributor in the current period.

total cost of revenues increased by $6,612,337, or 168.0%, to $10,548,245 for the nine months ended September 30, 2023 from $3,935,908

for the nine months ended September 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software

development and services.

total gross profit increased by $5,087,320, or 176.5%, to $7,970,186 for the nine months ended September 30, 2023 from $2,882,866 for

the nine months ended September 30, 2022, mainly attributable to (i) the increased gross profit of $4,418,239 from GO IPO consulting

services as the Company obtained more IPO consulting customers in 2023 and received warrants from its customers as noncash consideration

from consulting services;

(ii) the increased gross profit of $930,399 from customized software development and services as a result of

acquisition of Sigmaways and its subsidiaries on February 1, 2023;

offset by (iii) the decreased gross profit of $1,003,681 from sales

of on-premise software due to the overall market competition.

Our overall gross profit margin was 43.0% and 42.3% for the nine months

ended September 30, 2023 and 2022, respectively.

selling expenses decreased by $375,503 or 22.0%, to $1,330,747 for the nine months ended September 30, 2023 from $1,706,250 for the nine

months ended September 30, 2022, primarily attributable to a decrease of $902,271 in advertising expenses, as the Company spent heavily

on IR and PR in the U.S.

immediately after listing in Nasdaq in early 2022, offset by an increase of $483,669 in stock-based compensation

for sales staff.

a percentage of revenues, our selling expenses accounted for 7.2% and 25.0% of our total revenues for the nine months ended September

30, 2023 and 2022, respectively.

and Administrative Expenses

Our general and administrative expenses increased by $813,846, or 18.8%,

to $5,133,094 for the six months ended June 30, 2023 from $4,319,248 for the six months ended June 30, 2022, primarily attributable to

(i) an increase of $576,859 in salaries and welfare, an increase of $310,796 in office, utility and other expenses, an increase of $250,646

in depreciation and amortization expenses, and an increase of $115,807 in rent expenses, mostly due to the acquisition of Sigmaways and

its subsidiaries as well as the overall business expansion;

offset by (ii) a decrease of $271,771 in listing-related expenses as we finished

the process of going public in early 2022;

and (iii) a decrease of $281,522 in stock-based compensation as the Company awarded options

and RSUs to employees and service providers in early 2022 when the Company finished going public.

a percentage of revenues, general and administrative expenses were 37.1% and 87.3% of our revenues for the six months ended June 30,

general and administrative expenses increased by $1,473,116, or 25.3%, to $7,305,392 for the nine months ended September 30, 2023 from

$5,832,276 for the nine months ended September 30, 2022, primarily attributable to (i) an increase of $1,240,015 in salaries and welfare,

an increase of $297,951 in office, utility and other expenses, an increase of $419,800 in depreciation and amortization expenses, and

an increase of $186,759 in rent expenses, mostly due to the acquisition of Sigmaways and its subsidiaries, as well as the overall business

offset by (ii) a decrease of $242,877 in listing-related expenses as we finished the process of going public in early 2022;

and (iii) a decrease of $538,997 in stock-based compensation as the Company awarded options and RSUs to employees and service providers

in early 2022 when the Company finished going public.

a percentage of revenues, general and administrative expenses were 39.4% and 85.5% of our revenues for the nine months ended September

30, 2023 and 2022, respectively.

and Development Expenses

Our research and development expenses decreased by $406,255, or 77.3%, to

$119,232 for the six months ended June 30, 2023 from $525,487 for the six months ended June 30, 2022, primarily attributable to the decrease

in outsourcing expenses relating to the development of a high quality 12K VR camera and related data compression system, which was completed

in June 2022, offset by an increase of $57,839 in stock-based compensation for research and development staff.

a percentage of revenues, research and development expenses were 0.9% and 10.6% of our revenues for the six months ended June 30, 2023

research and development expenses decreased by $294,459, or 50.4%, to $289,303 for the nine months ended September 30, 2023 from $583,762

for the nine months ended September 30, 2022, primarily attributable to the decrease of $328,402 in outsourcing expenses relating to

the development of a high quality 12K VR camera and related data compression system, which was completed in June 2022, offset by an increase

of $59,104 in stock-based compensation for research and development staff.

a percentage of revenues, research and development expenses were 1.6% and 8.6% of our revenues for the nine months ended September 30,

2023 and 2022, respectively.

Other Expenses

other expenses primarily include changes in fair value of investments in marketable securities and changes in fair value of investments

in warrants, interest income generated from bank deposits, interest expense for bank loans and bonds, other income, and other expenses.

Our other expenses decreased by $40,234, or 83.7%, to $7,852 in the six months ended June 30, 2023 from $48,086 in the six months ended

June 30, 2022, primarily attributable to (i) an increase of $166,107 in changes in fair value of investments in warrants;

increase of $98,551 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government;

by (iii) a decrease of $229,022 in changes in fair value of investments in marketable securities.

income tax expense was $39,446 in the six months ended June 30, 2023, as compared to $8,163 in the six months

ended June 30, 2022, mainly due to the net income before income tax of $824,637 in the current period, as compared to a net loss before

income tax of $3,273,929 in the prior period.

Income (Loss)

a result of the foregoing, we reported a net income of $785,191 for the six months ended June 30, 2023, representing a $4,067,283, or

123.9%, increase from a net loss of $3,282,092 for the six months ended June 30, 2022.

Our other expenses increased by $717,317, or 2,926.6%, to $741,827 in the nine months ended September 30, 2023 from $24,510 in the nine

months ended September 30, 2022, primarily attributable to (i) a decrease of $294,565 in changes in fair value of investments in warrants;

(ii) a decrease of $500,762 in changes in fair value of investments in marketable securities;

offset by (iii) an increase of $135,996

in other income, primarily attributable to the CMS development subsidy granted by the Japanese government.

Tax Expense (Benefit)

income tax expense was $58,859 in the nine months ended September 30, 2023, as compared to tax benefit of $10,906 in the nine months

ended September 30, 2022, mainly due to one of our newly incorporated subsidiaries generated net income before income tax during the nine months

ended September 30, 2023 while all entities suffered from taxable loss in the prior period.

a result of the foregoing, we reported a net loss of $1,755,942 for the nine months ended September 30, 2023, representing a $3,497,084,

or 66.6%, decrease from a net loss of $5,253,026 for the nine months ended September 30, 2022.

Loss Attributable to Non-controlling Interest

owned 51% equity ownership interest of Sigmaways and its subsidiaries as of June 30, 2023.

Accordingly, we recorded net loss

attributable to the non-controlling interest of $185,298 in the six months ended June 30, 2023.

Income (Loss) Attributable to HeartCore Enterprises, Inc.

a result of the foregoing, we reported a net income attributable to HeartCore Enterprises, Inc.

of $970,489 for the six months ended

June 30, 2023, representing a $4,252,581, or 129.6%, increase from a net loss attributable to HeartCore Enterprises, Inc.

of $3,282,092

for the six months ended June 30, 2022.

owned 51% equity ownership interest of Sigmaways and its subsidiaries as of September 30, 2023.

Accordingly, we recorded a net loss

attributable to the non-controlling interest of $419,211 in the nine months ended September 30, 2023.

Net Loss Attributable to HeartCore Enterprises, Inc.

a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc.

of $1,336,731 for the nine months ended

September 30, 2023, representing a $3,916,295, or 74.6%, decrease from $5,253,026

for the nine months ended September 30, 2022.

and Capital Resources

of June 30, 2023, we had $4,238,741 in cash, as compared to $7,177,326 as of December 31, 2022.

As of June 30, 2023, our working capital

was $3,487,961, as compared to $4,887,444 as of December 31, 2022.

We also had $2,812,337 in accounts receivable as of June 30, 2023.

Our accounts receivable primarily includes balance due from customers for our on-premise software sold and services provided to and accepted

by customers, as well as Sigmaways’s accounts receivable related to customized

software development and services.

of September 30, 2023, we had $2,199,565 in cash, as compared to $7,177,326 as of December 31, 2022.

As of September 30, 2023, our working

capital was $1,095,609, as compared to $4,887,444 as of December 31, 2022.

We also had $2,562,239 in accounts receivable as of September

Our accounts receivable primarily includes balance due from customers for our on-premise software sold and services provided

to and accepted by customers, as well as Sigmaways’s accounts receivable related to customized software development and services.

following table sets forth summary of our cash flows for the periods indicated:

For the Six Months Ended

Net cash flows used in operating activities

$ (1,368,562 )

$ (2,093,867 )

the Nine Months Ended

September 30,

cash flows used in operating activities

cash flows used in investing activities

cash flows provided by (used in) financing activities

of exchange rate changes

change in cash and cash equivalents

and cash equivalents, beginning of the period

and cash equivalents, end of the period

cash flows used in operating activities was $2,457,661 for the nine months ended September 30, 2023, as compared to $4,206,370 net cash

flows used in operating activities for the nine months ended September 30, 2022, primarily consisting of the following:

loss of $1,755,942 for the nine months ended September 30, 2023.

Warrants received as non-cash consideration of $4,009,335

as two of our IPO consulting customers completed the IPO during the current period.

increase of $322,583 in accounts receivable in light of the increase in revenues.

by an increase of $200,256 in deferred revenue, due to the upfront payment received for long-term service contracts.

by stock-based compensation of $1,267,699 for the nine months ended September 30, 2023, as we granted equity rewards to our employees

and service providers in the current period.

by depreciation and amortization expenses of $495,200, mainly because we acquired Sigmaways and its subsidiaries on February 1, 2023

and recognized amortization expense for the intangible asset identified through the acquisition.

by the loss from changes in fair value of investments in marketable securities of $500,762 due to the decrease in customers’

stock price from the warrant exercise date to the balance sheet date.

Offset by the loss from changes in fair value of investments in warrants of $294,565 as we recognized investments in warrants and remeasured

the fair value at the period end.

by an increase of $597,247 in accounts payable and accrued expenses as we incurred more operating expenses

due to business.

Offset by non-cash lease expense of $254,876 due to the amortization or

operating lease right-of-use assets as time passed.

cash flows used in investing activities amounted to $1,781,810 for the nine months ended September 30, 2023, as compared to net cash

flows used in investing activities of $8,630 for the nine months ended September 30, 2022.

Net cash flows used in investing activities

Net cash flows provided by (used in) financing activities

Effect of exchange rate changes

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

cash flows used in operating activities was $1,368,562 for the six months ended June 30, 2023, as compared to $2,093,867 net cash flows

used in operating activities for the six months ended June 30, 2022, primarily consisting of the following:

income of $785,191 for the six months ended June 30, 2023.

Changes in fair value of investments in warrants of $166,107 and warrants

received as non-cash consideration of $4,009,335 as two of our IPO consulting customers completed the IPO during the current period and

we recognized investments in warrants and remeasured the fair value at the period end.

An increase of $596,312 in accounts receivable in light of the increase

Offset by an increase of $810,639 in deferred revenue, due to the upfront

payment received for long-term service contracts.

by stock-based compensation of $1,094,393 for the six months ended June 30, 2023, as we granted equity rewards to our employees and service

providers in the first quarter of 2023.

Offset by depreciation and amortization expenses of $360,097, mainly because

we acquired Sigmaways and its subsidiaries on February 1, 2023 and recognized amortization expense for the intangible asset identified

through the acquisition.

Offset by the loss from changes in fair value of investments in marketable

securities of $229,022 due to the decrease in customers’ stock price from the warrant exercise date to the balance sheet date.

by an increase of $106,625 in income tax payables as we generated more taxable income in the current period.

cash flows used in investing activities amounted to $1,181,646 for the six months ended June 30, 2023, as compared to net cash flows

used in investing activities of $9,455 for the six months ended June 30, 2022 .

Net cash flows used in investing activities for the six months ended June 30, 2023 primarily consisted of (i) payment for acquisition

of Sigmaways and its subsidiaries, net of cash acquired, of $724,910;

(ii) advance on notes receivable of $300,000;

and (iii) purchases

of property and equipment of $180,451.

cash flows used in financing activities amounted to $243,897 for the six months ended June 30, 2023, as compared to net cash flows provided

by financing activities of $11,651,622 for the six months ended June 30, 2022.

Net cash flows used in financing activities primarily

consisted of repayment of $411,923 for long-term debts, and repayment of $149,250 for insurance premium financing, offset by the net

proceeds of $328,967 from the factoring arrangement.

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

of June 30, 2023, future minimum lease payments under the non-cancelable lease agreements are as follows:

for the nine months ended September 30, 2023 primarily consisted of (i) payment for acquisition of Sigmaways and its subsidiaries, net

of cash acquired, of $724,910;

(ii) advances on notes receivable of $600,000;

and (iii) purchases of property and equipment of $516,658.

cash flows used in financing activities amounted to $432,051 for the nine months ended September 30, 2023, as compared to net cash flows

provided by financing activities of $9,122,350 for the nine months ended September 30, 2022.

Net cash flows used in financing activities

primarily consisted of repayment of $584,779 for long-term debts, and repayment of $266,756 for insurance premium financing, offset by

the net proceeds of $217,250 from the factoring arrangement and proceeds of $219,427 from long-term debt.

Company has entered into four 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 two leases for vehicles, one of which was terminated in

September 2023, and these leases were classified as finance leases.

of September 30, 2023, future minimum lease payments under the non-cancellable lease agreements are as follows:

Year Ended December 31,

8 unchanged sentences

Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions.

of June 30, 2023, future minimum loan payments are as follows:

of September 30, 2023, future minimum loan payments are as follows:

Year Ended December 31,

1 unchanged sentence

Sheet Arrangements

did not have any off-balance sheet arrangements as of June 30, 2023.

did not have any off-balance sheet arrangements as of September 30, 2023.

Accounting Policies and Estimates

121 unchanged sentences

balance sheets.

The amount of revenues recognized during the six months ended June 30, 2023 and 2022 that were included in the

The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the

opening deferred revenues balance was approximately $1.5 million and $1.2 million, respectively.

1 unchanged sentence

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 2. Management’s Discussion and Analysis