What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-15 compared with 2023-11-13 · 503 added, 532 removed, 65 unchanged (94% of the section changed)

2 unchanged sentences

and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe harbor for forward-looking

statements made by or on behalf of HeartCore Enterprises, Inc.

(the “Company”).

The Company and its representatives may from

time to time make written or oral statements that are “forward-looking,” including statements contained in this report and

other filings with the Securities and Exchange Commission (“SEC”) and in our reports and presentations to stockholders or

potential stockholders.

In some cases, forward-looking statements can be identified by words such as “believe,” “expect,”

“anticipate,” “plan,” “potential,” “continue” or similar expressions.

Such forward-looking

statements include risks and uncertainties and there are important factors that could cause actual results to differ materially from

those expressed or implied by such forward-looking statements.

These factors, risks and uncertainties can be found in Part I, Item 1A,

“Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as the same

may be updated from time to time, including in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q.

statements made by us or on our behalf.

We and our representatives may from time to time make written or oral statements that are “forward-looking,”

including statements contained in this report and other filings with the Securities and Exchange Commission (“SEC”) and in

our reports and presentations to stockholders or potential stockholders.

In some cases, forward-looking statements can be identified

by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,”

“continue” or similar expressions.

Such forward-looking statements include risks and uncertainties and there are important

factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

factors, risks and uncertainties can be found in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the

fiscal year ended December 31, 2023, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,”

of this Quarterly Report on Form 10-Q.

we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to

11 unchanged sentences

The first business

unit includes a customer experience management business that has been in existence for 12 years.

Our customer experience management platform

(the “CXM Platform”) includes marketing, sales, service and content management systems, as well as other tools and integrations,

that enable companies to attract and engage customers throughout the customer experience.

We also provide education, services and support

to help customers be successful with our CXM Platform.

second business unit is a digital transformation business which provides customers with robotics process automation, process mining and

task mining to accelerate the digital transformation of enterprises.

We also have an ongoing technology innovation team to develop software

that supports the narrow needs of large enterprise customers.

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

of the outstanding shares of Sigmaways, Inc.

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

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

The acquisition closed on February 1, 2023.

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

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

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

unit, our CX division, includes a customer experience management business (the “CXM Platform”) that has been in existence

for 14 years.

Our CXM Platform includes marketing, sales, service and content management systems, as well as other tools

and integrations, that enable companies to attract and engage customers throughout the customer experience.

We also provide education,

services and support to help customers be successful with our CXM Platform.

second business unit, our DX division, is a digital transformation business which provides customers with robotics process automation,

process mining and task mining to accelerate the digital transformation of enterprises.

We also have an ongoing technology innovation

team to develop software that supports the narrow needs of large enterprise customers.

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

As of May 14, 2024, we have entered into consulting agreements with 14 companies to assist them in their IPO process, whereby we are

entitled to receive from each company a consulting fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights

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

$0.01 or JPY1 per share.

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

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

were incorporated in the State of Delaware on May 18, 2021.

We conduct business activities principally through our wholly-owned subsidiary,

HeartCore Co., Ltd.

(“HeartCore Japan”), a Japanese corporation, which was established in Japan by Mr.

Sumitaka Yamamoto, our CEO, in 2009.

September 6, 2022, HeartCore Enterprises, Inc.

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

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

the State of California, and its wholly-owned subsidiaries.

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

of developing and sales of software in the United States.

The acquisition was closed on February 1, 2023.

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

and HeartCore Capital Advisors, Inc.

as a part of our Go IPO consulting business.

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

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

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

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

revenue and customer base.

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

transformation business unit) had 937 total customers in Japan.

(“HeartCore Capital Advisors”) in Japan, as a part of our Go IPO consulting business.

In the fourth quarter of 2023, we formed HeartCore Luvina Vietnam Company Limited in Vietnam, which is engaged in the business of software

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.

Recent Developments

Shoji Co., Ltd.

Service Agreement

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

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

Pursuant to the terms of the GATES Agreement,

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

to hire human resources, if the Company deems necessary;

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

deems necessary;

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

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

to develop growth strategy after public listing;

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

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

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

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

deems necessary;

of documents into English which the Company agrees to translate;

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

GATES with support services related to GATES’ Nasdaq listing;

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

for investor relations activities, if the Company deems necessary;

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

for investor relations activities, if the Company deems necessary.

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

April 11, 2024 (the “Koei Shoji Effective Date”), the Company entered into a Service Agreement (the “Koei Shoji Agreement”)

by and between the Company and Koei Shoji Co., Ltd., a Japanese corporation (“Koei Shoji”).

Pursuant to the terms of the

Koei Shoji Agreement, Koei Shoji engaged the Company, on an exclusive basis, to assist Koei Shoji in connection with its initial public offering.

The following

summarized the main services to be provided by the Company (collectively,

the “Koei Shoji Services”):

Suggesting to hire human

resources, if Koei Shoji deems necessary;

Providing support services

to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles, if Koei Shoji deems

Providing support services

to solve accounting issues, if Koei Shoji deems necessary;

Providing support services

to translate accounting documents (i.e., financial statement, general ledger, journal entry) and other documents, if Koei Shoji deems

Assisting with introduction

to law firms, underwriters and auditing firms for Koei Shoji to make its selections at its sole discretion, if Koei Shoji deems necessary;

Assisting in the preparation

of documentation for internal controls required for an initial public offering or de-SPAC transaction by Koei Shoji;

Providing support services

for converting Koei Shoji’s financial statements based on United States generally accounting principles, if Koei Shoji deems necessary;

Providing support services

related to the Nasdaq, the New York Stock Exchange or the NYSE American listing, if Koei Shoji deems necessary ;

Providing support services

related to the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings, if Koei Shoji deems necessary;

Support for investor relations

activities, if Koei Shoji deems necessary;

Suggesting for preparing

of investor presentation/deck and executive summary of Koei Shoji’s operation, if Koei Shoji deems necessary;

Support for investor relations

activities, if Koei Shoji deems necessary.

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

advisor or broker/dealer.

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

Pursuant to the terms of the Koei Shoji Agreement, the parties agreed that the Company will not provide the

following services, among others:

negotiation of the sale of Koei Shoji’s securities;

participation in discussions between Koei

Shoji and potential investors;

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

pre-screening

of potential investors;

due diligence activities;

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

in Koei Shoji.

exchange for providing the Koei Shoji Services, Koei Shoji will pay to the Company $500,000 (the “Services Fee”) as follows:

the Services Fee on the Koei Shoji Effective Date;

$150,000 of the Services

Fee three months after the Koei Shoji Effective Date;

$150,000 of the Services

Fee six months after the Koei Shoji Effective Date.

Shoji Warrant

Phase 3, in return for the Company’s NADAQ listing, the Company shall issue, and the Conpany shall be entitled to receive, a warrant to

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

a publicly traded company, which may be revised by mutual agreement between the Parties to change the issuing entity from Company to

another entity.

The total amount of such shares shall be an amount equal to 3% of the fully diluted share capital of Koei Shoji as of

Effective Date;

provided, however, that the number of such shares may be adjusted subject to the Warrant.

The right to receive Warrant

shall be deemed fully earned and vested as of the Effective Date.

The Warrant shall be issued within 15 days upon establishment of a

holding entity of Koei Shoji.

Service Agreement

March 18, 2024 (the “PharmaBio Effective Date”), the Company entered into a Service Agreement (the “PharmaBio Agreement”)

by and between the Company and PharmaBio Corporation., a Japanese corporation (“PharmaBio”).

Pursuant to the terms of the

PharmaBio Agreement, PharmaBio engaged the Company, on an exclusive basis, to assist PharmaBio in connection with its initial public offering.

following summarized the main services to be provided by the Company (collectively,

the “PharmaBio Services”):

Suggesting to hire human

resources, if PharmaBio deems necessary;

Providing support services

to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles, if PharmaBio deems

Providing support services

to solve accounting issues, if PharmaBio deems necessary;

Providing support services

to translate accounting documents (i.e., financial statement, general ledger, journal entry) and other documents, if PharmaBio deems

Assisting with introduction

to law firms, underwriters and auditing firms for PharmaBio to make its selections at its sole discretion, if PharmaBio deems necessary;

Assisting in the preparation

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

Providing support services

for converting PharmaBio’s financial statements based on United States generally accounting principles, if PharmaBio deems

Providing support services

related to the Nasdaq, the New York Stock Exchange or the NYSE American listing, if PharmaBio deems necessary ;

Providing support services

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

Support for investor relations

activities, if PharmaBio deems necessary;

Suggesting for preparing

of investor presentation/deck and executive summary of PharmaBio’s operation, if PharmaBio deems necessary;

Support for investor relations

activities, if PharmaBio deems necessary.

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

advisor or broker/dealer.

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

following services, among others:

negotiation of the sale of PharmaBio’s securities;

participation in discussions between PharmaBio

and potential investors;

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

pre-screening

of potential investors;

due diligence activities;

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

in PharmaBio.

exchange for providing the PharmaBio Services, PharmaBio will pay to the Company $800,000 (the “Services Fee”) as follows:

the Services Fee on the PharmaBio Effective Date;

$100,000 of the Services

Fee 2 months after the PharmaBio Effective Date;

$100,000 of the Services

Fee 4 months after the PharmaBio Effective Date;

$100,000 of the Services

Fee 6 months after the PharmaBio Effective Date;

$100,000 of the Services

Fee on the PharmaBio IPO Closing Date;

$300,000 of the Services

Fee on the Exercise Date of stock acquisition rights.

is agreed that PharmaBio shall issue stock acquisition rights of Japanese companies, which is equivalent to 3%

of outstanding shares one day before public listing in return for and contingent upon its public listing, subject to

common practice and procedures prior to the initial public offering for NASDAQ listing.

PharmaBio and the Company shall discuss and conclude

the separate agreement that shall define specific terms and conditions of stock acquisition rights within six months from the Effective Date.

Service Agreement

February 23, 2024 (the “Jyo Effective Date”), the Company entered into a Service Agreement (the “Jyo Agreement”)

by and between the Company and Jyo Co., Ltd., a Japanese corporation (“Jyo”).

Pursuant to the terms of the Jyo Agreement,

Jyo engaged the Company, on an exclusive basis, to assist Jyo in connection with its initial public offering.

The following

summarized the main services to be provided by the Company (collectively, the “Jyo Services”):

Suggesting to hire human

resources, if Jyo deems necessary;

Providing support services

to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles, if Jyo deems necessary;

Providing support services

to solve accounting issues, if Jyo deems necessary;

Providing support services

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

Assisting with introduction

to law firms, underwriters and auditing firms for Jyo to make its selections at its sole discretion, if Jyo deems necessary;

Assisting in the preparation

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

Providing support services

for converting Jyo’s financial statements based on United States generally accounting principles, if Jyo deems necessary;

Providing support services

related to the Nasdaq, the New York Stock Exchange or the NYSE American listing, if Jyo deems necessary ;

Providing support services

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

Support for investor relations

activities, if Jyo deems necessary;

Suggesting for preparing

of investor presentation/deck and executive summary of Jyo’s operation, if Jyo deems necessary;

Support for investor relations

activities, if Jyo deems necessary.

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

advisor or broker/dealer.

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

services, among others:

negotiation of the sale of GATES’ securities;

participation in discussions between GATES and potential

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

negotiation of the sale of Jyo’s securities;

participation in discussions between Jyo and potential investors;

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

pre-screening of potential investors;

due diligence activities;

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

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

of the Services Fee on the GATES Effective Date;

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

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

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

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

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

traded company.

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

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

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

and (ii) two years later

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

stock in the U.S.

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

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

The term of the GATES Agreement may be renewed upon

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

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

in the GATES Agreement.

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

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

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

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

Pursuant to the terms of the GATES Warrant, the Company

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

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

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

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

or (c) GATES consummates any other GATES Fundamental

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

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

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

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

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

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

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

caused the GATES Trigger Date to be achieved.

The GATES Warrant contains a 9.99% equity blocker.

of May 2023 ATM Offering

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

(“Sutter”) that the Company was terminating

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

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

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

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

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

The Company did not sell any shares of common stock under

the May 2023 Prospectus Supplement.

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

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

2023 ATM Offering

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

between the Company and H.C.

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

Pursuant to the prospectus supplement

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

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

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

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

(the “Shares”).

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

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

333-270503), which was declared effective

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

prospectus relating to the offering of the Shares.

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

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

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

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

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

The Company will designate the maximum amount of the Shares

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

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

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

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

or terminate the October 2023 ATM Agreement.

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

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

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

ATM Agreement pursuant to its terms.

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

the Securities Act.

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

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

supplement disclosing the terms of such privately negotiated transaction.

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

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

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

Sales of the Shares will be settled through

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

There is no arrangement

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

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

2023 ATM Agreement;

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

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

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

Pursuant to the terms of the October 2023 ATM Agreement,

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

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

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

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

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

The Manager has the right, by giving written notice

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

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

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

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

Notice Regarding Minimum Bid Price Requirement

due diligence

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

exchange for providing the Jyo Services for Phase 1, Jyo will pay to the Company $750,000 (the “Services Fee”) as follows:

$250,000 of the Services Fee on the Jyo Effective Date;

$150,000 of the Services Fee within 45 days after the Jyo Effective

$200,000 of the Services Fee three months after the Jyo Effective

$150,000 of the Services Fee six months after the Jyo Effective

Phase 2, in return for Jyo’s Nasdaq listing, Jyo will issue and the Company will be entitled to receive, a warrant to acquire a

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

The total amount of such shares will be an amount equal to 2% of the fully diluted share capital of Jyo as of the Jyo Effective

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

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

and (ii) two years later from

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

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

Jyo or its affiliated company becomes a public traded company in the U.S.

The term of the Jyo Agreement may be renewed upon the mutual

written agreement of the parties to the Jyo Agreement.

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

in the Jyo Agreement.

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

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

February 23, 2024, Jyo issued to the Company a common stock purchase warrant (the “Jyo Warrant”) to purchase 80 shares of

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

Pursuant to the terms of the Jyo Warrant, the Company may,

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

the New York Stock Exchange or the NYSE American;

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

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

or (c) Jyo consummates any other Jyo Fundamental Transaction

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

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

of the Jyo Trigger Date, exercise the Jyo Warrant to purchase 80 shares of Jyo’s capital stock (subject to adjustment as provided

in the Jyo Warrant), which represents 2% of Jyo’s issued and outstanding common stock as of the issuance date of the Jyo Warrant,

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

The number of shares for which the Jyo

Warrant will be exercisable will be automatically adjusted on the Jyo Trigger Date to be 2% of the fully diluted number and class of

shares of capital stock of Jyo as of the Jyo Trigger Date, following completion of the transactions which caused the Jyo Trigger Date

to be achieved.

The Jyo Warrant contains a 9.99% equity blocker.

April 1, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common shares

to be paid on May 3, 2024 to shareholders of record as of April 26, 2024.

The Company may issue quarterly dividends going forward, contingent

upon the financial results.

The four potential annual dividends may be equal to or greater than the April 2024 dividend.

Noncompliance

with Nasdaq’s Minimum Bid Price Requirement

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

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

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

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

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

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

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

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

Capital Market under the symbol “HTCR.”

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

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

for the then-last 30 consecutive business days, the Company did not meet this requirement.

The Bid Price Notice indicated that the Company

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

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

If at any time during this period the closing

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

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

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

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

Alternatively,

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

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

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

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

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

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

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

Capital Market, with the exception of the Minimum Bid Price Requirement, and provided written notice of its intention to cure the deficiency

during the second compliance period by effecting a reverse stock split, if necessary, then the Company may be granted an additional 180

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

April 24, 2024, the Company received written notice from the Nasdaq Staff indicating that although the Company was not in compliance

with the Minimum Bid Price Requirement, the Nasdaq Staff determined that the Company is eligible for an additional 180 calendar day period,

or until October 21, 2024, to regain compliance.

The Nasdaq Staff indicated that its determination was based on the Company meeting the

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

on the Nasdaq Capital Market, with the exception of the Minimum Bid Requirement, and the Company’s written notice of its intention

to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

Accordingly, there is no

immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR.”

at any time during this additional time period the closing bid price of the Company’s common stock is at least $1.00 per share

for a minimum of 10 consecutive business days, the Nasdaq Staff will provide the Company with written confirmation of compliance and

the matter will be closed.

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

with the other listing requirements.

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

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

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

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

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

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

respectively.

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

The Company is currently monitoring the closing bid price of its common stock and evaluating its

alternatives, if appropriate, to resolve the deficiency and regain compliance with Minimum Bid Price Requirement.

the three months ended March 31, 2024 and 2023, we generated revenues of $5,046,732 and $8,734,150, respectively, and reported net

loss of $1,478,002 and net income of $1,808,037, respectively, and cash flows provided by operating activities of $741,381 and cash

flows used in operating activities of $1,048,059, respectively.

As noted in our unaudited consolidated financial statements, as of

March 31, 2024, we had an accumulated deficit of $16,096,819.

of Operations

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

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

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

For the Three Months Ended September 30,

Cost of Revenues

Operating expenses:

Selling expenses

General and administrative expenses

Research and development expenses

Total operating expenses

Loss from operations

Other income (expenses)

Loss before income tax provision

Income tax expense (benefit)

net loss attributable to non-controlling interest

Net loss attributable to HeartCore Enterprises, Inc.

$ (2,307,220 )

of Results of Operations for the Three Months Ended March 31, 2024 and 2023

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

ended March 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease)

during such periods.

For the Three Months Ended March 31,

$ (3,687,418 )

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

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

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

(ii) increased revenue of $138,290

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

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

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

development and services.

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

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

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

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

subsidiaries on February 1, 2023;

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

increase in sale.

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

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

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

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

on IR and PR in the U.S.

immediately after listing in Nasdaq in early 2022;

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

for sales staff.

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

30, 2023 and 2022, respectively.

and Administrative Expenses

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

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

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

(ii) an increase of $169,154 in

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

subsidiaries as well as the overall business expansion;

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

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

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

30, 2023 and 2022, respectively.

and Development Expenses

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

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

of new CMS management screen features in the current period.

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

2023 and 2022, respectively.

Income (Expenses)

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

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

other expenses.

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

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

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

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

Tax Expense (Benefit)

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

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

while no entity generated taxable income in the prior period.

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

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

Loss Attributable to Non-controlling Interest

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

Accordingly, we recorded net loss attributable

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

Loss Attributable to HeartCore Enterprises, Inc.

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

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

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

for the three months ended September 30, 2022.

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

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

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

such periods.

For the Nine Months Ended September 30,

Cost of revenues

4 unchanged sentences

Total operating expenses

Loss from operations

Other expenses

Loss before income tax provision

Income (loss) from operations

Other income (expenses)

Income (loss) before income tax provision

Income tax expense (benefit)

net loss attributable to non-controlling interest

Net loss attributable to HeartCore Enterprises, Inc.

Net income (loss)

net loss attributable to non-controlling interests

Net income (loss) attributable to HeartCore Enterprises,

$ (1,333,350 )

$ (3,215,639 )

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

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

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

consulting services;

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

of Sigmaways and its subsidiaries on February 1, 2023;

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

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

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

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

development and services.

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

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

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

from consulting services;

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

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

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

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

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

ended September 30, 2023 and 2022, respectively.

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

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

on IR and PR in the U.S.

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

for sales staff.

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

total revenues decreased by $3,687,418, or 42.2%, to $5,046,732 for the three months ended March 31, 2024 from $8,734,150 for the

three months ended March 31, 2023, mainly attributable to (i) the decreased revenues of $4,617,270 from GO IPO consulting services

as the Company’s two IPO consulting customers successfully listed on the Nasdaq in the three months ended March 31, 2023 and

the Company received warrants from its customers as noncash consideration from consulting services, while no such revenue in the three

months ended March 31, 2024;

offset by (ii) an increase of $721,815 in revenues from sale of on-premise

software, primarily due to the Company newly obtained two large orders from two customers during three months ended March 31, 2024.

total costs of revenues slightly decreased by $86,523, or 2.8%, to $3,014,543 for the three months ended March 31, 2024 from

$3,101,066 for the three months ended March 31, 2023, in light of the decrease in sales in GO IPO consulting services and software development and other miscellaneous services, offset by

the increase in the costs related to customized software development and services and maintenance and support services.

total gross profit decreased by $3,600,895, or 63.9%, to $2,032,189 for the three months ended March 31, 2024 from $5,633,084 for

the three months ended March 31, 2023, mainly attributable to (i) a decrease in gross profit of $4,248,772 from GO IPO consulting

services, as we recognized revenues from the warrants of the customers upon customers’ IPO effectiveness in the three months

ended March 31, 2023, while no such revenue was recognized in the current period;

offset by (ii) an increase in gross profit of

$728,871 in sale of on-premise software, as the sale of CMS license increased significantly, while there was not much change in the corresponding costs as the product was developed by ourself, instead of purchasing

from outsiders.

the reasons discussed above, our overall gross profit margin decreased by 24.2% to 40.3% for the three months ended March 31, 2024 from

64.5% in the three months ended March 31, 2023.

selling expenses decreased by $348,935, or 61.4%, to $219,707 for the three months ended March 31, 2024 from $568,642 in the three

months ended March 31, 2023, primarily attributable to a decrease of $280,819 in stock-based compensation, as the Company

granted common stocks to the employees of Sigmaways in 2023, and no such event in the current period.

a percentage of revenues, our selling expenses accounted for 4.4% and 6.5% of our total revenues for the three months ended March

31, 2024 and 2023, respectively.

and Administrative Expenses

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

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

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

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

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

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

in early 2022 when the Company finished going public.

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

general and administrative expenses decreased by $278,904 or 10.4%, to $2,406,303 for the three months ended March 31, 2024 from

$2,685,207 in the three months ended March 31, 2023, primarily attributable to (i) a decrease of $479,527 in stock-based

compensation, as the Company granted common stocks to the employees of Sigmaways during three months ended March 31, 2024, and no

such event in the current period;

offset by (ii) an increase of $146,044 in salaries and welfare expenses, as certain sales staff

were promoted to executive management, and their compensation was reclassified from selling expenses in 2023 to general and

administrative expenses in 2024, and (iii) an increase of $129,677 in office, utility and other expenses, as continuous expansion of our business and establishment of new subsidiary.

a percentage of revenues, general and administrative expenses were 47.7% and 30.7% of our revenues for the three months ended March

31, 2024 and 2023, respectively.

and Development Expenses

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

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

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

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

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

2023 and 2022, respectively.

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

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

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

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

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

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

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

research and development expenses slightly increased by $9,510 or 11.9%, to $89,134 in the three months ended March 31, 2024 from

$79,624 in the three months ended March 31, 2023, primarily attributable to an increase of $65,408 in outsourcing expenses relating

to the development of new CMS management screen features in the current period;

offset by (ii) a decrease of $55,898 in stock-based compensation,

as we granted common stock to the employees of Sigmaways during three months ended March 31, 2023, and no such event in the current period.

a percentage of revenues, research and development expenses were 1.8% and 0.9% of our revenues for the three months ended

March 31, 2024 and 2023, respectively.

Income (Expenses), Net

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

investment in warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other

income, and other expenses.

Total other income, net, of $169,874 for the three months ended March 31, 2023 decreased by $1,045,088

or 615.2% to other expenses, net, of $875,214 for the

three months ended March 31, 2024, primarily attributable to an increase of $234,082 in loss on fair value changes in investments in

marketable securities and an increase of $872,252 in loss on fair value changes in investment in warrants.

Tax Expense (Benefit)

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

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

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

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

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

Loss Attributable to Non-controlling Interest

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

Accordingly, we recorded a net loss

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

Net Loss Attributable to HeartCore Enterprises, Inc.

tax benefit was $80,167 for the three months ended March 31, 2024, a decrease of $741,615, or 112.1% from income tax expense of

$661,448 in the three months ended March 31, 2023, primarily due to a net loss in the current period, while we recorded a net income

in the three months ended March 31, 2023.

Net Income (Loss)

a result of the foregoing, we reported a net loss of $1,478,002 for the three months ended March 31, 2024, representing a $3,286,039

or 181.7% decrease from a net income of $1,808,037 for the three months ended March 31, 2023.

Loss Attributable to Non-controlling Interests

owned 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina.

Accordingly, we recorded net loss attributable to the non-controlling interests of $144,652 and $74,252 in the

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

Net Income (Loss) Attributable to HeartCore Enterprises, Inc.

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

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

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

for the nine months ended September 30, 2022.

of $1,333,350 for the three months

ended March 31, 2024, representing a $3,215,639 or 170.8% decrease from a net income of $1,882,289 for the three months ended

March 31, 2023.

and Capital Resources

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

As of September 30, 2023, our working

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

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

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

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

As of March 31, 2024, we had $1,219,251 in cash as compared to $1,012,479

as of December 31, 2023.

We also had $3,086,203 in accounts receivable as of March 31, 2024.

Our accounts receivable primarily include

balance due from customers for our on-premise software sold and services provided and accepted by customers, as well as amounts billable

to the customers for customized software development and services.

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

the Nine Months Ended

September 30,

cash flows used in operating activities

cash flows used in investing activities

cash flows provided by (used in) financing activities

of exchange rate changes

change in cash and cash equivalents

and cash equivalents, beginning of the period

and cash equivalents, end of the period

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

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

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

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

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

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

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

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

and service providers in the current period.

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

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

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

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

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

the fair value at the period end.

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

due to business.

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

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

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

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

Net cash flows used in investing activities

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

of cash acquired, of $724,910;

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

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

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

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

Net cash flows used in financing activities

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

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

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

It has also entered into two

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

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

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

For the Three Months Ended March 31,

Net cash provided by (used in) operating activities

$ (1,048,059 )

Net cash provided by (used in) investing activities

Net cash used in financing activities

Effect of exchange rate changes

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

cash provided by operating activities was $741,381 for the three months ended March 31, 2024, primarily consisting of the following:

loss of $1,478,002 for the three months ended March 31, 2024.

increase of $5,060,658 in other liabilities, as we received advance payment of $5,000,000 for the sale of a portion of the warrants

we received from one of our GO IPO customers that are exercisable upon the customer’s successful listing.

increase of $295,799 in accounts payable and accrued expenses .

decrease of $234,082 in fair value of investments in marketable shares.

decrease of $678,887 in fair value of investment in warrants.

by an increase of $3,257,972 in prepaid expenses, as we made advance payment of $3,360,000

for referral fee.

by an increase of $523,110 in accounts receivable due to increased sale of on-premise software in the current period.

by a decrease of $300,011 in deferred revenue, due to the decreased upfront payment received for IPO consulting services while we

had fewer new customers.

cash provided by investing activities amounted to $10,814 for the three months ended March 31, 2024, primarily consisting of repayment

of $10,814 of loan provided to related party.

cash used in financing activities amounted to $474,752 for the three months ended March 31, 2024, primarily consisting of repayment of

$207,486 for short-term and long-term debts, and net repayment of $383,353 for factoring arrangement, offset by the proceeds of $68,138

from short-term debt and capital contribution of $67,195 from non-controlling shareholder.

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.

of March 31, 2024, future minimum lease payments under the non-cancelable lease agreements are as follows:

Year Ended December 31,

7 unchanged sentences

Non-current lease liabilities

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

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

Company’s debts included short-term debt and long-term debts borrowed from banks and

financial institutions.

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

Year Ended December 31,

1 unchanged sentence

Sheet Arrangements

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

did not have any off-balance sheet arrangements as of March 31, 2024.

Accounting Policies and Estimates

discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements.

These financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“U.S.

GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and

revenues and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose

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

We continue to evaluate the estimates and

assumptions that we believe to be reasonable under the circumstances.

We rely on these evaluations as the basis for making judgments

about the carrying values of assets and liabilities that are not readily apparent from other sources.

Since the use of estimates is an

integral component of the financial reporting process, actual results could differ from those estimates.

Some of our accounting policies

require higher degrees of judgment than others in their application.

We believe critical accounting policies as disclosed herein reflect

the more significant judgments and estimates used in preparation of our unaudited consolidated financial statements.

account for business combinations using the acquisition method, which requires management to estimate the fair value of the tangible

assets, liabilities, identifiable intangible asset and non-controlling interest, and to properly allocate purchase price consideration

to the individual assets acquired, liabilities assumed and non-controlling interest.

Goodwill is measured as the excess amount of consideration

The allocation of the purchase price utilizes significant estimates and assumptions in determining the fair values of identifiable

assets acquired, liabilities assumed and non-controlling interest, especially with respect to intangible asset.

These estimates are based

on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated

with an asset and are reviewed by consulting with third-party valuation appraisers.

The purchase price allocation for business acquisitions

contains uncertainties because it requires management’s judgment.

fair value of the intangible asset is estimated using the income approach using the multi-period excess earnings method.

Management applies

significant judgement related to this fair value method, which included the selection of an expected EBITDA margin assumption for the

forecast period, and discount rate assumptions.

These significant assumptions are based on company specific information and projections,

which are not observable in the market (except for the discount rate assumption) and, therefore, are considered Level 2 and Level 3 measurements.

These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

accounting for business combinations is a critical accounting estimate because it requires estimates and judgement in assessing the future

cash flows of the acquired business, the fair value of non-controlling interest, and the allocation of the future cash flows to identifiable

intangible assets, in determining the fair value for assets and liabilities.

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

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

(i) identify the contract(s)

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

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

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

Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.

Company currently generates its revenues from the following main sources:

from On-Premise Software

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

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

for a specified term.

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.

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.

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.

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.

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.

Our discussion and analysis of our financial

condition and results of operations are based upon our unaudited consolidated financial statements.

These financial statements are prepared

in accordance with the generally accepted accounting principles in the United States (“U.S.

GAAP”), which requires us to

make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose

contingent assets and liabilities on the date of the unaudited consolidated financial statements, and to disclose the reported amounts

of revenues and expenses incurred during the financial reporting period.

We continue to evaluate the estimates and assumptions that we

believe to be reasonable under the circumstances.

We rely on these evaluations as the basis for making judgments about the carrying values

of assets and liabilities that are not readily apparent from other sources.

Since the use of estimates is an integral component of the

financial reporting process, actual results could differ from those estimates.

Some of our accounting policies require higher degrees

of judgment than others in their application.

We believe critical accounting policies as disclosed herein reflect the more significant

judgments and estimates used in preparation of our unaudited consolidated financial statements.

The Company recognizes revenues under ASC Topic 606,

“Revenue from Contracts with Customers”.

To determine revenue recognition for contracts with

customers, the Company performs the following five steps:

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

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

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

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

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.

The Company currently generates its revenue from the

following main sources:

Revenues from On-Premise Software

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.

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.

Revenues from Maintenance and Support Services

Maintenance and support services provided with software

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

the subscription.

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

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

Revenues from Software as a Service (“SaaS”)

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.

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.

Revenues from Software Development and Other

Miscellaneous Services

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.

Revenues from Customized Software Development

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 contracts 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.

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.

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

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.

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.

Revenues from Consulting

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

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

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

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

subject to the constraint on variable consideration.

The Company assesses the estimated amount of the variable noncash consideration at

contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of

cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved.

Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues.

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

in revenues until the underlying uncertainties have been 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.

The Company records deferred revenue

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

Deferred revenue is reported

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

The amount of revenues recognized during the 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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis