What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 375 added, 448 removed, 120 unchanged (87% of the section changed)

29 unchanged sentences

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.

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,

3 unchanged sentences

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.

14, 2024, we have entered into consulting agreements with 14 companies to assist them in their IPO process, pursuant to which 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 .

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 in

The Company received $9,000,000 during the six months ended June 30, 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.

July 2024, BloomZ Inc.

(“BloomZ”), one of our Go IPO clients, successfully began trading on The Nasdaq Capital Market.

We hope that this marks the beginning of a second wave of initial

public offerings for our Go IPO clients, as we are optimistic regarding the backlog of Go IPO deals.

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

2 unchanged sentences

(“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.

Sumitaka Yamamoto,

our CEO, in 2009.

September 6, 2022, 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.

acquisition closed on February 1, 2023.

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

and HeartCore Capital Advisors, Inc.

(“HeartCore Financial”) in the U.S.

and HeartCore Capital

Advisors, Inc.

(“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

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 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 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

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.

In the fourth

quarter of 2023, we formed HeartCore Luvina Vietnam Company Limited in Vietnam (“HeartCore Luvina”), 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.

In April 2024, HeartCore Financial incorporated a

branch office, HeartCore Financial, Inc.

– Japan Branch Office, in Japan.

February 29, 2024, the Company entered into a warrants transfer agreement with an unrelated third party to sell a warrant it

received from a Go IPO client as non-cash consideration from consulting services for $9,000,000 in cash.

The Company received

$9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants were exercisable

upon the Go IPO’s client’s consummation of a merger with a special purpose acquisition company or the occurrence of

other fundamental events, as described in the warrant agreement between the Company and the Go IPO client.

March 29, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common

The dividend was paid on May 3, 2024 to shareholders of record as of April 26, 2024, resulting in an aggregate of $417,283

in total dividends paid by the Company.

July 22, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common

The dividend will be paid on August 26, 2024 to shareholders of record as of August 19, 2024, resulting in an aggregate of

$417,283 in total dividends to be paid by the Company.

Company may continue to issue quarterly dividends going forward, contingent upon Board of Directors approval, following review of

the Company’s then-current financial results.

Future dividends, if any, may be less than, equal to or greater than recent

Noncompliance

34 unchanged sentences

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.

For the three months ended June 30, 2024 and 2023, we generated revenues

of $4,066,388 and $5,095,373, respectively, reported a net loss of $2,211,118 and $1,022,846, respectively.

the six months ended June 30, 2024 and 2023, we generated revenues of $9,113,120 and $13,829,523, respectively, reported a net loss

of $3,689,120 and net income of $785,191, respectively, and had cash flows used in operating activities of $1,460,744 and 1,368,562, respectively.

As noted in our unaudited consolidated financial statements, as of

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

June 30, 2024, we had an accumulated deficit of $18,047,919.

of Operations

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,

of Results of Operations for the Three Months Ended June 30, 2024 and 2023

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

June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such

For the Three Months Ended June 30,

$ (1,028,985 )

5 unchanged sentences

Total operating expenses

Loss from operations

Other expenses

Loss before income tax provision

Income tax benefit

net loss attributable to non-controlling interests

Net loss attributable to HeartCore Enterprises, Inc.

$ (1,951,100 )

$ (1,039,300 )

total revenues decreased by $1,028,985, or 20.2%, to $4,066,388 for the three months ended June 30, 2024 from $5,095,373 for the

three months ended June 30, 2023, mainly attributable to (i) the decreased revenues of $486,631 from GO IPO consulting services as

in the three months ended June 30, 202 4, the

Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement with the customer

was terminated and the Company will refund $500,000 to the customer;

(ii) the decreased revenues of $325,441 in maintenance and

supporting services, as we entered into a significant maintenance service contract with a customer in the three months ended June

30 , 2023 while there was no such contract in the

current period ;

and (iii) the decreased revenues of $172,894 in customized software development and services due to intense competition

in software industry.

total costs of revenues decreased by $326,431, or 9.1%, to $3,260,507 for the three months ended June 30, 2024 from $3,586,938 for

the three months ended June 30, 2023, in light of the decrease in sales in GO IPO consulting services and on-premise software, offset by the increase in the costs related to customized software

development and services and software as a service.

total gross profit decreased by $702,554, or 46.6%, to $805,881 for the three months ended June 30, 2024 from $1,508,435 for the

three months ended June 30, 2023, mainly attributable to (i) a decrease in gross profit of $118,376 from GO IPO consulting services

due to the consulting service agreement termination with a customer that resulted in reduction of consulting service revenues in the

three months ended June 30, 2024;

(ii) a decrease in gross profit of $346,136 in maintenance and support services in light of the

decrease in sales;

and (iii) a decrease in gross profit of $289,934 in customized software development and services in light of the

increase in costs due to intense market competition .

For the reasons discussed above, our overall gross profit margin decreased

by 9.8% to 19.8% for the three months ended June 30, 2024 from 29.6% in the three months ended June 30, 2023.

selling expenses decreased by $308,654, or 63.2%, to $179,408 for the three months ended June 30, 2024 from $488,062 in the three

months ended June 30, 2023, primarily attributable to (i) a decrease of $222,924 in advertising expenses due to less advertising

activities in the current period;

and (ii) a decrease of $77,580 in sales commission in light of the decrease in revenues.

a percentage of revenues, our selling expenses accounted for 4.4% and 9.6% of our total revenues for the three months ended

June 30, 2024 and 2023, respectively.

and Administrative Expenses

general and administrative expenses decreased by $425,478, or 17.4%, to $2,022,409 for the three months ended June 30, 2024 from

$2,447,887 in the three months ended June 30, 2023, primarily attributable to (i) a decrease of $230,118 in salaries and welfare due

to the retirement of certain senior employees;

and (ii) a decrease of $243,627 in office, utility, and other expenses due to our

effort to reduce operating costs.

a percentage of revenues, our general and administrative expenses were 49.7% and 48.0% of our total revenues for the three months

ended June 30, 2024 and 2023, respectively.

and Development Expenses

Our research and development expenses slightly increased by $71,660, or

180.9%, to $111,268 in the three months ended June 30, 2024 from $39,608 in the three months ended June 30, 2023, primarily attributable

to an increase of $72,559 in outsourcing expenses relating to the development of new CMS management screen features in the current period.

a percentage of revenues, our research and development expenses were 2.7% and 0.8% of our total revenues for the three months ended

June 30, 2024 and 2023, respectively.

Income (Expenses), Net

Our 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.

Other expenses, net, of $177,726 for the three months ended June

30, 2023 increased by $598,351, or 336.7%, to other expenses, net, of $776,077 for the three months ended June 30, 2024, primarily attributable

to an increase of $531,562 in loss on fair value changes in investment in warrants.

benefit was $72,163 in the three months ended June 30, 2024, a decrease of $549,839, or 88.4%, from income tax benefit of $622,002

in the three months ended June 30, 2023, primarily due to a net loss before income tax provision in the current period, while we

recorded a net income before income tax provision in the three months ended March 31, 2023 and the Company started to consider net operating losses carried forward from previous years in income tax calculation

and recognized an income tax benefit in the three months ended June 30, 2023 to offset the income tax expense recognized in the prior

As a result of the foregoing, we reported a net loss of $2,211,118 for

the three months ended June 30, 2024, representing a $1,188,272, or 116.2%, increase from a net loss of $1,022,846 for the three months

ended June 30, 2023.

Loss Attributable to Non-controlling Interests

We owned 51% equity interest in Sigmaways

and its subsidiaries and 51% equity interest in HeartCore Luvina.

Accordingly, we recorded net loss attributable to non-controlling

interests of $260,018 and $111,046 for the three months ended June 30, 2024 and 2023, respectively.

Loss Attributable to HeartCore Enterprises, Inc.

As a result of the foregoing, we reported a net loss attributable to HeartCore

Enterprises, Inc.

of $1,951,100 for the three months ended June 30, 2024, representing a $1,039,300, or 114.0%, increase from a net loss

attributable to HeartCore Enterprises, Inc.

of $911,800 for the three months ended June 30, 2023.

of Results of Operations for the Six Months Ended June 30, 2024 and 2023

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

30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

For the Six Months Ended June 30,

$ (4,716,403 )

Cost of revenues

Operating expenses:

Selling expenses

General and administrative expenses

Research and development expenses

Total operating expenses

Income (loss) from operations

Other income (expenses)

Other expenses

Income (loss) before income tax provision

2 unchanged sentences

net loss attributable to non-controlling interests

Net income (loss) attributable to HeartCore Enterprises,

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

$ (3,284,450 )

$ (4,254,939 )

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.

total revenues decreased by $4,716,403, or 34.1%, to $9,113,120 for the six months ended June 30, 2024 from $13,829,523 for the six

months ended June 30, 2023, mainly attributable to (i) the decreased revenues of $5,103,901 from GO IPO consulting services as the

Company’s two IPO consulting customers successfully listed on the Nasdaq in the six months ended June 30, 2023 and the Company

received warrants from its customers as non-cash consideration from consulting services, while there was no such activity in the six

months ended June 30, 2024;

(ii) the decreased revenues of $399,151 from maintenance and support services, as we entered into

a significant maintenance service contract with a customer in the six months ended June 30, 2023 while

there was no such contract in the current period ;

offset by (iii) an increase of $592,971 in revenues

from sale of on-premise software, primarily due to the Company newly obtained two large orders from two customers during the six

months ended June 30, 2024.

total costs of revenues slightly decreased by $412,954, or 6.2%, to $6,275,050 for the six months ended June 30, 2024 from

$6,688,004 for the six months ended June 30, 2023, mainly in light of the decrease in sales in GO IPO consulting services.

total gross profit decreased by $4,303,449, or 60.3%, to $2,838,070 for the six months ended June 30, 2024 from $7,141,519 for the

six months ended June 30, 2023, mainly attributable to (i) a decrease in gross profit of $4,367,148 from GO IPO consulting services,

as we recognized revenues from the warrants of the customers upon customers’ IPO effectiveness in the six months ended June

30, 2023, while there was no such activity in the current period;

(ii) a decrease in gross profit of $483,044 in maintenance and

support services in light of the decrease in sales;

offset by (iii) an increase in gross profit of $759,015 in sales of on-premise

software, as the sales 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 20.5% to 31.1% for the six months ended June 30, 2024 from

51.6% in the six months ended June 30, 2023.

selling expenses decreased by $657,589, or 62.2%, to $399,115 for the six months ended June 30, 2024 from $1,056,704 in the six

months ended June 30, 2023, primarily attributable to a decrease of $338,863 in stock-based compensation, as the Company granted

shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period;

and (ii) a decrease of $322,142 in advertising expense due to less advertising activities in the current period.

As a percentage of revenues, our selling expenses accounted for 4.4% and

7.6% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

and Administrative Expenses

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.

general and administrative expenses decreased by $704,382, or 13.7%, to $4,428,712 for the six months ended June 30, 2024 from

$5,133,094 in the six months ended June 30, 2023, primarily attributable to (i) a decrease of $532,207 in stock-based compensation,

as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event

in the current period;

and (ii) a decrease of $113,950 in office, utility, and other expenses due to our effort to reduce operating

a percentage of revenues, our general and administrative expenses were 48.6% and 37.1% of our total revenues for the six months

ended June 30, 2024 and 2023, respectively.

and Development Expenses

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

research and development expenses slightly increased by $81,170, or 68.1%, to $200,402 in the six months ended June 30, 2024 from

$119,232 in the six months ended June 30, 2023, primarily attributable to an increase of $137,967 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.

offset by (ii) a decrease of $56,797 in stock-based

compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was

no such event in the current period.

a percentage of revenues, our research and development expenses were 2.2% and 0.9% of our total revenues for the six months ended

June 30, 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.

Our 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.

Other expenses, net, of $7,852 for the six months ended June

30, 2023 increased by $1,643,439, or 20,930.2%, to other expenses, net, of $1,651,291 for the six months ended June 30, 2024, primarily attributable

to an increase of $201,309 in loss on fair value changes in investments in marketable securities and an increase of $1,403,814 in loss

on fair value changes in investment in warrants.

Tax Expense (Benefit)

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.

tax benefit was $152,330 for the six months ended June 30, 2024, a decrease of $191,776, or 486.2%, from income tax expense of

$39,446 in the six months ended June 30, 2023, primarily due to a net loss before income tax provision in the current period, while

we recorded a net income before income tax provision in the six months ended June 30, 2023.

Income (Loss)

As a result of the foregoing, we reported a net loss of $3,689,120 for

the six months ended June 30, 2024, representing a $4,474,311, or 569.8%, decrease from a net income of $785,191 for the six months ended

June 30, 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 $1,333,350 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.

We owned 51% equity interest in Sigmaways

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

Accordingly, we recorded net loss attributable to non-controlling

interests of $404,670 and $185,298 for the six months ended June 30, 2024 and 2023, respectively.

Income (Loss) Attributable to HeartCore Enterprises, Inc.

As a result of the foregoing, we reported a net loss attributable to HeartCore

Enterprises, Inc.

of $3,284,450 for the six months ended June 30, 2024, representing a $4,254,939, or 438.4%, decrease from a net income

attributable to HeartCore Enterprises, Inc.

of $970,489 for the six months ended June 30, 2023.

and Capital Resources

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.

of June 30, 2024, we had $3,806,349 in cash and cash equivalents, as compared to $1,012,479 as of December 31, 2023.

We also had $2,440,872 in accounts

receivable, current as of June 30, 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:

For the Three Months Ended March 31,

Net cash provided by (used in) operating activities

For the Six Months Ended June 30,

Net cash flows used in operating activities

$ (1,460,744 )

Net cash provided by (used in) investing activities

Net cash used in financing activities

$ (1,368,562 )

Net cash flows provided by (used in) investing activities

Net cash flows used in financing activities

Effect of exchange rate changes

2 unchanged sentences

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,

cash flows used in operating activities was $1,460,744 for the six months ended June 30, 2024, primarily consisting of the

Net loss of $3,689,120

for the six months ended June 30, 2024.

Depreciation and amortization expenses of $374,946.

Non-cash lease expense of $182,546.

A loss of $430,331 on fair value changes in investments in marketable shares.

A loss of $1,237,707 on fair value changes in investment in warrants.

An increase of $548,402 in accounts receivable due to increased sale of on-premise software in the current period.

Offset by an increase of $558,667

in other liabilities, mainly because we terminated the consulting service agreement

with a customer and will refund $500,000 to the customer.

Net cash flows provided by investing activities amounted to $5,271,823

for the six months ended June 30, 2024, primarily attributable to net proceeds from sale of unearned warrants of $5,640,000, offset by

payment of $350,000 to purchase long-term investment in SAFE and prepayment of $35,209 for property and equipment.

cash flows used in financing activities amounted to $874,136 for the six months ended June 30, 2024, primarily consisting of

repayment of $281,451 for short-term and long-term debts, and net repayment of $242,008 for factoring arrangement, and dividend

distribution of $417,283.

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 June 30, 2024, future minimum lease payments under the non-cancelable lease agreements are as follows:

Year Ending December 31,

Finance Leases

6 unchanged sentences

Non-current lease liabilities

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,

Company’s debts included long-term debts borrowed from banks and financial institutions.

of June 30, 2024, future minimum principal payments for long-term debts are as follows:

Year Ending December 31,

Remaining of 2024

Sheet Arrangements

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

did not have any off-balance sheet arrangements as of June 30, 2024.

Accounting Policies and Estimates

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.

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.

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.

Company recognizes revenues under the Financial Accounting Standards Board’s Accounting Standards Codification (“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

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

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

right for a specified term.

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

to the customers.

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

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

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 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 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 contract pricing is at stated billing rates per hour.

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

For services provided under the 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

These contracts are

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

For services provided under the contracts that result in the

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

an asset with an alternative use to the Company.

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

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

customers of the Company’s performance to date.

from Consulting Services

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

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

and supporting the listing process.

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

Cash consideration is paid in installment

payments and is recognized in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance

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.

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 Company records reduction to revenues for estimated

customer returns and allowances.

The Company bases its estimates on historical rates of customer returns and allowances as well as the

specific identification of outstanding returns.

The actual amount of customer returns and allowances, which is inherently uncertain, may

differ from the Company’s estimates.

If the Company determines that actual or expected returns or allowances are significantly higher

or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which

it makes such a determination.

Reserves for customer refunds are included within other current liabilities or other non-current liabilities

on the consolidated balance sheets.

At a minimum, the Company reviews and refines these estimates on a quarterly basis.

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, current and non-current, 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 six months ended June 30, 2024 and 2023 that were included

in the opening deferred revenue balance was approximately $ 1.5 million and $ 1.3 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