What changed in this filing

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Item 1. Financial Statements

2024-05-15 compared with 2023-11-13 · 549 added, 675 removed, 442 unchanged (73% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

Current assets:

2 unchanged sentences

Investments in marketable securities

Investment in equity securities

Prepaid expenses

Note receivable

Current portion of long-term note receivable

6 unchanged sentences

Intangible asset, net

Long-term investments in warrants

Long-term investment in equity securities

Long-term investment in warrants

Long-term note receivable

2 unchanged sentences

Long-term loan receivable from related party

Long-term loan receivable

Other non-current assets

5 unchanged sentences

Due to related party

Short-term debt

Current portion of long-term debts

16 unchanged sentences

Shareholders’ equity:

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and December 31, 2023)

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

20,842,690 and 17,649,886 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)

20,864,144 and 20,842,690 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)

Additional paid-in capital

5 unchanged sentences

shareholders’ equity

Non-controlling interest

Non-controlling interests

Total shareholders’ equity

2 unchanged sentences

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended

Cost of revenues

4 unchanged sentences

Total operating expenses

Loss from operations

( 1,787,745 )

( 2,013,579 )

( 5,239,422 )

Income (loss) from operations

Other income (expenses):

Changes in fair value of investments in marketable securities

Changes in fair value of investments in warrants

Changes in fair value of investment in warrants

Interest income

2 unchanged sentences

Total other income (expenses)

Loss before income tax provision

( 2,521,720 )

( 1,990,003 )

( 1,697,083 )

Income (loss) before income tax provision

( 1,558,169 )

Income tax expense (benefit)

( 2,541,133 )

( 1,970,934 )

( 1,755,942 )

( 5,253,026 )

net loss attributable to non-controlling interest

Net loss attributable to HeartCore Enterprises, Inc.

$ ( 2,307,220 )

$ ( 1,970,934 )

Net income (loss)

( 1,478,002 )

net loss attributable to non-controlling interests

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

$ ( 1,333,350 )

1 unchanged sentence

Foreign currency translation adjustment

Total comprehensive loss

( 2,631,876 )

( 1,842,229 )

( 1,841,186 )

( 4,824,908 )

comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to HeartCore Enterprises, Inc.

$ ( 2,396,782 )

$ ( 1,842,229 )

Total comprehensive income (loss)

( 1,467,707 )

comprehensive loss attributable to non-controlling interests

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

$ ( 1,318,144 )

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

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

Weighted average common shares outstanding

1 unchanged sentence

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Common Shares

Accumulated Other

Total Shareholders’

Number of Shares

Total HeartCore

Enterprises, Inc.

Comprehensive

Income (Loss)

Equity (Deficit)

Shareholders’

Balance, December 31, 2022

$ ( 10,573,579 )

Net income (loss)

Foreign currency translation adjustment

Issuance of common shares for cash

Issuance of common shares from exercise of share options

Issuance of common shares for acquisition of subsidiary

Non-controlling interest arising from acquisition of subsidiary

Capital contribution from non-controlling shareholder

Stock-based compensation

Balance, March 31, 2023

Foreign currency translation adjustment

Stock-based compensation

Repurchase of common shares

Balance, June 30, 2022

Foreign currency translation adjustment

Stock-based compensation

Repurchase of common shares

Balance, September 30, 2022

$ ( 8,691,290 )

Common Shares

Accumulated Other

Total HeartCore Enterprises, Inc.

Total HeartCore

Enterprises, Inc.

Comprehensive

2 unchanged sentences

Balance, December 31, 2023

$ ( 14,763,469 )

( 1,333,350 )

( 1,478,002 )

Net income (loss)

( 1,333,350 )

( 1,478,002 )

Foreign currency translation adjustment

Issuance of common shares for acquisition of subsidiary

Non-controlling interests arising from acquisition of subsidiary

Capital contribution from non-controlling shareholder

Stock-based compensation

Balance, March 31,

Foreign currency translation adjustment

Stock-based compensation

Balance, June 30, 2023

Foreign currency translation adjustment

Stock-based compensation

Balance, September 30, 2023

$ ( 16,096,819 )

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

Cash flows from operating activities:

$ ( 1,755,942 )

$ ( 5,253,026 )

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

Warrants received as noncash consideration

( 4,009,335 )

Changes in fair value of investments in marketable securities

Changes in fair value of investments in warrants

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Operating lease liabilities

Finance lease liabilities

Income tax payables

Deferred revenue

Other liabilities

Net cash flows used in operating activities

the Three Months Ended

Cash flows from operating

income (loss)

$ ( 1,478,002 )

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

and amortization expenses

of debt issuance costs

lease expense

termination of lease

received as noncash consideration

( 4,009,335 )

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from disposal of property and equipment

Advances on note receivable

Repayment of loan provided to related party

Payment for acquisition of subsidiary, net of cash acquired

Net cash flows used in investing activities

in fair value of investments in marketable securities

in fair value of investment in warrants

in assets and liabilities:

( 3,257,972 )

Cash flows from financing activities:

Proceeds from initial public offering, net of issuance cost

Proceeds from issuance of common shares prior to initial public offering

Repurchase of common shares

payable and accrued expenses

payroll and other employee costs

related party

lease liabilities

cash flows provided by (used in) operating activities

( 1,048,059 )

Payments for finance leases

Proceeds from long-term debt

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

Effect of exchange rate changes

Net change in cash and cash equivalents

Cash flows from investing

of property and equipment

of loan provided to related party

for acquisition of subsidiary, net of cash acquired

cash flows provided by (used in) investing activities

Cash flows from financing

for finance leases

from short-term debt

of short-term and long-term debts

of insurance premium financing

from factoring arrangement

repayment of factoring arrangement

for debt issuance costs

contribution from non-controlling shareholder

cash flows used in financing activities

of exchange rate changes

Net change in cash and cash

( 1,967,411 )

Cash and cash equivalents - beginning of the period

Cash and cash equivalents - end of the period

Supplemental cash flow disclosure:

Interest paid

Income taxes paid

Non-cash investing and financing transactions:

Payroll withheld as repayment of loan receivable from employees

Liabilities assumed in connection with purchase of property and equipment

Share repurchase liability settled by issuance of common shares

Deferred offering costs recognized against the proceeds from the offering

Insurance premium financing

Common shares issued for acquisition of subsidiary

Investments in 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

and cash equivalents - beginning of the period

and cash equivalents - end of the period

Supplemental cash flow

Non-cash investing and

financing transactions:

lease right-of-use assets obtained in exchange for operating lease liabilities

premium financing

assumed in connection with purchase of property and equipment

shares issued for acquisition of subsidiary

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

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

9 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 unaudited consolidated financial statements.

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

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 software.

Beginning from early 2022, HeartCore USA is engaged in the 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

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

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

referred to as the Company.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

HeartCore Luvina started its operations from February 2024.

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 transferred

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

of Presentation and Principles of Consolidation

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

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

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

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

The unaudited consolidated financial statements include the accounts of

the Company and its subsidiaries.

All significant intercompany accounts and transactions have been eliminated.

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

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

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

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

The unaudited consolidated financial statements include

the accounts of the Company and its subsidiaries.

All significant intercompany accounts and transactions have been

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

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

GAAP, the management is required to make certain estimates

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

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

These estimates are based

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

Significant estimates required to be made

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

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

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

and purchase price allocation with respect to business combination.

Actual results could differ from those estimates.

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

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

of the pandemic continue to be unknown.

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

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

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

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

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

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

financial statements as soon as they become known.

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

material to the Company’s unaudited consolidated financial statements.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 unaudited 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 unaudited consolidated financial

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.

Retirement Obligations

6 unchanged sentences

The following table presents changes in asset retirement obligations:

OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

September 30,

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

Beginning balance

1 unchanged sentence

Accretion expense

Liabilities settled

Foreign currency translation adjustment

9 unchanged sentences

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

the nine months ended September 30, 2023 and 2022, software development costs expensed as incurred amounted to $ 289,303 and $ 583,762 ,

respectively.

the three months ended March 31, 2024 and 2023, software development costs expensed as incurred amounted to $ 89,134 and $ 79,624 , respectively.

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

in warrants represent stock warrants of its consulting service customers and are not registered for public sale.

The warrants are measured

at fair value and any changes in fair value are recognized in other income (expenses).

Investments in warrants are classified as long-term

if the warrants are exercisable over one year after the date of receipt.

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

1 unchanged sentence

The marketable

securities as of September 30, 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).

securities 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 (expenses).

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

anticipates to dispose of the investment within one year from the date of receipt based on information available as of the date the unaudited

consolidated financial statements are issued.

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

1 unchanged sentence

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 assets.

economic useful life of the respective asset.

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

5 unchanged sentences

to be impaired and written down to its fair value.

There were no impairments of these assets during the nine months ended September 30,

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

2024 and 2023.

10 unchanged sentences

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

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

at the dates of the transaction.

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

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

The resulting exchange differences are recorded

in the unaudited consolidated statements of operations.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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 unaudited statements of changes in shareholders’

equity (deficit).

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 unaudited consolidated

statements of operations and comprehensive income (loss).

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

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 within the unaudited

consolidated statements of changes in shareholders’ equity.

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

4 unchanged sentences

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 value-added taxes and applicable local government levies.

Company currently generates its revenues from the following main sources:

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 revenue 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.

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

to the customer.

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

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

software and maintenance and support service.

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

when those services are sold on a standalone basis.

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

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

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

or other observable evidence.

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

to the customers.

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

the customers with the right for a specified term.

Revenues from on-premise licenses are recognized upfront at the point in time when

the software is made available to the 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 software and maintenance and support service.

The SSP for maintenance and support services is estimated

based upon observable transactions when those services are sold on a standalone basis.

The SSP of on-premise software is typically estimated

using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the

same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible

from past transactions or other observable evidence.

from Maintenance and Support Services

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

software updates when and if available during the subscription.

Revenues from maintenance and support services are recognized over time

as such services are performed.

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

by the customers.

Maintenance and support services provided with software licenses consist of trouble shooting, technical support and

the right to receive unspecified software updates when and if available during the subscription.

Revenues from maintenance and support

services are recognized over time as such services are performed.

Revenues for consumption-based services are generally recognized as

the services are performed and accepted by the customers.

from Software as a Service (“SaaS”)

Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing

the rights of the software to the customers.

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 subscription contracts

are generally one year or less in length.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s software is available for use as hosted application arrangements under subscription fee agreements

without licensing the rights of the software to the customers.

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 customers.

The subscription contracts are generally one year or less in length.

from Software Development and Other Miscellaneous Services

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.

The Company also provides other miscellaneous services,

such as 3D Space photography.

The Company generally recognizes revenue 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.

The 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.

The Company also provides

other miscellaneous services, such as 3D Space photography.

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 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 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 contract that result in the

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

an asset with an alternative use to the Company.

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

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

of the Company’s performance to date.

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 are generally less than one year in length and normally include

both cash and noncash consideration.

Cash consideration is paid in installment payments and is recognized in revenue over the period

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

Noncash consideration is in the

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

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

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

The Company has determined that its contracts

do not include a significant financing component.

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

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

The Company factors certain accounts receivable upon or after

the performance obligation is being met.

The Company records deferred revenue on the consolidated balance sheets when revenues are recognized

subsequent to cash collection for an invoice.

Deferred revenue is reported net of related uncollected deferred revenue in the consolidated

balance sheets.

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

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

The 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.

The timing of revenue recognition may differ from

the timing of invoicing to the customers.

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.

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

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

The amount of revenues recognized

during the three months ended March 31, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.0

million and $0.9 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

three and nine months ended September 30, 2023 and 2022 is as following:

OF DISAGGREGATION OF REVENUES

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

The 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 three months ended March

31, 2024 and 2023 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Three Months Ended

Revenues from on-premise software

5 unchanged sentences

Total revenues

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

For the Three Months Ended

Revenues from customer experience management platform

6 unchanged sentences

Total revenues

of September 30, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset)

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

of March 31, 2024 and 2023, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and

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

Concentration

of Credit Risk

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

The Company usually

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

The Company conducts periodic reviews of the financial condition

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

the nine months ended September 30, 2023, customer B and C represent 14.2 % and 13.6 %, respectively, of the Company’s total revenues.

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

the nine months ended September 30, 2023, vendor D, B, A and E represent 26.4 %, 26.2 %, 22.1 % and 15.9 %, respectively, of the Company’s

total purchases.

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

of the Company’s total purchases.

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

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

consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line

basis over the requisite service period or vesting period.

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 three months ended March 31, 2024, customer A and B represent 13.4 % and 13.0 %, respectively, of the Company’s total revenues.

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

total revenues.

the three months ended March 31, 2024, no vendor accounts for more than 10% of the Company’s total purchases.

For the three

months ended March 31, 2023, vendor A, B and C represent 38.5 %, 29.6 %

respectively, of the Company’s total purchases.

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

Stock Compensation”.

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

is recognized in the unaudited consolidated statements of operations

and comprehensive income (loss) based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis

over the requisite service period or vesting period.

The Company records forfeitures as they occur.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

The excess of the purchase price over those fair values

8 unchanged sentences

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

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

statements of operations and comprehensive loss.

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 income (loss).

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

3 unchanged sentences

Value Measurements

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

Fair value is defined as the price that would be received

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

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

inputs when measuring fair value.

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

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

ASC Topic 820 establishes three levels of inputs that may

be used to measure fair value:

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

Fair value is defined as the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

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

use of unobservable inputs when measuring fair value.

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

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

ASC Topic 820 establishes three levels of inputs

that may be used to measure fair value:

quoted prices in active markets for identical assets or liabilities;

2 unchanged sentences

or liabilities.

of September 30, 2023 and December 31, 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.

Company received warrants from its customers as noncash consideration from consulting services.

The warrants are not registered for public

sale and are measured at fair value at contract inception.

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

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

The valuation of investments in warrants was determined

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

interest rate for the term of the warrants exercise.

Such valuations are classified within Level 3 of the fair value hierarchy.

following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022:

OF INVESTMENTS IN WARRANTS

For the Nine Months Ended

September 30,

Fair value of investments in warrants at beginning of the period

Warrants received as noncash consideration

Changes in fair value of investments in warrants

Investments in warrants converted to marketable securities

( 1,257,868 )

Fair value of investments in warrants at end of the period

in Marketable Securities

Company’s investments in marketable securities registered for public sale with readily determinable fair value are measured at

quoted prices on a recurring basis at the end of the period.

Marketable securities are classified within Level 1 of the fair value hierarchy.

following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30,

2023 and 2022:

OF INVESTMENTS IN MARKETABLE SECURITIES

For the Nine Months Ended

September 30,

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

Investments in 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 period

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2024 and December 31, 2023, 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

Assets measured at fair value on a recurring basis as of March

31, 2024 and December 31, 2023 are summarized below (also see NOTE 6).

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Fair Value Measurements as of March 31, 2024

Quoted Prices in Active Markets for Identical

Assets (Level 1)

Significant Other

Fair Value at

Investments in marketable securities

Long-term investment in warrants

Fair Value Measurements as of December 31, 2023

Prices in Active Markets for Identical

Investments in

marketable securities

Long-term investment in warrants

Accounting Pronouncements

Accounting Pronouncements Recently Adopted

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

2016-13, Financial Instruments – Credit Losses (Topic

326), Measurement of Credit Losses on Financial Instruments.

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

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

As a result, ASC

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

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

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

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

As the Company is an “emerging growth company”

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

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

October 2021, the FASB issued ASU No.

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

from Contracts with Customers.

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

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

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

of and after a business combination.

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

periods within those fiscal years.

The Company adopted ASU No.

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

on the Company’s unaudited consolidated financial statements.

Accounting Pronouncements Not Yet Effective

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

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

In December 2023, the FASB issued Accounting Standards

Update (“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 information.

2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis.

all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis.

Early adoption

is permitted.

The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related

3 – ACCOUNTS RECEIVABLE

receivable consists of the following:

OF ACCOUNTS RECEIVABLE NET

September 30,

receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

Accounts receivable – non-factored

5 unchanged sentences

expenses consist of the following:

OF PREPAID EXPENSES

September 30,

SCHEDULE OF PREPAID EXPENSES

Prepayments to software vendors

2 unchanged sentences

Prepaid insurance premium

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5 — NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE

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

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 pursuant to which all of the promissory note principal amount and accrued interest owed to the Company shall

be converted into and exchanged for 600,000

shares of common shares of the promissory note issuer upon the effectiveness of its IPO.

promissory note issuer has not completed the IPO as of September 30, 2023.

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.

Referral fee paid in advance

5 – RELATED PARTY TRANSACTIONS

of September 30, 2023 and December 31, 2022, the Company has a due to related party balance of $ 7,859 and $ 402 , respectively, from Sumitaka

of March 31, 2024 and December 31, 2023, the Company has a due to related party balance of $ 256 and $ 1,476 , respectively, from Sumitaka

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

1 unchanged sentence

bearing and due on demand.

During the nine months ended September 30, 2023, the related party paid operating expenses on behalf of the

Company and received the payments in a net amount of $ 7,562 .

During the nine months ended September 30, 2022, the related party paid

operating expenses on behalf of the Company and received the payments in a net amount of $ 3,098 .

of September 30, 2023 and December 31, 2022, the Company has a loan receivable balance of $ 226,515 and $ 294,919 , respectively, from Heartcore

During the three months ended March 31, 2024, the Company made payments to the related party for operating expenses

the related party paid on behalf of the Company in a net amount of $ 1,161 .

During the three months ended March 31, 2023, the related

party paid operating expenses on behalf of the Company and received the payments in a net amount of $ 2,544 .

of March 31, 2024 and December 31, 2023, the Company has a loan receivable balance of $ 202,922 and $ 227,704 , respectively, from Heartcore

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

1 unchanged sentence

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

the nine months ended September 30, 2023 and 2022, the Company received repayments of $ 34,823 and $ 33,042 , respectively, from this related

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

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

the three months ended March 31, 2024 and 2023, the Company received repayments of $ 10,814 and $ 11,955 , respectively, from this related

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

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.

The 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 period.

The valuation of

investment in warrants is determined using the Black-Scholes model based on the stock price, exercise price, expected

volatility, time to maturity, and a risk-free interest rate for the term of the warrants exercise.

following table summarizes the Company’s investment in warrants activities for the

three months ended March 31, 2024 and 2023:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

For the Three Months Ended

Fair value of investment in warrants at beginning of the period

Warrants received as noncash consideration

Changes in fair value of investment in warrants

Warrants converted to marketable securities

Fair value of investment in warrant at end of the period

in Marketable Securities

The 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 period.

The following table summarizes the Company’s investments

in marketable securities activities for the three months ended March 31, 2024 and 2023:

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

For the Three Months Ended

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

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 period

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

September 30,

and equipment, net consists of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

Leasehold improvements

2 unchanged sentences

Property and equipment, net

expenses were $ 70,200 and $ 64,398 for the nine months ended September 30, 2023 and 2022, respectively.

expenses are $ 28,710 and $ 17,062 for the three months ended March 31, 2024 and 2023, respectively.

9 – INTANGIBLE ASSET, NET

asset, net is as follows:

OF INTANGIBLE ASSETS

September 30,

SCHEDULE OF INTANGIBLE ASSETS

Customer relationship

1 unchanged sentence

Intangible asset, net

expenses were $ 425,000 and nil for the nine months ended September 30, 2023 and 2022, respectively.

of September 30, 2023, the future estimated amortization cost for intangible asset is as follows:

OF AMORTIZATION INTANGIBLE ASSET

expenses are $ 159,375 and $ 106,250 for the three months ended March 31, 2024 and 2023, respectively.

of March 31, 2024, the future estimated amortization cost for intangible asset is as follows:

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET

Year Ended December 31,

Remaining of 2024

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

It has also entered into two leases

for office equipment, one of which was terminated in June 2022, and two leases for vehicles, one of which was terminated in September

2023, and these leases were classified as finance leases.

Right-of-use assets of these finance leases in the amount of $ 85,591 and $ 18,335

are included in property and equipment, net as of September 30, 2023 and December 31, 2022, respectively.

Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases 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 $ 75,751

are included in property and equipment, net as of March 31, 2024 and December 31, 2023, respectively.

lease expenses for lease payments are recognized on a straight-line basis over the lease term.

2 unchanged sentences

following an effective interest rate method.

Leases with initial term of twelve months or less are not recorded on the consolidated balance

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 Nine Months Ended

September 30,

SCHEDULE OF LEASE COSTS

For the Three Months Ended

Finance lease costs

4 unchanged sentences

Total lease costs

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES

For the Nine Months Ended

September 30,

OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY’S LEASES

For the Three Months Ended

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

Operating lease right-of-use asset s obtained

in exchange for operating lease liabilities

Weighted average remaining lease term (years)

4 unchanged sentences

Operating leases

of September 30, 2023, the future maturity of lease liabilities is as follows:

OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES

of March 31, 2024, the future maturity of lease liabilities is as follows:

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

Year Ended December 31,

8 unchanged sentences

to the operating lease agreements, the Company made security deposits to the lessors.

The security deposits amounted to $ 338,220 and

$ 244,395 as of September 30, 2023 and December 31, 2022, respectively.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The security deposits amount to $ 325,267 and

$ 348,428 as of March 31, 2024 and December 31, 2023, respectively.

11 – OTHER CURRENT LIABILITIES

current liabilities consists of the following:

OF OTHER CURRENT LIABILITIES

consumption taxes

received for warrants sale *

On 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 (“Consulting Customer”) as noncash

consideration from consulting services for $ 9,000,000

The Company received $ 5,000,000

in March 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s

consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant

agreement it had with the Consulting Customer.

The remaining $ 4,000,000

was received in April 2024.

12 – FACTORING LIABILITY

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

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

17 unchanged sentences

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

of September 30, 2023, there was $ 217,250 borrowed and outstanding under the Factoring Agreement.

There are various fees charged by the

Factor, including initial discount purchase fee, factoring fee and interest expense.

During the nine months ended September 30, 2023,

the Company recorded $ 54,790 in interest expense related to the Factoring Agreement.

of March 31, 2024 and December 31, 2023, there was $ 179,414

and $ 562,767 borrowed and outstanding under the Factoring Agreement, respectively.

There are various fees charged by the Factor,

including initial discount purchase fee, factoring fee and interest expense.

During the three months ended March 31, 2024 and 2023,

the Company recorded $ 16,108

and $ 22,695 in interest expenses related to the Factoring Agreement, respectively.

13 – INSURANCE PREMIUM FINANCING

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.

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 September 30, 2023 and December 31, 2022, the balance of the insurance premium financing was $ 122,279 and nil , respectively.

the nine months ended September 30, 2023 and 2022, the interest incurred was $ 25,988 and $ 19,859 , respectively.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

12 — LONG-TERM DEBTS

Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions, which consist of

of March 31, 2024 and December 31, 2023, the balances of the insurance premium financing were $ 157,917

respectively.

During the three months ended March 31, 2024 and 2023, the Company recorded $ 2,039

and $ 5,304 ,

respectively, in interest expenses related to the insurance premium financing.

Company’s short-term debt represents loans borrowed from a bank and a financial institution as follows:

SCHEDULE OF SHORT-TERM DEBTS

Name of Bank/Financial

Interest Rate

Balance as of

Biz Forward Co., Ltd.

JPY 19,280,001 (a)

12/26/2023 – 1/31/2024

Resona Bank, Limited

JPY 10,000,000

1/4/2024 – 7/4/2024

loan is secured by accounts receivable of HeartCore Japan in the amount of JPY 23,882,562 .

Company’s long-term debts included bond payable and loans borrowed from banks and financial institutions, which consist of

the following:

SCHEDULE OF LONG-TERM DEBTS

Name of Financial Institutions

Original Amount Borrowed

Original Amount

Borrowed (JPY)

Interest Rate

Balance as of

September 30,

Balance as of

Banks/Financial

Original Amount

Balance as of

Corporate bond issued through Resona Bank, Limited

JPY 100,000,000

JPY 100,000,000 (b)(d)

1/10/2019 – 1/10/2024

Loans with banks and other financial institutions

Loans with banks and financial institutions

Resona Bank, Limited

16 unchanged sentences

12/30/2019 – 12/30/2026

The Shoko Chukin Bank, Ltd.

Sumitomo Mitsui Banking Corporation

JPY 10,000,000

10/4/2023 – 9/30/2028

Sumitomo Mitsui Banking Corporation

JPY 10,000,000

10/4/2023 – 9/30/2028

The Shoko Chukin Bank, Ltd.

11 unchanged sentences

3/31/2022 – 3/31/2025

Higashi-Nippon Bank

JPY 30,000,000

10/11/2023 – 9/30/2028

First Home Bank

1 unchanged sentence

Wall Street Journal U.S.

Prime Rate + 2.750 %

Rate + 2.750 %

Small Business Administration

8 unchanged sentences

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

expense for long-term debts was $ 44,295 and $ 19,502 for the nine months ended September 30, 2023 and 2022, respectively.

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

expense for short-term debt and long-term debts was $ 2,628 and

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

Interest expense for short-term debt and long-term debts was nil and

respectively, for the three months ended March 31, 2023.

of March 31, 2024, future minimum principal payments for long-term debts are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

1 unchanged sentence

Remaining of 2024

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

15 – INCOME TAXES

USA, Sigmaways and HeartCore Financial, incorporated in the United States, are subject to federal income tax at 21 % statutory tax rate

with respect to the profit generated from the United States.

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

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

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

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.

6 unchanged sentences

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 tax rate

of approximately 34.59 % for the nine months ended September 30, 2023 and 2022.

the nine months ended September 30, 2023 and 2022, 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 three months ended March 31, 2024 and 2023.

the three months ended March 31, 2024 and 2023, the Company’s income tax expense (benefit) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Nine Months Ended

September 30,

For the Three Months Ended

Income tax expense (benefit)

effective tax rate was ( 3.47 ) % and 0.21 % for the nine months ended September 30, 2023 and 2022, respectively.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

effective tax rate was 5.14 % and 26.78 % for the three months ended March 31, 2024 and 2023, respectively.

16 – 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 (approximately $ 0.09 ) each.

All options are

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

as a vesting condition.

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

the vesting of the related stock options.

As of November 3, 2021, 324 units of the options were forfeited, and the CEO of the Company

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

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

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

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

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

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

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

In the same period, the share

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

HeartCore Japan) from exercise of stock options.

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

SCHEDULE OF UNVESTED STOCK OPTION

of Stock Options

and unvested as of January 1, 2022

and exercised

and unvested as of September 30, 2022

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

under which 2,400,000 shares of common shares are authorized for issuance.

On December 25, 2021, the Company awarded options to purchase

1,534,500 shares of common shares pursuant to the 2021 Plan 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 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

prior employees of the Company.

The options are fully vested and exercisable on the grant date, with the expiration date on August 9,

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 and stockholders 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 September

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

following table summarizes the stock options activity and related information for the nine months ended September 30, 2023 and 2022:

under which 2,400,000

shares of common shares are authorized for issuance.

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.

options vest 50 %

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

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 March 31, 2024.

following table summarizes the stock options activity and related information for the three months ended March 31, 2024 and 2023:

SCHEDULE OF STOCK OPTION ACTIVITY

As of January 1, 2023

As of September 30, 2022

As of March 31, 2023

As of January 1, 2024

As of September 30, 2023

Vested and exercisable as of September 30, 2023

Company calculated the fair value of options granted in the nine months ended September 30, 2023 using the Black-Scholes model.

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

the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to options of $ 144,306 and

$ 479,122 , respectively.

For the three and nine months ended September 30, 2022, the Company recognized stock-based compensation related

to options of $ 280,883 and $ 858,633 , respectively.

The outstanding unamortized stock-based compensation related to options was $ 578,075

(which will be recognized through August 2027) as of September 30, 2023.

As of March 31, 2024

Vested and exercisable as of March 31, 2024

The Company calculated the fair value of options granted in the three

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

Significant assumptions used in the valuation include expected volatility,

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

The Company recognized stock-based

compensation related to options of $ 70,447 and $ 184,335 during

the three months ended March 31, 2024 and 2023, respectively.

The outstanding unamortized stock-based compensation related to options was $ 345,437 (which will be recognized through December 2025)

as of March 31, 2024.

Stock Units (“RSUs”)

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

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

shares of common shares.

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

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

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

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

March 22, 2023, the Company entered into agreements with employees and service providers of Sigmaways and granted 671,350 RSUs pursuant

2 unchanged sentences

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

following table summarizes the RSUs activity for the nine months ended September 30, 2023 and 2022:

following table summarizes the RSUs activity for the three months ended March 31, 2024 and 2023:

SCHEDULE OF RESTRICTED STOCK UNITS

Number of RSUs

Weighted Average

Grant Date Fair

1 unchanged sentence

Unvested as of January 1, 2023

Unvested as of September 30, 2022

Unvested as of March 31, 2023

Unvested as of January 1, 2024

Unvested as of September 30, 2023

the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to RSUs of $ 29,000 and $ 788,577 ,

respectively.

For the three and nine months ended September 30, 2022, the Company recognized stock-based compensation related to RSUs

of $ 55,768 and $ 366,844 , respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 130,110 (which will

be recognized through February 2026) as of September 30, 2023.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Unvested as of March 31, 2024

The Company recognized stock-based compensation related to RSUs of $ 21,265

and $ 730,893

during the three months ended March 31, 2024 and 2023, respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 79,845

(which will be recognized through February 2026) as of March 31, 2024.

17 – SHAREHOLDERS’ EQUITY

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

shares, par value of $ 0.0001 per share.

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

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

of the Company.

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

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

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

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

The Company has deferred costs of

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

costs were 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 14).

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

Repurchase Program

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

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

The timing and amount of repurchases under

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

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

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

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

As of September

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

February 1, 2023, 2,500,000 shares of common shares were issued for the acquisition of 51 % of the outstanding shares of Sigmaways and

its subsidiaries with fair value of $ 3,150,000 (also see NOTE 17).

of September 30, 2023 and December 31, 2022, there were 20,842,690 and 17,649,886 shares of common shares issued and outstanding, respectively.

preferred shares were issued and outstanding as of September 30, 2023 and December 31, 2022.

16 – 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 three and nine months ended September 30, 2023 and 2022 is as follows:

February 1, 2023, 2,500,000 shares of common shares were issued for the acquisition of 51 % of the outstanding shares of

Sigmaways and its subsidiaries with fair value of $ 3,150,000 (also see NOTE 19).

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

On February 16, 2024, the Company received capital contribution

of VND 1,646.4 million in cash, equivalent to $ 67,195 , from the non-controlling shareholder of the subsidiary.

of March 31, 2024 and December 31, 2023, there were 20,864,144 and 20,842,690 shares of common shares issued and

outstanding, respectively.

shares were issued and outstanding as of March 31, 2024 and December 31, 2023.

18 – NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated

on the basis of weighted average outstanding common shares.

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

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

Common shares

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

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

if their effect would be anti-dilutive.

computation of basic and diluted net income (loss) per share for the three months ended March 31, 2024 and 2023 is as follows:

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

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Net loss per share - basic and diluted:

Net loss attributable to HeartCore Enterprises, Inc.

For the Three Months Ended

Net income (loss) per share – basic and diluted

Net income (loss) attributable to HeartCore

Enterprises, Inc.

common shareholders

$ ( 1,333,350 )

$ ( 1,970,934 )

$ ( 1,336,731 )

$ ( 5,253,026 )

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

Net loss per share - basic and diluted

the three and nine months ended September 30, 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.

ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

17 – BUSINESS COMBINATION

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

51 % of the outstanding shares of Sigmaways, Inc.

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

Weighted average number of common shares outstanding used in calculating net income

(loss) per share

Net income (loss) per share – basic and diluted

For the three months ended March 31, 2024 and 2023,

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

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

NOTE 19 – BUSINESS COMBINATION

On 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.

1 unchanged sentence

was closed on February 1, 2023.

Sigmaways and its subsidiaries are primarily engaged in the business of developing and sales of software

in the United States.

The Company aimed to expand the business of software development and sales in the United States through this acquisition.

The purchase consideration was $ 4,150,000 , consisted of $ 1,000,000 in cash and 2,500,000 shares of common shares of the Company with

fair value of $ 3,150,000 at the closing date.

total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities and non-controlling interest

based on their estimated fair values as of the acquisition date.

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

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

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

purchase price was allocated on the acquisition date as follows:

OF BUSINESS PURCHASE PRICE ALLOCATION

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.

The 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.

The purchase price is allocated on the acquisition

date as follows:

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION

Current assets

9 unchanged sentences

Total purchase consideration

results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s

unaudited consolidated financial statements since the date of acquisition.

Sigmaways and its subsidiaries contributed revenues and net

loss of $ 6,332,479 and $ 855,532 , respectively, to the Company from February 1, 2023 to September 30, 2023.

forma results of operations for the business combination have not been presented because they are not material to the unaudited consolidated

statements of operations and comprehensive loss for the three and nine months ended September 30, 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 not recognize any impairment

loss on goodwill during the nine months ended September 30, 2023.

18 - SUBSEQUENT EVENTS

October 4, 2023, the Company obtained a five-year term loan in the amount of JPY 10,000,000 (approximately $ 73,000 ) from the Sumitomo

Mitsui Banking Corporation, with an interest rate of 0.2 % per annum starting in November 2026.

The loan is co-guaranteed by Sumitaka

Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.

October 4, 2023, the Company obtained a five-year term loan in the amount of JPY 10,000,000 (approximately $ 73,000 ) from the Sumitomo

Mitsui Banking Corporation, with an interest rate of 0.6 % per annum.

The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s

CEO and major shareholder, and Tokyo Credit Guarantee Association.

October 5, 2023, the Company obtained a five-year term loan in the amount of JPY 30,000,000 (approximately $ 219,000 ) from the Higashi-Nippon

Bank, with an interest rate of 1.45 % per annum.

The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder,

and Tokyo Credit Guarantee Association.

The results of operations, financial position and

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

the date of acquisition.

Pro forma results of operations for the business combination

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

The Company’s policy is to perform its annual

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

indicate that an impairment may exist.

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

31, 2024 and 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements