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Item 1. Financial Statements

2025-11-18 compared with 2025-08-13 · 920 added, 927 removed, 290 unchanged (86% of the section changed)

FINANCIAL STATEMENTS

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

ENTERPRISES, INC.

BALANCE SHEETS

September 30,

Current assets:

2 unchanged sentences

Investments in marketable securities

Investment in warrants

Prepaid expenses

Current portion of long-term note receivable

Due from related party

Deferred offering costs

Other current assets

Current assets of discontinued operations

Total current assets

Non-current assets:

Accounts receivable, non-current

Property and equipment, net

4 unchanged sentences

Security deposits

Long-term loan receivable from related party

Other non-current assets

Non-current assets of discontinued operations

Total non-current assets

3 unchanged sentences

Accounts payable and accrued expenses – related party

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related parties

Due to related party

Short-term debt – related party

8 unchanged sentences

Other current liabilities

Current liabilities of discontinued operations

Total current liabilities

4 unchanged sentences

Asset retirement obligations

Non-current liabilities of discontinued operations

Total non-current liabilities

2 unchanged sentences

Preferred shares, $ 0.0001 par value, 20,000,000 shares authorized;

Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of June 30, 2025 and December 31, 2024, respectively;

aggregate liquidation preference of $ 2,200,611 and nil as of June 30, 2025 and December 31, 2024, respectively

Common shares, $ 0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of September 30, 2025 and December 31, 2024, respectively;

aggregate liquidation preference of $ 2,256,833 and nil as of September 30, 2025 and December 31, 2024, respectively

Common shares, $ 0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Subscription receivable

11 unchanged sentences

Total liabilities and shareholders’ equity

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS )

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

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS )

For the Three Months Ended

For the Six Months Ended

Cost of revenues (including cost of revenues resulting from transactions with a related party of $ 31,328 and $ 56,523 for the three and six months ended June 30, 2025, respectively, and of $ 25,117 and $ 25,117 for the three and six months ended June 30, 2024, respectively)

September 30,

For the Nine Months Ended

September 30,

Cost of revenues (including cost of revenues resulting from transactions with a related party of $ 61,078 and $ 117,601 for the three and nine months ended September 30, 2025, respectively, and of $ 101,452 and $ 126,569 for the three and nine months ended September 30, 2024, respectively)

Operating expenses:

Selling expenses

General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of $ 11,433 and $ 29,048 for the three and six months ended June 30, 2025, respectively, and of $ 6,473 and $ 6,473 for the three and six months ended June 30, 2024, respectively)

General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of nil and $ 29,048 for the three and nine months ended September 30, 2025, respectively, and of $ 17,474 and $ 23,947 for the three and nine months ended September 30, 2024, respectively)

Research and development expenses

Total operating expenses

Income (loss) from operations

( 1,507,204 )

( 1,136,692 )

Income (loss) from continuing operations

( 1,859,402 )

1 unchanged sentence

Changes in fair value of investments in marketable securities

Changes in fair value of investment in warrants

Changes in fair value of investments in warrants

Loss on sale of warrants

( 3,970,628 )

Changes in fair value of derivative liability

Interest income

1 unchanged sentence

Other expenses

Total other income (expenses)

Total other expenses

( 1,031,704 )

Income (loss) before income tax expense (benefit)

( 2,762,892 )

Income (loss) from continuing operations before income tax expense

( 2,858,295 )

Income tax expense

Net income (loss) from continuing operations

( 2,913,181 )

Income tax expense (benefit)

Income (loss) from discontinued operations, net of income tax

Net income (loss)

( 1,724,700 )

( 2,075,875 )

( 3,689,120 )

net loss attributable to non-controlling interests

1 unchanged sentence

( 1,553,018 )

( 1,987,090 )

( 3,284,450 )

Dividends accrued on Series A convertible preferred shares

2 unchanged sentences

$ ( 1,609,851 )

$ ( 1,987,701 )

$ ( 3,284,450 )

Other comprehensive income (loss):

2 unchanged sentences

( 1,715,032 )

( 2,027,837 )

( 3,702,945 )

comprehensive loss attributable to non-controlling interests

1 unchanged sentence

$ ( 1,539,679 )

$ ( 1,937,902 )

$ ( 3,290,474 )

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

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

per common share

Income (loss) from discontinued operations per common share

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

per common share

Weighted average common shares outstanding

The accompanying notes are an integral

part of these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2025 AND 2024

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

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

Preferred Shares

Common Shares

Accumulated Other

Total HeartCore Enterprises, Inc.

Comprehensive

9 unchanged sentences

Foreign currency translation adjustment

Issuance of common shares

Issuance of common shares related to at the market offering agreement

Collection of subscription receivable

14 unchanged sentences

( 1,281,417 )

Net income (loss)

Foreign currency translation adjustment

Dividends accrued on Series A convertible preferred shares

Stock-based compensation

Balance, September 30, 2025

$ ( 17,797,861 )

$ ( 1,366,835 )

HeartCore Enterprises, Inc.

Comprehensive

Shareholders’

Non-controlling

Shareholders’

14 unchanged sentences

( 18,047,919 )

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

Cash flows from operating activities:

$ ( 18,047,919 )

income (loss)

currency translation adjustment

September 30, 2024

$ ( 6,990,113 )

Adjustments to reconcile net loss to net cash flows used in operating

$ ( 6,990,113 )

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

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

Cash flows from operating activities of continuing operations:

Net income (loss)

$ ( 1,724,700 )

Income from discontinued operations, net of income tax

Net income (loss) from continuing operations

( 2,913,181 )

Adjustments to reconcile net income (loss) from continuing

operations to net cash flows used in operating activities of continuing operations:

Depreciation and amortization expenses

Loss on disposal of property and equipment

Amortization of debt issuance costs

Non-cash lease expense

2 unchanged sentences

Stock-based compensation

Marketable securities received as noncash consideration

Warrants received as noncash consideration

( 12,969,683 )

Changes in fair value of investments in marketable securities

Changes in fair value of investment in warrants

Changes in fair value of investments in warrants

( 1,631,700 )

Loss on sale of warrants

Changes in fair value of derivative liability

Gain on settlement of asset retirement obligations

1 unchanged sentence

Accounts receivable

( 1,145,166 )

Prepaid expenses

1 unchanged sentence

Accounts payable and accrued expenses – related party

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related parties

Due to related party

Operating lease liabilities

2 unchanged sentences

Other liabilities

Net cash flows used in operating activities

Net cash flows used in operating activities of continuing operations

( 2,980,958 )

( 3,027,115 )

Cash flows from investing activities:

Purchases of property and equipment

Prepayment for property and equipment

Cash flows from investing activities of continuing operations:

Purchase of investment in SAFE

1 unchanged sentence

Proceeds from sale of marketable securities

Repayment of loan provided to related party

Net cash flows provided by investing activities

Cash flows from financing activities:

Payments for finance leases

Proceeds from short-term debt

Repayment of short-term and long-term debts

Net cash flows provided by investing activities of continuing operations

Cash flows from financing activities of continuing operations:

Payments for finance lease

Repayment of related party debt

Repayment of long-term debts

Repayment of insurance premium financing

3 unchanged sentences

Distribution of dividends

Proceeds from issuance of common shares

Proceeds from issuance of common shares related to at the market offering agreement

Proceeds from collection of subscription receivable

1 unchanged sentence

Proceeds from issuance of Series A convertible preferred shares and common shares related to securities purchase agreement, net of share issuance costs

Net cash flows provided by (used in) financing activities

Net cash flows provided by (used in) financing activities of continuing operations

( 1,168,769 )

Cash flows from discontinued operations:

Net cash flows provided by (used in) operating activities of discontinued operations

Net cash flows provided by investing activities of discontinued operations

Net cash flows used in financing activities of discontinued operations

Net cash flows used in discontinued operations

( 1,080,748 )

Effect of exchange rate changes

6 unchanged sentences

Non-cash investing and financing transactions:

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

Insurance premium financing

1 unchanged sentence

Issuance of common shares related to equity purchase agreement

Dividends accrued on Series A

convertible preferred shares

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION

HeartCore Enterprises, Inc.

USA”), a holding company, was incorporated under the laws of the State of Delaware on May 18, 2021 .

On July 16, 2021, HeartCore USA executed a share

exchange agreement with certain shareholders of HeartCore Co., Ltd.

(“HeartCore Japan”), a company that was incorporated in

Japan on June 12, 2009.

Pursuant to the terms of the share exchange agreement, HeartCore USA issued 15,999,994 shares of its common shares

to the shareholders of HeartCore Japan in exchange for 10,706 shares out of 10,984 shares of common shares issued by HeartCore Japan,

representing approximately 97.5 % of HeartCore Japan’s outstanding common shares.

On February 24, 2022, HeartCore USA purchased the

remaining 278 shares of common shares of HeartCore Japan.

As a result, HeartCore Japan became a wholly-owned operating subsidiary of HeartCore

The share exchange on July 16, 2021 has been accounted

for as a recapitalization between entities under common control since the same controlling shareholders controlled these two entities

before and after the transaction.

The consolidation of HeartCore USA and its subsidiary has been accounted for at historical cost and

prepared on the basis as if the transaction had become effective as of the beginning of the earliest period presented in the accompanying

unaudited consolidated financial statements.

HeartCore USA, via its wholly-owned operating

subsidiary, HeartCore Japan, is mainly engaged in the business of developing and sales of comprehensive software.

Beginning from early

2022, HeartCore USA is engaged in the business of providing consulting services to Japanese companies with intention to go public in the

United States capital market.

On September 6, 2022, HeartCore USA entered into

a share exchange and purchase agreement to acquire 51 % of the outstanding shares of Sigmaways, Inc.

(“Sigmaways”), a company

incorporated under the laws of the State of California in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V.

and Sigmaways

Technologies Ltd.

Dividends accrued on Series A convertible preferred shares

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

ENTERPRISES, INC.

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Enterprises, Inc.

(“HeartCore USA”), a holding company, was incorporated under the laws of the State of Delaware on May 18,

July 16, 2021, HeartCore USA executed a share exchange agreement with certain shareholders of HeartCore Co., Ltd.

(“HeartCore Japan”),

a company that was incorporated in Japan on June 12, 2009.

Pursuant to the terms of the share exchange agreement, HeartCore USA issued

15,999,994 shares of its common shares to the shareholders of HeartCore Japan in exchange for 10,706 shares out of 10,984 shares of common

shares issued by HeartCore Japan, representing approximately 97.5 % of HeartCore Japan’s outstanding common shares.

24, 2022, HeartCore USA purchased the remaining 278 shares of common shares of HeartCore Japan.

As a result, HeartCore Japan became a

wholly-owned operating subsidiary of HeartCore USA.

share exchange on July 16, 2021 has been accounted for as a recapitalization between entities under common control since the same controlling

shareholders controlled these two entities before and after the transaction.

The consolidation of HeartCore USA and its subsidiary has

been accounted for at historical cost and prepared on the basis as if the transaction had become effective as of the beginning of the

earliest period presented in the unaudited consolidated financial statements.

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

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

with intention to go public in the United States capital market.

September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement to acquire 51 % of the outstanding shares of Sigmaways,

(“Sigmaways”), a company incorporated under the laws of the State of California in April 2006, and its wholly-owned

subsidiaries, Sigmaways B.V.

and Sigmaways Technologies Ltd.

(“Sigmaways Technologies”).

Sigmaways B.V.

was incorporated in Netherlands in November 2019.

Sigmaways Technologies

was incorporated in Canada in August 2020.

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

and sales of software in the United States.

The acquisition was closed on February 1, 2023.

In January 2023, HeartCore USA incorporated a

wholly-owned subsidiary, HeartCore Financial, Inc.

(“HeartCore Financial”), under the laws of the State of Delaware.

Financial is engaged in the business of providing financial consulting services.

In November 2023, HeartCore Japan established

a 51 % owned subsidiary in Vietnam, HeartCore Luvina Vietnam Company Limited (“HeartCore Luvina”), which is engaged in the

business of providing software development and other services.

HeartCore Luvina started its operations from February 2024.

In April 2024, HeartCore Financial incorporated

a branch office, HeartCore Financial, Inc.

– Japan Branch Office (“HeartCore Financial – Japan”), in Japan.

Financial – Japan is engaged in the business of providing financial consulting services.

HeartCore USA, HeartCore Japan, Sigmaways, Sigmaways

B.V., Sigmaways Technologies, HeartCore Financial, HeartCore Luvina and HeartCore Financial – Japan are hereafter referred to as

the “Company”.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

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

All significant intercompany

accounts and transactions have been eliminated.

These unaudited interim consolidated financial

statements do not include all of the information and disclosure required by the U.S.

GAAP for complete financial statements.

Interim results

are not necessarily indicative of results for a full year.

In the opinion of management, all adjustments consisting of normal recurring

nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim

periods have been included.

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated

financial statements and related notes for the year ended December 31, 2024.

Use of Estimates

In preparing the unaudited consolidated financial

statements in conformity U.S.

GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements

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

These estimates are based on information available as of

the date of the unaudited consolidated financial statements.

Significant estimates required to be made by management include, but are

not limited to, useful life of property and equipment, impairment of long-lived assets, valuation of stock-based compensation, valuation

allowance of deferred tax assets, implicit interest rate of operating and finance leases, valuation of asset retirement obligations, valuation

of investment in warrants, revenue recognition with respect to allocation of transaction price and valuation of derivative liability.

was incorporated

in Netherlands in November 2019.

Sigmaways Technologies was incorporated in Canada in August 2020.

Sigmaways and its wholly-owned subsidiaries

are primarily engaged in the business of providing software development and other services in the United States.

The acquisition was

closed on February 1, 2023.

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

(“HeartCore Financial”), under

the laws of the State of Delaware.

HeartCore Financial is engaged in the business of providing consulting services.

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

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

HeartCore Luvina started its operations

from February 2024.

In October 2025, HeartCore Japan transferred 51% of the outstanding shares of HeartCore Luvina to HeartCore USA.

April 2024, HeartCore Financial incorporated a branch office, HeartCore Financial, Inc.

– Japan Branch Office (“HeartCore

Financial – Japan”), in Japan.

HeartCore Financial – Japan is engaged in the business of providing consulting services.

July 24, 2025, the Board of Directors approved to enter into a non-binding letter of intent to sell 100% of the outstanding shares of

HeartCore Japan.

The sale of HeartCore Japan represents a strategic shift that has or will have a major impact on the results of operations

and has been accounted for as a discontinued operation (see NOTE 16).

The sale transaction was closed on October 31, 2025.

October 2025, HeartCore USA incorporated a wholly-owned subsidiary, Higgs Field Co., Ltd.

(“Higgs Field”), in Japan.

Field is engaged in the business of providing business and management consulting services.

USA, HeartCore Japan, Sigmaways, Sigmaways B.V., Sigmaways Technologies, HeartCore Financial, HeartCore Luvina, HeartCore Financial –

Japan and Higgs Field are hereafter referred to as the “Company” unless specific reference is made to an entity.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and Principles of Consolidation

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

States of America (“U.S.

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

and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of the Company and

its subsidiaries.

The Company has presented the assets and liabilities of HeartCore Japan and its results of operations and cash flows

as discontinued operations in the unaudited consolidated financial statements as of and for all periods presented.

All footnotes exclude

balances and activities of HeartCore Japan unless otherwise noted.

All significant intercompany accounts and transactions have been eliminated.

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

complete consolidated financial statements.

Interim results are not necessarily indicative of results for a full year.

In the opinion

of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position

and the results of operations and cash flows for the interim periods have been included.

The unaudited consolidated financial statements

should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2024.

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

GAAP, the management is required to make certain estimates

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

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

These estimates are based on information available as of the date of the unaudited consolidated financial statements.

Significant estimates

required to be made by management include, but are not limited to, useful life of property and equipment, impairment of long-lived assets,

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

valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition with respect to fair value of noncash

consideration and allocation of transaction price, and valuation of derivative liability.

Actual results could differ from those estimates.

Asset Retirement Obligations

Pursuant to the lease agreements for the office

space, the Company is responsible to restore these spaces back to its original statute at the time of leaving.

The Company recognizes

an obligation related to these restorations as asset retirement obligations in the consolidated balance sheets, in accordance with the

Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset

Retirement Obligation Accounting”.

The Company capitalizes the associated asset retirement cost by increasing the carrying amount

of the related property and equipment.

The following table presents changes in asset

retirement obligations:

Beginning balance

Accretion expense

Liabilities settled

Foreign currency translation adjustment

Ending balance

Software Development Costs

Software development costs are expensed as incurred

until the point the Company establishes technological feasibility.

Technological feasibility is established upon completion of a detailed

program design or the completion of a working model.

Costs incurred by the Company between establishment of technological feasibility

and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products.

The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and

all software development costs have been expensed as incurred.

In the three and six months ended June 30, 2025,

software development costs expensed as incurred amounted to $ 161,481 and $ 285,374 , respectively.

In the three and six months ended June

30, 2024, software development costs expensed as incurred amounted to $ 111,268 and $ 200,402 , respectively.

These software development

costs were included in the research and development expenses.

Investment in Warrants

Investment in warrants represents stock warrants

earned from its consulting service customers.

The warrants are measured at fair value and any changes in fair value are recognized in

other income (expenses).

Investment in warrants is classified as long-term if the warrants are exercisable over one year after the date

Investments in Marketable Securities

Investments in marketable securities represent

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

The marketable securities are obtained through stocks

of its customers received as noncash consideration from consulting services and through exercise of stock warrants of its consulting service

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

Impairment of Long-Lived Assets

Long-lived assets with finite lives, primarily

property and equipment and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances

indicate that the carrying amount of an asset may not be recoverable.

If the estimated cash flows from the use of the asset and its eventual

disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.

were no impairments of these assets during the three and six months ended June 30, 2025 and 2024.

Foreign Currency Translation

The functional currency of HeartCore Japan and

HeartCore Financial – Japan is the Japanese Yen (“JPY”).

The functional currency of HeartCore USA, HeartCore Financial

and Sigmaways is the United States Dollar (“US$”).

The functional currency of Sigmaways B.V.

in warrants represent stock warrants earned from its consulting service customers.

The warrants are measured at fair value and any changes

in fair value are recognized in other income (expenses).

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

over one year after the date of receipt.

in Marketable Securities

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

The marketable

securities are obtained through stocks of its customers received as noncash consideration from consulting services and through exercise

of stock warrants of its consulting service customers and measured at fair value with any changes in fair value recognized in other income

of Long-Lived Assets

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

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

If the estimated cash flows

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

and written down to its fair value.

There were no impairments of these assets during the three and nine months ended September 30, 2025

Currency Translation

functional currency of HeartCore Japan, HeartCore Financial – Japan and Higgs Field is the Japanese Yen (“JPY”).

functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”).

The functional

currency of Sigmaways B.V.

is the Euro (“EUR”).

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

The functional currency of HeartCore Luvina

is the Vietnam Dong (“VND”).

Transactions denominated in currencies other than the functional currency are translated into

the functional currency at the exchange rates prevailing at the dates of the transaction.

Monetary assets and liabilities denominated

in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the

balance sheet dates.

The resulting exchange differences are recorded in the unaudited consolidated statements of operations and comprehensive

income (loss).

The reporting currency of the Company is the US$,

and the accompanying unaudited consolidated financial statements have been expressed in US$.

In accordance with ASC Topic 830-30, “Translation

of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using

the exchange rate on the balance sheet date.

Revenues and expenses are translated at average rate prevailing during the period.

and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive

income within the unaudited consolidated statements of changes in shareholders’ equity.

Revenue Recognition

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 revenues 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 revenues 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 services.

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.

for 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.

Subscription fees from these applications are recognized over time on a ratable basis over the customer contract term beginning on the

date the Company’s solution is made available to the customers.

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

Revenues from Software Development and Other

Miscellaneous Services

The Company provides customers with software development

and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application,

and workflow development.

The Company also provides other miscellaneous services, such as 3D Space photography.

The Company generally

recognizes revenues at a point in time when control is transferred to the customers and the Company is entitled to the payment, which

is when the promised services are delivered and accepted by the customers.

Revenues from Customized Software Development

The Company’s customized software development

and services revenues primarily include revenues from providing software development solutions and other support services to its customers.

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

Transactions denominated in currencies other than

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

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

using the applicable exchange rates at the balance sheet dates.

The resulting exchange differences are recorded in the unaudited consolidated

statements of operations and comprehensive income (loss).

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

In accordance

with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic

830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$

are translated into US$, using the exchange rates on the balance sheet dates.

Revenues and expenses are translated at average rates prevailing

during the periods.

The gains and losses resulting from the translation of financial statements are recorded as a separate component

of accumulated other comprehensive income within the unaudited consolidated statements of changes in shareholders’ equity.

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

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

(i) identify the contract(s)

with a 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 performance obligations in the contract, and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

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

The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross

sales in Netherlands and nil of gross sales in the United States.

Company currently generates its revenues from the following main sources:

from Software Development 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 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 process.

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 services contracts normally include both cash and noncash considerations.

Cash consideration is paid in

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

of that performance obligation.

Noncash consideration is in the form of stocks and 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

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

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.

Sales Returns and

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 on the

consolidated balance sheets.

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

Contract Balances

The timing of revenue

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

The Company determines that its contracts do not include a significant

financing component.

The Company records a contract asset, which is included in accounts receivable, current or 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

The amount of revenues recognized during the six months ended June 30, 2025 and 2024 that were included in the opening deferred

revenue balance are approximately $ 1.3 million and $ 1.5 million, respectively.

Disaggregation of Revenues

The Company disaggregates its revenues from contracts

by product/service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash

flows are affected by economic factors.

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 stocks and 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 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.

Returns and Allowances

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.

The Company determines 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 amounts of revenues recognized during the nine months ended September 30, 2025 and 2024 that

were included in the opening deferred revenue balances were approximately $ 0.6 million and $ 0.6 million, respectively.

Disaggregation

Company disaggregates its revenues from contracts by revenue stream types, as the Company believes it best depicts how the nature, amount,

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

The Company’s disaggregation of revenues

by revenue stream for the three and six months ended June 30, 2025 and 2024 is as follows:

by revenue stream for the three and nine months ended September 30, 2025 and 2024 is as follows:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Three Months

For the Six Months

Revenues from on-premise software

Revenues from maintenance and support services

Revenues from software as a service (“SaaS”)

Revenues from software development and other miscellaneous services

Ended September 30,

For the Nine Months

Ended September 30,

Revenues from software development services

Revenues from customized software development and services

1 unchanged sentence

Total revenues

The Company’s disaggregation of revenues

by product/service for the three and six months ended June 30, 2025 and 2024 is as follows:

Concentration

of Credit Risk

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

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

The Company conducts periodic reviews

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

the three and nine months ended September 30, 2025 and 2024, customers account for 10% or more of the Company’s revenues are as

OF CONCENTRATION OF CREDIT RISK

For the Three Months

For the Six Months

Revenues from customer experience management platform

Revenues from process mining

Revenues from robotic process automation

Revenues from task mining

Revenues from customized software development and services

Revenues from consulting services

Revenues from others

Total revenues

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to credit risk consist primarily of accounts receivable, note receivable and other receivable.

The Company usually does not

require collateral or other security to support these receivables.

The Company conducts periodic reviews of the financial condition and

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

For the three and six months ended June 30, 2025

and 2024, customers account for 10% or more of the Company’s total revenues are as follows:

Ended September 30,

For the Nine Months

Ended September 30,

of September 30, 2025 and December 31, 2024, customers account for 10% or more of the Company’s accounts receivable are as follows:

September 30,

the three and nine months ended September 30, 2025 and 2024, vendor accounts for 10% or more of the Company’s purchases is as follows:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

As of June 30, 2025 and December 31, 2024, customers

account for 10% or more of the Company’s total accounts receivable are as follows:

For the three and six months ended June 30, 2025

and 2024, no vendor accounts for more than 10% of the Company’s total purchases.

As of June 30, 2025 and December 31, 2024, vendor

accounts for 10% or more of the Company’s total accounts payable and accrued expenses is as follows:

* Less than 10%.

Segment Reporting

ASC Topic 280, “Segment Reporting”,

requires use of the management approach model for segment reporting.

The management approach model is based on the way a company’s

chief operating decision maker (“CODM”) organizes segments within the Company for making operating decisions assessing performance

and allocating resources.

Reportable segments are based on products and services, geography, legal structure, management structure, or

any other manner in which management disaggregates a company (see NOTE 18).

Stock-based Compensation

The Company accounts for stock-based compensation

awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”.

The cost of services received from employees

and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations and

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

over the requisite service period or vesting period.

The Company records forfeitures as they occur.

Series A Convertible Preferred Shares and Derivative

When the Company issues Series A convertible preferred

shares (see NOTE 16), it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether

the instrument should be classified as a liability under ASC Topic 480, “Distinguishing Liabilities from Equity”, and second

whether the conversion feature should be accounted for separately from the host instrument.

A conversion feature of the Series A convertible

preferred shares would be separated from the convertible instrument and classified as a derivative liability if the conversion feature,

as a standalone instrument, meets the definition of an embedded derivative under ASC Topic 815, “Derivatives and Hedging”.

Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the

Company’s equity, as defined in ASC Topic 815-40, or when it must be settled either in cash or by issuing equity shares that are

readily convertible to cash.

The Company assesses the Series A convertible

preferred shares as a whole and determines it does not meet the liability classification pursuant to ASC Topic 480 and the Company classifies

the host instrument as permanent equity because no features provide for redemption by the holders of the Series A convertible preferred

shares or conditional redemption, which is not solely within the Company’s control, and there are no unconditional obligations in

that (1) the Company must or may settle in a variable number of its equity shares, and (2) the monetary value is predominantly fixed,

varying with something other than the fair value of the Company’s equity shares or varying inversely in relation to the Company’s

equity shares.

The Company assesses the conversion feature of

the Series A convertible preferred shares for derivative accounting consideration and determines it meets the definition of an embedded

derivative, which is separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheets

at fair value, with any changes in its fair value recognized in the unaudited consolidated statements of operations and comprehensive

income (loss).

The Company values the fair value of derivative liability using the income approach with the discounted cash flow valuation

method with the assistance of a third-party valuation appraiser.

The determination of fair value requires management to make significant

estimates and assumptions related to forecasted cash flows and discount rate.

Fair Value Measurements

The Company performs fair value measurements in

accordance with ASC Topic 820, “Fair Value Measurements and Disclosures”.

Fair value is defined as the price that would be

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

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

of unobservable inputs when measuring fair value.

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

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

ASC Topic 820 establishes three levels of inputs

that may be used to measure fair value:

Ended September 30,

For the Nine Months

Ended September 30,

of September 30, 2025 and December 31, 2024, vendors account for 10% or more of the Company’s accounts payable and accrued expenses

are as follows:

September 30,

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

The management approach

model is based on the way a company’s chief operating decision maker (“CODM”) organizes segments within the Company

for making operating decisions, assessing performance and allocating resources.

Reportable segments are based on products and services,

geography, legal structure, management structure, or any other manner in which management disaggregates a company (see NOTE 17).

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

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

consolidated statements of operations and comprehensive income (loss) based on the estimated fair value of those awards on the grant

date and amortized on a straight-line basis over the requisite service period or vesting period.

The Company records forfeitures as they

A Convertible Preferred Shares and Derivative Liability

the Company issues the Series A convertible preferred shares (see NOTE 14), it first evaluates the balance sheet classification of the

convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC Topic 480, “Distinguishing

Liabilities from Equity”, and second evaluates whether the conversion feature should be accounted for separately from the host

A conversion feature of the Series A convertible preferred shares would be separated from the convertible instrument and

classified as a derivative liability if the conversion feature, as a standalone instrument, meets the definition of an embedded derivative

under ASC Topic 815, “Derivatives and Hedging”.

Generally, characteristics that require derivative treatment include, among

others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC Topic 815-40, or when it must be

settled either in cash or by issuing equity shares that are readily convertible to cash.

Company assesses the Series A convertible preferred shares as a whole and determines it does not meet the liability classification pursuant

to ASC Topic 480 and the Company classifies the host instrument as permanent equity because no features provide for redemption by the

holders of the Series A convertible preferred shares or conditional redemption, which is not solely within the Company’s control,

and there are no unconditional obligations in that (i) the Company must or may settle in a variable number of its equity shares, and

(ii) the monetary value is predominantly fixed, varying with something other than the fair value of the Company’s equity shares

or varying inversely in relation to the Company’s equity shares.

Company assesses the conversion feature of the Series A convertible preferred shares for derivative accounting consideration and determines

it meets the definition of an embedded derivative, which is separated from the host instrument and classified as a derivative liability

carried on the consolidated balance sheets at fair value with any changes in fair value recognized in other income (expenses).

values the fair value of derivative liability using the income approach with the discounted cash flow valuation method with the assistance

of a third-party valuation appraiser.

The determination of fair value requires management to make significant estimates and assumptions

related to forecasted cash flows and discount rate.

Value Measurements

Company performs fair value measurements in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures”.

value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the

use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

An asset’s or a liability’s

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

ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:

quoted prices in active markets for identical assets or liabilities;

inputs other than Level 1 that are observable, either directly or indirectly;

unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

As of June 30, 2025 and December 31, 2024, the

carrying values of current assets, except for investments in marketable securities, and current liabilities, except for derivative liability,

approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Assets and liabilities measured at fair value

on a recurring basis as of June 30, 2025 and December 31, 2024 are summarized below (also see NOTE 6 for investments):

Fair Value Measurements as of June 30, 2025

unobservable inputs that are supported by little or no market activities and that are significant to the fair values of the assets

or liabilities.

of September 30, 2025 and December 31, 2024, the carrying values of current assets, except for investments in marketable securities and

investment in warrants, and current liabilities, except for derivative liability, approximated their fair values reported in the consolidated

balance sheets due to the short-term maturities of these instruments.

and liabilities measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 are summarized below (also

see NOTE 5 for investments):

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Fair Value Measurements as of September 30, 2025

Quoted Prices

Markets for Identical

Assets or Liabilities

Significant Other

Fair Value at

September 30, 2025

Investments in marketable securities

Investment in warrants

Long-term investment in warrants

5 unchanged sentences

Fair Value at

December 31, 2024

Investments in marketable securities

Long-term investment in warrants

Derivative liability

Recent Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards

Update (“ASU”) No.

Held for Sale and Discontinued Operations

accordance with ASC Topic 205-20, “Presentation of Financial Statements – Discontinued Operations”, a component or

a group of components of an entity shall be classified as held for sale in the period in which all of the following criteria are met:

(i) management, having the authority to approve the action, commits to a plan to sell the entity to be sold;

(ii) the entity to be sold

is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such entities

(iii) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the entity to

be sold have been initiated;

(iv) the sale of the entity to be sold is probable and transfer of the entity to be sold is expected to

qualify for recognition as a completed sale within one year;

(v) the entity to be sold is being actively marketed for sale at a price

that is reasonable in relation to its current fair value;

and (vi) actions required to complete the plan indicate that it is unlikely

that significant changes to the plan will be made or that the plan will be withdrawn.

A component or a group of components of an entity

classified as held for sale is reported at the lower of its carrying amount or fair value less cost to sell.

If the fair value of the

entity to be sold less cost to sell is lower than its carrying amount, an impairment loss is recognized and update each reporting period

as appropriate.

Assets held for sale are not depreciated or amortized.

results of operations of the entity to be sold classified as held for sale are reported as discontinued operations if the disposal represents

a strategic shift that has or will have a major effect on an entity’s operations and financial results.

Company assesses the sale of HeartCore Japan and determines it meets the held for sale criteria and the discontinued operations criteria.

The assets and liabilities of HeartCore Japan have been reflected as assets and liabilities of discontinued operations in the consolidated

balance sheets for all periods presented.

The results of operations of HeartCore Japan are presented as discontinued operations in the

unaudited consolidated statements of operations and comprehensive income (loss) for all periods presented.

Prior periods have been adjusted

to conform to the current presentation.

Accounting Pronouncements

December 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, to enhance the transparency and

decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

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

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

Improvement to

Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate

reconciliation and income taxes paid information.

2023-09 is effective for public companies for annual reporting periods beginning

after December 15, 2024, on a prospective basis.

For all other entities, it is effective for annual reporting periods beginning after

December 15, 2025, on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of this ASU on

its unaudited consolidated financial statements and related disclosures.

November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, requiring public companies to disclose additional information

about specific expense categories in the notes to the consolidated financial statements on an annual and interim basis.

is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027.

Early adoption

1 unchanged sentence

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

In November 2024, the FASB issued ASU No.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of

Income Statement Expenses, requiring public companies to disclose additional information about specific expense categories in the notes

to the consolidated financial statements on an annual and interim basis.

2024-03 is effective for fiscal years beginning after

December 15, 2026, and for interim periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating

the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

3 – ACCOUNTS RECEIVABLE

receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

September 30,

Accounts receivable – non-factored

3 unchanged sentences

Total accounts receivable

current portion

( 3,000,337 )

( 1,950,050 )

Accounts receivable, non-current

NOTE 4 – PREPAID EXPENSES

Prepaid expenses consist of the following:

Prepayments to software and consulting services vendors

Prepaid marketing fees

Prepaid subscription fees

Prepaid insurance premium

Total prepaid expenses

NOTE 5 – RELATED PARTY TRANSACTIONS

As of June 30, 2025 and December 31, 2024, the

Company had a due to related parties balance of $ 590 and $ 47 , respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”)

and major shareholder of the Company.

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

During the six months ended June

30, 2025, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $ 514 .

the six months ended June 30, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of

the Company in a net amount of $ 1,246 .

As of June 30, 2025 and December 31, 2024, the

Company had a due to related parties balance of nil and $ 885 , respectively, from Luvina Software Joint Stock Company (“Luvina Software”),

the non-controlling shareholder of HeartCore Luvina.

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

During the six

months ended June 30, 2025 and 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of

the Company in a net amount of $ 884 and nil , respectively.

As of June 30, 2025 and December 31, 2024, the Company had an accounts payable

and accrued expenses balance of $ 22,924 and $ 47,199 , respectively, to Luvina Software.

During the three and six months ended June 30,

2025, the Company engaged the related party for software development and other support services in the amount of $ 42,761 and $ 85,571 ,

respectively.

During the three and six months ended June 30, 2024, the Company engaged the related party for software development and

other support services in the amount of $ 31,590 and $ 31,590 , respectively.

As of June 30, 2025 and December 31, 2024, the

Company had a loan receivable balance of $ 158,378 and $ 164,067 , respectively, from HeartCore Technology Inc., a company controlled by

the CEO of the Company.

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

The balance is unsecured, bears an annual interest

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

During the six months ended June 30, 2025 and 2024, the

Company received repayments of $ 21,139 and $ 21,166 , respectively, from this related party.

As of June 30, 2025 and December 31, 2024, the

Company had a short-term debt balance of $ 75,000 to Prakash Sadasivam, the CEO of Sigmaways and Chief Strategy Officer (“CSO”)

of the Company.

4 – RELATED PARTY TRANSACTIONS

of September 30, 2025 and December 31, 2024, the Company had due to related party balances of nil and $ 885 , respectively, from Luvina

Software Joint Stock Company (“Luvina Software”), the non-controlling shareholder of HeartCore Luvina.

The balance is unsecured,

non-interest bearing and due on demand.

During the nine months ended September 30, 2025 and 2024, the Company repaid to the related party

for operating expenses the related party paid on behalf of the Company of $ 884 and nil , respectively.

As of September 30, 2025 and December

31, 2024, the Company had accounts payable and accrued expenses balances of $ 25,507 and $ 47,199 , respectively, to Luvina Software.

the three and nine months ended September 30, 2025, the Company engaged the related party for software development and other support

services of $ 61,078 and $ 146,649 , respectively.

During the three and nine months ended September 30, 2024, the Company engaged the related

party for software development and other support services of $ 118,926 and $ 150,516 , respectively.

of September 30, 2025 and December 31, 2024, the Company had short-term debt balances of $ 70,900 and $ 75,000 , respectively, to Prakash

Sadasivam, the CEO and non-controlling shareholder of Sigmaways.

The debt is borrowed from the related party for working capital purpose.

The balance is unsecured, bears an annual interest

of 7.5 % and due on demand.

NOTE 6 – INVESTMENTS

Investment in Warrants

The Company received warrants from its customers

as noncash consideration from consulting services.

The warrants are not registered for public sale and are initially measured at fair

value at contract inception.

The Company’s investment in warrants is measured on a recurring basis and carried on the consolidated

balance sheets at an estimated fair value at the end of the period.

The valuation of investment in warrants is determined using the Black-Scholes

model based on the stock price, exercise price, expected volatility, time to maturity, and risk-free interest rate for the term of the

warrants exercise.

The following table summarizes the Company’s

investment in warrants activities for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

Fair value of investment in warrants at beginning of the period

Changes in fair value of investment in warrants

( 1,237,707 )

The balance is unsecured, bears an annual interest of 7.5 % and due on demand.

During the nine months ended September 30, 2025 and 2024,

the Company repaid to the related party of $ 4,100 and nil , respectively.

5 – INVESTMENTS

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

The warrants are not registered for public

sale and are initially measured at fair value at contract inception.

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

basis and carried on the consolidated balance sheets at an estimated fair value at the end of the period.

The valuation of investments

in warrants is determined using the Black-Scholes model based on the stock price, exercise price, expected volatility, time to maturity

and risk-free interest rate for the term of the warrants exercise.

following table summarizes the Company’s investments in warrants activities for the nine months ended September 30, 2025 and 2024:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

For the Nine Months

Ended September 30,

Fair value of investments in warrants at beginning of the period

Warrants received as noncash consideration

Changes in fair value of investments in warrants

Warrants converted to marketable securities

Fair value of investment in warrants at end of the period

Investments in Marketable Securities

The Company’s investments in marketable

securities represent stocks received from its customers as noncash consideration from consulting services and stocks received upon the

exercise of warrants described above.

They are registered for public sale with readily determinable fair values, and are measured at quoted

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

The following table summarizes the Company’s

investments in marketable securities activities for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

( 6,443,276 )

Warrants sold *

( 9,610,628 )

Fair value of investments in warrants at end of the period

February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants

it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $ 9,000,000

The 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 warrants 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.

in Marketable Securities

Company’s investments in marketable securities represent stocks received from its customers as noncash consideration from consulting

services and stocks received upon the exercise of warrants described above.

They are registered for public sale with readily determinable

fair values, and are measured at quoted prices on a recurring basis at the end of the period.

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

2025 and 2024:

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

For the Nine Months

Ended September 30,

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

Marketable securities received as noncash consideration

Marketable securities converted from warrants

3 unchanged sentences

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

NOTE 7 – LONG-TERM NOTE RECEIVABLE

On September 1, 2023, the Company purchased a

$ 300,000 promissory note from a non-related company.

The promissory note bears an interest rate of 4 % per annum and matures on September

On the first business day following each annual anniversary of September 1, 2023, the promissory note issuer shall pay to the

Company the sum of one-third of the total promissory note amount due and outstanding, including all accrued and unpaid interest as of

such time, unless such annual payment has been forgiven by the Company pursuant to certain conditions.

The interest rate would be 10 %

per annum for any amount that is unpaid when due.

The Company forgave the first annual payment of the promissory note and recognized loss

on forgiveness of long-term note receivable of $ 100,000 on December 31, 2024.

NOTE 8 – PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

6 – LONG-TERM NOTE RECEIVABLE

September 1, 2023, the Company purchased a $ 300,000 promissory note from a non-related company.

The promissory note bears an interest

rate of 4 % per annum and matures on September 2, 2026 .

On the first business day following each annual anniversary of September 1, 2023,

the promissory note issuer shall make payment to the Company the sum of one-third of the total promissory note amount due and outstanding,

including all accrued and unpaid interest as of such time, unless such annual payment has been forgiven by the Company pursuant to certain

The interest rate would be 10 % per annum for any amount that is unpaid when due.

The Company forgave the first annual payment

of the promissory note and recognized loss on forgiveness of long-term note receivable of $ 100,000 on December 31, 2024.

As of the date

of this report, the Company did not receive the second annual payment of the promissory note from the promissory note issuer.

7 – PROPERTY AND EQUIPMENT, NET

and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

September 30,

Leasehold improvements

2 unchanged sentences

Total property and equipment, net

For the three and six months ended June 30, 2025,

the Company recognized depreciation expenses of $ 15,530 and $ 42,437 , respectively.

For the three and six months ended June 30, 2024, the

Company recognized depreciation expenses of $ 27,486 and $ 56,196 , respectively.

NOTE 9 – LEASES

The Company has entered into operating leases

for office space with terms ranging from two to fifteen years, and finance leases for office equipment and vehicle with terms of five

The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the

determination of the lease term and initial measurement of lease right-of-use assets and lease liabilities is included in the unaudited

consolidated financial statements.

Right-of-use assets of finance leases of $ 57,612 and $ 60,440 are included in property and equipment,

net as of June 30, 2025 and December 31, 2024, respectively.

Operating lease costs for lease payments are recognized

on a straight-line basis over the lease term.

Finance lease costs include amortization, which is recognized on a straight-line basis over

the expected life of the leased assets, and interest expense, which is recognized following an effective interest rate method.

with initial term of twelve months or less are not recorded in the consolidated balance sheets.

The components of lease costs for the three and

six months ended June 30, 2025 and 2024 are as follows:

For the Three Months

For the Six Months

Finance lease costs

Amortization of finance lease right-of-use assets

Interest on finance lease liabilities

Total finance lease costs

Operating lease costs

Total lease costs

The following table presents supplemental information

related to the Company’s leases for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from finance leases $ 388 $ 499

Operating cash flows from operating leases 171,662 206,648

Financing cash flows from finance leases 8,375 8,526

Operating lease right-of-use assets obtained in exchange for operating lease liabilities 23,495 125,735

Weighted average remaining lease term (years)

Finance leases 3.2 4.3

Operating leases 6.7 7.2

Weighted average discount rate (per annum)

Finance leases 1.32 % 1.32 %

Operating leases 1.35 % 1.37 %

As of June 30, 2025, the future maturity of lease

liabilities is as follows:

Year Ended December 31,

Remaining of 2025

Total lease payments

imputed interest

Total lease liabilities

current portion

Non-current lease liabilities

Pursuant to the operating lease agreements, the

Company made security deposits to the lessors.

The security deposits amounted to $ 225,649 and $ 307,996 as of June 30, 2025 and December

31, 2024, respectively.

NOTE 10 – OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

Accrued consumption taxes

the three and nine months ended September 30, 2025, the Company recognized depreciation expenses of $ 8,265 and $ 36,994 , respectively.

For the three and nine months ended September 30, 2024, the Company recognized depreciation expenses of $ 17,147 and $ 52,478 , respectively.

8 – OTHER CURRENT LIABILITIES

current liabilities consist of the following:

OF OTHER CURRENT LIABILITIES

September 30,

Customer refund liability *

Cumulative dividends accrued on Series A convertible preferred shares

Total other current liabilities

* On June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting services agreement with the customer was terminated and the Company will refund $ 500,000 to the customer in August 2025.

NOTE 11 – FACTORING LIABILITY

Sigmaways, the subsidiary acquired by the Company

in February 2023, entered into a factoring and security agreement (“Factoring Agreement”) with The Southern Bank Company,

an unrelated factor (“Factor”), in February 2017, for the purpose of factoring certain accounts receivable.

Under the terms

of the Factoring Agreement, Sigmaways may offer for sale, and the Factor may purchase in its sole discretion, certain accounts receivable

of Sigmaways (“Purchased Receivable”).

The Factoring Agreement provided for a maximum of $ 850,000 in Purchased Receivable.

Selected accounts receivable is submitted to the

Factor, and Sigmaways receives 90 % of the face value of the accounts receivable by wire transfer.

Upon payment by the customers, the remainder

of the amount due is received from the Factor after deducting certain fees.

The Factoring Agreement specifies that eligible

accounts receivable is factored with recourse.

Under the terms of the recourse provision, Sigmaways is required to reimburse the Factor,

upon demand, for Purchased Receivable that is not paid on time by the customers.

The performance of all obligations and payments to the

Factor is personally guaranteed by Prakash Sadasivam, the CEO of Sigmaways and CSO of the Company, and secured by all Sigmaways’

now owned and hereafter assets and any sums maintained by the Factor that are identified as payable to Sigmaways.

The Factoring Agreement has an initial term of

twelve months and automatically renews for successive twelve-month renewal periods unless terminated pursuant to the terms of the Factoring

Sigmaways may terminate the Factoring Agreement with sixty days’ written notice to the Factor and is subject to certain

early termination fee.

The Factoring Agreement contains covenants that

are customary for accounts receivable-based factoring agreements and also contains provisions relating to events of default that are customary

for agreements of this type.

As of June 30, 2025 and December 31, 2024, there

were $ 226,212 and $ 172,394 borrowed and outstanding under the Factoring Agreement, respectively.

There are various fees charged by the

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

During the three and six months ended June 30, 2025,

the Company recorded $ 15,698 and $ 24,599 in interest expenses related to Factoring Agreement, respectively.

During the three and six months

ended June 30, 2024, the Company recorded $ 14,678 and $ 30,786 in interest expenses related to Factoring Agreement, respectively.

NOTE 12 – INSURANCE PREMIUM FINANCING

In January 2025, the Company entered into an insurance

premium financing agreement with AFCO Direct, a division of AFCO Credit Corporation, for $ 139,500 at an annual interest rate of 13.9 %

for eleven months from February 1, 2025, payable in eleven monthly installments of principal and interest.

In January 2024, the Company entered into an insurance

premium financing agreement with BankDirect Capital Finance for $ 172,689 at an annual interest rate of 13.9 % for eleven months from February

1, 2024, payable in eleven monthly installments of principal and interest.

As of June 30, 2025 and December 31, 2024, the

balances of the insurance premium financing were $ 90,869 and $ 16,626 , respectively.

During the three and six months ended June 30, 2025,

the Company recorded $ 4,042 and $ 5,874 in interest expenses related to insurance premium financing, respectively.

During the three and

six months ended June 30, 2024, the Company recorded $ 5,005 and $ 7,044 in interest expenses related to insurance premium financing, respectively.

NOTE 13 – LONG-TERM DEBTS

The Company’s long-term debts represent

loans borrowed from banks and financial institutions as follows:

Name of Banks/Financial Institutions Original Amount

Borrowed Loan

Duration Annual

Rate Balance as of

June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting services agreement

with the customer was terminated and the Company would refund $ 500,000 to the customer in August 2025.

As of the date of this report,

the Company did not make payment to the customer.

9 – FACTORING LIABILITY

the subsidiary acquired by the Company in February 2023, entered into a factoring and security agreement (“Factoring Agreement”)

with The Southern Bank Company, an unrelated factor (“Factor”), in February 2017, for the purpose of factoring certain accounts

Pursuant to the terms of the Factoring Agreement, Sigmaways may offer for sale, and the Factor may purchase in its sole discretion,

certain accounts receivable of Sigmaways (“Purchased Receivable”).

The Factoring Agreement provided for a maximum of $ 850,000

in Purchased Receivable.

accounts receivable is submitted to the Factor, and Sigmaways receives 90% of the face value of the accounts receivable by wire transfer.

Upon payment by the customers, the remainder of the amount due is received from the Factor after deducting certain fees.

Factoring Agreement specifies that eligible accounts receivable is factored with recourse.

Pursuant to the terms of the recourse provision,

Sigmaways is required to reimburse the Factor, upon demand, for Purchased Receivable that is not paid on time by the customers.

The performance

of all obligations and payments to the Factor is personally guaranteed by Prakash Sadasivam, the CEO and non-controlling shareholder

of Sigmaways, and secured by all Sigmaways’ now owned and hereafter assets and any sums maintained by the Factor that are identified

as payable to Sigmaways.

Factoring Agreement has an initial term of twelve months and automatically renews for successive twelve-month renewal periods unless

terminates pursuant to the terms of the Factoring Agreement.

Sigmaways may terminate the Factoring Agreement with sixty days’ written

notice to the Factor and is subject to certain early termination fee.

Factoring Agreement contains covenants that are customary for accounts receivable-based factoring agreements and also contains provisions

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

of September 30, 2025 and December 31, 2024, there were $ 228,310 and $ 172,394 borrowed and outstanding under the Factoring Agreement,

respectively.

There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense.

During the three and nine months ended September 30, 2025, the Company recorded $ 11,338 and $ 35,937 in interest expenses related to Factoring

Agreement, respectively.

During the three and nine months ended September 30, 2024, the Company recorded $ 7,920 and $ 38,706 in interest

expenses related to Factoring Agreement, respectively.

10 – INSURANCE PREMIUM FINANCING

January 2025, the Company entered into an insurance premium financing agreement with AFCO Direct, a division of AFCO Credit Corporation,

for $ 139,500 at an annual interest rate of 13.9 % for eleven months from February 1, 2025, payable in eleven monthly installments of principal

and interest.

January 2024, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 172,689 at an annual

interest rate of 13.9 % for eleven months from February 1, 2024, payable in eleven monthly installments of principal and interest.

of September 30, 2025 and December 31, 2024, the balances of the insurance premium financing were $ 52,823 and $ 16,626 , respectively.

During the three and nine months ended September 30, 2025, the Company recorded $ 2,695 and $ 8,569 in interest expenses related to insurance

premium financing, respectively.

During the three and nine months ended September 30, 2024, the Company recorded $ 3,336 and $ 10,380 in

interest expenses related to insurance premium financing, respectively.

11 – LONG-TERM DEBTS

Company’s long-term debts represent loans borrowed from a bank and a financial institution as follows:

SCHEDULE OF LONG-TERM DEBTS

Name of Bank/Financial Institution

Original Amount

Balance as of

Resona Bank, Limited JPY 10,000,000 (a)(b) 9/30/2020 – 9/30/2027 1.000 % $ 25,711 $ 29,440

Resona Bank, Limited JPY 40,000,000 (a)(b) 9/30/2020 – 9/30/2027 1.000 % 102,844 117,762

Resona Bank, Limited JPY 20,000,000 (a)(b) 11/13/2020 – 10/31/2027 1.600 % 53,077 60,386

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 12/30/2019 – 12/30/2026 1.975 % 17,720 22,441

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 10/4/2023 – 9/30/2028 0.600 % 50,407 54,062

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 10/4/2023 – 9/30/2028 0.000 % 50,407 54,062

The Shoko Chukin Bank, Ltd.

JPY 50,000,000 7/27/2020 – 6/30/2027 1.290 % 126,573 141,638

The Shoko Chukin Bank, Ltd.

JPY 30,000,000 7/25/2023 – 6/30/2028 Tokyo Interbank Offered Rate + 1.950 % 148,341 154,220

Japan Finance Corporation JPY 80,000,000 11/17/2020 – 11/30/2027 0.210 % 235,900 256,971

Higashi-Nippon Bank JPY 30,000,000 (a) 3/31/2022 – 3/31/2025 1.550 % -

Higashi-Nippon Bank JPY 30,000,000 (a)(b) 10/11/2023 – 9/30/2028 1.600 % 156,478 164,401

First Home Bank $ 350,000 (c) 4/18/2019 – 4/18/2029 Wall Street Journal U.S.

September 30, 2025

Balance as of

December 31, 2024

First Home Bank

$ 350,000 (a)

4/18/2019 – 4/18/2029

Wall Street Journal U.S.

Prime Rate + 2.750

Small Business Administration $ 350,000 (c) 5/30/2020 – 5/30/2050 3.750 % 345,875 349,322

Small Business Administration

$ 350,000 (a)

5/30/2020 – 5/30/2050

Aggregate outstanding principal balances

unamortized debt issuance costs ( 10,907 ) ( 12,000 )

current portion

Non-current portion

(a) These debts are guaranteed by Sumitaka Yamamoto, the CEO and major shareholder of the Company.

(b) These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.

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

During the three and six months ended June 30,

2025, the Company recorded $ 12,925 and $ 24,447 in interest expenses related to long-term debts, respectively.

During the three and six

months ended June 30, 2024, the Company recorded $ 17,056 and $ 32,942 in interest expenses related to long-term debts, respectively.

As of June 30, 2025, future minimum principal

payments for long-term debts are as follows:

debts are guaranteed by Prakash Sadasivam, the CEO and non-controlling shareholder of Sigmaways, and secured by all assets of Sigmaways.

the three and nine months ended September 30, 2025, the Company recorded $ 7,050 and $ 22,134 in interest expenses related to long-term

debts, respectively.

During the three and nine months ended September 30, 2024, the Company recorded $ 14,801 and $ 36,189 in interest

expenses related to long-term debts, respectively.

of September 30, 2025, future minimum principal payments for long-term debts are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

Year Ended December 31,

Remaining of 2025

NOTE 14 – INCOME TAXES

United States

HeartCore USA, Sigmaways and HeartCore Financial,

incorporated in the United States, are subject to federal income tax at 21 % statutory tax rate with respect to the profit generated from

the United States.

Sigmaways B.V.

12 – INCOME TAXES

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

with respect to the profit generated from the United States.

is a company incorporated in Netherlands.

in November 2019.

The first EUR 200,000 of taxable income is subject to a statutory tax rate of 19 % and the remaining taxable income is

subject to a statutory tax rate of 25.80 %.

Sigmaways Technologies is a company incorporated

in British Columbia in Canada in August 2020.

It is subject to income tax on income arising in, or derived from, the tax jurisdiction

in British Columbia it operates.

The basic federal rate of Part I tax is 38 % of taxable income, 28 % after federal tax abatement.

the general tax reduction, the net federal tax rate is 15 %.

The provincial and territorial lower and higher tax rates in British Columbia

are 2 % and 12 %, respectively.

HeartCore Luvina is a company incorporated in

Vietnam in November 2023.

The first EUR200,000 of taxable income is subject to a statutory tax rate of 19 % and the

remaining taxable income is subject to a statutory tax rate of 25.80 %.

Technologies is a company incorporated in British Columbia in Canada.

It is subject to income tax on income arising in, or derived from,

the tax jurisdiction in British Columbia it operates.

The basic federal rate of Part I tax is 38 % of taxable income, 28 % after federal

tax abatement.

After the general tax reduction, the net federal tax rate is 15 %.

The provincial and territorial lower and higher tax

rates in British Columbia are 2 % and 12 %, respectively.

Luvina is a company incorporated in Vietnam.

It is subject to standard income tax rate at 20 % with respect to the taxable income.

The Company conducts its major businesses in Japan

and is subject to tax in this jurisdiction.

As a result of its business activities, the Company files tax returns that are subject to

examination by the local tax authority.

Income taxes in Japan applicable to the Company are imposed by the national, prefectural and municipal

governments, and in the aggregate result in an effective statutory tax rate of approximately 34.59 % for the three and six months ended

June 30, 2025 and 2024.

For the three and six months ended June 30, 2025

and 2024, the Company’s income tax expense (benefit) are as follows:

Company conducts its major businesses in Japan and is subject to tax in this jurisdiction.

As a result of its business activities, the

Company files tax returns that are subject to examination by the local tax authority.

Income taxes in Japan applicable to the Company

are imposed by the national, prefectural and municipal governments, and in the aggregate result in an effective statutory tax rate of

approximately 34.59 % for the three and nine months ended September 30, 2025 and 2024.

the three and nine months ended September 30, 2025 and 2024, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Three Months

For the Six Months

Ended June 30,

Income tax expense (benefit)

$ ( 152,330 )

For the three and six months ended June 30, 2025, the effective tax

rate was ( 0.34 )% and 2.62 %, respectively.

For the three and six months ended June 30, 2024, the effective tax rate was ( 3.16 )% and ( 3.97 )%,

respectively.

NOTE 15 – STOCK-BASED COMPENSATION

Stock Options

On August 6, 2021, the Board of Directors and

shareholders of the Company approved a 2021 Equity Incentive Plan (“2021 Plan”), under which 2,400,000 shares of common shares

are authorized for issuance.

On August 9, 2022, the Company awarded stock options

to purchase 14,500 shares of common shares at an exercise price of $ 2.48 per share to three prior employees of the Company.

options are fully vested and exercisable on the grant date, with the expiration date on August 9, 2026 .

On February 3, 2023, the Company awarded stock

options to purchase 100,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $ 1.17 per share to an employee of

The stock options vest 50 % on the grant date and February 1, 2024, respectively, with the expiration date on February 3,

On August 1, 2023, the Board of Directors of the

Company approved a 2023 Equity Incentive Plan, under which 2,000,000 shares of common shares are authorized for issuance.

On August 25, 2023, the Company awarded stock

options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $ 1.10 per share to an employee of

The stock options vest on each annual anniversary of the date of issuance, in an amount equal to 25 % of the applicable shares

of common shares, with the expiration date on August 25, 2033 .

The following table summarizes the stock options

activities and related information for the six months ended June 30, 2025 and 2024:

Stock Options Weighted

Price Weighted

(Years) Intrinsic

Ended September 30,

For the Nine Months

Ended September 30,

Income tax expense

the three and nine months ended September 30, 2025, the effective tax rate were 2.52 % and 1.92 %, respectively.

For the three and nine

months ended September 30, 2024, the effective tax rate were 1.68 % and 1.48 %, respectively.

13 – STOCK-BASED COMPENSATION

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

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

December 25, 2021, the Company awarded stock options to purchase 1,534,500 shares of common shares pursuant to the 2021 Plan at an exercise

price of $ 2.50 per share to various officers, directors, employees and consultants of the Company.

The stock options vest on each annual

anniversary of the date of issuance, in an amount equal to 25 % of the applicable shares of common shares, with the expiration date on

December 25, 2031 .

August 9, 2022, the Company awarded stock options to purchase 14,500 shares of common shares at an exercise price of $ 2.48 per share

to three prior employees of the Company.

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

on August 9, 2026 .

February 3, 2023, the Company awarded stock options to purchase 100,000 shares of common shares pursuant to the 2021 Plan at an exercise

price of $ 1.17 per share to an employee of the Company.

The stock options vest 50 % on the grant date and February 1, 2024, respectively,

with the expiration date on February 3, 2033 .

August 1, 2023, the Board of Directors of the Company approved a 2023 Equity Incentive Plan (“2023 Plan”), under which 2,000,000

shares of common shares are authorized for issuance.

August 25, 2023, the Company awarded stock options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise

price of $ 1.10 per share to an employee of the Company.

The stock options vest on each annual anniversary of the date of issuance, in

an amount equal to 25 % of the applicable shares of common shares, with the expiration date on August 25, 2033 .

following table summarizes the stock options activities and related information for the nine months ended September 30, 2025 and 2024:

SCHEDULE OF STOCK OPTION ACTIVITY

As of January 1, 2024

Forfeited ( 35,000 ) 2.42 - -

As of June 30, 2024 1,512,000 $ 2.41 7.51 $ -

As of September 30, 2024

As of January 1, 2025

Exercised ( 100,000 ) 1.17 - -

Forfeited ( 6,500 ) 2.50 - -

As of June 30, 2025 1,400,000 $ 2.50 6.43 $ -

Vested and exercisable as of June 30, 2025 1,053,625 $ 2.50 6.42 $ -

For the three and six months ended June 30, 2025,

the Company recognized stock-based compensation related to stock options of $ 22,006 and $ 52,682 , respectively.

For the three and six months

ended June 30, 2024, the Company recognized stock-based compensation related to stock options of $ 40,597 and $ 111,044 , respectively.

outstanding unamortized stock-based compensation related to stock options was $ 59,573 (which will be recognized through December 2025)

as of June 30, 2025.

Restricted Stock Units (“RSUs”)

On February 9, 2022, the Company entered into

executive employment agreements with five executives and granted 85,820 RSUs pursuant to the 2021 Plan.

The RSUs vest on each annual anniversary

of the date of the employment agreement, in an amount equal to 25 % of the applicable shares of common shares.

The fair value of the RSUs

at grant date is $ 424,809 .

The following table summarizes the RSUs activities

and related information for the six months ended June 30, 2025 and 2024:

As of September 30, 2025

Vested and exercisable as of September 30, 2025

the three and nine months ended September 30, 2025, the Company recognized stock-based compensation related to stock options of $ 3,032

and $ 55,714 , respectively.

For the three and nine months ended September 30, 2024, the Company recognized stock-based compensation related

to stock options of $ 73,457 and $ 184,501 , respectively.

The outstanding unamortized stock-based compensation related to stock options

was $ 27,941 (which will be recognized through December 2025) as of September 30, 2025.

Stock Units (“RSUs”)

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

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

shares of common shares.

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

following table summarizes the RSUs activities and related information for the nine months ended September 30, 2025 and 2024:

SCHEDULE OF RESTRICTED STOCK UNITS

Unvested as of January 1, 2024

Unvested as of June 30, 2024

Unvested as of September 30, 2024

Unvested as of January 1, 2025

Unvested as of June 30, 2025

For the three and six months ended June 30, 2025,

the Company recognized stock-based compensation related to RSUs of $ 5,918 and $ 7,522 , respectively.

For the three and six months ended

June 30, 2024, the Company recognized stock-based compensation related to RSUs of $ 15,445 and $ 36,710 , respectively.

The outstanding unamortized

stock-based compensation related to RSUs was $ 14,420 (which will be recognized through February 2026) as of June 30, 2025.

Unvested as of September 30, 2025

the three and nine months ended September 30, 2025, the Company recognized stock-based compensation related to RSUs of $ 5,986 and $ 13,508 ,

respectively.

For the three and nine months ended September 30, 2024, the Company recognized stock-based compensation related to RSUs

of $ 15,615 and $ 52,325 , respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 8,434 (which will be

recognized through February 2026) as of September 30, 2025.

14 – SHAREHOLDERS’ EQUITY

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

par value of $ 0.0001 per share.

Purchase Agreement

30, 2025, the Company entered into an equity purchase agreement and a registration rights agreement with Crom Structured Opportunities

Fund I, LP (“Crom Structured”), pursuant to which Crom Structured has committed to purchase up to $ 25 million in shares of

the Company’s common shares, subject to certain limitations and conditions set forth in the equity purchase agreement.

shall not issue or sell any shares of common shares under the equity purchase agreement which, when aggregated with all purchases of common

shares made by Crom Structured pursuant to the equity purchase agreement, would result in beneficial ownership of more than 4.99 % of the

Company’s outstanding shares of common shares.

terms of the equity purchase agreement, the Company has the right, but not the obligation, to sell to Crom Structured, shares of common

shares over the period commencing on the date of the equity purchase agreement and ending on the earlier of (i) the date on which Crom

Structured shall have purchased common shares pursuant to the equity purchase agreement equal to $ 25 million, (ii) June 30, 2027, (iii)

written notice of termination by the Company to Crom Structured, (iv) the registration statement is no longer effective after the initial

effective date of the registration statement, or (v) the date that the Company commences a voluntary bankruptcy case, a bankruptcy proceeding

is commenced against the Company, a custodian is appointed for the Company or for all or substantially all of its property, or the Company

makes a general assignment for the benefit of its creditors.

The purchase price will be calculated as 96 % of the volume weighted average

price (“VWAP”) of the Company’s common shares on the trading day immediately preceding the respective common shares

purchase notice delivery date.

Concurrently with the signing

of the equity purchase agreement, the Company issued 485,437 shares of common shares to Crom Structured as a commitment fee.

fair value of the shares issued for the commitment fee of $ 250,000 was recorded as deferred offering costs in the consolidated balance

six months ended June 30, 2025, no common shares were sold under the terms of the equity purchase agreement.

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

shares, par value of $ 0.0001 per share.

the Market Offering Agreement (“ATM Agreement”)

October 23, 2023, the Company entered into a ATM Agreement with H.C.

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

pursuant to which the Company may offer and sell, from time to time, through Wainwright, shares of the Company’s common shares,

par value of $ 0.0001 per share, having an aggregate offering price of up to approximately $ 2 million (“ATM Shares”).

Company pays commission fees of 4 % for each completed sale of ATM Shares pursuant to the terms of the ATM Agreement.

During the nine

months ended September 30, 2025 and 2024, the Company sold a total of 15,892 and nil shares of the ATM Shares for net proceeds of $ 30,445

and nil after deducting commission fees and other transaction costs, respectively.

The subscription receivable of $ 103,942 related to

ATM Shares sold on December 31, 2024 was collected in full on January 2, 2025.

of Series A Convertible Preferred Shares and Securities Purchase Agreement

30, 2025, the Company filed a certificate of designations of preferences and rights of Series A convertible preferred shares (“Series

June 30, 2025, the Company filed a certificate of designations of preferences and rights of Series A convertible preferred shares (“Series

A COD”) with the Secretary of State of the State of Delaware to set forth the terms of the Series A convertible preferred shares.

3 unchanged sentences

A convertible preferred shares:

● Dividends – Each Series A convertible preferred shares holder

(“Holder”) shall be entitled to receive dividends of 10 % per annum on the stated value of each share of Series A convertible

preferred shares.

● Liquidation – In the event of any voluntary or involuntary

liquidation, dissolution or winding up of the Company, the Holders shall be entitled to receive, prior and in preference to any distribution

of any of the assets or surplus funds of the Company to the holders of common shares and any other class or series of equity shares of

the Company, an amount per share equal to the greater of (i) the stated value plus all accrued and unpaid dividends thereon or (ii) the

amount that such Holder would receive if such Holder converts all of its shares of Series A convertible preferred shares into common shares

immediately prior to such liquidation, dissolution or winding up.

If, upon any such liquidation, dissolution or winding up, the assets

and funds available for distribution among the Holders shall be insufficient to permit the payment to such Holders of the full preferential

amount aforesaid, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among

the Holders in proportion to the amount that each such Holder is entitled to receive.

After the payment of the full amount of the liquidation

preference to which they are entitled, the Holders shall have no right or claim to any of the remaining assets of the Company.

● Voting – The Series A convertible preferred shares shall have

no voting rights.

However, as long as any shares of Series A convertible preferred shares are outstanding, the Company shall not, without

the affirmative vote of the Holders of a majority of the outstanding shares of Series A convertible preferred shares, and with each share

of Series A convertible preferred shares having one vote on (i) alter or change adversely the powers, preferences or rights given to the

Series A convertible preferred shares or alter or amend the Series A COD, (ii) issue additional shares of Series A convertible preferred

shares or increase or decrease (other than by conversion) the number of authorized shares of Series A convertible preferred shares, or

(iii) enter into any agreement with respect to any of the foregoing.

● Conversion – Each Holder shall have the right, at such Holder’s

opinion, to convert any or all of the Series A convertible preferred shares held by such Holder into fully paid and nonassessable shares

of common shares.

The number of shares of common shares issuable upon conversion of each share of Series A convertible preferred shares

shall be equal to the quotient obtained by dividing (i) the stated value plus all accrued and unpaid dividends thereon by (ii) 90 % of

the average of the two lowest VWAP of the Company’s common shares for the five trading days immediately preceding the respective

common shares conversion notice delivery date.

● Redemption – No share of Series A convertible preferred shares

shall be redeemable under any circumstances.

30, 2025, the Company entered into a securities purchase agreement and a registration rights agreement with Crom Structured, pursuant

to which the Company closed, issued and sold to Crom Structured an aggregate of 2,000 shares of the Company’s designated Series

A convertible preferred shares for an aggregate purchase price of $ 2,000,000 .

Concurrently with the signing of the securities purchase

agreement, the Company issued 750,000 shares of common shares (“ 750,000 Common Shares”) to Crom Structured for no consideration.

The Company received net proceeds of $ 1,800,000 from the securities purchase agreement after deducting share issuance transaction fees.

The net proceeds from the securities purchase agreement were allocated to Series A convertible preferred shares and 750,000 Common Shares

based on their relative fair values.

six months ended June 30, 2025, no shares of Series A convertible preferred shares were converted into common shares.

Dividends accrued on Series A convertible preferred shares amounted to $ 611 in the six months ended June 30,

the Market Offering Agreement (“ATM Agreement”)

23, 2023, the Company entered into a ATM Agreement with H.C.

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

to which the Company may offer and sell, from time to time, through Wainwright, shares of the Company’s common shares, par value

of $ 0.0001 per share, having an aggregate offering price of up to approximately $ 2 million (“ATM Shares”).

The Company pays

commission fees of 4 % for each completed sale of ATM Shares under the terms of the ATM Agreement.

During the six months ended June 30,

2025 and 2024, the Company sold a total of 15,892 and nil shares of the ATM Shares for net proceeds of $ 30,445 and nil after deducting

commission fees and other transaction costs, respectively.

The subscription receivable of $ 103,942 related to ATM Shares sold on December

31, 2024 was collected in full on January 2, 2025.

– Each Series A convertible preferred shares holder (“Holder”) shall be entitled to receive dividends of 10 % per

annum on the stated value of each share of Series A convertible preferred shares.

– In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Holders shall be

entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders

of common shares and any other class or series of equity shares of the Company, an amount per share equal to the greater of (i) the

stated value plus all accrued and unpaid dividends thereon or (ii) the amount that such Holder would receive if such Holder converts

all of its shares of Series A convertible preferred shares into common shares immediately prior to such liquidation, dissolution

or winding up.

If, upon any such liquidation, dissolution or winding up, the assets and funds available for distribution among the

Holders shall be insufficient to permit the payment to such Holders of the full preferential amount aforesaid, then the entire assets

and funds of the Company legally available for distribution shall be distributed ratably among the Holders in proportion to the amount

that each such Holder is entitled to receive.

After the payment of the full amount of the liquidation preference to which the Holders

are entitled, the Holders shall have no right or claim to any of the remaining assets of the Company.

– The Series A convertible preferred shares shall have no voting rights.

However, as long as any shares of Series A convertible

preferred shares are outstanding, the Company shall not, without the affirmative vote of the Holders of a majority of the outstanding

shares of Series A convertible preferred shares, and with each share of Series A convertible preferred shares having one vote on

(i) alter or change adversely the powers, preferences or rights given to the Series A convertible preferred shares or alter or amend

the Series A COD, (ii) issue additional shares of Series A convertible preferred shares or increase or decrease (other than by conversion)

the number of authorized shares of Series A convertible preferred shares, or (iii) enter into any agreement with respect to any of

the foregoing.

– Each Holder shall have the right, at such Holder’s opinion, to convert any or all of the Series A convertible preferred

shares held by such Holder into fully paid and nonassessable shares of common shares.

The number of shares of common shares issuable

upon conversion of each share of Series A convertible preferred shares shall be equal to the quotient obtained by dividing (i) the

stated value plus all accrued and unpaid dividends thereon by (ii) 90 % of the average of the two lowest volume weighted average price

(“VWAP”) of the Company’s common shares for the five trading days immediately preceding the respective common shares

conversion notice delivery date.

– No share of Series A convertible preferred shares shall be redeemable under any circumstances.

June 30, 2025, the Company entered into a securities purchase agreement and a registration rights agreement with Crom Structured Opportunities

Fund I, LP (“Crom Structured”), pursuant to which the Company closed, issued and sold to Crom Structured an aggregate of

2,000 shares of the Company’s designated Series A convertible preferred shares for an aggregate purchase price of $ 2,000,000 .

with the signing of the securities purchase agreement, the Company issued 750,000 shares of common shares (“ 750,000 Common Shares”)

to Crom Structured for no consideration.

The Company received net proceeds of $ 1,800,000 from the securities purchase agreement after

deducting share issuance transaction fees.

The net proceeds from the securities purchase agreement were allocated to Series A convertible

preferred shares and 750,000 Common Shares based on their relative fair values.

the three and nine months ended September 30, 2025, no shares of Series A convertible preferred shares were converted into common shares.

the three and nine months ended September 30, 2025, dividends accrued on Series A convertible preferred shares amounted to $ 56,222 and

$ 56,833 , respectively.

Purchase Agreement

June 30, 2025, the Company entered into an equity purchase agreement and a registration rights agreement with Crom Structured, pursuant

to which Crom Structured has committed to purchase up to $ 25 million in shares of the Company’s common shares, subject to certain

limitations and conditions set forth in the equity purchase agreement.

The Company shall not issue or sell any shares of common shares

under the equity purchase agreement which, when aggregate with all purchases of common shares made by Crom Structured pursuant to the

equity purchase agreement, would result in beneficial ownership of more than 4.99 % of the Company’s outstanding shares of common

to the terms of the equity purchase agreement, the Company has the right, but not the obligation, to sell to Crom Structured, shares

of common shares over the period commencing on the date of the equity purchase agreement and ending on the earlier of (i) the date on

which Crom Structured shall have purchased common shares pursuant to the equity purchase agreement equal to $ 25 million, (ii) June 30,

2027, (iii) written notice of termination by the Company to Crom Structured, (iv) the registration statement is no longer effective after

the initial effective date of the registration statement, or (v) the date that the Company commences a voluntary bankruptcy case, a bankruptcy

proceeding is commenced against the Company, a custodian is appointed for the Company or for all or substantially all of its property,

or the Company makes a general assignment for the benefit of its creditors.

The purchase price will be calculated as 96 % of the VWAP

of the Company’s common shares on the trading day immediately preceding the respective common shares purchase notice delivery date.

with the signing of the equity purchase agreement, the Company issued 485,437 shares of common shares to Crom Structured as a commitment

The total fair value of the common shares issued for the commitment fee of $ 250,000 was recorded as deferred offering costs in the

consolidated balance sheets.

the three and nine months ended September 30, 2025, no common shares were sold pursuant to the terms of the equity purchase agreement.

Contribution for Non-controlling Shareholder

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

On February 16, 2024, the Company received capital

contribution of VND1, 646.4 million in cash, equivalent to $ 67,195 , from the non-controlling shareholder of the subsidiary.

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

On February 16, 2024, the Company received

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

of Dividends on Common Shares

29, 2024, the Board of Directors approved a dividend declaration of $ 0.02 per share of common share for the shareholders of record at

the close of business on April 26, 2024.

The dividends in the amount of $ 417,283 were paid on May 3, 2024.

March 29, 2024, the Board of Directors of the Company approved a dividend declaration of $ 0.02 per share of common shares for the shareholders

of record at the close of business on April 26, 2024.

The dividends of $ 417,283 were paid on May 3, 2024.

July 22, 2024, the Board of Directors of the Company approved a dividend declaration of $ 0.02 per share of common shares for the shareholders

of record at the close of business on August 19, 2024.

The dividends of $ 417,283 were paid on August 26, 2024.

Issued and Outstanding

30, 2025 and December 31, 2024, there were 23,310,770 and 21,937,987 shares of common shares issued and outstanding, respectively.

30, 2025 and December 31, 2024, there were 2,000 and no shares of preferred shares (designated as Series A convertible preferred shares)

issued and outstanding, respectively.

NOTE 17 – NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated

on the basis of weighted average outstanding common shares.

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

average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and Series A convertible preferred shares.

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

common shares related to the early exercised stock options and unvested RSUs.

Potentially dilutive common shares issuable upon conversion

of the Series A convertible preferred shares are determined by applying the if-converted method.

Potentially dilutive common shares are

not included in the calculation of diluted net income (loss) per share if their effect would be anti-dilutive.

The computation of basic and diluted net income

(loss) per share for the three and six months ended June 30, 2025 and 2024 is as follows:

of September 30, 2025 and December 31, 2024, there were 23,310,770 and 21,937,987 shares of common shares issued and outstanding, respectively.

of September 30, 2025 and December 31, 2024, there were 2,000 and no shares of preferred shares (designated as Series A convertible preferred

shares) issued and outstanding, respectively.

15 – NET INCOME (LOSS) PER SHARE

net income (loss) per share is calculated on the basis of weighted average outstanding common shares.

Diluted net income (loss) per share

is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs

and Series A convertible preferred shares.

Potentially dilutive common shares are determined by applying the treasury stock method to

the assumed conversion of share repurchase liability to common shares related to the early exercised stock options and unvested RSUs.

Potentially dilutive common shares issuable upon conversion of the Series A convertible preferred shares are determined by applying the

if-converted method.

Potentially dilutive common shares are not included in the calculation of diluted net income (loss) per share if

their effect would be anti-dilutive.

computation of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2025 and 2024 is as follows:

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

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Net income (loss) per share – basic

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

common shareholders

Ended September 30,

For the Nine Months

Ended September 30,

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

per common share – basic

Net income (loss) from continuing operations

$ ( 137,122 )

$ ( 2,913,181 )

net loss from continuing operations attributable to non-controlling interests

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

( 2,741,499 )

Weighted average number of common shares outstanding used in calculating net income (loss) per share – basic

Net income (loss) per share – basic

Net income (loss) per share – diluted

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

Dividends accrued on Series A convertible preferred shares

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

common shareholders

( 2,798,332 )

Weighted average number of common shares outstanding – basic

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

per common share – basic

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

per common share – diluted

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

$ ( 2,741,499 )

changes in fair value derivative liability

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

( 2,731,820 )

Dividends accrued on Series A convertible preferred shares

Weighted average number of common shares outstanding – diluted

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

per common share – diluted

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Income (loss) from discontinued operations per common share – basic

Income (loss) from discontinued operations, net of income tax

$ ( 302,662 )

Weighted average number of common shares outstanding – basic

Income (loss) from discontinued operations per common share – basic

Income (loss) from discontinued operations per common share – diluted

Income (loss) from discontinued operations, net of income tax

$ ( 302,662 )

Weighted average number of common shares outstanding – basic

Dilutive effect of stock options, RSUs and Series A convertible preferred shares

Weighted average number of common shares outstanding – diluted

Income (loss) from discontinued operations per common share – diluted

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

per common share – basic

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

common shareholders

$ ( 1,609,851 )

Weighted average number of common shares outstanding – basic

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

per common share – basic

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

per common share – diluted

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

$ ( 1,553,018 )

changes in fair value derivative liability

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

( 1,543,339 )

Weighted average number of common shares outstanding used in calculating net income (loss) per share – basic

Weighted average number of common shares outstanding – basic

Dilutive effect of stock options, RSUs and Series A convertible preferred shares

Weighted average number of common shares outstanding used in calculating net income (loss) per share – diluted

Net income (loss) per share – diluted

NOTE 18 – SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

Operating segments are defined as components of

an entity for which discrete financial information is available and is regularly reviewed by the CODM, the CEO of the Company, in making

decisions regarding resource allocation and performance assessment.

The Company determines its operations constitute a single operating

segment and reportable segment in accordance with ASC Topic 280.

The CODM assesses financial performance and decides how to allocate resources

based on consolidated net income (loss).

Segment assets are reported on the Company’s consolidated balance sheets.

The following table summarizes selected financial

information with respect to the Company’s single operating segment and reportable segment for the three and six months ended June

30, 2025 and 2024:

Weighted average number of common shares outstanding – diluted

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

per common share – diluted

16 – DISCONTINUED OPERATIONS

July 24, 2025, in light of the intense competition of the software market in Japan, the Board of Directors of the Company approved to

enter into a non-binding letter of intent to sell 100% of the outstanding shares of HeartCore Japan.

The sale transaction was closed

on October 31, 2025.

The Company does not expect to have any continuing involvement in HeartCore Japan subsequent to the closing .

The Company determines the assets of HeartCore Japan met the criteria for classification as held for sale as of

September 30, 2025.

Additionally, the Company determines the sale of HeartCore Japan represents a strategic shift that has or will have

a major impact on its operations and financial results.

Accordingly, all results of operations of HeartCore Japan have been removed from

continuing operations and presented as discontinued operations in the unaudited consolidated statements of operations and comprehensive

income (loss) for all periods presented.

All assets and liabilities of HeartCore Japan have been presented separately as assets and liabilities

of discontinued operations in the consolidated balance sheets as of September 30, 2025 and December 31, 2024.

On October 31, 2025, the

Company entered into a purchase agreement to sell 100 % of the outstanding shares of HeartCore Japan to Smith Japan Holdings KK for a

cash consideration of approximately $ 12 million, subject to price adjustment.

following table summarizes the results of operations from discontinued operations, net of income tax in the unaudited consolidated statements

of operations and comprehensive income (loss) for the three and nine months ended September 30, 2025 and 2024:

OF OPERATIONS, ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Cost of revenues

Operating expenses:

Selling expenses

General and administrative expenses

Research and development expenses

Total operating expenses

Income (loss) from discontinued operations

Total other income (expenses)

Income (loss) from discontinued operations before income tax expense (benefit)

Income tax expense (benefit)

Income (loss) from discontinued operations, net of income tax

$ ( 302,662 )

following table summarizes the assets and liabilities of discontinued operations in the consolidated balance sheets as of September 30,

2025 and December 31, 2024:

September 30,

Assets of discontinued operations

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Due from related party

Other current assets

Accounts receivable, non-current

Property and equipment, net

Operating lease right-of-use assets

Deferred tax assets

Security deposits

Long-term loan receivable from related party

Other non-current assets

Total assets of discontinued operations

Liabilities of discontinued operations

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Current portion of long-term debts

Operating lease liabilities, current

Income tax payables

Deferred revenue

Other current liabilities

Long-term debts

Operating lease liabilities, non-current

Asset retirement obligations

Total liabilities of discontinued operations

and liabilities classified as held for sale are reported at the lower of carrying amount or fair value less cost to sell.

valuation allowance against the assets classified as held for sale as of September 30, 2025.

As of the closing date of the sale of HeartCore

Japan, the assets classified as held for sale, net of valuation allowance, and liabilities classified as held for sale will be derecognized

and any gain or loss on sale will be recorded.

17 – SEGMENT AND GEOGRAPHIC INFORMATION

segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the

CODM, the CEO of the Company, in making decisions regarding resource allocation and performance assessment.

The Company determines its

operations constitute a single operating segment and reportable segment in accordance with ASC Topic 280.

The CODM assesses financial

performance and decides how to allocate resources based on consolidated net income (loss) from continuing operations.

Segment assets

are reported on the Company’s consolidated balance sheets.

following table summarizes the selected financial information with respect to the Company’s single operating segment and reportable

segment for the three and nine months ended September 30, 2025 and 2024:

OF SINGLE OPERATING SEGMENT AND REPORTABLE SEGMENT

For the Three Months

For the Six Months

Ended September 30,

For the Nine Months

Ended September 30,

Software related cost of revenues

3 unchanged sentences

Research and development expenses

Income (loss) from operations

( 1,507,204 )

( 1,136,692 )

( 2,190,159 )

Total other income (expenses)

( 1,651,291 )

Income (loss) before income tax expense (benefit)

Income (loss) from continuing operations

( 1,859,402 )

Total other expenses

( 1,031,704 )

( 2,762,892 )

Income tax expense (benefit)

Net income (loss)

Income (loss) from continuing operations before income tax expense

( 2,858,295 )

Income tax expense

Net income (loss) from continuing operations

$ ( 137,122 )

$ ( 2,913,181 )

Geographic Information

The following table summarizes the breakdown of

revenues by geography for the three and six months ended June 30, 2025 and 2024:

following table summarizes the breakdown of revenues by geography for the three and nine months ended September 30, 2025 and 2024:

OF SUMMARIZES THE BREAKDOWN OF REVENUES BY GEOGRAPHY

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

United States

1 unchanged sentence

Total revenues

The following table summarizes the breakdown of

long-lived assets by geography as of June 30, 2025 and December 31, 2024:

following table summarizes the breakdown of long-lived assets by geography as of September 30, 2025 and December 31, 2024:

OF SUMMARIZES THE BREAKDOWN OF LONG-LIVED ASSETS BY GEOGRAPHY

September 30,

United States

1 unchanged sentence

Total long-lived assets

NOTE 19 – SUBSEQUENT EVENT

On July 1, 2025, the Company converted partial

of the warrants it received from a customer as noncash consideration from consulting services into marketable securities.

On July 4, 2025, the U.S.

government enacted

the One Big Beautiful Bill Act (“OBBBA”) which includes, among other provisions, changes to the U.S.

corporate income tax

system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain

provisions within the Tax Cuts and Jobs Act.

The Company is currently evaluating the impact of OBBBA on its unaudited consolidated financial

statements and related disclosures.

On July 24, 2025, the Board of Directors of the

Company approved to enter into a non-binding letter of intent to sell 100 % of the outstanding shares of HeartCore Japan to a non-related

company for a cash consideration of approximately $ 12 million, subject to price adjustment.

18 – SUBSEQUENT EVENTS

October 3, 2025, the Company granted 153,482 RSUs pursuant to the 2023 Plan to four executives of the Company.

The RSUs are fully vested

on the grant date.

The fair value of the RSUs at grant date is $ 131,150 .

October 19, 2025, the Board of Directors of the Company approved a distribution declaration of $ 0.13 per share of common shares for the shareholders

of record at the close of business on November 10, 2025.

The distribution of $ 3,199,038 was paid on November 17, 2025.

October 20, 2025, Crom Structured converted 480 shares of Series A convertible preferred shares into 1,143,730 shares of common shares.

October 22, 2025, the Board of Directors of the Company approved to amend the number of designated shares of Series A convertible preferred

shares to 4,000 shares pursuant to the Series A COD.

October 31, 2025, the Company entered into a purchase agreement to sell 100 % of the outstanding shares of HeartCore Japan to Smith Japan

Holdings KK for a cash consideration of approximately $ 12 million, subject to price adjustment.

The sale transaction was closed on the

On November 3, 2025, Crom Structured converted 503

shares of Series A convertible preferred shares into 811,825 shares of common shares.

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

What changed 10-Q

Item 1. Financial Statements