What changed in this filing

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Item 9A. Controls and Procedures

2024-04-09 compared with 2023-03-31 · 1525 added, 912 removed, 1332 unchanged (65% of the section changed)

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December 31, 2023, our disclosure controls and procedures were not effective.

The ineffectiveness of our disclosure controls and procedures

was due to the existence of the material weakness identified below.

Lack of sufficient financial

reporting and accounting personnel with appropriate knowledge of U.S GAAP and the Securities and Exchange Commission (“SEC”)

reporting and compliance requirements to design, implement and operate key controls over financial reporting process to address complex

technical accounting issues and related disclosures in accordance with U.S.

GAAP and financial reporting requirements set forth by

The ineffectiveness of our disclosure controls and

procedures was due to the existence of the material weakness identified below.

of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S GAAP and the Securities and Exchange

Commission (“SEC”) reporting and compliance requirements to design, implement and operate key controls over financial

reporting process to address complex technical accounting issues and related disclosures in accordance with U.S.

GAAP and financial

reporting requirements set forth by the SEC.

do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud.

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in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange

Act) during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially

were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the

Exchange Act) during the three months ended December 31, 2023 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

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director earlier resigns or is removed.

Sumitaka Yamamoto

Chairman of Board, Chief

Executive Officer and President

Chief Operating Officer

Prakash Sadasivam

Chief Strategy Officer

Hidekazu Miyata

Chief Technical Officer

Chief Financial Officer

CX Division Vice President

Ferdinand Groenewald

Yoshitomo Yamano

Takeshi Omoto

of Board, Chief Executive Officer and President

Operating Officer and Director

Strategy Officer and Director

Technical Officer

Financial Officer

Division Vice President

information concerning our directors and executive officers listed above is set forth below.

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from October 1, 2019 to May 31, 2021.

Miyata graduated with a bachelor’s degree in

economics from Doshisha University, Japan.

Miyata does not hold, and has not previously held, any directorships in any reporting

Miyata graduated with a bachelor’s degree in economics from

Doshisha University, Japan.

Miyata does not hold, and has not previously held, any directorships in any reporting companies.

Gao has served as our Chief Financial Officer since May 18, 2021.

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Since August 30, 2021, Mr.

has also served as the head of the CX division and member of the Board of Directors of HeartCore Co.

Kuno graduated with

a bachelor’s degree in business administration from Hosei University, Tokyo, Japan.

Kuno does not hold, and has not previously

held, any directorships in any reporting companies.

Kuno has also served

as the head of the CX division and member of the Board of Directors of HeartCore Co.

Kuno graduated with a bachelor’s degree

in business administration from Hosei University, Tokyo, Japan.

Kuno does not hold, and has not previously held, any directorships

in any reporting companies.

Groenewald has been an independent member of our Board of Directors since January 24, 2022.

Since January 2,

Groenewald has served as the Chief Accounting Officer of Muscle Maker, Inc., a Nasdaq listed company.

From September 2018 to

January 2, 2022, Mr.

2022 to July 2022, Mr.

Groenewald served as the Chief Accounting Officer of Sadot Group, Inc.

(f/k/a Muscle Maker, Inc., a Nasdaq

listed company).

From September 2018 to January 2, 2022, Mr.

Groenewald served as the Chief Financial Officer of Muscle Maker, Inc.

From January 25, 2018 through May 29, 2018,

Groenewald served as the Vice President of Finance, Principal Financial Officer and Principal Accounting Officer of Muscle Maker,

Inc., Muscle Maker Development, LLC and Muscle Maker Corp., LLC.

In addition, from October 2017 through May 29, 2018, he served as the

controller of Muscle Maker, Inc.

Groenewald is a certified public accountant with significant experience in finance and accounting.

From July 2018 through August 2018, he served as senior financial reporting accountant of Wrinkle Gardner & Company, a full service

tax, accounting and business consulting firm.

From February 2017 to October 2017, Mr.

Groenewald served as Senior Financial Accounting

Consultant at Pharos Advisors, Inc.

serving a broad range of industries.

From November 2013 to February 2017, he served as a Senior Staff

Accountant at Financial Consulting Strategies, LLC where he provided a broad range of accounting, financial reporting, and pre-auditing

services to various industries.

From August 2015 to December 2015, Mr.

Groenewald served as a Financial Reporting Analyst at Valley National

Groenewald holds a Bachelor of Science in accounting from the University of South Africa.

Groenewald does not hold, and

has not previously held, any directorships in any reporting companies.

Yamano has been an independent member of our Board of Directors since May 18, 2021.

Yamano was also an independent

member of the Board of Directors of HeartCore Co.

from August 2018 through March 2021.

Since April 2016, Mr.

Yamano has served as the

Chief Executive Officer of Yamano Holdings Corporation.

Yamano graduated with a bachelor’s degree in commerce from Meiji University,

Tokyo, Japan.

Yamano does not hold, and has not previously held, any directorships in any reporting companies.

We believe that Mr.

Yamano is qualified to serve on our Board of Directors due to his expertise in business and operations matters.

Tan has been an independent member of our Board of Directors since September 1, 2021.

Since April 2015, Mr.

served as the Chief Executive Officer of Daitan Group, a company known for its Fuji Soba noodles.

Tan graduated from Keio University

in Tokyo with a bachelor’s degree in economics.

Tan does not hold, nor has he ever held, a directorship in any of the reporting

We believe that Mr.

Tan is qualified to serve on our Board of Directors due to his expertise in business and operations matters.

Omoto has been an independent member of our Board of Directors since September 1, 2021.

Since July 2012, Mr.

has served as a partner at Ambitious Tokyo Law Office.

Omoto graduated with a Law Degree from Chuo University, Tokyo, Japan.

Omoto does not hold, and has not previously held, any directorships in any reporting companies.

We believe that Mr.

Omoto is qualified

to serve on our Board of Directors due to his expertise in corporate governance and legal matters.

Katai has been an independent member of our Board of Directors since September 1, 2021.

Since June 2018, Mr.

has served as an accounting advisor at Katai Accounting Firm.

From December 2008 through December 2017, he served as auditor at KPMG

Katai graduated with a bachelor’s degree in faculty of commerce from Doshisha University, Kyoto, Japan.

does not hold, and has not previously held, any directorships in any reporting companies.

From January 25, 2018 through May 29, 2018, Mr.

Groenewald served as the Vice President of Finance, Principal Financial Officer and

Principal Accounting Officer of Muscle Maker, Inc., Muscle Maker Development, LLC and Muscle Maker Corp., LLC.

In addition, from

October 2017 through May 29, 2018, he served as the controller of Muscle Maker, Inc.

Groenewald is a certified public accountant

with significant experience in finance and accounting.

From July 2018 through August 2018, he served as senior financial reporting

accountant of Wrinkle Gardner & Company, a full service tax, accounting and business consulting firm.

From February 2017 to

October 2017, Mr.

Groenewald served as Senior Financial Accounting Consultant at Pharos Advisors, Inc.

serving a broad range of

From November 2013 to February 2017, he served as a Senior Staff Accountant at Financial Consulting Strategies, LLC

where he provided a broad range of accounting, financial reporting, and pre-auditing services to various industries.

2015 to December 2015, Mr.

Groenewald served as a Financial Reporting Analyst at Valley National Bank.

Groenewald holds a

Bachelor of Science in accounting from the University of South Africa.

Groenewald does not hold, and has not previously held,

any directorships in any reporting companies.

Neville, age 52, has served as Vice President of People Operations (Human Resources) at PlayStation since January

From June 2019 to January 2021, she was Senior Director of People Operations (Human Resources) at StubHub, an eBay Inc.

EBAY) company, and from 2018 to 2019, Ms.

Neville served as Senior Director of Go-to-Market Operations at Adobe Inc.

Prior to that time, she served as Senior Director, North American Business Operations (2017-2018) and Senior Director, Head of HR operations

& Chief of Staff (2015-2017) at eBay Inc.

She also previously held various positions at Dell Inc.

Neville earned

a Bachelor of Arts from Ecole Superieure de Gestion in Paris, France, and a Master of Business Administration from Paris Graduate School

of Management in Paris, France.

We believe that Ms.

is qualified to serve on our Board of Directors due to her experience in business, financial and public company matters.

Sato, age 54, is founder and Managing Partner of GIIP Global Advisory, Inc., a multi-country accounting and CFO service

He has served as Managing Partner since its founding in 2009.

Sato previously served as Senior Financial Officer and fund

of funds manager for Japanese investors for AIFAM Inc.

and as Senior Consultant at KPMG, LLP and PricewaterhouseCoopers Japan (Chuo-Aoyama

Audit Corporation).

Sato received a Masters in Business Administration from University of Southern California, Marshall School of

Business, and a B.S.

in Social Science from Hitotsubashi University in Tokyo, Japan.

We believe that Mr.

Katia is qualified to serve

on our Board of Directors due to his expertise in accounting and financial services matters.

Sato is qualified to serve on

our Board of Directors due to his experience in business, financial and accounting matters.

Board of Directors elects our executive officers annually by majority vote.

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Sumitaka Yamamoto, the Chairman of Board, Chief Executive Officer and President

of the Company, beneficially owns 10,995,969 shares of our common stock, which represent approximately 52.8% of the voting power of our

outstanding capital stock.

As a result, the Company is a “controlled company” under Nasdaq Capital Market corporate

governance standards.

As a controlled company, the Company does not have to comply with certain corporate governance requirements under

Nasdaq Capital Market rules, including the requirements that:

a majority of the Company’s

Board of Directors to consist of “independent directors” as defined by the applicable rules and regulations of Nasdaq

Capital Market;

the compensation of the

Company’s executive officers to be determined, or recommended to the Board of Directors for determination, by independent directors

constituting a majority of the independent directors of the Board in a vote in which only independent directors participate or by

a Compensation Committee comprised solely of independent directors;

that director nominees

to be selected, or recommended to the Board of Directors for selection, by independent directors constituting a majority of the independent

directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised solely of

independent directors.

of the Company, beneficially owns 10,607,159 shares of our common stock, which represent approximately 50.9%

of the voting power of our outstanding capital stock.

As a result, the Company is a “controlled company” under Nasdaq Capital

Market corporate governance standards.

As a controlled company, the Company does not have to comply with certain corporate governance

requirements under Nasdaq Capital Market rules, including the requirements that:

majority of the Company’s Board of Directors to consist of “independent directors” as defined by the applicable

rules and regulations of Nasdaq Capital Market;

compensation of the Company’s executive officers to be determined, or recommended to the Board of Directors for determination,

by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors

participate or by a Compensation Committee comprised solely of independent directors;

director nominees to be selected, or recommended to the Board of Directors for selection, by independent directors constituting a

majority of the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee

comprised solely of independent directors.

Company has determined to avail itself of certain of these exemptions.

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of independent directors.

Company’s Board of Directors has affirmatively determined that five of its eight directors (Ferdinand Groenewald, Yoshitomo

Yamano, Yuki Tan, Takeshi Omoto, and Yuta Katai) are independent directors of the Company within the meaning of Nasdaq Capital Market’s

Therefore, a majority of the members of the Board of Director consists of independent directors.

Company’s Board of Directors has affirmatively determined that three of its six directors (Ferdinand Groenewald, Heather Neville,

and Koji Sato) are independent directors of the Company within the meaning of Nasdaq Capital Market’s rules.

Therefore, a majority

of the members of the Board of Director consists of independent directors.

of the Board of Directors

have established an audit committee, which consists of five independent directors:

Ferdinand Groenewald, Yoshitomo Yamano, Yuki Tan,

Takeshi Omoto, and Yuta Katai.

Groenewald is the chair of the audit committee.

Groenewald and Mrs.

Katai qualifies as

an “audit committee financial expert” under SEC rules.

Our audit committee adopted a written charter, a copy of which is

posted on the Corporate Governance section of our website, at www.heartcore.co.jp.

We have established an audit committee,

which consists of three independent directors:

Ferdinand Groenewald, Heather Neville and Koji Sato.

is the chair of the audit committee.

Groenewald qualifies as an “audit committee financial expert” under SEC rules.

audit committee adopted a written charter, a copy of which is posted on the Corporate Governance section of our website, at www.heartcore.co.jp.

audit committee is authorized to:

approve and retain the independent auditors to conduct

the annual audit of our financial statements;

review the proposed scope and results of the audit;

review and pre-approve audit and non-audit fees and

review accounting and financial controls with the independent

auditors and our financial and accounting staff;

review and approve transactions between us and our

directors, officers and affiliates;

recognize and prevent prohibited non-audit services;

establish procedures for complaints received by us

regarding accounting matters;

oversee internal audit functions, if any.

and retain the independent auditors to conduct the annual audit of our financial statements;

the proposed scope and results of the audit;

and pre-approve audit and non-audit fees and services;

accounting and financial controls with the independent auditors and our financial and accounting staff;

and approve transactions between us and our directors, officers and affiliates;

and prevent prohibited non-audit services;

procedures for complaints received by us regarding accounting matters;

internal audit functions, if any.

we are a “controlled company” within the meaning of the corporate governance standards of Nasdaq Capital Market, we are not

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website within four business days following the date of any such amendment to, or waiver from, a provision of our code of ethics.

Section 16(a) Reports

securities laws, directors, certain officers and persons holding more than 10% of our common stock must report their initial ownership

of our common stock and any changes in their ownership to the SEC.

The SEC has designated specific due dates for these reports and we

must identify in this Report on Form 10-K those persons who did not file these reports when due.

Based solely on our review of copies

of the reports filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting

requirements for fiscal year 2023 were complied with by each person who at any time during the 2023 fiscal year was a director or an

executive officer or held more than 10% of our common stock, except for the following:

Sadasivam failed to file a Form 3 and Forms 4 for a series of related transactions on February 1, 2023, February 9, 2023, and March 22,

Neville failed to file a Form 3 on May 30, 2023.

Sato failed to file a Form 3 on September 29, 2023.

All these transactions

were timely reported by the Company on a Current Report on Form 8-K.

on Liability and Indemnification of Officers and Directors

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from liability or limitation thereof is not permitted by the General Corporation Law of the State of Delaware.

February 9, 2022, each of Takeshi Omoto, Yoshitomo Yamano, Yuki Tan and Yuta Katai entered into an indemnification agreement with the

June 1, 2023, the Company entered into a Director Agreement with Heather Neville, and this Director Agreement was converted into an Independent

Director Agreement on November 1, 2023.

On September 29, 2023 the Company entered into an Independent Director Agreement as well as an

Indemnification Agreement with Koji Sato.

Previously, Ferdinand Groenewald entered into an indemnification agreement with the Company.

Each indemnification agreement

provides, among other things, for indemnification to the fullest extent permitted by law and our certificate of incorporation and bylaws

against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim.

The indemnification agreements

provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to us if it is found that such indemnitee

is not entitled to such indemnification under applicable law and our certificate of incorporation and bylaws.

Each director agreement and indemnification agreement provides, among other things, for indemnification to the fullest extent permitted

by law and our certificate of incorporation and bylaws against any and all expenses, judgments, fines, penalties and amounts paid in

settlement of any claim.

The indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and

for reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our certificate

of incorporation and bylaws.

certificate of incorporation also permits us to maintain insurance on behalf of any officer, director or employee for any liability arising

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2023 and 2022 to certain of our executive officers, who we collectively refer to as our “named executive officers”, or “NEOs”.

Name and Position

Sumitaka Yamamoto

Chief Executive Officer

Equity Incentive Plan Compensation ($)

qualified Deferred Compensation Earnings ($)

All Other Compensation ($)

Executive Officer

Strategy Officer and Director

Operating Officer and Director

Vice President

Employment Agreement with Sumitaka Yamamoto

28, 2022, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment

Agreement, Mr.

October 28, 2022, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Yamamoto’s annual salary increased from $381,000 to $450,000, effective November 1, 2022.

Employment Agreement with Qizhi Gao

On January 10, 2023, we entered

in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement, Mr.

January 10, 2023, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Gao’s annual salary increased from $54,012 to $120,222, effective January 1, 2023.

Employment Agreement with Kimio Hosaka

On January 10, 2023, we entered

in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement, Mr.

January 10, 2023, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Hosaka’s annual salary increased from $95,459 to $164,770, effective January 1, 2023.

Employment Agreement with Hidekazu Miyata

On January 10, 2023, we entered

in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement, Mr.

January 10, 2023, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Miyata’s annual salary increased from $75,600 to $112,616, effective January 1, 2023.

Employment Agreement with Keisuke Kuno

On January 10, 2023, we

entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement,

January 10, 2023, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Kuno’s annual salary increased from $109,000 to $152,308, effective January 1, 2023.

Applicable to All Executive Employment Agreements

of the Executive Employment Agreements as described above, has an initial term of one year, provided that the term of each agreement

will automatically be extended for one or more additional terms of one year each unless either the Company or applicable executive provides

notice to the other of their desire to not so renew the initial term or renewal term (as applicable) at least 30 days prior to the expiration

of then-current initial term or renewal term (as applicable).

Each of the agreements provide that the applicable executive’s employment

with the Company shall be “at will,” meaning that either applicable executive or the Company may terminate the applicable

executive’s employment at any time and for any reason, subject to the other provisions of the agreement.

Agreement with Prakash Sadasivam

February 1, 2023, we entered into an Employment Agreement with Prakash Sadasivam whereby Mr.

Sadasivam serves as our Chief Strategy Officer.

Sadasivam’s annual salary is $96,000.

Applicable to All Employment Agreements

of the Employment Agreements as described above, has an initial term of one year, provided that the term of each agreement will automatically

be extended for one or more additional terms of one year each unless either the Company or applicable executive provides notice to the

other of their desire to not so renew the initial term or renewal term (as applicable) at least 30 days prior to the expiration of then-current

initial term or renewal term (as applicable).

Each of the agreements provide that the applicable executive’s employment with the

Company shall be “at will,” meaning that either applicable executive or the Company may terminate the applicable executive’s

employment at any time and for any reason, subject to the other provisions of the agreement.

of the agreements may be terminated by the Company, either with or without “Cause”, or by the applicable executive, either

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purposes of each agreement, “Cause” means:

a violation of any material

written rule or policy of the Company for which violation any employee may be terminated pursuant to the written policies of the

Company reasonably applicable to an executive employee;

misconduct by the applicable

executive to the material detriment of the Company;

the applicable executive’s

conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony;

the applicable executive’s

gross negligence in the performance of the applicable executive’s duties and responsibilities to the Company as described in

this Agreement;

the applicable executive’s

material failure to perform the applicable executive’s duties and responsibilities to the Company as described in the agreement

(other than any such failure resulting from the applicable executive’s incapacity due to physical or mental illness or any

such failure subsequent to the applicable executive being delivered a notice of termination without Cause by the Company or delivering

a notice of termination for Good Reason to the Company), in either case after written notice from the Board to the applicable executive

of the specific nature of such material failure and the applicable executive’s failure to cure such material failure within

10 days following receipt of such notice.

violation of any material written rule or policy of the Company for which violation any employee may be terminated pursuant to the

written policies of the Company reasonably applicable to an executive employee;

by the applicable executive to the material detriment of the Company;

applicable executive’s conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty

to, a felony;

applicable executive’s gross negligence in the performance of the applicable executive’s duties and responsibilities

to the Company as described in this Agreement;

applicable executive’s material failure to perform the applicable executive’s duties and responsibilities to the Company

as described in the agreement (other than any such failure resulting from the applicable executive’s incapacity due to physical

or mental illness or any such failure subsequent to the applicable executive being delivered a notice of termination without Cause

by the Company or delivering a notice of termination for Good Reason to the Company), in either case after written notice from the

Board to the applicable executive of the specific nature of such material failure and the applicable executive’s failure to

cure such material failure within 10 days following receipt of such notice.

purposes of each agreement, “Good Reason” means:

at any time following a

Change of Control (as defined below), a material diminution by the Company of compensation and benefits (taken as a whole) provided

to the applicable executive immediately prior to a Change of Control;

a reduction in base salary

or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management personnel;

the relocation of the applicable

executive’s principal executive office to a location more than 50 miles further from the applicable executive’s principal

executive office immediately prior to such relocation;

a material breach by the

Company of any of the terms and conditions of the agreement which the Company fails to correct within 10 days after the Company receives

written notice from the applicable executive of such violation.

any time following a Change of Control (as defined below), a material diminution by the Company of compensation and benefits (taken

as a whole) provided to the applicable executive immediately prior to a Change of Control;

reduction in base salary or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management

relocation of the applicable executive’s principal executive office to a location more than 50 miles further from the applicable

executive’s principal executive office immediately prior to such relocation;

material breach by the Company of any of the terms and conditions of the agreement which the Company fails to correct within 10 days

after the Company receives written notice from the applicable executive of such violation.

purposes of each agreement a “Change of Control” of the Company will be deemed to have occurred if, after the effective date

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with respect to other equity grants made to such executive:

the Company will pay to

the applicable executive any unpaid base salary and benefits then owed or accrued, and any unreimbursed expenses;

any unvested portion of

any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will immediately

be forfeited;

all of the parties’

rights and obligations under the agreement will cease, other than those rights or obligations which arose prior to the termination

date or in connection with such termination, and subject to the survival provisions of the agreements.

Company will pay to the applicable executive any unpaid base salary and benefits then owed or accrued, and any unreimbursed expenses;

unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the

Company will immediately be forfeited;

of the parties’ rights and obligations under the agreement will cease, other than those rights or obligations which arose prior

to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

the event that the Company terminates the term of the applicable agreement or the applicable executive’s employment without Cause,

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with respect to other equity grants made to such executive:

the Company will pay to

the applicable executive any base salary, bonuses, and benefits then owed or accrued, and any unreimbursed expenses;

the Company will pay to

the applicable executive, in one lump sum, an amount equal to the base salary that would have been paid to the applicable executive

for the remainder of the initial term of the applicable agreement (if the termination occurs during the initial term of the applicable

agreement) or renewal term of the applicable agreement (if the termination occurs during a renewal term of the applicable agreement);

any unvested portion of

any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will, to the

extent not already vested, be deemed automatically vested;

all of the parties’

rights and obligations under the agreement will cease, other than those rights or obligations which arose prior to the termination

date or in connection with such termination, and subject to the survival provisions of the agreements.

Company will pay to the applicable executive any base salary, bonuses, and benefits then owed or accrued, and any unreimbursed expenses;

Company will pay to the applicable executive, in one lump sum, an amount equal to the base salary that would have been paid to the

applicable executive for the remainder of the initial term of the applicable agreement (if the termination occurs during the initial

term of the applicable agreement) or renewal term of the applicable agreement (if the termination occurs during a renewal term of

the applicable agreement);

unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the

Company will, to the extent not already vested, be deemed automatically vested;

of the parties’ rights and obligations under the agreement will cease, other than those rights or obligations which arose prior

to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

the event of the applicable executive’s death or total disability during the term of the applicable agreement, the term of the

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settled by arbitration.

On February 9, 2022, each of the executives for whom an employment agreement was executed was issued a number of shares of restricted

stock pursuant to the Company’s 2021 Equity Incentive Plan.

February 9, 2022, each of the executives for whom an employment agreement was executed was issued a number of shares of restricted stock

pursuant to the Company’s 2021 Equity Incentive Plan.

These awards were made pursuant to the form of restricted award agreement

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February 9, 2025 and February 9, 2026.

The first 25% shares of restricted stock of 21,454 shares were issued on February 16, 2023.

Number of Shares of

Restricted Stock

The first 25% shares of restricted stock of 21,454 shares were issued on February 16, 2023, and

the second 25% shares were issued on February 9, 2024.

Sumitaka Yamamoto

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following table sets forth information on outstanding options and stock awards held by the executive officers as of December 31, 2023.

Option Awards

Unexercisable

Market Value Per Share Of

Value Per Share Of

Sumitaka Yamamoto

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Narrative Disclosure

have not maintained, and do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan, 401(k) plan

or other retirement benefits.

have not maintained, and do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan, or other retirement benefits.

Payments Upon Termination or Change in Control

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as directors.

During fiscal year 2022, each of Sumitaka Yamamoto, our Chief Executive Officer, and Kimio Hosaka, our Chief Operating

Officer, was a member of our board of directors, as well as an employee, and received no additional compensation for their services as

See the section titled “Executive Compensation” for more information about the compensation for these individuals

for fiscal year 2022.

During fiscal year 2023, each of Sumitaka Yamamoto, our Chief Executive Officer, Kimio Hosaka, our Chief Operating Officer,

and Prakash Sadasivam, our Chief Strategy Officer, was a member of our board of directors, as well as an employee, and received no additional

compensation for their services as a director.

See the section titled “Executive Compensation” for more information about

the compensation for these individuals for fiscal year 2023.

following table presents the total compensation for each person who served as a non-employee director of the Company during fiscal year

Fees Earned or

Compensation ($)

Earned or Paid in Cash

Takeshi Omoto

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Ferdinand Groenewald

Heather Marie Neville

Director Agreements

Omoto, Yoshitomo Yamano, Yuki Tan and Yuta Katai entered into the Company’s form of Independent Director Agreement dated as of

February 9, 2022.

Previously, Ferdinand Groenewald entered into the Company’s form of Independent Director Agreement.

On June 1, 2023,

Heather Marie Neville entered into a Director Agreement, and on November 1, 2023, Ms.

Neville entered into an Independent Director Agreement.

On September 29, 2023, Koji Sato entered into an Independent Director Agreement.

Previously, Ferdinand Groenewald entered into the Company’s

form of Independent Director Agreement.

Independent Director Agreements provide that each non-employee director will be compensated as follows:

Each director will be paid

the sum of $50,000 annually for director’s service as a director of the Company, to be paid $12,500 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.

Each director shall be

paid $4,000 annually for service as a member of the Audit Committee and an additional sum of $3,000 annually for service as the Chairman

of the Audit Committee, with each of these payments to be paid quarterly in equal portions, within five business days of the end

of each calendar quarter, and with any amount for any partial calendar quarter being appropriately prorated.

the term of the applicable independent director agreement, the Company will reimburse the applicable director for all reasonable out-of-pocket

expenses incurred by the applicable director in attending any in-person meetings, provided that the applicable director 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 of the applicable director in excess

of $500) must be approved in advance by the Company.

director will be paid the sum of $50,000 annually for director’s service as a director of the Company, to be paid $12,500 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.

director shall be paid $4,000 annually for service as a member of the Audit Committee and an additional sum of $3,000 annually for

service as the Chairman of the Audit Committee, with each of these payments to be paid quarterly in equal portions, within five business

days of the end of each calendar quarter, and with any amount for any partial calendar quarter being appropriately prorated.

Independent Director Agreements contain additional terms.

During the term of the applicable director agreement, the Company

will reimburse the applicable director for all reasonable out-of-pocket expenses incurred by the applicable director in attending any

in-person meetings, provided that the applicable director 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 of the applicable director in excess of $500) must be approved in advance by the Company.

of the agreements contains customary confidentiality provisions, and customary provisions related to Company ownership of intellectual

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(i.e., a “work-made-for-hire” provision).

of the agreement provide that, during the term (which continues as long as the applicable director is serving as a director of the Company),

of the agreements provide that, during the term (which continues as long as the applicable director is serving as a director of the Company),

the applicable director is be entitled to indemnification and insurance coverage for officers’ liability, fiduciary liability and

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Equity Incentive Plan

August 1, 2023, the Board approved, and proposed for stockholder approval, the 2023 Equity Incentive Plan (the “2023 Plan”).

The shareholders approved the 2023 Plan at the Annual Shareholder’s meeting on September 29, 2023.

The 2023 Plan provides for various

stock-based incentive awards, including incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”),

stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), and other equity-based

or cash-based awards.

The 2023 Plan highlights and the summary of the material features of the 2023 Plan appearing below are qualified

in their entirety by reference to the copy of the 2023 Plan attached as Appendix I to the Proxy Statement filed with the SEC on August

of the 2023 Plan are as follows:

Board or a committee of the Board will administer the 2023 Plan.

total number of shares of common stock authorized for issuance under the 2023 Plan is 2,000,000 shares, or approximately 9.60% of

the common stock outstanding at the time of approval.

non-employee director may be granted awards under the 2023 Plan during any calendar year if such awards would exceed a total value

of $300,000 (calculated in accordance with the terms of the 2023 Plan).

exercise price of options and SARs may not be less than the fair market value of the common stock on the date of grant.

addition to other vesting requirements, the administrator may condition the vesting of awards on the achievement of specific performance

Features of the 2023 Plan

2023 Plan is effective August 1, 2023 and will terminate on August 1, 2033, unless the Board terminates it earlier.

purpose of the 2023 Plan is to provide a means through with the Company and its subsidiaries may attract and retain key personnel, and

to provide a means whereby directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and

maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare

of the Company and its subsidiaries and aligning their interests with those of the Company’s stockholders.

Administration

to the terms of the 2023 Plan, the Board or a committee of the Board shall administer the 2023 Plan.

The administrator will have the

authority to, among other things, (i) determine fair market value under the 2023 Plan;

(ii) select the service providers to whom awards

may be granted;

(iii) determine the number of shares to be covered by each award granted under the 2023 Plan;

(iv) approve forms of award

agreements for use under the 2023 Plan;

(v) determine the terms and conditions, not inconsistent with the terms of the 2023 Plan, of

any award, with such terms and conditions including, but not being limited to, the exercise price, the time or times when awards may

be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction

or limitation regarding any award or the shares relating thereto, based in each case on such factors as the administrator will determine;

(vi) determine whether an award will be settled in shares, cash, other property or in any combination thereof;

(vii) construe and interpret

the terms of the 2023 Plan and awards granted pursuant to the 2023 Plan;

(viii) prescribe, amend and rescind rules and regulations relating

to the 2023 Plan, including rules and regulations relating to sub-plans;

(ix) modify or amend awards;

(x) correct any defect, supply

any omission or reconcile any inconsistency in the 2023 Plan or any award agreement and make all other determinations and take such other

actions with respect to the 2023 Plan or any award as the administrator may deem advisable to the extent not inconsistent with the provisions

of the 2023 Plan or applicable law;

and (xi) make all other determinations deemed necessary or advisable for administering the 2023 Plan.

administrator will have the discretion to select particular performance targets in connection with awards under the 2023 Plan.

directors and consultants (except those performing services in connection with the offer or sale of the Company’s securities in

a capital raising transaction, or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiaries

will be eligible to receive awards under the 2023 Plan.

ISOs may only be granted to employees.

administrator may, from time to time, grant awards under the 2023 Plan to one or more eligible participants.

All awards will vest and

become exercisable in such manner and on such date or dates or upon such event or events as determined by the administrator and as set

forth in any applicable award agreement, including, without limitation, attainment of performance targets, consistent with the terms

of the 2023 Plan.

Shares Available

to the provisions of the 2023 Plan, the maximum aggregate number of shares that may be subject to awards and sold under the 2023 Plan

is 2,000,000.

The shares may be authorized but unissued, or reacquired common stock.

If an award expires or becomes unexercisable without

having been exercised in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, RSUs, performance

units or performance shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for

awards other than options or SARs, the forfeited or repurchased shares) which were subject thereto will become available for future grant

or sale under the 2023 Plan (unless the 2023 Plan has terminated).

the event that any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,

split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate

structure of the Company affecting the Company’s common stock occurs, the administrator, in order to prevent diminution or enlargement

of the benefits or potential benefits intended to be made available under the 2023 Plan, will adjust the number and class of shares of

stock that may be delivered under the 2023 Plan and/or the number, class, and price of shares of stock covered by each outstanding award,

and the numerical share limits provided in the 2023 Plan.

administrator may grant options to purchase shares of common stock under the 2023 Plan to eligible participants for such numbers of shares

and having such terms as the administrator designates and consistent with the 2023 Plan.

However, ISOs may only be granted to employees

of the Company or its subsidiaries.

The administrator will also determine the type of option granted (e.g., ISO) or a combination of

various types of options.

Each option granted under the 2023 Plan will be evidenced by an award agreement.

exercise price for an option may not be less than 100% of the fair market value of the Company’s common stock on the date the option

provided, however, that in the case of an ISO granted to an employee who, at the time of the grant, owns stock representing

more than 10% of the voting power of all classes of stock of the Company or any subsidiary, the exercise price will be no less than 110%

of the fair market value on the grant date.

term of each option will be stated in the applicable award agreement.

In the case of an ISO, the term will be no more than 10 years from

the date of grant.

In the case of an ISO granted to a participant who, at the time the ISO is granted, owns stock representing more than

10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary, the term of the ISO will be

five years from the date of grant or such shorter term as may be provided in the award agreement.

Appreciation Rights

administrator may grant SARs under the 2023 Plan to eligible participants having such terms as the administrator designates and consistent

with the 2023 Plan.

Each SAR granted under the 2023 Plan will be evidenced by a SAR agreement.

The exercise price for a SAR may not be

less than 100% of the fair market value of the Company’s common stock on the date the SAR is granted.

administrator may grant shares of restricted stock under the 2023 Plan to eligible participants in such amounts and upon such terms as

the administrator determines and consistent with the 2023 Plan.

as provided in the 2023 Plan or as the administrator determines, shares of restricted stock may not be sold, transferred, pledged, assigned,

or otherwise alienated or hypothecated until the end of the applicable period of restriction.

The administrator, in its sole discretion,

may impose such other restrictions on shares of restricted stock as it may deem advisable or appropriate.

Except as otherwise provided

in the 2023 Plan, shares of restricted stock will be released from escrow as soon as practicable after the last day of the period of

restriction or at such other time as the administrator may determine.

The administrator, in its discretion, may accelerate the time at

which any restrictions will lapse or be removed.

the period of restriction, grantees holding shares of restricted stock granted under the 2023 Plan may exercise full voting rights with

respect to those shares, unless the administrator determines otherwise.

During the period of restriction, grantees holding shares of

restricted stock will be entitled to receive all dividends and other distributions paid with respect to such shares, unless the administrator

provides otherwise.

If any such dividends or distributions are paid in shares of common stock, the shares will be subject to the same

restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid.

the date set forth in the award agreement, the restricted stock for which restrictions have not lapsed will revert to the Company and

again will become available for grant under the 2023 Plan.

administrator may grant RSUs under the 2023 Plan to eligible participants in such amounts and upon such terms as the administrator determines

and consistent with the 2023 Plan.

The administrator will set vesting criteria in its discretion, which, depending on the extent to which

the criteria are met, will determine the number of RSUs that will be paid out to the grantee.

The administrator may set vesting criteria

based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued

employment or service), applicable federal or state securities laws, or any other basis determined by the administrator in its discretion.

meeting the applicable vesting criteria, the grantee will be entitled to receive a payout as determined by the administrator or as set

forth in the applicable award agreement.

Notwithstanding the foregoing, at any time after the grant of RSUs, the administrator, in its

sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

Payment of earned RSUs will be made as

soon as practicable after the date(s) determined by the administrator and set forth in the award agreement.

The administrator, in its

sole discretion, may settle earned RSUs in cash, shares of common stock, or a combination of both.

will have no voting rights with respect to shares of common stock represented by RSUs until the date of the issuance of such shares.

However, the administrator, in its discretion, may provide in the applicable award agreement that the grantee will be entitled to dividend

equivalent rights with respect to the payment of cash dividends on common stock during the period beginning on the date such award is

granted and ending, with respect to each share subject to the award, on the earlier of the date the award is settled or the date on which

it is terminated.

Dividend equivalent rights, if any, shall be paid by crediting the grantee with a cash amount or with additional whole

RSUs as of the date of payment of such cash dividends on common stock, as determined by the administrator.

The number of additional RSUs

(rounded to the nearest whole number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on

the dividend payment date with respect to the number of shares of common stock represented by the RSUs previously credited to the grantee

by (b) the fair market value per share of common stock on such date.

Such cash amount or additional RSUs will be subject to the same

terms and conditions and will be settled in the same manner and at the same time as the RSUs originally subject to the RSU award.

the event of a dividend or distribution paid in shares of common stock or other property or any other adjustment made upon a change in

the capital structure of the Company as provided in the 2023 Plan, appropriate adjustments will be made in the grantee’s RSU award

so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other

than regular, periodic cash dividends) to which the grantee would be entitled by reason of the shares of common stock issuable upon settlement

of the award, and all such new, substituted or additional securities or other property shall be immediately subject to the same vesting

conditions as are applicable to the award.

the date set forth in the award agreement, all unearned RSUs will be forfeited to the Company.

Units and Performance Shares

awards may be granted to eligible participants at any time and from time to time, as will be determined by the Administrator, in its

sole discretion.

Each performance unit will have an initial value that is established by the administrator on or before the date of grant.

Each performance share will have an initial value equal to the fair market value of a share of common stock on the date of grant.

administrator will set performance objectives or other vesting provisions in its discretion which, depending on the extent to which they

are met, will determine the number or value of performance units/shares that will be paid out to the grantees.

Each performance award

will be evidenced by an award agreement that will specify the performance period, and such other terms and conditions as the administrator,

in its sole discretion, will determine.

administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals

(including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined

by the administrator in its discretion (“Performance Goals”).

Performance Goals shall be established by the administrator

on the basis of targets to be attained (“Performance Targets”) with respect to one or more measures of business or financial

performance (each, a “Performance Measure”), subject to the terms of the 2023 Plan.

Measures may be based upon one or more of the following, as determined by the administrator:

(3) expenses;

operating income;

(5) gross margin;

(6) operating margin;

(7) earnings before any one or more of:

stock-based compensation expense, interest,

taxes, depreciation and amortization;

(8) pre-tax profit;

(9) net operating income;

(10) net income;

(11) economic value added;

free cash flow;

(13) operating cash flow;

(14) balance of cash, cash equivalents and marketable securities;

(15) stock price;

(16) earnings

(17) return on stockholder equity;

(18) return on capital;

(19) return on assets;

(20) return on investment;

(21) total stockholder

(22) employee satisfaction;

(23) employee retention;

(24) market share;

(25) customer satisfaction;

(26) product development;

(27) research and development expenses;

(28) completion of an identified special project;

and (29) completion of a joint venture or other

corporate transaction.

the applicable performance period has ended, the holder of performance units/shares will be entitled to receive a payout of the number

of performance units/shares earned by the participant over the performance period, to be determined as a function of the extent to which

the corresponding performance objectives or other vesting provisions have been achieved.

After the grant of a performance unit/share,

the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance

of earned performance units or performance shares will be made as soon as practicable after the expiration of the applicable performance

The administrator, in its sole discretion, may pay earned performance units/shares in the form of cash, in shares of common stock

(which have an aggregate fair market value equal to the value of the earned performance units/shares at the close of the applicable performance

period) or in a combination thereof.

the date set forth in the award agreement, all unearned or unvested performance units or performance shares will be forfeited to the

Company, and again will be available for grant under the 2023 Plan.

stock and RSUs granted to officers and employees may be granted with the intent that the award satisfy the “Performance-Based Exception”

(any such award intended to satisfy the Performance-Based Exception, a “Qualified Performance-Based Award”).

The grant, vesting,

or payment of a Qualified Performance-Based Award may depend on the degree of achievement of one or more performance goals relative to

a pre-established targeted level or levels using one or more performance targets as determined by the administrator (on an absolute or

relative (including, without limitation, relative to the performance of one or more other companies or upon comparisons of any of the

indicators of performance relative to one or more other companies) basis, any of which may also be expressed as a growth or decline measure

relative to an amount or performance for a prior date or period) for the Company on a consolidated basis or for one or more of the Company’s

subsidiaries, segments, divisions, or business or operational units, or any combination of the foregoing.

The performance period applicable

to any performance units or performance shares may not be less than three months nor more than 10 years.

To satisfy the Performance-Based

Exception, the performance measure(s) applicable to the Qualified Performance-Based Award and specific performance formula, goal or goals

(“targets”) must be established and approved by the administrator during the first 90 days of the applicable performance

period (and, in the case of performance periods of less than one year, in no event after 25% or more of the performance period has elapsed)

and while performance relating to such target(s) remains substantially uncertain within the meaning of Section 162(m) of the Code.

shall have no voting rights with respect to shares of common stock represented by performance share awards until the date of the issuance

of such shares of common stock, if any.

However, the administrator, in its discretion, may provide in the award agreement evidencing

any performance share award that the participant shall be entitled to dividend equivalent rights with respect to the payment of cash

dividends on common stock during the period beginning on the date the award is granted and ending, with respect to each share subject

to the award, on the earlier of the date on which the performance shares are settled or the date on which they are forfeited.

Such dividend

equivalent rights, if any, shall be credited to the participant either in cash or in the form of additional whole performance shares

as of the date of payment of such cash dividends on common stock, as determined by the administrator and as provided in the 2023 Plan.

Dividend equivalent rights shall not be paid with respect to performance units.

Equity-Based Awards and Other Cash-Based Awards

administrator may grant other equity-based awards and other cash-based awards under the 2023 Plan to eligible persons, pursuant to the

terms of the 2023 Plan.

and Termination

administrator may amend, alter, suspend or terminate the 2023 Plan.

However, the Company will obtain stockholder approval of any amendment

to the extent necessary and desirable to comply with applicable laws.

Income Tax Effects of the 2023 Plan

federal income tax consequences applicable to the Company in connection with ISOs, NQSOs, SARs, restricted stock, RSUs and performance

awards are complex and depend, in large part, on the surrounding facts and circumstances.

A participant should consult with his or her

tax advisor regarding the taxation of awards under the Plan.

Under current federal income tax laws, however, a participant will generally

recognize income with respect to grants of stock options, SARs, restricted stock, RSUs and performance awards as described below.

options may be granted in the form of ISOs or NQSOs.

ISOs are eligible for favorable tax treatment under the Code.

To meet the Code requirements,

the maximum value of ISOs that first become exercisable in any one year (determined as of the dates of grants of the ISOs) is limited

Under the Code, persons do not realize compensation income upon the grant of an ISO or NQSO.

At the time of exercise of

a NQSO, the holder realizes compensation income in the amount of the difference between the grant price and the fair market value of

the Company stock on the date of exercise multiplied by the number of shares for which the option is exercised.

At the time of exercise

of an ISO, no compensation income, however, is recognized but the difference between the grant price and the fair market value of the

Company’s common stock on the date of exercise multiplied by the number of shares for which the option is exercised is an item

of tax preference which may require the payment of alternative minimum tax.

The tax basis for determining capital gain or loss from the

sale of stock acquired pursuant to a NQSO is the fair market value of the stock or the date of exercise.

If the shares acquired on exercise

of an ISO are held for at least two years after grant of the option and one year after exercise, the excess of the amount realized on

sale over the exercise price is taxed as capital gains.

If the shares acquired on exercise of an ISO are disposed of, including disposition

by gift, within two years after grant or one year of exercise, the holder realizes compensation income equal to the excess of the fair

market value of shares on the date of exercise over the option price.

Additional amounts realized are taxed as capital gains.

generally is entitled to a deduction under the Code at the time and equal to the amount of compensation income realized by the holder

of an option under the 2023 Plan.

income recognized by the exercise of NQSOs is subject to Federal Insurance Contributions Act (“FICA”) and Medicare taxes

when the optionee is an employer and self-employment tax when the optionee is a director.

Compensation income realized upon the premature

disposition of stock acquired pursuant to an ISO is not subject to FICA and Medicare taxes.

are taxed on the date of exercise and RSUs are taxed on the date of vesting.

A participant is taxed on the amount he or she is paid upon

exercise of an SAR or vesting of an RSU.

The Company accrues a corresponding deduction.

The amount taxed is also subject to FICA and

Medicare taxes in the case of an employee and self-employment tax in the case of a director.

recognize as taxable income the fair market value of restricted stock on the date the restriction period ends.

The amount taxed is subject

to FICA and Medicare taxes in the case of an employee and self-employment tax in the case of a director.

The Company is entitled to a

corresponding tax deduction at the same time.

Dividends paid during the restricted period are taxable compensation/income to the participant

and are deductible by the Company.

The value of the stock on the date the restriction period ends becomes the participant’s tax

basis for determining subsequent capital gain or loss on the sale of the stock.

A participant may elect to have the fair market value

of restricted stock taxed to him or her at the time of grant.

In this event, the participant recognizes no income when the restrictions

The participant’s tax basis in the stock, for determining capital gain or loss upon the subsequent sale of the stock, is

the fair market value of the stock on the date of grant.

In this event, the Company accrues a tax deduction equal to the amount of income

recognized by the participant on the grant date, and the participant does not accrue a tax deduction or benefit in the event the stock

is subsequently forfeited.

payments pursuant to performance awards are taxable as compensatory income to a participant when it is paid and the Company accrues a

corresponding income tax deduction in this amount.

The amount taxed is subject to FICA and Medicare taxes.

Section 162(m)

162(m) of the Code limits the deductibility by the Company of compensation paid to the CEO and the other four most highly compensated

Section 162(m) of the Code provides an exception to this deduction limitation for certain “qualified performance-based

compensation.” Payments or grants under the 2023 Plan are intended to qualify as “qualified performance-based compensation”

under the Code and applicable regulations.

Section 280G and 4999

20% excise tax is imposed under Code Section 4999 on participants who receive certain payments in connection with a change of control

of the Company and the Company cannot deduct such payments.

It is possible that the value of accelerated vesting and lapse of restrictions

on 2023 Plan awards could constitute change of control payments and that (i) the value of the acceleration could be subject to the excise

tax, (ii) this could cause other Company change of control payments to be subject to the tax, and (iii) in this event, the Company would

not be able to deduct these items for income tax purposes.

Plan Benefits

of the Record Date, approximately 80 employees, five non-employee directors and nine consultants are eligible to participate in the 2023

The benefits or amounts that the Company’s Chief Executive Officer, the other named executive officers, other employees or

non-employee directors may receive under the 2023 Plan are not determinable because all benefits or amounts are at the discretion of

the administrator.

of December 31, 2023, the Company has not granted any stock-based compensation awards to employees, including officers, or non-employee

directors pursuant to the 2023 Plan.

Equity Incentive Plan

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

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and cash-based incentives for participants.

There were 6,330 shares available for award as of March 30, 2023 under the 2021

There were 4,330 shares available for award as of March 30, 2024 under the 2021 Plan.

purpose of 2021 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth information regarding the beneficial ownership of our common stock as of March 31, 2023 by:

each person known by us to be the beneficial owner

of more than 5% of our outstanding shares of common stock;

each of our executive officers and directors that beneficially

owns shares of our common stock;

all our executive officers and directors as a group.

the table below, percentage ownership is based on 20,842,690 shares of our common stock issued and outstanding as of March 31, 2023.

following table sets forth information regarding the beneficial ownership of our common stock as of December 31, 2023 by:

person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

of our executive officers and directors that beneficially owns shares of our common stock;

our executive officers and directors as a group.

the table below, percentage ownership is based on 20,842,690 shares of our common stock issued and outstanding as of December 31, 2023.

Unless otherwise noted below, the address for each beneficial owner listed on the table is c/o HeartCore Enterprises, Inc., 1-2-33, Higashigotanda,

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Name and Address of Beneficial Owner

Percentage of

Number and Nature of Shares Beneficially Owned (1)

Percentage of Outstanding Common Stock

Directors and Executive Officers:

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Ferdinand Groenewald

Yoshitomo Yamano

Takeshi Omoto

Heather Marie Neville

All executive officers and directors as a group (9 persons) (2)

1 unchanged sentence

Daishin Yasui

less than 1%.

The percentages in the

table have been calculated based on 20,842,690 shares of our common stock outstanding on March 31, 2023.

a stockholder’s percentage of beneficial ownership, we include in the numerator and denominator the common stock outstanding

and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other derivative

securities owned by that person which are exercisable within 60 days of March 31, 2023.

Common stock options and

derivative securities held by other stockholders are disregarded in this calculation.

Therefore, the denominator used in calculating

beneficial ownership among our stockholders may differ.

Unless we have indicated otherwise, each person named in the table has sole

voting power and sole investment power for the shares listed opposite such person’s name.

Includes the directors

and named executive officers listed above, as well as (i) 72,048 shares beneficially owned by Hidekazu Miyata, our Chief Technical

Officer, and (ii) 21,620 shares beneficially owned by Qizhi Gao, our Chief Financial Officer.

percentages in the table have been calculated based on 20,842,690 shares of our common stock outstanding on December 31, 2023.

calculate a stockholder’s percentage of beneficial ownership, we include in the numerator and denominator the common stock

outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other

derivative securities owned by that person which are exercisable within 60 days of December 31, 2023.

Common stock options and derivative

securities held by other stockholders are disregarded in this calculation.

Therefore, the denominator used in calculating beneficial

ownership among our stockholders may differ.

Unless we have indicated otherwise, each person named in the table has sole voting power

and sole investment power for the shares listed opposite such person’s name.

the directors and named executive officers listed above, as well as (i) 72,048 shares beneficially owned by Hidekazu Miyata, our

Chief Technical Officer, and (ii) 21,620 shares beneficially owned by Qizhi Gao, our Chief Financial Officer.

Authorized for Issuance under Equity Compensation Plans

8 unchanged sentences

Equity compensation plans not approved by security holders

This represents shares of common stock issuable pursuant to the 2021 Equity Incentive Plan (the “2021 Plan”).

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

Under the 2021 Plan, 2,400,000 shares of common stock are authorized for issuance to employees, directors and independent contractors

(except those performing services in connection with the offer or sale of the Company’s securities in a capital raising transaction,

or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiary.

The 2021 Plan authorizes equity-based

and cash-based incentives for participants.

were 6,330 and 777,680 shares available for award under the 2021 Plan as of March 30, 2023 and December 31, 2022,

respectively.

This represents shares of common stock issuable pursuant to the 2023 Plan and the 2021 Plan.

were an aggregate 2,004,330 shares available for award under the 2021 and 2023 Plans as of December 31, 2023.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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Party Transactions

As of December

31, 2022 and 2021, the Company has a due to related party balance of $402 and $1,110, respectively, from Sumitaka Yamamoto, the CEO and

major shareholder of the Company.

As of December 31, 2023 and 2022, the Company has

a due to related party balance of $1,476 and $402, respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”)

and major shareholder of the Company.

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

During the year ended December

2022, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company in a net amount of

During the year ended December 31, 2021, the Company advanced $87,664 to this related party, and the related party paid expenses

of $111,350 on behalf of the Company.

As of December 31, 2020, Sumitaka Yamamoto held 467,622 shares issued with repurchase provision

in relation to the stock options the Company granted in May 2016 that he repurchased on behalf of the Company.

On November 3, 2021, the

Company redeemed 484,056 shares that Sumitaka Yamamoto held on behalf of the Company for $1 and settled the share repurchase payable to

him of $28, resulting in a gain on shares redemption of $27.

As of December 31, 2022 and 2021,

the Company has a loan receivable balance of $294,919 and $386,315, respectively, from Heartcore Technology Inc., a company controlled

by the CEO of the Company.

31, 2023, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $1,123.

the year ended December 31, 2022, the Company repaid to the related party for operating expenses the related party paid on behalf of the

Company in a net amount of $575.

As of December 31, 2023 and 2022, the Company has

a loan receivable balance of $227,704 and $294,919, respectively, from Heartcore Technology Inc., a company controlled by the CEO of the

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

The balance is unsecured, bears an annual

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

During the year ended December 31, 2021, the

Company loaned $55,212 to this related party, and the related party paid expenses of $13,704 on behalf of the Company.

During the year

ended December 31, 2022, the Company received repayments of $44,871 from this related party.

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 12, 2021, when Suzuyo Shinwart Corporation was a related party of the Company, the Company has revenues from this related

party of $157,791 from software sales and incurred cost with this related party of $332,669 for software development services provided.

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.

During the period

from October 27, 2021 through December 31, 2021, 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.

Company’s Board of Directors has affirmatively determined that five of its eight directors, including Ferdinand Groenewald,

Yoshitomo Yamano, Yuki Tan, Takeshi Omoto, and Yuta Katai are independent directors of the Company within the meaning of Nasdaq Capital

Market’s rules.

We are a “controlled company” under Nasdaq Capital Market rules and are not required to have a majority

of independent directors on the Board.

See “Management—Controlled Company and Director Independence” for additional

The balance is unsecured, bears an annual interest of 1.475%,

and requires repayments in installments starting from February 2022.

During the years ended December 31, 2023 and 2022, the Company received

repayments of $45,404 and $44,871, respectively, from this related party.

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.

Company’s Board of Directors has affirmatively determined that three of its six directors, Ferdinand Groenewald, Heather Neville,

and Koji Sato are independent directors of the Company within the meaning of Nasdaq Capital Market’s rules.

We are a “controlled

company” under Nasdaq Capital Market rules and are not required to have a majority of independent directors on the Board.

See “Management—Controlled

Company and Director Independence” for additional information.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents

are filed as part of this annual report:

Financial Statements

following documents are filed as part of this annual report:

Index to Financial Statements on page F-1.

Financial Statements Schedules

All financial statements

schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information

is presented in the financial statements and notes thereto beginning on page F-1 of this annual report.

We hereby file as part

of this annual report the exhibits listed in the Exhibit Index immediately before the signature page to this Annual Report on Form

Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained

by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.

Copies of such material can also be obtained from the Public Reference

Section of the SEC, 100 F Street, N.E., Washington, D.C.

20549, at prescribed rates or on the SEC website at www.sec.gov.

Statements Schedules

financial statements schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the

required information is presented in the financial statements and notes thereto beginning on page F-1 of this annual report.

hereby file as part of this annual report the exhibits listed in the Exhibit Index immediately before the signature page to this

Annual Report on Form 10-K.

Exhibits which are incorporated herein by reference can be inspected and copied at the public reference

facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.

Copies of such material can also be obtained

from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C.

20549, at prescribed rates or on the SEC website

at www.sec.gov.

Form 10-K Summary

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have audited the accompanying consolidated balance sheets of HeartCore Enterprises, Inc.

and its subsidiary (the “Company”)

and its subsidiaries (collectively, the “Company”)

as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’

1 unchanged sentence

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2022 and 2021, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles

31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States of America.

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provide a reasonable basis for our opinion.

/s/ MaloneBailey, LLP

MaloneBailey, LLP

www.malonebailey.com

We have served as the Company’s auditor since

March 31, 2023

have served as the Company’s auditor since 2021.

ENTERPRISES, INC.

BALANCE SHEETS

December 31, 2023

December 31, 2022

Current assets:

1 unchanged sentence

Accounts receivable

Investments in marketable securities

Investment in equity securities

Prepaid expenses

Current portion of long-term note receivable

Due from related party

Loan receivable from employee

Other current assets

3 unchanged sentences

Operating lease right-of-use assets

Intangible asset, net

Long-term investment in warrants

Long-term note receivable

Deferred tax assets

1 unchanged sentence

Long-term loan receivable from related party

Loan receivable from employee, non-current

Other non-current assets

Total non-current assets

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

2 unchanged sentences

Due to related party

Short-term debt

Current portion of long-term debts

Factoring liability

Operating lease liabilities, current

2 unchanged sentences

Deferred revenue

Mandatorily redeemable financial interest

Other current liabilities

4 unchanged sentences

Finance lease liabilities, non-current

Deferred tax liabilities

Other non-current liabilities

1 unchanged sentence

Total liabilities

Shareholders’ equity (deficit):

Shareholders’ equity:

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

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

17,649,886 and 15,819,943 shares issued;

17,649,886 and 15,546,454 shares outstanding as of December 31, 2022 and 2021, respectively)

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

Additional paid-in capital

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( 10,573,579 )

Accumulated other comprehensive income (loss)

Total shareholders’ equity (deficit)

Total 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 consolidated financial statements.

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Total operating expenses

Income (loss) from operations

Loss from operations

( 4,119,355 )

( 6,696,079 )

Other income (expenses):

Changes in fair value of investments in marketable securities

Changes in fair value of investment in warrants

Interest income

Interest expense

Interest expenses

Government grants

Other expenses

Total other income (expenses)

Income (loss) before income tax provision

Loss before income tax benefit

( 5,010,364 )

Income tax expense (benefit)

( 6,683,384 )

net income attributable to non-controlling interest

Income tax benefit

( 4,876,700 )

( 6,677,466 )

net loss attributable to non-controlling interest

Net loss attributable to HeartCore Enterprises, Inc.

1 unchanged sentence

$ ( 6,677,466 )

Other comprehensive income:

Other comprehensive income (loss):

Foreign currency translation adjustment

1 unchanged sentence

( 4,911,328 )

comprehensive income attributable to non-controlling interest

( 6,297,457 )

comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to HeartCore Enterprises, Inc.

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THE YEARS ENDED DECEMBER 31, 2023 AND 2022

paid-in capital *

comprehensive

income (loss)

Common Shares

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Shareholders’

Total Shareholders’

Comprehensive

5 unchanged sentences

( 6,677,466 )

Foreign currency translation adjustment

Issuance of common shares

Stock-based compensation

Reclassification of non-controlling interest to mandatorily redeemable financial interest

Balance, December 31, 2021

( 6,677,466 )

Foreign currency translation adjustment

Issuance of common shares for cash

Issuance of common shares from exercise of share options

Stock-based compensation

Repurchase of common shares

( 1,349,390 )

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( 3,500,000 )

Retirement of treasury shares

( 1,349,390 )

( 3,499,865 )

Balance, December 31, 2022

$ ( 10,573,579 )

Foreign currency translation adjustment

Issuance of common shares for cash

Issuance of common shares from exercise of share options

Stock-based compensation

Repurchase of common shares

$ ( 10,573,579 )

( 4,189,890 )

Retirement of treasury shares

( 4,189,890 )

( 4,876,700 )

Foreign currency translation adjustment

Issuance of common shares for acquisition of subsidiary

Non-controlling interest arising from acquisition of subsidiary

Stock-based compensation

Balance, December 31, 2023

1 unchanged sentence

$ ( 14,763,469 )

* Retrospectively

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

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

5 unchanged sentences

$ ( 6,677,466 )

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

Depreciation expenses

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

Depreciation and amortization expenses

Gain on disposal of property and equipment

Amortization of debt issuance costs

Non-cash lease expense

Loss on termination of lease

Deferred income taxes

Stock-based compensation

Gain on shares redemption

Warrants received as noncash consideration

( 3,763,621 )

Changes in fair value of investments in marketable securities

Changes in fair value of investment in warrants

Changes in assets and liabilities:

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Other liabilities

Net cash flows provided by (used in) operating activities

Net cash flows used in operating activities

( 4,331,209 )

( 4,808,547 )

Cash flows from investing activities:

Purchases of property and equipment

Advance and loan provided to related parties

Proceeds from disposal of property and equipment

Advances on notes receivable

Repayment of loan provided to related party

Payment for acquisition of subsidiary, net of cash acquired

Net cash flows used in investing activities

( 1,780,952 )

Cash flows from financing activities:

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Payments for finance leases

Proceeds from long-term debt

Proceeds from short-term and long-term debts

Repayment of long-term debts

Repayment of insurance premium financing

Net proceeds from factoring arrangement

Payments for debt issuance costs

Payment for mandatorily redeemable financial interest

Net cash flows provided by (used in) financing activities

Net cash flows provided by financing activities

Effect of exchange rate changes

Net change in cash and cash equivalents

( 6,164,847 )

Cash and cash equivalents - beginning of the year

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Non-cash investing and financing transactions:

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

Payroll withheld as repayment of loan receivable from employees

Expenses paid by related parties on behalf of the Company

Reclassification of non-controlling interest to mandatorily redeemable financial interest

Share repurchase liability settled by issuance of common shares

1 unchanged sentence

Insurance premium financing

Common shares issued for acquisition of subsidiary

Warrants converted to marketable securities

Finance lease right-of-use asset obtained in exchange for finance lease liability

Operating lease right-of-use asset obtained in exchange for operating lease liability

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

Note receivable converted to investment in equity securities

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

12 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

3 unchanged sentences

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.

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

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

intention to go public in the United States capital market.

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

1 unchanged sentence

(“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 .

The acquisition was closed on February 1, 2023.

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

and Sigmaways Technologies Ltd.

(“Sigmaways Technologies”).

Sigmaways B.V.

was incorporated in Netherlands in November 2019.

Sigmaways Technologies was incorporated in Canada in August 2020.

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

acquisition was closed on February 1, 2023.

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

Financial”) , under the laws of the State of Delaware.

HeartCore Financial is engaged in the

business of providing financial consulting services.

(“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”), in Japan.

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

Japanese companies.

USA, HeartCore Japan, Sigmaways, HeartCore Financial, and HeartCore Capital Advisors are hereafter referred to as the Company.

(“HeartCore Capital Advisors”),

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

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

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

Luvina had no operation activities during the year ended December 31, 2023.

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

with HeartCore Japan being the surviving entity.

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

transferr ed all of its assets and liabilities to

HeartCore Japan.

The merger has been accounted for as a recapitalization between entities under common control since the same

controlling shareholders controlled the two entities before and after the transaction.

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

Luvina are hereafter referred to as the Company.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission

The 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.

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

All significant

intercompany accounts and transactions have been eliminated.

Non-controlling

portion of the income applicable to the non-controlling interest in subsidiary is separately reflected in the consolidated statements

portion of the income applicable to the non-controlling interest in subsidiaries is separately reflected in the consolidated statements

of operations and comprehensive loss.

1 unchanged sentence

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

of asset retirement obligations and revenue recognition.

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

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

These estimates are based on information

available as of the date of the consolidated financial statements.

Significant estimates required to be made by management include, but

are not limited to, the allowance for credit losses, useful lives of property and equipment and intangible asset, the impairment of long-lived

assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating

and finance leases, valuation of asset retirement obligations, valuation of investment in warrants, revenue recognition and purchase

price allocation with respect to business combination.

Actual results could differ from those estimates.

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.

and Cash Equivalents

and cash equivalents include cash on hand and deposits in banks that are unrestricted as to withdrawal or use.

receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the original

amount less an allowance for doubtful receivables.

The Company reviews the accounts receivable on a periodic basis and makes general

and specific allowances when there is doubt as to the collectability of individual balances.

The Company usually determines the adequacy

of reserves for doubtful accounts based on individual account analysis and historical collection trends.

The Company establishes a provision

for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due.

The allowance is based

on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.

The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements

of operations and comprehensive loss.

Delinquent account balances are written off against the allowance for doubtful accounts after management

has determined that the likelihood of collection is remote.

In circumstances in which the Company receives payment for accounts receivable

that have previously been written off, the Company reverses the allowance and bad debt.

receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the original amount

less an allowance for credit losses.

The Company adopted the

Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic 326) on January 1, 2023.

The allowance for credit losses reflects the Company’s current estimate of credit losses expected to be incurred over the life

of the receivables.

The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses

including the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers.

The Company also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that

may affect a customer’s ability to pay in establishing and adjusting its allowance for credit losses.

Accounts receivable balances

are written off after all collection efforts have ceased.

The allowance is recorded against accounts receivable balances, with a corresponding

charge recorded in the consolidated statements of operations and comprehensive loss.

In circumstances in which the Company receives payment

for accounts receivable that have previously been written off, the Company reverses the allowance and credit losses.

and Equipment, Net

2 unchanged sentences

over the estimated useful lives, as more details follow:

OF PROPERTY AND EQUIPMENT USEFUL LIVES

Leasehold improvements

SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIVES

Straight-line

of estimated useful life or lease term

Machinery and equipment

Declining balance method

Straight-line method

and equipment

Straight-line

or declining balance method

Straight-line

for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.

for major renewals and betterments which substantially extend the useful life of assets are capitalized.

for major renewals and betterments which substantially extend the useful lives of the assets are capitalized.

The cost and related accumulated

5 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”.

The Company capitalizes the associated asset retirement cost by increasing

the carrying amount of the related property and equipment.

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

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

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

The following table presents changes in asset retirement obligations:

OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

Beginning balance

Liabilities incurred

Accretion expense

Foreign currency translation adjustment

Foreign currency translation

Ending balance

Company adopted the Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) on January 1, 2019 using a modified retrospective

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets

the classification criteria of a finance or operating lease.

Lease terms of certain operating leases include the non-cancellable period

for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal

option is reasonably certain.

Company leases office facilities, which are classified as operating leases and leases office equipment and furniture, and a vehicle,

which are classified as a finance lease in accordance with Topic 842.

Under Topic 842, lessees are required to recognize the following

for all leases on the commencement date:

(i) lease liability, which is a lessee’s obligation to make lease payments arising from

a lease, measured on a discounted basis;

and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use,

or control the use of, a specified asset for the lease term.

Operating leases are included in operating lease right-of-use assets, operating

lease liabilities, current, and operating lease liabilities, non-current, and finance leases are included in property and equipment,

net, finance lease liabilities, current, and finance lease liabilities, non-current in the consolidated balance sheets.

determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria

of a finance or operating lease.

Lease terms of certain operating leases include the non-cancellable period for which the Company has

the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain.

Company leases office facilities, which are classified as operating leases and leases office equipment and vehicles, which are

classified as finance leases in accordance with ASC Topic 842, “Leases”.

Under ASC Topic 842, lessees are required to

recognize the following for all leases on the commencement date:

(i) lease liability, which is a lessee’s obligation to make

lease payments arising from a lease, measured on a discounted basis;

and (ii) right-of-use asset, which is an asset that represents

the lessee’s right to use, or control the use of, a specified asset for the lease term.

Operating leases are included in

operating lease right-of-use assets, operating lease liabilities, current, and operating lease liabilities, non-current, and finance

leases are included in property and equipment, net, finance lease liabilities, current, and finance lease liabilities, non-current

in the consolidated balance sheets.

most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information

13 unchanged sentences

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

of Long-Lived Assets

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

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

If the estimated cash flows

from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired

and written down to its fair value.

There were no impairments of these assets during the years ended December 31, 2022 and 2021.

in warrants represents stock warrants of its consulting service customers.

The warrants are measured at fair value and any changes in

fair value are recognized in other income (expenses).

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

over one year after the date of receipt.

in Marketable Securities

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

The marketable

securities as of December 31, 2023 were obtained through exercise of stock warrants of its consulting service customers and measured

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

in Equity Securities

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

net asset value.

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

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

Investment in equity securities is classified as current asset if the Company

plans to dispose of the investment within one year from the date of receipt.

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

The acquired intangible

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

economic useful life of the respective asset.

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

of Long-Lived Assets Other Than Goodwill

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

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

If the estimated

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

to be impaired and written down to its fair value.

There were no impairments of these assets during the years ended December 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 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.

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).

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”).

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

Transactions denominated in currencies other than the

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

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 consolidated statements

of operations and comprehensive loss.

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

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 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 consolidated statements of changes in shareholders’ equity

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

OF FOREIGN CURRENCY TRANSLATION

SCHEDULE OF FOREIGN CURRENCY TRANSLATION

December 31, 2023

December 31, 2022

US$1 exchange rate

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

US$1 exchange rate

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

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

(i) identify the contract(s)

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

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

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

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

government levies.

The Consumption Tax on sales are calculated at 10% and nil of gross sales in Japan and in the U.S., respectively.

(i) identify the

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

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

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

satisfies the performance obligation.

Revenues amount represents the invoiced value, net of a value-added tax (“Consumption

Tax”) and applicable local government levies.

The Consumption Tax on sales are calculated at 10% of gross sales in Japan and

Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross sales in the United States .

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.

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

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

right for a specified term.

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

to the customers.

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

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

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or other observable evidence.

from Maintenance and Support Service

from Maintenance and Support Services

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

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

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

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

The subscription contracts

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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.

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such as 3D Space photography.

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

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

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

from 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 related to the initial

public offering and supporting the listing process.

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

Revenues from consulting services are recognized over the period of the contract by reference to progress toward complete

from Customized Software Development and Services

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

solutions and other support services to its customers.

The contract pricing is at stated billing rates per hour.

These contracts are

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

For services provided under the contracts that result in the

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

an asset with an alternative use to the Company.

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

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

customers of the Company’s performance to date.

from Consulting Services

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

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

and supporting the listing process.

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

Cash consideration

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

satisfaction of that performance obligation.

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

value at contract inception.

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

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

The Company assesses the estimated amount of the

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

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

is subsequently resolved.

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

be included in revenues.

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

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

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

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

The amount of revenues recognized

during the years ended December 31, 2022 and 2021 that were included in the opening deferred revenues balance was approximately $ 1.5

million and $ 1.5 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 in the

consolidated balance sheets, when revenues are recognized prior to invoicing.

The Company factors certain accounts receivable upon or

after the performance obligation is being met.

The Company records deferred revenue in the consolidated balance sheets when revenues

are recognized subsequent to cash collection for an invoice.

Deferred revenue is reported net of related uncollected deferred revenue

in the consolidated balance sheets.

The amount of revenues recognized during the years ended December 31, 2023 and 2022 that were included

in the opening deferred revenue balance was approximately $ 1.6 million and $ 1.5 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 revenues and cash flows are affected by economic factors.

The Company’s disaggregation of revenues for the

years ended December 31, 2022 and 2021 is as following:

OF DISAGGREGATION OF REVENUES

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

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

The Company’s disaggregation of revenues

by revenue stream for the years ended December 31, 2023 and 2022 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Years Ended

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 Service

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

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For the Years Ended

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

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

of December 31, 2022 and 2021, and for the years then ended, all long-lived assets and almost all of the revenues generated

are attributed to the Company’s operation in Japan.

of revenues primarily consists of salaries and outsourcing expenses (e.g., bonuses, employee benefits, payroll taxes, outsourcing professional

fees) for personnel and parties directly involved in the delivery of services and products directly to customers.

Cost of revenues also

includes royal/license payments to vendors, and hosting and infrastructure costs related to the delivery of the Company’s products

and services.

of December 31, 2023 and 2022, and for the years then ended, substantially all of the long-lived assets (excluding intangible asset)

and the majority of revenues generated are attributed to the Company’s operation in Japan.

of revenues primarily consists of salaries and outsourcing expenses (e.g., bonuses, employee benefits, payroll taxes, outsourcing

professional fees) for personnel and parties directly involved in the delivery of services and products directly to

Cost of revenues also includes royal/license payments to vendors, and hosting and infrastructure costs related to the

delivery of the Company’s products and services.

expenses consist primarily of costs of promotion and marketing for the Company’s image and products/services, and costs of direct

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The Company expenses advertising costs as incurred or the first time the advertising

takes place, whichever is earlier, in accordance with the ASC 720-35, “Advertising Costs”.

The advertising expenses were

$ 1,902,942 and $ 195,916 for the years ended December 31, 2022 and 2021, respectively.

takes place, whichever is earlier, in accordance with the ASC Topic 720-35, “Advertising Costs”.

The advertising expenses

were $ 832,491 and $ 1,902,942 for the years ended December 31, 2023 and 2022, respectively.

Concentration

of Credit Risk

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 conducts periodic reviews of the financial condition

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

the year ended December 31, 2022, no customer accounts for more than 10 % of the Company’s total revenues.

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

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

The Company conducts periodic reviews

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

the year ended December 31, 2023, customer A, B and C represent 15.1 %, 10.4 % and 10.1 %, respectively, of the Company’s total revenues.

For the year ended December 31, 2022, no customer accounts for more than 10% of the Company’s total revenues.

the year ended December 31, 2023, no vendor accounts for more than 10% of the Company’s total purchases.

For the year ended December

31, 2021, customer A represents 15.2 % of the Company’s total revenues.

the year ended December 31, 2022, vendor A, B, and C represent 37.5 %, 23.6 % and 20.9 %, respectively, of the Company’s total purchases.

For the year ended December 31, 2021, vendor A, B, C and D represent 31.1 %, 24.4 %, 20.4 % and 11.1 %, respectively, of the Company’s

total purchases.

280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.

31, 2022, vendor A, B and C represent 37.5 %, 23.6 % and 20.9 %, respectively, of the Company’s total purchases.

Topic 280, “Segment Reporting”, requires use of the “management approach” model for segment reporting.

The management

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legal structure, management structure, or any other manner in which management disaggregates a company.

determined the Company’s operations constitute a single reportable segment in accordance with ASC 280.

determined the Company’s operations constitute a single reportable segment in accordance with ASC Topic 280.

Comprehensive

Income or Loss

220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income or loss, its components

Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income or loss, its components

and accumulated balances.

Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources.

Accumulated comprehensive income (loss), as presented in the accompanying consolidated statements of changes in shareholders’ equity

(deficit), consists of changes in unrealized gains and losses on foreign currency translation.

Company computes basic and diluted loss per share in accordance with ASC 260, Earnings per Share .

Basic loss per share is computed

by dividing net loss by the weighted average number of common shares outstanding during the reporting period.

Diluted loss per share

is computed by dividing net loss by the weighted average number of common shares, common share equivalents and potentially dilutive securities

outstanding during each period.

Common share equivalents are not included in the calculation of diluted loss per share if their effect

would be anti-dilutive.

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

Accumulated other comprehensive income (loss), as presented in the accompanying consolidated statements of changes in shareholders’

equity (deficit), consists of changes in unrealized gains and losses on foreign currency translation.

Company computes basic and diluted loss per share in accordance with ASC Topic 260, “Earnings per Share”.

Basic loss per

share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period.

loss per share is computed by dividing net loss by the weighted average number of common shares, common share equivalents and potentially

dilutive securities outstanding during the reporting period.

Common share equivalents are not included in the calculation of diluted

loss per share if their effect would be anti-dilutive.

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 consolidated

statement 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.

statements of operations and comprehensive loss based on the estimated fair value of those awards on the grant date and amortized on

a straight-line basis over the requisite service period or vesting period.

The Company records forfeitures as they occur.

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Parties and Transactions

Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related

Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC Topic 850, “Related

Party Disclosures” and other relevant ASC standards.

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can be substantiated.

taxes are accounted for using an asset and liability method of accounting for income taxes in accordance with ASC 740, “Income

Taxes.” Under this method, income tax expense is recognized for the amount of:

taxes are accounted for using an asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income

Under this method, income tax expense is recognized for the amount of:

(i) taxes payable or refundable for the current

9 unchanged sentences

all of the deferred tax assets will not be realized.

Company follows ASC 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax

position taken or expected to be taken in a tax return.

ASC 740 also provides guidance on recognition of income tax assets and liabilities,

classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions,

accounting for income taxes in interim periods, and income tax disclosures.

the provisions of ASC 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by

the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position

Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statements recognition and measurement

of a tax position taken or expected to be taken in a tax return.

ASC Topic 740 also provides guidance on recognition of income tax assets

and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated

with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

the provisions of ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination

by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position

that would be ultimately sustained.

The benefit of a tax position is recognized in the financial statements in the period during which,

based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,

including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more

than 50% likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated with tax

positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the

accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general

and administrative expenses in the statements of operations.

The benefit of a tax position is recognized in the consolidated financial statements in the period

during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon

examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with

other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit

that is more than 50% likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated

with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits

in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon

Interest associated with unrecognized tax benefits is classified as interest expenses and penalties are classified in selling,

general and administrative expenses in the consolidated statements of operations and comprehensive loss.

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 consolidated statements

of operations and comprehensive 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 820.

Fair value is defined as the price that would be received to sell

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

ASC 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 820 establishes three levels of inputs that may be used to measure

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 December 31, 2022 and 2021, the carrying values of cash and cash equivalents, accounts receivable, prepaid expenses, due from

related party, current portion of loan receivable from employee, other current assets, accounts payable and accrued expenses, accrued

payroll and other employee costs, due to related party, current portion of long-term debts, current portion of operating and finance

lease liabilities, income tax payables, deferred revenue, mandatorily redeemable financial interest and other current liabilities approximated

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

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 December 31, 2023 and 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities

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

measured at fair value on a recurring basis as of December 31, 2023 are summarized below (also see NOTE 6).

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Quoted Prices in Active Markets for Identical Assets

Significant Other

Fair Value at

Fair Value Measurements as of December 31, 2023

Quoted Prices in Active Markets for Identical Assets

Significant Other

Fair Value at

Investments in marketable securities

Long-term investment in warrants

Accounting Pronouncements

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.

Accounting Pronouncements Recently Adopted

June 2016, the FASB issued 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 No.

on January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements.

2020-10, 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 No.

2016-13 on January 1, 2023 and the adoption

did not have a material impact on the Company’s consolidated financial statements.

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

This ASU 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 public companies for

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

For all other entities, it is effective for fiscal years beginning after December 31, 2023, including interim periods

within those fiscal years.

The Company elected to adopt ASU No.

2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial

Accounting Pronouncements Not Yet Effective

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, to enhance the

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

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

prospective basis.

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

Early adoption is permitted.

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

financial statements and related disclosures.

3 – ACCOUNTS RECEIVABLE

receivable consists of the following:

OF ACCOUNTS RECEIVABLE NET

receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

December 31, 2023

December 31, 2022

Accounts receivable – non-factored

Accounts receivable – factored with recourse

Accounts receivable, gross

allowance for doubtful accounts

allowance for credit losses

Accounts receivable

for doubtful accounts movement is as follows:

OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

Beginning balance

Additions to allowance

Foreign currency translation adjustment

Ending balance

4 – PREPAID EXPENSES

expenses consist of the following:

OF PREPAID EXPENSES

SCHEDULE OF PREPAID EXPENSES

December 31, 2023

December 31, 2022

Prepayments to software vendors

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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, were capitalized

and recorded on the balance sheet.

The deferred offering expenses were reclassified to shareholders’ equity (deficit) 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 December 31, 2023 and 2022, the Company has a due to related party balance of $ 1,476 and $ 402 , respectively, from Sumitaka Yamamoto,

the CEO and major shareholder of the Company.

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

During the year ended

December 31, 2022, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company in

a net amount of $ 575 .

During the year ended December 31, 2021, the Company advanced $ 87,664 to this related party, and the related party

paid expenses of $ 111,350 on behalf of the Company.

As of December 31, 2020, Sumitaka Yamamoto held 467,622 shares issued with repurchase

provision in relation to the stock options the Company granted in May 2016 that he repurchased on behalf of the Company.

3, 2021, the Company redeemed 484,056 shares that Sumitaka Yamamoto held on behalf of the Company for $ 1 and settled the share repurchase

payable to him of $ 28 , resulting in a gain on shares redemption of $ 27 (also see NOTE 13).

As of December 31, 2022 and 2021, the Company has

a loan receivable balance of $ 294,919 and $ 386,315 , respectively, from Heartcore Technology Inc., a company controlled by the CEO of the

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

The balance is unsecured, non-interest bearing

and due on demand.

During the year ended December 31, 2023, the related party paid operating expenses on behalf of the Company and received

the payments in a net amount of $ 1,123 .

During the year ended December 31, 2022, the Company repaid to the related party for operating

expenses the related party paid on behalf of the Company in a net amount of $ 575 .

of December 31, 2023 and 2022, the Company has a loan receivable balance of $ 227,704 and $ 294,919 , respectively, from Heartcore Technology

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

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

The balance is unsecured, bears an annual interest of 1.475 %,

and requires repayments in installments starting from February 2022.

During the year ended December 31, 2021, the Company loaned $ 55,212

to this related party, and the related party paid expenses of $ 13,704 on behalf of the Company.

During the year ended December 31, 2022,

the Company received repayments of $ 44,871 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 12, 2021, when Suzuyo Shinwart Corporation was a related party of the Company, the Company has revenues from this related

party of $ 157,791 from software sales and incurred cost with this related party of $ 332,669 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 .

During the period from October 27, 2021 through December 31, 2021, 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 — LOAN RECEIVABLE FROM EMPLOYEE

Company occasionally made loans to its employees to assist their life.

The Company has a loan receivable from an employee as of December

31, 2021, the annual interest rate for this loan is 1.975 % and the term of this loan is three years .

Repayments are deducted from the

monthly salary of this employee.

The loan was fully repaid during the year ended December 31, 2022.

The balance is

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

During the years

ended December 31, 2023 and 2022, the Company received repayments of $ 45,404 and $ 44,871 , respectively, from this related party.

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 – INVESTMENTS

in Equity Securities

May 2, 2023, the Company purchased a $ 300,000

promissory note from a non-related company.

The note bears an interest rate of 8 %

per annum and matures on the earlier of 1)

the date of the closing of capital-raising transactions in the amount of $ 300,000

or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public

offering (“IPO”) on the Nasdaq Capital Market or New York Stock Exchange, or 3) 180 days following the note issuance.

The interest rate would be 12 %

per annum for any amount that is unpaid when due.

On July 27, 2023, the Company entered into a note exchange agreement with

the promissory note issuer to convert all of the promissory note principal amount and accrued interest into 600,000

shares of common shares of the promissory note issuer.

The Company plans to dispose of the common shares after the promissory note

issuer completes its IPO, which is expected to occur within a year.

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

The warrants are not registered for

public sale and are initially measured at fair value at contract inception using the Black-Scholes model and binomial model with the

assistance of a third-party valuation appraiser.

The following table summarizes the inputs to the models

used to estimate the fair value of the warrants received and recognized as consulting services revenues for the years ended December 31, 2023 and 2022:

OF ESTIMATED FAIR VALUE OF WARRANTS FROM CONSULTING SERVICES

For the Years Ended December

$ 3.38 – 439.99

Exercise price

Expected volatility

52.57 % – 96.30 %

Time to maturity (in years)

Risk-free interest rate

3.52 % – 4.12 %

Company’s investment in warrants is measured on a recurring basis and carried on the balance sheets at an estimated fair value

at the end of the year.

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

The following table summarizes the inputs to the model used to estimate the fair value of the investment in warrants as of December

31, 2023 and 2022:

December 31, 2023

December 31, 2022

Exercise price

Expected volatility

Time to maturity (in years)

Risk-free interest rate

The following table summarizes the Company’s investment in warrants activities for the years ended December

31, 2023 and 2022:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

For the Years Ended December 31,

Fair value of investment in warrants at beginning of the year

Warrants received as noncash consideration

Changes in fair value of investment in warrants

Warrants converted to marketable securities

( 1,257,868 )

Fair value of investment in warrants at end of the year

in Marketable Securities

Company’s investments in marketable securities represent stocks received upon the exercise of warrants described above.

They are registered

for public sale with readily determinable fair values, and are measured at quoted prices on a recurring basis at the end of the

The following table summarizes the Company’s investments in marketable securities activities for the years ended

December 31, 2023 and 2022:

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

For the Years Ended December

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

Warrants converted to marketable securities

Changes in fair value of investments in marketable securities

Marketable securities sold

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

7 – LONG-TERM NOTE RECEIVABLE

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

The note bears an interest rate of 4 %

per annum and matures on September 2, 2026.

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

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

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

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

8 – PROPERTY AND EQUIPMENT, NET

and equipment, net consist of the following:

OF PROPERTY AND EQUIPMENT NET

Leasehold improvements

Machinery and equipment

and equipment, net consists of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

and equipment

accumulated depreciation

Property and equipment, net

expense was $ 83,333 and $ 105,394 for the years ended December 31, 2022 and 2021, respectively.

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

It has also entered into two leases

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

Right-of-use assets of these finance leases in the amount of $ 18,335 and $ 57,167 are included in property and equipment, net

as of December 31, 2022 and 2021, respectively.

and equipment, net

expenses are $ 98,644 and $ 83,333 for the years ended December 31, 2023 and 2022, respectively.

9 – INTANGIBLE ASSET, NET

asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

December 31, 2023

December 31, 2022

Customer relationship

accumulated amortization

Intangible asset, net

expenses are $ 584,375 and nil for the years ended December 31, 2023 and 2022, respectively.

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

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET

Year Ended December 31,

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

It has also entered into a lease

for office equipment, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as

finance leases.

Right-of-use assets of these finance leases in the amount of $ 85,613 and $ 18,335 are included in property and equipment,

net as of December 31, 2023 and 2022, respectively.

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

Finance lease costs include amortization,

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

following an effective interest rate method.

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

components of lease costs are as follows:

OF LEASE COSTS

For the Years Ended

SCHEDULE OF LEASE COSTS

For the Years Ended December 31,

Finance lease costs

3 unchanged sentences

Operating lease costs

Short-term lease costs

Total lease costs

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

OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES

For the Years Ended

OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY’S LEASES

For the Years Ended December 31,

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

2 unchanged sentences

Financing cash flows from finance leases

Finance lease right-of-use asset obtained in exchange for finance lease liability

Operating lease right-of-use asset obtained in exchange for operating lease liability

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

2 unchanged sentences

Operating leases

Weighted-average discount rate:

Weighted-average discount rate (per annum)

Finance leases

1 unchanged sentence

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

OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES

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

Year Ended December 31,

7 unchanged sentences

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

The security deposits amounted to $ 244,395 and

The security deposits amount to $ 348,428 and $ 244,395

as of December 31, 2023 and 2022, respectively.

9 — LONG-TERM DEBTS

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

the following:

11 – FACTORING LIABILITY

the subsidiary acquired by the Company in February 2023, 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

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

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

The Factoring Agreement provided for a maximum of

$ 850,000 in Purchased Receivable.

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

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

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

Under the terms of the recourse provision,

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

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

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

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

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

terminated pursuant to the terms of the Factoring Agreement.

The Company may terminate the Factoring Agreement with sixty days’

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

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

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

of December 31, 2023, there was $ 562,767

borrowed and outstanding under the Factoring

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

During the year ended December 31, 2023, the Company recorded $ 67,257

in interest expenses related to the Factoring

12 – 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.

of December 31, 2023 and 2022, the balance of the insurance premium financing was nil.

During the years ended December 31, 2023 and 2022, the Company recorded $ 29,171

and $ 21,277 ,

respectively, in interest expenses related to the insurance premium financing.

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

SCHEDULE OF SHORT-TERM DEBTS

Name of Financial

Interest Rate

Balance as of

Biz Forward Co., Ltd.

JPY 19,280,001

12/26/2023 – 1/31/2024

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

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

SCHEDULE OF LONG-TERM DEBTS

Name of Banks/Financial

Original Amount Borrowed

Interest Rate

Loan Duration

Annual Interest Rate

Corporate bond issued through Resona

Bank, Limited

Balance as of

Corporate bond issued through Resona Bank, Limited

JPY 100,000,000 (a)(c)

1/10/2019 – 1/10/2024

Loans with banks and other financial institutions

Loans with banks and financial institutions

Resona Bank, Limited

30,000,000 (a)

JPY 50,000,000 (a)(b)

12/29/2017 – 12/29/2024

Resona Bank, Limited

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

9/30/2020 – 9/30/2027

Resona Bank, Limited

JPY 40,000,000 (a)(b)

9/30/2020 – 9/30/2027

Resona Bank, Limited

JPY 20,000,000 (a)(b)

11/13/2020 – 10/31/2027

Resona Bank, Limited

Sumitomo Mitsui Banking Corporation

JPY 100,000,000 (a)

12/28/2018 – 6/30/2024

Sumitomo Mitsui Banking Corporation

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

12/30/2019 – 12/30/2026

Sumitomo Mitsui Banking Corporation

10,000,000 (a)(b)

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

10/4/2023 – 9/30/2028

Sumitomo Mitsui Banking Corporation

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

10/4/2023 – 9/30/2028

The Shoko Chukin Bank, Ltd.

JPY 30,000,000

9/28/2018 – 8/31/2023

The Shoko Chukin Bank, Ltd.

JPY 50,000,000

7/27/2020 – 6/30/2027

Japan Finance Corporation

The Shoko Chukin Bank, Ltd.

JPY 30,000,000

7/25/2023 – 6/30/2028

Tokyo Interbank Offered Rate + 1.950 %

Japan Finance Corporation

JPY 80,000,000

11/17/2020 – 11/30/2027

Higashi-Nippon Bank

JPY 30,000,000 (a)

3/31/2022 – 3/31/2025

Higashi-Nippon Bank

JPY 30,000,000 (a)(b)

10/11/2023 – 9/30/2028

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

2 unchanged sentences

Non-current portion

These debts are guaranteed

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

These 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.

expense for long-term debts was $ 20,523 and $ 32,700 for the years ended December 31, 2022 and 2021, respectively.

of December 31, 2022, future minimum loan payments are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

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

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

bond is guaranteed by Resona Bank, Limited.

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

expense for short-term debt and long-term debts was $ 5,150 and $ 61,390 , respectively, for the year ended December 31, 2023.

expense for short-term debt and long-term debts was nil and $ 20,523 , respectively, for the year ended December 31, 2022.

the year ended December 31, 2023, the Company entered into amended loan agreements with banks and a financial institution for

certain debts.

The amended terms mainly include changes of installment payment amount and maturity date.

The Company analyzed the

amendments under ASC Topic 470 and concluded that the amended debts are not considered substantially different and the transactions

are accounted for as debt modifications with no gain or loss recognized.

of December 31, 2023, future minimum payments for long-term debts are as follows:

SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR SHORT-TERM DEBT AND LONG-TERM DEBTS

Year Ended December 31,

10 — 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.

December 31, 2022, the insurance premium financing was fully repaid.

During the year ended December 31, 2022, the interest incurred was

14 – INCOME TAXES

USA is a company registered in the State of Delaware incorporated in May 2021 and subjects to federal income tax at 21 % statutory

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

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

with respect to the profit generated from the United States.

is a company incorporated in Netherlands in November 2019.

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

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

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

It is subject to income tax on income arising in,

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

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

28 % after federal tax abatement.

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

The provincial and territorial lower

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

Luvina is a company incorporated in Vietnam in November 2023.

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

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

2 unchanged sentences

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 % for the years ended December 31, 2022 and 2021, respectively.

the years ended December 31, 2022 and 2021, the Company’s income tax expense (benefit) are as follows:

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

approximately 34.59 % for the years ended December 31, 2023 and 2022.

the years ended December 31, 2023 and 2022, the Company’s income tax benefit is as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Years Ended

Income tax expense (benefit)

reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of operations to the Japanese

statutory tax rate for the years ended December 31, 2022 and 2021 is as follows:

For the Years Ended December 31,

Income tax benefit

$ ( 133,664 )

reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of operations and comprehensive

loss to the Japanese statutory tax rate for the years ended December 31, 2023 and 2022 is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATES RECONCILIATION

For the Years Ended

For the Years Ended December

Japanese statutory tax rate

4 unchanged sentences

Other adjustments

Effective tax rate

tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2022 and 2021 are presented below:

Effective income tax rate

tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2023 and 2022 are

presented below:

SCHEDULE OF DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES

December 31, 2023

December 31, 2022

Deferred tax assets

2 unchanged sentences

Research and development – costs capitalized for tax purposes

Lease liabilities

Asset retirement obligations

Fair value change on investment securities

Net operating losses carried forward

Total deferred tax assets, gross

valuation allowance

1 unchanged sentence

( 2,511,846 )

Total deferred tax assets

Total deferred tax assets, net

Deferred tax liabilities

Right-of-use assets

$ ( 880,157 )

$ ( 921,233 )

Asset retirement costs

Intangible asset acquired through business combination

( 1,264,375 )

Total deferred tax liabilities

$ ( 2,192,145 )

$ ( 949,834 )

Deferred tax assets, net

Deferred tax liabilities, net

$ ( 1,264,375 )

realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future

The Company regularly assesses the ability to realize its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not

that some portion of the deferred tax assets will not be realized.

The Company weighs all available positive and negative evidence, including

its earnings history and results of recent operations, projected future taxable income, and tax planning strategies.

The Company regularly assesses the ability to realize its deferred tax assets and establishes a valuation allowance if it is

more-likely-than-not that some portion of the deferred tax assets will not be realized.

The Company weighs all available positive and

negative evidence, including its earnings history and results of recent operations, projected future taxable income, and tax planning

amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward

12 unchanged sentences

tax benefits in the next twelve months from December 31, 2023.

The Company’s Japan subsidiary income tax return filed for the tax

years ending from May 31, 2018 through December 31, 2022 are subject to examination by the relevant taxing authorities.

The Company’s Japan subsidiaries income tax returns filed for the

tax years ending from May 31, 2019 through December 31, 2023 are subject to examination by the relevant taxing authorities.

files income tax returns in the U.S.

federal and state jurisdictions.

The tax years ending from December 31, 2021 through December 31,

2023 generally remain subject to examination by the Internal Revenue Service and various state taxing authorities.

is not currently under examination in any jurisdictions.

15 – 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 ).

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

All options are

14 unchanged sentences

from exercise of stock options.

following summarized the Company’s stock option activity for the stock options issued in 2016 for the years ended December 31,

2022 and 2021:

following table summarizes the Company’s stock option activity for the stock options issued in 2016 for the year ended December

SCHEDULE OF UNVESTED STOCK OPTION

Stock Options

Issued and unvested as of January 1, 2022

Issued and unvested balance

Issued and unvested as of December 31, 2021

Issued and unvested balance

Vested and exercised

Exercisable of December 31, 2022

Exercisable balance

Issued and unvested as of December 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 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 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 .

under which 2,400,000

shares of common shares are authorized for issuance.

August 2, 2022, the Company awarded options to purchase 2,000 shares of common shares pursuant to the 2021 Plan 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

1 unchanged sentence

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

As of December 31, 2022, none of the options were exercised.

following table summarizes the share options activity and related information for the years ended December 31, 2022 and 2021:

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

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

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

expiration date on February 3, 2033 .

August 25, 2023, the Company awarded options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price

of $ 1.10 per share to an employee of the Company.

The options vest on each annual anniversary of the date of issuance, in an amount equal

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

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

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

No shares were issued pursuant to the 2023 Plan as of December

following table summarizes the stock options activity and related information for the years ended December 31, 2023 and 2022:

SCHEDULE OF STOCK OPTION ACTIVITY

3 unchanged sentences

Vested and exercisable as of December 31, 2023

granted before January 1, 2022 were valued using the binomial model with the assistance of an independent valuation specialist.

calculated the fair value of options granted in the year ended December 31, 2022 using the Black-Scholes model.

The following table summarizes

the inputs to the models used to estimate the fair value of the options granted during the years ended December 31, 2022 and 2021.

calculated the fair value of options granted in the years ended December 31, 2023 and 2022 using the Black-Scholes model.

The following

table summarizes the inputs to the model used to estimate the fair value of the options granted for the years ended December 31, 2023

SCHEDULE OF ESTIMATE FAIR VALUE ASSUMPTIONS OF STOCK OPTIONS

For the Years Ended

Expected volatility

Risk-free interest rate

2.82 % - 2.97 %

Dividend yield

Exercise term

4 - 6.25 years

the Years Ended December

interest rate

Company recognized stock-based compensation related to options of $ 612,937 and $ 1,097,130 during the years ended December 31, 2023 and

10 unchanged sentences

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

following table summarizes the RSUs activity for the year ended December 31, 2022:

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 years ended December 31, 2023 and 2022:

SCHEDULE OF RESTRICTED STOCK UNITS

5 unchanged sentences

Unvested as of December 31, 2022

Company recognized RSU-related stock-based compensation of $ 422,613 and nil during the years ended December 31, 2022 and 2021, respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 227,195 (which will be recognized through February 2026) as

of December 31, 2022.

13 – SHAREHOLDERS’ EQUITY (DEFICIT)

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

Unvested as of December 31, 2023

Company recognized stock-based compensation related to RSUs of $ 817,576 and $ 422,613 during the years ended December 31, 2023 and 2022,

respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 101,110 (which will be recognized through February

2026) as of December 31, 2023.

16 – SHAREHOLDERS’ EQUITY

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

shares, par value of $ 0.0001 per share.

November 3, 2021, the Company redeemed 484,056 shares issued of HeartCore Enterprises, Inc.

from the CEO of the Company for $ 1 in total

for the shares related to the early exercise of stock options the CEO held on behalf of the Company.

The redemption of shares resulted

in 484,056 shares reduced from the shares issued.

the period from October 27, 2021 through December 31, 2021, the Company issued 304,000 shares of common shares at a purchase price of

$ 2.50 per share for an aggregate net proceeds of $ 677,945 in a private placement, including 30,000 shares of common shares issued to

the officers of the Company.

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

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.

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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 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 12).

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

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

costs are charged against the proceeds from the offering.

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

$ 16 (also see NOTE 15).

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

February 1, 2023, 2,500,000

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

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

(also see NOTE 18).

Repurchase Program

3 unchanged sentences

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 at any time.

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

5 unchanged sentences

treasury shares have been retired.

of December 31, 2022 and 2021, there were 17,649,886 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 December 31, 2022 and 2021.

The number of shares reflects the retrospective presentation

of the share issuance on July 16, 2021, due to the recapitalization between entities under common control.

14 - 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.

15 – LOSS PER SHARE

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

Diluted 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.

Common share equivalents are not included in the calculation of diluted loss per share if their effect would

be anti-dilutive.

computation of basic and diluted loss per share for the years ended December 31, 2022 and 2021 is as follows:

of December 31, 2023 and 2022, there are 20,842,690 and 17,649,886 shares of common shares issued and outstanding, respectively.

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

17 – NET LOSS PER SHARE

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

Diluted net loss per share is computed on

the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and other dilutive

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 loss per share if their effect would be anti-dilutive.

computation of basic and diluted net loss per share for the years ended December 31, 2023 and 2022 is as follows:

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

For the Years Ended

Loss per share – basic and diluted

Allocation of net loss attributable to HeartCore Enterprises, Inc.’s common shareholders used in calculating loss per common share

For the Years Ended December 31,

Net loss per share – basic and diluted

Net loss attributable to HeartCore Enterprises, Inc.

common shareholders

$ ( 4,189,890 )

$ ( 6,677,466 )

Net loss attributable to common shareholders

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

Net loss per share - basic and diluted

the years ended December 31, 2023 and 2022, the weighted average common shares outstanding are the same for basic and diluted net loss

per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

18 – BUSINESS COMBINATION

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

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

The Sigmaways Agreement was further amended on December

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

Sigmaways and its subsidiaries are primarily

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

The Company aims to expand the business of software

development and sales in the United States through this acquisition.

The purchase consideration is $ 4,150,000 , consisted of $ 1,000,000

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

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

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

The excess of the purchase price over those fair values is

recorded as goodwill.

purchase price is allocated on the acquisition date as follows:

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION

Current assets

Acquired intangible asset

Non-current assets

Current liabilities

( 1,146,900 )

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

Denominator used for loss per share

Loss per share – basic and diluted

the years ended December 31, 2022 and 2021, the weighted average shares outstanding are the same for basic and diluted loss per share

calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

Deferred tax liabilities

( 1,428,000 )

Non-current liabilities

Non-controlling interest

( 3,190,000 )

Total purchase consideration

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

consolidated financial statements since the date of acquisition.

Sigmaways and its subsidiaries contributed revenues and net loss of

$ 8,784,239 and $ 1,401,654 , respectively, to the Company from February 1, 2023 to December 31, 2023.

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

of operations and comprehensive loss for the years ended December 31, 2023 and 2022.

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 no t recognize any impairment

loss on goodwill for the years ended December 31, 2023 and 2022.

19 - SUBSEQUENT EVENTS

6, 2022, the Company entered into a share exchange and purchase agreement to acquire 51 % of the outstanding shares of Sigmaways, a company

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

1, 2023, the Company closed the acquisition for a total consideration of $ 4,150,000 , including $ 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.

As a result, Sigmaways became a subsidiary of the Company.

Due to the limited

time since the acquisition date and the effort required to conform the financial statements to the Company’s practices and policies, the

initial accounting for the business combination is incomplete at the time of this filing.

As a result, the Company is unable to provide

the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed , intangible assets and goodwill, if any.

This information will be included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

February 3, 2023, the Company granted stock options to an employee to purchase 100,000

common shares at an exercise price of $ 1.17

per share throughout a period of ten years from the grant date.

The stock options will vest 5 0% on the grant date and February 1, 2024, respectively .

March 12, 2023, Signature Bank was closed by its state chartering authority, the New York State Department of Financial Services.

the same date the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver and transferred all customer deposits

and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that is being operated by the

The Company automatically became a customer of Signature Bridge Bank, N.A.

as part of this action.

The Company held approximately

$ 4.7 million cash deposits at Signature Bridge Bank, N.A.

as of March 12, 2023.

Normal banking activities resumed on Monday, March 13,

March 22, 2023, the Company granted 671,350 shares of common shares to the employees and service providers of Sigmaways.

Certificate of Incorporation of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Bylaws of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-1 (File No.

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

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

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

it received from a customer as noncash consideration from consulting services for $ 9,000,000

On April 1, 2024, the Board of

Directors of the Company declared a cash dividend of $ 0.02

per share of the Company’s common shares to

be paid on May 3, 2024 to shareholders of record as of April 26, 2024.

of Incorporation of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.1 to the registrant’s Registration

Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Memorandum to Share Exchange Agreement dated July 15, 2021, among HeartCore Co., Sumitaka.

Yamamoto, and Information Services International-Dentsu Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-1 (File No.

of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form

S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Share Exchange Agreement dated July 16, 2021, among HeartCore Enterprises, Inc., all shareholders of HeartCore Co., Ltd., and Sumitaka Yamamoto as representative of the shareholders of HeartCore Co., Ltd.

of Securities (incorporated by reference to Exhibit 4.1 to the registrant’s Amended Annual Report on Form 10-K/A filed with

the SEC on October 23, 2023).

to Share Exchange Agreement dated July 15, 2021, among HeartCore Co., Sumitaka.

Yamamoto, and Information Services International-Dentsu

(incorporated by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-1 (File No.

filed with the SEC on January 3, 2022).

Stock Purchase Agreement dated August 10, 2021, between HeartCore Enterprises, Inc.

and Dentsu Digital Investment Limited (incorporated by reference to Exhibit 10.3 to the registrant’s Registration Statement on Form S-1 (File No.

Exchange Agreement dated July 16, 2021, among HeartCore Enterprises, Inc., all shareholders of HeartCore Co., Ltd., and Sumitaka

Yamamoto as representative of the shareholders of HeartCore Co., Ltd.

(incorporated by reference to Exhibit 10.2 to the registrant’s

Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

HeartCore Enterprises, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Registration Statement on Form S-1 (File No.

Purchase Agreement dated August 10, 2021, between HeartCore Enterprises, Inc.

and Dentsu Digital Investment Limited (incorporated

by reference to Exhibit 10.3 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC

on January 3, 2022).

Enterprises, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Registration Statement

on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Kimio Hosaka (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).).

Agreement, dated February 9, 2022, between the Company and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

Agreement, dated February 9, 2022, between the Company and Kimio Hosaka (incorporated by reference to Exhibit 10.3 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Keisuke Kuno (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

1 unchanged sentence

Employment Agreement, dated February 9, 2022, between the Company and Hidekazu Miyata (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Form of Independent Director Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 (File No.

of Independent Director Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to

Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3,

Form of Indemnification Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to Exhibit 10.11 to the registrant’s Registration Statement on Form S-1 (File No.

of Indemnification Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to Exhibit

10.11 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Consulting and Services Agreement, dated as of March 31, 2022, by and between the registrant and Moveaction Co., Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

Common Stock Purchase Warrant issued by Moveaction Co., Ltd.

and Services Agreement, dated as of March 31, 2022, by and between the registrant and Moveaction Co., Ltd.

(incorporated by reference

to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

Stock Purchase Warrant issued by Moveaction Co., Ltd.

to the registrant.

(incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

Consulting and Services Agreement, dated as of April 13, 2022, by and between the registrant and A.L.I.

(incorporated by reference to Exhibit 10.2 to the registrant’s

Current Report on Form 8-K filed with the SEC on April 6, 2022).

and Services Agreement, dated as of April 13, 2022, by and between the registrant and A.L.I.

Technologies Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2022).

Common Stock Purchase Warrant issued by A.L.I.

(incorporated by reference

to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2022).

Stock Purchase Warrant issued by A.L.I.

Technologies Inc.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2022).

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s

Current Report on Form 8-K filed with the SEC on May 11, 2022).

Consulting and Services Agreement, dated as of May 13, 2022, by and between the registrant and SYLA Holdings Co.

63 unchanged sentences

to the registrant (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Hidekazu Miyata.

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Keisuke Kuno.

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Kimio Hosaka.

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Qizhi Gao.

Service Agreement, dated as of October 2, 2023, by and between the registrant and GATES GROUP Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).

Common Stock Purchase Warrant, dated October 2, 2023, issued by GATES GROUP Inc.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).

At The Market Offering Agreement, dated October 23, 2023, by and between HeartCore Enterprises, Inc.

Wainwright & Co., LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 23, 2023).

Director Agreement, dated June 1, 2023, by and between the registrant and Heather Neville (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2023).

Indemnification Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 5, 2023).

Independent Director Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 5, 2023).

Independent Director Agreement dated November 1, 2023, by and between the registrant and Heather Neville.

List of Subsidiaries

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Data File (formatted as Inline XBRL and contained in Exhibit 101).

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Filed herewith

Furnished herewith.

Management contracts and compensation plans and arrangements

1 unchanged sentence

on its behalf by the undersigned, thereunto duly authorized.

HEARTCORE ENTERPRISES, INC.

March 31, 2023

ENTERPRISES, INC.

April 8, 2024

Sumitaka Yamamoto

Chief Executive Officer and President

Executive Officer and President

person whose signature appears below hereby appoints Sumitaka Yamamoto and Qizhi Gao, and each of them, as attorneys-in-fact with full

7 unchanged sentences

Sumitaka Yamamoto

Chairman of Board, Chief

Executive Officer and President

March 31, 2023

Sumitaka Yamamoto

(Principal Executive

of Board, Chief Executive Officer and President

Executive Officer)

Financial Officer (Principal Financial Officer and Principal Accounting Officer)

March 31, 2023

/s/ Ferdinand

March 31, 2023

Ferdinand Groenewald

/s/ Yoshitomo

March 31, 2023

Yoshitomo Yamano

March 31, 2023

Takeshi Omoto

March 31, 2023

Prakash Sadasivam

Heather Neville

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-K

Item 9A. Controls and Procedures