What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-14 · 244 added, 272 removed, 223 unchanged (70% of the section changed)

37 unchanged sentences

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.

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.

2022, we started the GO IPO business, which supports Japanese companies listing on The Nasdaq Stock Market and the New York Stock Exchange

in the United States.

As of November 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.

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

13 unchanged sentences

(“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 (“HeartCore Luvina”), which is engaged in the business of software

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 development.

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

4 unchanged sentences

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.

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

On February 29, 2024, the Company entered into a

warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting

Customer”) as noncash consideration from consulting services for $9,000,000 in cash.

The warrants to be transferred are exercisable

only upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of

other fundamental events defined in the warrant agreement it had with the Consulting Customer.

The Company completed its sale of warrants

in September 2024 and recorded $3,970,628 in loss on sale of warrants from this transaction.

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

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 shares.

The dividend was paid on August 26, 2024 to shareholders of record as of August 19, 2024, resulting in an aggregate of $417,283 in

total dividends 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 dividends.

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

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

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

1 unchanged sentence

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

The Bid Price Notice indicated that the Company

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 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.

Capital Market under the symbol “HTCR,” and the Company continued to monitor the closing bid price of its common stock and

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

Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share and, as of October 26, 2023, based

upon the closing bid price for the then-last 30 consecutive business days, the Company no longer met this requirement.

The Bid Price

Notice indicated that the Company would be provided 180 calendar days, or until April 23, 2024, in which to regain compliance.

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

Alternatively,

4 unchanged sentences

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 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.

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

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

On April 24, 2024, the Company received written notice (the “April 2024 Nasdaq Letter”) 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 was eligible for an additional 180 calendar day period, or until October 21, 2024, to regain compliance.

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 effectuating a reverse stock split, if necessary.

Accordingly, there was 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 between April 24, 2024 and October 21, 2024, the closing 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 would be closed.

October 22, 2024, the Company received written notice (the “October 2024 Nasdaq Notice”) from the Nasdaq Staff indicating

that the Company was not in compliance with the Minimum Bid Price Requirement.

Pursuant to the October 2024 Nasdaq Notice, unless the

Company requests an appeal of the determination to delist the Company’s common stock by October 29, 2024, trading of the Company’s

common stock will be suspended at the opening of business on October 31, 2024, and a Form 25-NSE will be filed with the SEC which will

remove the Company’s securities from listing and registration on Nasdaq.

Company appealed the determination on October 29, 2024.

Submission of the hearing request stayed the suspension of the Company’s

securities and the filing of the Form 25-NSE pending the Panel’s decision.

On November 5, 2024, the Company received written

notice from the Nasdaq Staff that the Company demonstrated compliance with the $1.00 minimum bid price requirement set forth in Nasdaq

Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market.

As a result, the hearing appealed on October 29, 2024 has

now been cancelled as the Company regained compliance with the Nasdaq Capital Market’s listing requirements.

the three months ended September 30, 2024 and 2023, we generated revenues of $17,850,411 and $4,688,908, respectively, reported a net

income of $10,816,930 and a net loss of $2,541,133, respectively.

the nine months ended September 30, 2024 and 2023, we generated revenues of $26,963,531 and $18,518,431, respectively, reported a net

income of $7,127,810 and a net loss of $1,755,942, respectively, and had cash flows used in operating activities of $3,499,514 and $2,457,661,

respectively.

As noted in our unaudited consolidated financial statements, as of September 30, 2024, we had an accumulated deficit of

of Operations

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

of Results of Operations for the Three Months Ended September 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 )

September 30, 2024 and 2023, 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

4 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Other expenses

Loss before income tax provision

Income tax benefit

Income (loss) before income tax provision

Income tax expense

Net income (loss)

net loss attributable to non-controlling interests

Net loss attributable to HeartCore Enterprises, Inc.

$ (1,951,100 )

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

$ (2,307,220 )

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.

total revenues increased by $13,161,503, or 280.7%, to $17,850,411 for the three months ended September 30, 2024 from $4,688,908 for

the three months ended September 30, 2023, mainly attributable to the increased revenues of $13,272,315 from GO IPO consulting services

as two of the Company’s GO IPO customers successfully listed on the Nasdaq in the third quarter of 2024 and the Company recognized

revenues from noncash consideration in the form of warrants and ordinary shares from the consulting services customers.

total costs of revenues decreased by $427,217, or 11.1%, to $3,433,024 for the three months ended September 30, 2024 from $3,860,241

for the three months ended September 30, 2023, primarily attributable to (i) a decrease of $238,701 in the costs of GO IPO consulting

services in line with the decrease in revenues of GO IPO consulting services by excluding th e amount recognized from noncash consideration;

(ii) a decrease of $219,058 in the costs of customized software development and services in light of the decrease in sales.

total gross profit increased by $13,588,720, or 1,639.8%, to $14,417,387 for the three months ended September 30, 2024 from $828,667

for the three months ended September 30, 2023, mainly attributable to an increase in gross profit of $13,511,016 from GO IPO consulting

services as the Company recognized revenues from noncash consideration in the form of warrants and ordinary shares from two of IPO customers

upon their IPO effectiveness with no associated costs in the three months ended September 30, 2024, while there was no such event during

the three months ended September 30, 2023 .

the reason discussed above, our overall gross profit margin increased by 63.1% to 80.8% for the three months ended September 30, 2024

from 17.7% for the three months ended September 30, 2023.

selling expenses decreased by $30,933, or 11.3%, to $243,110 for the three months ended September 30, 2024 from $274,043 in the three

months ended September 30, 2023, primarily attributable to a decrease of $41,224 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 selling expenses accounted for 1.4% and 5.9% of our total revenues for the three months ended September

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.

general and administrative expenses decreased by $205,581, or 9.5%, to $1,966,717 for the three months ended September 30, 2024 from

$2,172,298 in the three months ended September 30, 2023, primarily attributable to a decrease of $230,045 in salaries and welfare due

to the retirement of certain employees.

a percentage of revenues, our general and administrative expenses were 11.0% and 46.3% of our total revenues for the three months ended

September 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.

research and development expenses decreased by $62,542, or 36.8%, to $107,529 in the three months ended September 30, 2024 from $170,071

in the three months ended September 30, 2023, primarily attributable to a decrease of $61,986 in outsourcing expenses relating to the

development of new CMS management screen features which will be completed soon.

a percentage of revenues, our research and development expenses were 0.6% and 3.6% of our total revenues for the three months ended September

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.

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

in warrants, loss on sale of warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other

income, and other expenses.

Other expenses, net, of $733,975 for the three months ended September 30, 2023 increased by $323,851, or

44.1%, to other expenses, net, of $1,057,826 for the three months ended September 30, 2024, primarily attributable to (i) a loss of $3,970,628

on sale of warrants, offset (ii) by an increase of $3,330,079 in changes in fair value of investment in warrants and (iii) an increase

of $394,012 in changes in fair value of investments in marketable securities.

tax expense was $225,275 in the three months ended September 30, 2024, an increase of $205,862, or 1,060.4%, from income tax expense

of $19,413 in the three months ended September 30, 2023, primarily due to a net income before income tax provision in the current period,

while we recorded a net loss before income tax provision in the three months ended September 30, 2023.

Income (Loss)

a result of the foregoing, we reported a net income of $10,816,930 for the three months ended September 30, 2024, representing a $13,358,063,

or 525.7%, increase from a net loss of $2,541,133 for the three months ended September 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 )

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 $240,876 and $233,913 for the three months ended September 30, 2024 and 2023, respectively.

Income (Loss) Attributable to HeartCore Enterprises, Inc.

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

of $11,057,806 for the three months ended

September 30, 2024, representing a $13,365,026, or 579.3%, increase from a net loss attributable to HeartCore Enterprises, Inc.

of $2,307,220

for the three months ended September 30, 2023.

of Results of Operations for the Nine Months Ended September 30, 2024 and 2023

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

September 30, 2024 and 2023, 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

7 unchanged sentences

Income (loss) before income tax provision

Income tax expense (benefit)

Income tax expense

Net income (loss)

2 unchanged sentences

$ (1,336,731 )

$ (4,254,939 )

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

total revenues increased by $8,445,100, or 45.6%, to $26,963,531 for the nine months ended September 30, 2024 from $18,518,431 for

the nine months ended September 30, 2023, mainly attributable to the increased revenues of $8,168,414 from GO IPO consulting

services as two of the Company’s GO IPO customers successfully listed on the Nasdaq in the third quarter of 2024 and the

Company recognized revenues from noncash consideration in the form of warrants and ordinary shares from the consulting services

customers of $13.5 million, while only $4 million of revenue recognized from noncash consideration in the form of warrants in the

nine months ended September 30, 2023.

total cost of revenues decreased by $840,171, or 8.0%, to $9,708,074 for the nine months ended September 30, 2024 from $10,548,245 for

the nine months ended September 30, 2023, mainly attributable to (i) a decrease of $975,454 in the costs of GO IPO consulting services

in line with the decrease in revenues of GO IPO consulting services by excluding th e amount recognized from noncash consideration, offset

by (ii) an increase of $259,917 in customized software development and services as the sales increased.

total gross profit increased by $9,285,271, or 116.5%, to $17,255,457 for the nine months ended September 30, 2024 from $7,970,186 for

the nine months ended September 30, 2023, mainly attributable to an increase in gross profit of $9,143,868 from GO IPO consulting services,

as the Company recognized greater revenues from noncash consideration from IPO customers upon their IPO effectiveness with no associated

costs in the nine months ended September 30, 2024 than that recognized in the same period in 2023.

the reason discussed above, our overall gross profit margin increased by 21.0% to 64.0% for the nine months ended September 30, 2024

from 43.0% in the nine months ended September 30, 2023.

selling expenses decreased by $688,522, or 51.7%, to $642,225 for the nine months ended September 30, 2024 from $1,330,747 in the nine

months ended September 30, 2023, primarily attributable to (i) a decrease of $380,087 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.

(ii) a decrease of $337,882 in advertising expense due to less advertising activities in the current period.

a percentage of revenues, our selling expenses accounted for 2.4% and 7.2% of our total revenues for the nine months ended September

30, 2024 and 2023, respectively.

and Administrative Expenses

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.

general and administrative expenses decreased by $909,963, or 12.5%, to $6,395,429 for the nine months ended September 30, 2024 from

$7,305,392 in the nine months ended September 30, 2023, primarily attributable to (i) a decrease of $566,923 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 $314,119 in salaries welfare mainly due to the retirement of certain employees.

a percentage of revenues, our general and administrative expenses were 23.8% and 39.4% of our total revenues for the nine months ended

September 30, 2024 and 2023, respectively.

and Development Expenses

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

research and development expenses slightly increased by $18,628, or 6.4%, to $307,931 in the nine months ended September 30, 2024 from

$289,303 in the nine months ended September 30, 2023, primarily attributable to (i) an increase of $75,981 in outsourcing expenses relating

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

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.

offset by (ii) a decrease of $57,353 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 1.1% and 1.6% of our total revenues for the nine months ended September

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 $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 $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.

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

in warrants, loss on sale of warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other

income, and other expenses.

Other expenses, net, of $741,827 for the nine months ended September 30, 2023 increased by $1,967,290, or

265.2%, to other expenses, net, of $2,709,117 for the nine months ended September 30, 2024, primarily attributable to a loss of $3,970,628

on sale of warrants, offset by an increase of $192,703 in changes in fair value of investments in marketable securities and an increase

of $1,926,265 in changes in fair value of investment in warrants.

tax expense was $72,945 for the nine months ended September 30, 2024, an increase of $14,086, or 23.9%, from income tax expense of $58,859

in the nine months ended September 30, 2023, primarily due to an income before income tax provision in the current period, while we recorded

a loss before income tax provision in the nine months ended September 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.

a result of the foregoing, we reported a net income of $7,127,810 for the nine months ended September 30, 2024, representing a $8,883,752,

or 505.9%, increase from a loss of $1,755,942 for the nine months ended September 30, 2023.

Loss Attributable to Non-controlling Interests

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.

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 $645,546 and $419,211 for the nine months ended September 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.

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

of $7,773,356 for the nine months ended

September 30, 2024, representing a $9,110,087, or 681.5%, increase from a net loss attributable to HeartCore Enterprises, Inc.

of $1,336,731

for the nine months ended September 30, 2023.

and Capital Resources

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 Six Months Ended June 30,

of September 30, 2024, we had $1,232,117 in cash and cash equivalents, as compared to $1,012,479 as of December 31, 2023.

$2,578,855 in accounts receivable, current as of September 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 a summary of our cash flows for the periods indicated:

For the Nine Months Ended September 30,

Net cash flows used in operating activities

7 unchanged sentences

Cash and cash equivalents, end of the period

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.

cash flows used in operating activities was $3,499,514 for the nine months ended September 30, 2024, primarily consisting of the following:

income of $7,127,810 for the nine months ended September 30, 2024.

securities and warrants received as noncash consideration in total of $13,541,693 as two of our IPO consulting customers completed

the IPO during the current period.

gain of $1,631,700 on fair value changes in investment in warrants.

increase of $685,531 in accounts receivable due to increased sale of on-premise software in the current period.

by loss of $3,970,628 recognized on sale of warrants to a third party.

by depreciation and amortization expenses of $561,659.

by an increase of $540,008 in other liabilities, mainly because we terminated the consulting service agreement with a GO IPO

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

cash flows provided by investing activities amounted to $5,317,323 for the nine months ended September 30, 2024, primarily attributable

to net proceeds from sale of warrants of $5,640,000, offset by payment of $350,000 to purchase long-term investment in SAFE.

cash flows used in financing activities amounted to $1,529,441 for the nine months ended September 30, 2024, primarily consisting of

repayment of $453,048 for short-term and long-term debts, net repayment of $257,295 for factoring arrangement, and dividend distribution

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,

It has also entered into a lease for office equipment and it was terminated in March 2024, and two leases for vehicles,

one of which was terminated in September 2023, and these leases were classified as finance leases.

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

Year Ended December 31,

Finance Leases

7 unchanged sentences

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,

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

Remaining of 2024

Sheet Arrangements

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

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

Accounting Policies and Estimates

55 unchanged sentences

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.

Company provides customers with software development and support services pursuant to their specific requirements, which are primarily

composed 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

30 unchanged sentences

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.

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 on the consolidated balance sheets.

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

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

1 unchanged sentence

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.

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 nine months ended September 30, 2024 and 2023

that were included in the opening deferred revenue balance was approximately $1.8 million and $1.5 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