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Item 2. Management’s Discussion and Analysis

2025-11-18 compared with 2025-08-13 · 450 added, 685 removed, 41 unchanged (97% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Private Securities Litigation Reform Act

of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities

Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe harbor for forward-looking statements made by us or

on our behalf.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),

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

statements made by us or on our behalf.

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

1 unchanged sentence

our reports and presentations to stockholders or potential stockholders.

In some cases, forward-looking statements can be identified by

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

or similar expressions.

Such forward-looking statements include risks and uncertainties and there are important factors that could cause

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

These factors, risks and uncertainties

can be found in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31,

2024, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,” of this Quarterly Report

on Form 10-Q.

Although we believe the expectations reflected

in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could

have a material effect on the future financial performance of the Company.

The forward-looking statements in this report are made on the

basis of management’s assumptions and analyses, as of the time the statements are made, in light of their experience and perception

of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances.

Except as otherwise required by the federal

securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement

contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this Quarterly Report on Form 10-Q to

reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement

Business Overview

We are a leading software development company

based in Tokyo, Japan.

In some cases, forward-looking statements can be identified

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

“continue” or similar expressions.

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

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

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

fiscal year ended December 31, 2024, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,”

of this Quarterly Report on Form 10-Q.

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

foresee or identify all factors that could have a material effect on the future financial performance of the Company.

The forward-looking

statements in this report are made on the basis of management’s assumptions and analyses, as of the time the statements are made,

in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate

under the circumstances.

as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions

to any forward-looking statement contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this

Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances

on which any statement is based.

2022, HeartCore Enterprises, Inc.

(“HeartCore USA”) started the GO IPO business, which supports Japanese companies listing on The Nasdaq Stock Market (“Nasdaq”) and

the New York Stock Exchange (“NYSE”) in the United States.

As of September 30, 2025, we have entered into consulting agreements

with 16 companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting

fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the fully-diluted share capital

of such companies that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share.

have also been a leading software development company based in Tokyo, Japan.

We provide software through two business units.

The first business unit, our CX division, includes a customer

experience management business (the “CXM Platform”) that has been in existence for over 15 years.

Our CXM Platform includes

marketing, sales, service and content management systems, as well as other tools and integrations, that enable companies to attract and

engage customers throughout the customer experience.

We also provide education, services and support to help customers be successful

with our CXM Platform.

The second business unit, our DX division, is

a digital transformation business which provides customers with robotics process automation, process mining and task mining to accelerate

the digital transformation of enterprises.

We also have an ongoing technology innovation team to develop software that supports the narrow

needs of large enterprise customers.

During 2022, we started the GO IPO business, which

supports Japanese companies listing on The Nasdaq Stock Market (“Nasdaq”) and NYSE in the United States.

As of June 30, 2025,

we have entered into consulting agreements with 16 companies to assist them in their IPO process, whereby we are entitled to receive from

each company a consulting fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the

fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share.

We were incorporated in the State of Delaware

on May 18, 2021.

We conduct business activities principally through our wholly owned subsidiary, HeartCore Co.

Japan”), which was established in Japan in 2009 by Sumitaka Yamamoto, our Chairman of Board, Chief Executive Officer and President

and a significant stockholder of the Company.

On September 6, 2022, we 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, and its wholly owned subsidiaries.

Sigmaways and its wholly owned subsidiaries are engaged in the business

of developing and sales of software in the United States.

The acquisition closed on February 1, 2023.

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

Financial”) in the U.S.

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

existence for over 15 years.

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

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

We also provide education,

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

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

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

We also have an ongoing technology innovation

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

We made the strategic decision to sell our software business assets in Japan and to concentrate our efforts on our GO IPO consulting

October 31, 2025, the Company entered into a Purchase Agreement (the “HeartCore Japan Agreement”) with Smith Japan

Holdings KK (“Smith Japan”), pursuant to which the Company agreed to sell to Smith Japan, and Smith Japan agreed to

purchase (the “HeartCore Japan Sale”), all of the outstanding equity interests of HeartCore Co., Ltd., a wholly owned

subsidiary of the Company (“HeartCore Japan”).

See “Recent Events” below.

January 2023, we formed HeartCore Financial, Inc.

(“HeartCore Financial”), a wholly owned subsidiary of HeartCore USA,

as part of our GO IPO consulting business.

In the fourth quarter of 2023, we formed HeartCore Luvina Vietnam

Company (“HeartCore Luvina”) in Vietnam, which is engaged in the business of software development.

In April 2024, HeartCore Financial incorporated

a branch office, HeartCore Financial, Inc.

– Japan Branch Office, in Japan.

Recent Developments

Nasdaq Notice Regarding Minimum Bid Price Requirement

On May 6, 2025, we received written notice (the

“Bid Price Notice”) from the Nasdaq Listing Qualification Department (the “Nasdaq Staff”) indicating that we were

not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price

Requirement”) for continued listing on the Nasdaq Capital Market.

The notification of noncompliance has no immediate effect on the

listing or trading of our common stock on the Nasdaq Capital Market under the symbol “HTCR,” and we are currently monitoring

the closing bid price of our common stock and evaluating our alternatives, if appropriate, to resolve the deficiency and regain compliance

with this rule.

The Nasdaq Listing Rules require listed securities

to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price for the last 30 consecutive business days, we

no longer meet this requirement.

The Bid Price Notice indicated that we will be provided 180 calendar days, or until November 3, 2025,

in which to regain compliance.

If at any time during this period the closing bid price of our common stock is at least $1.00 per share

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

will be closed.

Alternatively, if we fail to regain compliance

with Rule 5550(a)(2) prior to the expiration of the 180 calendar day period, but meet the continued listing requirement for market value

of publicly held shares and all of the other applicable standards for initial listing on the Nasdaq Capital Market, with the exception

of the Minimum Bid Price Requirement, and provide written notice of our intention to cure the deficiency during the second compliance

period by effecting a reverse stock split, if necessary, then we may be granted an additional 180 calendar days to regain compliance with

Rule 5550(a)(2).

There can be no assurance that we will be able

to regain compliance with the Minimum Bid Price Requirement, even if we maintain compliance with the other listing requirements.

In November 2023, we formed HeartCore Luvina Vietnam Company

(“HeartCore Luvina”), a 51% owned subsidiary, in Vietnam, which is engaged in the business of software development and

other services.

HeartCore Luvina started operations in 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

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

In October 2025, HeartCore USA incorporated

a wholly-owned subsidiary, Higgs Field Co., Ltd.

(“Higgs Field”), in Japan.

Higgs Field is engaged in the business of providing

business and management consulting services.

of HeartCore Japan

Company has made the strategic decision to sell its software business assets in Japan and to concentrate its efforts on its GO IPO consulting

October 31, 2025, the Company entered into the HeartCore Japan Agreement with Smith Japan in relation to the HeartCore Japan Sale.

to the terms of the HeartCore Japan Agreement, the purchase price of the HeartCore Japan Sale is ¥1,800,418,650 (equivalent to approximately

$12 million, based on the October 31, 2025 Federal Reserve conversion rate of ¥154.05 = USD $1) (the “Purchase Price”),

subject to adjustment as set forth in the HeartCore Japan Agreement, to be paid as follows:

An amount of ¥1,013,340,000 less the amount of HeartCore

Japan’s debts as set forth in the HeartCore Japan Agreement (the “Estimated Debt”) will be paid by the Smith Japan

to the Company on the Closing Date (such final amount, the “Closing Payment”).

An amount of ¥126,133,200 (the “Holdback Amount”)

will be retained by the Smith Japan from the Closing Payment, and, subject to the provisions of the HeartCore Japan Agreement, will be

paid by Smith Japan to the Company on the first business day occurring the later of:

(a) 180 after the Closing Date, or (b) if applicable,

the date the Net Tangible Assets (as defined in the HeartCore Japan Agreement) is finally determined pursuant to the terms of the HeartCore

Japan Agreement (the “Holdback Release Date”).

An amount of ¥273,866,800 (the “Long Term Holdback

Amount”) in respect of the agreements (“Multi-year Licensing Agreements”) concerning the licensing of HeartCore Japan’s

“HeartCore CMS” product to a specified customer for a period of more than one year will be retained by Smith Japan from the

Closing Payment and will be paid by Smith Japan as set forth in the HeartCore Japan Agreement.

Subject to the provisions of the HeartCore Japan Agreement,

an amount of ¥387,078,650 (the “Deferred Consideration”), which shall consist of a principal amount of ¥322,700,000

with an uncompounded rate of interest of 6.65% per annum, will be retained by Smith Japan from the Closing Payment and will be paid by

Smith Japan on October 31, 2028, the third annual anniversary of the Closing Date.

Within five business days following the final determination

of the actual amount of HeartCore Japan’s debts as of the Closing (the “Final Debt Amount”), Smith Japan shall pay

to the Company an amount equal to (i) the Estimated Debt minus (ii) the Final Debt Amount (such payment, the “Debt True-Up Payment”).

For the avoidance of doubt, if the Final Debt Amount is greater than the Estimated Debt, no payment shall be owed by Smith Japan.

to the terms of the HeartCore Japan Agreement, for a period of six months following the closing date (October 31, 2025), (i) the Company

agreed to provide Smith Japan with certain accounting and reporting transition services, and (ii) Smith Japan agreed to provide the Company

with certain human resources transition services.

HeartCore Japan Agreement contains customary representations, warranties, conditions, covenants, and indemnification obligations for

a transaction of this type.

HeartCore Japan Sale closed on October 31, 2025.

Distribution to Stockholders

HeartCore USA and its Board of Directors deemed it in the best interests of HeartCore USA and its stockholders to authorize a one-time payment

to its stockholders in the amount of $0.13 per share of common stock.

federal tax purposes, this payment to stockholders will

be deemed to be a distribution.

The record date for holders of HeartCore USA’s common stock to participate in the distribution is

November 10, 2025, and the payment date is November 17, 2025.

Notice Regarding Minimum Bid Price Requirement

May 6, 2025, we received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualification Department (the “Nasdaq

Staff”) indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule

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

The notification of

noncompliance has no immediate effect on the listing or trading of our common stock on the Nasdaq Capital Market under the symbol “HTCR,”

and we are currently monitoring the closing bid price of our common stock and evaluating our alternatives, if appropriate, to resolve

the deficiency and regain compliance with this rule.

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

for the last 30 consecutive business days, we no longer meet this requirement.

The Bid Price Notice indicated that we will be provided

180 calendar days, or until November 3, 2025, in which to regain compliance.

If we failed to regain compliance with Rule 5550(a)(2) prior

to the expiration of the 180 calendar day period, but meet the continued listing requirement for market value of publicly held shares

and all of the other applicable standards for initial listing on the Nasdaq Capital Market, with the exception of the Minimum Bid Price

Requirement, and provide written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse

stock split, if necessary, then we may be granted an additional 180 calendar days to regain compliance with Rule 5550(a)(2).

November 4, 2025, the Nasdaq Staff notified us of its determination that HeartCore USA is eligible for an additional 180-day period, or

until May 1, 2026, to regain compliance with the Minimum Bid Price Requirement.

If at any time during this additional time period the

closing bid price of HeartCore USA’s security is at least $1 per share for a minimum of 10 consecutive business days, Nasdaq will

close the matter.

compliance cannot be timely demonstrated, the Nasdaq Staff will provide notify us that our common stock will be delisted.

At that time,

we may appeal the Nasdaq Staff’s determination to a Hearings Panel.

There can be no assurance that we will be able to

regain compliance with the Minimum Bid Price Requirement, even if we maintain compliance with the other listing requirements.

considering actions that we may take in response to the Bid Price Notice in order to regain compliance with the continued listing requirements,

but no decisions regarding a response have been made at this time.

Nasdaq Notice Regarding Minimum Stockholders’

Equity Requirement

On May 24, 2025, we received written notice (the

“Stockholders’ Equity Notice”) from the Nasdaq Staff indicating that we are not in compliance with the $2,500,000 minimum

stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b) (the “Minimum Stockholders’ Equity Requirement”)

for continued listing on the Nasdaq Capital Market.

Additionally, the Nasdaq Staff noted that we do not meet the alternatives of market

value of listed securities or net income from continuing operations as of May 23, 2025.

Under Nasdaq rules, we had 45 calendar days (or

until July 8, 2025) to submit a plan to regain compliance, which we did.

On July 11, 2025, the Nasdaq Staff notified us that they had

granted us an extension until September 30, 2025, to regain compliance with the Minimum Stockholders’ Equity Requirement.

to the terms of the extension, on or before September 30, 2025, we must complete the transactions pursuant to the Equity Purchase Agreement

and Securities Purchase Agreement (both as defined below) and evidence compliance with the Minimum Stockholders’ Equity Requirement

as indicated in the Nasdaq Staff’s notification.

The notification of noncompliance had no immediate

effect on the listing or trading of our common stock on the Nasdaq Capital Market under the symbol “HTCR.” There can be no

assurance that we will be able to regain compliance with the Minimum Stockholders’ Equity Requirement, even if we maintain compliance

with the other listing requirements.

Consulting and Services Agreement with tmsuk

On May 30, 2025 (the “tmsuk Effective Date”),

we entered into a Consulting and Services Agreement (the “tmsuk Consulting Agreement”) with tmsuk Co., Ltd., a Japanese corporation

Pursuant to the terms of the tmsuk Consulting Agreement, we agreed to provide tmsuk certain services, including

the following (collectively, the “tmsuk Services”):

(i) Assistance with the introduction, for a law firm, underwriter

and auditing firm for tmsuk, with tmsuk making their selections, at their sole discretion;

(ii) Assisting in the preparation of documentation for internal controls

required for an initial public offering or de-SPAC or other Fundamental Transaction (as defined in the tmsuk Warrant) by tmsuk;

(iii) Providing support services to remove problematic accounting

accounts upon listing;

(iv) Translation of requested documents into English;

(v) Attend and, if requested by tmsuk, lead, meetings with tmsuk’s

management and employees;

(vi) Provide tmsuk with support services related to tmsuk’s

NASDAQ listing;

(vii) Conversion of accounting data from Japanese standards to U.S.

(viii) Assist in the preparation of S-1 or F-1 filings;

(ix) Creation of English web page;

(x) Preparing an investor presentation/deck and executive summary

of tmsuk’s operations.

In providing the tmsuk Services, we agreed to

not render legal advice or perform accounting services, nor act as an investment advisor or broker/dealer.

Pursuant to the terms of the

tmsuk Consulting Agreement, the parties agreed that we will not provide the following services, among others:

negotiation for the sale

of tmsuk’s securities;

participation in discussions between tmsuk and potential investors;

assisting in structuring any transactions

involving the sale of tmsuk’s securities;

pre-screening of potential investors;

due diligence activities;

nor providing advice relating

to valuation of or financial advisability of any investments in tmsuk;

or handling any funds or securities on behalf of tmsuk.

Pursuant to the terms of the tmsuk Consulting

Agreement, tmsuk agreed to compensate us as follows in return for the provision of the tmsuk Services during the nine-month term:

(a) $500,000, to be paid as follows:

(i) $200,000 on the tmsuk Effective

(ii) $150,000 on the three-month anniversary of the tmsuk Effective Date;

and (iii) $150,000 on the six-month anniversary of the

tmsuk Effective Date;

(b) Issuance by tmsuk to the Company of a warrant (the “tmsuk

Warrant”), deemed fully earned and vested as of the tmsuk Effective Date, to acquire a number of shares of capital stock of tmsuk,

to initially be equal to 3% of the fully diluted share capital of tmsuk as of the tmsuk Effective Date, subject to adjustment as set

forth in the tmsuk Consulting Agreement and the tmsuk Warrant.

Issuance by tmsuk of the tmsuk Warrant may be

subject to the approval of tmsuk’s stockholders, and in such case, the tmsuk Warrant will not be issued unless and until stockholder

approval is obtained.

In the event that tmsuk stockholder approval is not obtained, and the tmsuk Warrant is not issued, on or before

the 90 th day following the tmsuk Effective Date, the parties agreed to reasonably cooperate to come to mutual agreement on

an alternate method to provide to us the same value and rights as would have been provided pursuant to the tmsuk Warrant.

In the event that the term of the tmsuk Consulting

Agreement is extended beyond the initial nine-month term, tmsuk agreed to compensate us for tmsuk Services provided at the rate of $150

per hour, based on the hours spent by our personnel providing the tmsuk Services.

The tmsuk Consulting Agreement may be terminated

at any time by either party upon notice to the other party.

OEM Sales Agreement

On June 23, 2025, HeartCore Japan entered into

an OEM Sales Agreement (the “Silver Egg Agreement”) by and between HeartCore Japan and Silver Egg Technology CO.

Pursuant to the terms of the Silver Egg Agreement, Silver Egg agreed to provide to HeartCore Japan its AI recommendation

service, “Aigent Recommender,” developed by Silver Egg (the “Services”).

The specific terms and conditions for

the provision of the Services will be determined in individual agreements.

The Silver Egg Agreement will serve as the basic agreement

and will apply to all individual agreements between HeartCore Japan and Silver Egg during the term of the Silver Egg Agreement, and such

individual agreements will constitute a part of the Silver Egg Agreement.

The term of the Silver Egg Agreement is two years.

Unless either party notifies the other in writing at least six months prior to the expiration of the term, the Silver Egg Agreement will

automatically renew for additional two year periods.

Notwithstanding the foregoing, if either party wishes to terminate the Silver Egg

Agreement during the term, both parties must agree in writing.

The term of each individual contract pursuant to the Silver Egg Agreement

will commence on the date of the individual contract and will continue until the last day of the month in which 12 months have elapsed

from the start date of the use of the Services.

However, unless HeartCore Japan or Silver Egg gives written notice to the other party

at least 30 days prior to the expiration of the term, the individual contract will be automatically renewed for an additional 12-month

Pursuant to the terms of the individual agreement

for the first year (through June 30, 2026) and for the second year (from July 1, 2026 to June 30, 2027), when HeartCore Japan achieves

the target number of contracts (20), the monthly service fees to be paid by HeartCore Japan to Silver Egg will be as follows:

to 500,000 page views:

- 800,000 page views:

– 1,000,000 page views:

If HeartCore Japan does not achieve the target number of contracts by June 30, 2026, the monthly service fees to be paid by

HeartCore Japan to Silver Egg for the second year (from July 1, 2026 to June 30, 2027) will increase as follows:

to 500,000 page views:

- 800,000 page views:

● 800,001 – 1,000,000 page views:

Consulting and Services Agreement with

Cipher Core Co., Ltd.

On June 30, 2025, the

Company entered into a Consulting and Services Agreement (the “Consulting Agreement”) with Cipher Core Co., Ltd.

As compensation for its services under the Consulting Agreement, Cipher Core will pay the Company an aggregate of $500,000

in fees, and issue to the Company a warrant to acquire 3% of Cipher Core’s capital stock, on a fully diluted basis.

The number of

warrant shares, which is fully earned, vested, and non-returnable, may be subject to adjustments.

As part of the Consulting

Agreement, the Company agreed to assist Cipher Core in its efforts to go public and list on the Nasdaq Stock Market (“Nasdaq”).

Under the Consulting Agreement, the Company will assist Cipher Core with:

the introduction for a law firm, underwriter and auditing

firm for Cipher Core, with Cipher Core making their selections, at their sole discretion;

translating requested documents into English;

assisting in the preparation of documentation for internal

controls required for an IPO;

conversion of accounting data from Japanese standards to

providing support services to remove problematic accounting

accounts upon listing;

support creation of an English web page;

preparation of an investor presentation and executive summary

of the operations;

provision of providing general support services;

assisting in the preparation of a registration statement.

In providing the services under the Consulting Agreement,

the Company will not render legal advice or perform accounting services, and will not act as an investment advisor or broker/dealer.

Pursuant to the terms of the Consulting Agreement, the parties agreed that the Company will not provide the following services, among

negotiation for the sale of Cipher Core’s securities;

participation in discussions between Cipher Core and potential investors;

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

pre-screening of potential investors;

due diligence activities;

nor providing advice relating to valuation of or financial advisability of any investments in Cipher Core;

or handling any funds or securities on behalf of Cipher Core.

Equity Purchase Agreement

On June 30, 2025, we and Crom

Structured Opportunities Fund I, LP (“Crom” or the “Investor”), an accredited investor, entered into an Equity

Purchase Agreement (the “Equity Purchase Agreement”), pursuant to which the we have the right, but not the obligation, to

direct the Investor , at any time and from time to time during the Commitment Period (as hereinafter

defined) as provided in the Equity Purchase Agreement, to purchase up to $25,000,000 (the “Maximum Commitment Amount”) in

aggregate gross purchase price of newly issued fully paid shares of our common stock, par value $0.0001 (the “Advance Shares”).

The “Commitment Period” means, subject to the terms and conditions of the Equity Purchase Agreement, the period commencing

on June 30, 2025 and ending on the earlier of (i) the date on which the Investor shall have

purchased Advance Shares equal to the Maximum Commitment Amount, (ii) June 30, 2027, (iii) written notice of termination by us to the

Investor , (iv) the Equity Line of Credit (“ELOC”) Registration Statement (as

hereinafter defined) is no longer effective after the initial effective date of the ELOC Registration Statement, (v) the date that we

commence a voluntary bankruptcy case, a bankruptcy proceeding is commenced against us, a custodian is appointed for us or for all or substantially

all of its property, or we make a general assignment for the benefit of its creditors, or (vi) the date on which the Equity Purchase Agreement

is terminated by mutual written consent of the parties.

Under the terms and subject to the conditions

of the Equity Purchase Agreement, we have the right, but not the obligation, to direct the Investor ,

by our delivery to the Investor of a notice (the “Advance Notice”) from time

to time, to purchase Advance Shares (i) in a minimum amount not less than $25,000, calculated based on 96% of the volume-weighted average

price (“VWAP”) of our common stock on the trading day immediately preceding the date during the Commitment Period that an

Advance Notice is deemed delivered (the “Advance Date”), and (ii) in a maximum amount up to the lesser of (a) $500,000, or

(b) 50% of the average daily trading value of the common stock during the seven trading days immediately preceding the respective Advance

Date (excluding the single highest volume trading day and the single lowest volume trading day from such calculation) multiplied by the

lowest VWAP of the common stock during the seven trading days immediately preceding the respective Advance Date (each, an “Advance”).

Each Advance is subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or

other similar transaction as provided in the Equity Purchase Agreement.

The number of Advance Shares then to be purchased

by the Investor may not exceed the number of such shares that, when aggregated with all other

shares of common stock then owned by the Investor beneficially or deemed beneficially owned

by the Investor , would result in the Investor owning

more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common

stock issuable pursuant to an Advance Notice.

The Equity Purchase Agreement further provides

that we may not issue or sell to the Investor any Advance Shares under the Equity Purchase

Agreement in excess of 19.99% of our issued and outstanding common stock on June 30, 2025, until stockholder approval satisfying the requirements

of Nasdaq Rule 5635(d) has been obtained and is in effect.

We obtained this stockholder approval on June 30, 2025.

We also agreed to pay the Investor

a commitment fee equal to $250,000 worth of shares of common stock (“ELOC Commitment Shares”), with the number of ELOC

Commitment Shares issued being based on the Nasdaq official closing price of the common stock on June 27, 2025, the trading day immediately

prior to the effective date of the Equity Purchase Agreement, in consideration for the Investor’s

entry into the Equity Purchase Agreement.

Pursuant to the terms of the Equity Purchase Agreement,

we agreed that we will not without the prior written consent of the Investor , enter into

an “Equity Line of Credit” or a “Variable Rate Transaction,” as such terms are defined in the Equity Purchase

The Investor agreed not to engage in any short sale or hedging transactions with

respect to the common stock during the term of the Equity Purchase Agreement.

We may terminate the Equity Purchase Agreement at any time

by written notice to the Investor at least five trading days in advance;

provided that there

are no outstanding Advance Notices.

We and the Investor may also terminate the Equity Purchase

Agreement at any time by mutual written consent.

In addition, the Equity Purchase Agreement will automatically terminate at the end of

the Commitment Period.

Pursuant to the terms of the Equity Purchase Agreement,

we agreed that it would also comply with the ELOC Registration Rights Agreement (as hereinafter defined) with respect to the filing and

effectiveness deadlines of the ELOC Registration Statement in accordance with the terms of the ELOC Registration Rights Agreement.

We will not issue or sell any shares of common

stock to the Investor pursuant to the Equity Purchase Agreement, except for the ELOC Commitment

Shares, until and unless the ELOC Registration Statement has been declared effective by the SEC.

The Equity Purchase Agreement also contains customary

representations, warranties, indemnification provisions and closing conditions.

The representations, warranties and covenants contained

in the Equity Purchase Agreement were made only for purposes of the Equity Purchase Agreement and as of specific dates, were solely for

the benefit of the parties to such agreement and are subject to certain important limitations.

ELOC Registration Rights Agreement

In connection with the execution of the Equity

Purchase Agreement, we and the Investor entered into a Registration Rights Agreement dated

June 30, 2025 (the “ELOC Registration Rights Agreement”), pursuant to which we agreed to use our commercially reasonable efforts

to prepare and file within 30 calendar days from the date of the Equity Purchase Agreement, an initial registration statement covering

the resale of all of the shares of common stock which the Investor may acquire (including

the Advance Shares and the Commitment Shares) pursuant to the Equity Purchase Agreement (the “ELOC Registration Statement”).

We have also agreed to have the ELOC Registration Statement declared effective by the SEC within 90 days from June 30, 2025.

We filed such Registration Statement on Form S-1

333-288937) with the SEC on July 25, 2025.

Securities Purchase Agreement

On June 30, 2025, we and the Investor executed a Securities Purchase Agreement (the “Securities

Purchase Agreement”).

According to the terms of the Securities Purchase Agreement, we agreed to issue to the Investor ,

and the Investor agreed to purchase from us, 2,000 shares of our Series A Convertible Preferred

Stock at a purchase price equal to $1,000 per share ($2,000,000 in the aggregate), with each such share of Series A Convertible Preferred

Stock having a stated value of $1,100.

The sale of the shares of Series A Convertible Preferred Stock closed on June 30, 2025 (the “Closing”).

In connection with executing the Securities Purchase

Agreement, for no additional consideration, at Closing, we issued to the Investor 750,000

shares of common stock (the “SPA Commitment Shares”).

has the right at any time (subject to certain ownership limitations) to convert all or any portion of the then Series A Convertible Preferred

Stock into shares of common stock (the “Conversion Shares”).

For additional information regarding the conversion terms of

the Series A Convertible Preferred Stock, please see “ Series A Convertible Preferred Stock ” below.

Pursuant to the Securities Purchase Agreement,

we will, at all times, reserve from its authorized and unissued shares of common stock, two times such number of shares of common stock

as shall from time to time be sufficient to effectuate the conversion of all outstanding shares of Series A Convertible Preferred Stock.

The Securities Purchase Agreement also contains

customary representations, warranties, indemnification provisions and closing conditions.

The representations, warranties and covenants

contained in the Securities Purchase Agreement were made only for purposes of the Securities Purchase Agreement and as of specific dates,

were solely for the benefit of the parties to such agreement and are subject to certain important limitations.

SPA Registration Rights Agreement

In connection with the execution of the Securities

Purchase Agreement, we and the Investor entered into a registration rights agreement (the

“SPA Registration Rights Agreement”), pursuant to which we agreed to file, within 30 calendar days from the date of the Securities

Purchase Agreement, an initial registration statement covering the resale of all of the Conversion Shares and SPA Commitment Shares.

have also agreed to have such registration statement declared effective by the SEC within 90 days from June 30, 2025.

A Convertible Preferred Stock

On June 30, 2025, we filed a Certificate of Designations

of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock (“Certificate of Designations”) with the

Secretary of State of the State of Delaware.

The number of shares of Series A Convertible Preferred Stock designated is 2,000 and each

share of Series A Convertible Preferred Stock has a stated value equal to $1,100 (the “Stated Value”).

The Series A Convertible Preferred Stock have

no voting rights.

However, as long as any shares of Series A Convertible Preferred Stock are outstanding, we will not, without the affirmative

vote of the holders of a majority of the then outstanding shares of the Series A Convertible Preferred Stock, (a) alter or change adversely

the powers, preferences or rights given to the Series A Convertible Preferred Stock or alter or amend the Certificate of Designations,

(b) increase the number of authorized shares of Series A Convertible Preferred Stock, or (c) enter into any agreement with respect to

any of the foregoing.

Upon any liquidation, dissolution or winding-up,

whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the Certificate of Designations), a holder of Series

A Convertible Preferred Stock (“Holder”) will receive 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 converted all of its shares

of Series A Convertible Preferred Stock into common stock immediately prior to such liquidation, dissolution or winding up.

such liquidation, dissolution or winding up, the assets and funds available for distribution among the Holders of the Series A Convertible

Preferred Stock will be insufficient to permit the payment to such Holders of the full preferential amount aforesaid, then the entire

assets and funds legally available for distribution will be distributed ratably among the Holders of the Series A Convertible Preferred

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

The conversion price in effect on any conversion

date will be equal to 90% of the average of the two lowest volume-weighted average prices (the “VWAP”) of the common stock

on Nasdaq (or such other national securities exchange on which the common stock is then listed) for the five Trading Days immediately

preceding the date of the conversion notice delivered by the Holder of Series A Preferred Stock (the “Conversion Notice Date”),

with such VWAP and resulting Conversion Price being subject to equitable adjustments for any stock splits or combinations occurring with

respect to the common stock during such measurement period.

Each holder will be entitled to receive dividends of 10% per

annum on the Stated Value of each share of Preferred Stock.

We filed such Registration Statement on Form S-1

333-288937) with the SEC on July 25, 2025.

Approval of Securities Issuances and Reverse Stock Split

30, 2025, the holders of an aggregate of 13,147,393 shares of our common stock, representing approximately 60% of our overall voting power,

executed a written consent in lieu of a meeting pursuant to which it approved (i) the issuance of a number of shares of our common stock

in excess of 20% of the issued and outstanding shares of common stock as of the date of the execution of the Equity Purchase Agreement

and the Securities Purchase Agreement, and the issuance of all shares of common stock pursuant to the Equity Purchase Agreement and the

Securities Purchase Agreement, or on conversion of the Series A Convertible Preferred Stock (the “20% Issuance”), (ii) a reverse

stock split of our common stock, at a ratio of no less than 1-for-2 and no more than 1-for-30, with such ratio to be determined at the

sole discretion of the Board of Directors, and with any fractional shares of common stock resulting therefrom being rounded up to the

nearest whole share of common stock (the “Reverse Stock Split”), and (iii) a form of amendment to our Certificate of Incorporation

to effectuate the Reverse Stock Split (the “Reverse Stock Split Amendment” and collectively with the 20% Issuance and the

Reverse Stock Split, the “Actions”).

to rules adopted by the SEC under the Exchange Act, an Information Statement

on Schedule 14C (the “Information Statement”) describing the Actions will be filed with the SEC and mailed to our stockholders.

None of the Actions may become effective earlier than 20 calendar days following the mailing of the Information Statement.

Financial Overview

For the three months ended June 30, 2025 and 2024,

we generated revenues of $4,744,246 and $4,066,388, respectively, and reported a net income (loss) of $1,061,506 and $(2,211,118), respectively.

For the six months ended June 30, 2025 and 2024, we generated revenues

of $8,331,272 and $9,113,120, respectively, reported a net loss of $2,075,875 and $3,689,120, respectively, and had cash flows used in

operating activities of $2,674,892 and $1,735,744, respectively.

As noted in our unaudited consolidated financial statements, as of June

30, 2025, we had an accumulated deficit of $18,231,933.

Results of Operations

Comparison of Results of Operations for the

Three Months Ended June 30, 2025 and 2024

The following table summarizes our operating results

as reflected in our unaudited statements of operations for the three months ended June 30, 2025 and 2024, respectively, and provides information

regarding the dollar and percentage increase (or decrease) during such periods.

For the Three Months Ended June 30,

including a reverse stock split, if necessary, but no decisions regarding a response have been made at this time.

the three months ended September 30, 2025 and 2024, we generated revenues of $2,990,329 and $16,240,865, respectively, and

reported a net loss from continuing operations of $137,122 and a net income from continuing operations of $11,119,592,

respectively.

the nine months ended September 30, 2025 and 2024, we generated revenues of $7,052,799 and $21,270,891, respectively, reported a net loss from continuing operations of $2,913,181 and a net income from continuing operations of $6,705,342, respectively, and had cash flows used in operating activities of continuing operations

$2,980,958 and $3,027,115, respectively.

As noted in our unaudited consolidated financial statements, as of September 30, 2025, we

had an accumulated deficit of $17,797,861.

of Operations

of Results of Operations for the Three Months Ended September 30, 2025 and 2024

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

30, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

For the Three Months Ended September 30,

$ (13,250,536 )

Cost of revenues

(12,541,707 )

Operating expenses:

3 unchanged sentences

Total operating expenses

Income (loss) from operations

Other income (expenses)

Income (loss) before income tax benefit

Income tax benefit

Net income (loss)

Income (loss) from continuing operations

(12,352,168 )

Other expenses

Income (loss) from continuing operations before income tax expense

(11,443,066 )

Income tax expense

Net income (loss) from continuing

(11,256,714 )

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

(10,465,755 )

net loss attributable to non-controlling interests

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

Net income attributable to HeartCore Enterprises, Inc.

(10,623,734 )

Dividends accrued on Series A convertible preferred shares

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

common shareholders

Net income attributable to HeartCore Enterprises, Inc.

$ (10,679,956 )

Our total revenues increased by $677,858, or 16.7%, to $4,744,246 for

the three months ended June 30, 2025, from $4,066,388 for the three months ended June 30, 2024, primarily attributable to (i) an increased

revenue of $1,155,548 from the sale of on-premise software, primarily attributable the Company obtained multiple large orders of CMS license

in the current period, while no such comparable large order was obtained in second quarter 2024;

(ii) an increased revenue of $134,571

from software as a service (“SaaS”), mainly because the Company put more efforts to expand and promote its traditional SaaS

business in Japan during current quarter and obtained more orders, partially offset by (iii) a decreased revenue of $340,279 from customized

software development and services in connection with the intense competition of the software market in the U.S.;

and (iv) a decreased

revenue of $319,396 from software development and other services, mainly as the Company shifted its business strategies to focus more

on development and expansion its on-premise software revenue and SaaS revenue in the second quarter 2025, resulting in less resources

and efforts were put on software development and other services.

Cost of Revenues

Our total cost of revenues decreased by $733,856, or 22.5%, to $2,526,651

for the three months ended June 30, 2025, from $3,260,507 for the three months ended June 30, 2024, mainly attributable to (i) the decrease

of $579,688 in the cost of customized software development and services, which was in light of the decrease in sales in the second quarter

2025 and the decrease was also attributable to Sigmaways cut down its subcontracting cost in the current quarter by ending cooperation

with certain costly vendors for cost saving purpose;

and (ii) the decrease of $120,475 in the cost of GO IPO consulting services as fewer

IPO projects were ongoing when compared with the second quarter 2024, and the Company also improved its operational efficiency in managing

of IPO consulting projects, leading to costs decreased.

Our total gross profit increased by $1,411,714,

or 175.2%, to $2,217,595 for the three months ended June 30, 2025, from $805,881 for the three months ended June 30, 2024, mainly attributable

to (i) an increase of $1,086,885 in gross profit from sale of on-premises software, as the sale increased dramatically while there was

not much change in the corresponding costs as the product was developed independently and fixed, which were not proportional to sales;

(ii) an increase of $239,409 in gross profit from customized software development and services, as Sigmaways reduced outsourcing costs

by ending cooperation with costly vendors in the second quarter 2025, resulting in costs decreased more than revenue did;

increase of $147,654 in gross profit from IPO consulting service, as the Company implement its operational efficiency for consulting revenue

with the accumulation of IPO consulting projects experience in the current quarter.

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

by 26.9%, to 46.7%, for the three months ended June 30, 2025 from 19.8% for the three months ended June 30, 2024.

Selling Expenses

Our selling expenses increased by $206,214, or

114.9%, to $385,622 for the three months ended June 30, 2025 from $179,408 in the three months ended June 30, 2024, primarily attributable

to an increase of $224,138 in sales salaries, commissions and welfare, resulting from the employee restructuring in late 2024 by transferring

certain administrative and management department employees to sales department to promote selling activities for software business in

As a percentage of revenues, our selling expenses

accounted for 8.1% and 4.4% of our total revenues for the three months ended June 30, 2025 and 2024, respectively.

General and Administrative Expenses

Our general and administrative expenses decreased by $459,382, or 22.7%,

to $1,563,027 for the three months ended June 30, 2025 from $2,022,409 in the three months ended June 30, 2024, primarily attributable

to (i) a decrease of $169,503 in depreciation and amortization expenses, primarily because we fully impaired intangible asset arose from

acquisition of Sigmaways at the end of last fiscal year, resulting in no amortization expenses were recorded in current quarter;

a decrease of $284,619 in consultant and professional service fees, mainly because we incurred broker fees in connection with termination

of the IPO consulting services in the second quarter 2024, while no such expenses incurred in the current quarter.

As a percentage of revenues, general and administrative

expenses were 32.9% and 49.7% of our revenues for the three months ended June 30, 2025 and 2024, respectively.

Research and Development Expenses

Our research and development expenses increased

by $50,213, or 45.1%, to $161,481 in the three months ended June 30, 2025, from $111,268 in the three months ended June 30, 2024, primarily

attributable to an increase of $82,419 in salaries and welfare expenses for the employees assigned to the development of a new product,

Global CMS, which started in late 2024, offset by a decrease of $32,016 in outsourcing costs due to the expiration of certain outsourcing

contracts in the current period.

As a percentage of revenues, research and development

expenses were 3.4% and 2.7% of our revenues for the three months ended June 30, 2025 and 2024, respectively.

Other Income (Expenses), Net

Our other income (expenses) primarily includes

changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated

from bank deposits, interest expenses for bank loans, other income and other expenses.

Total other expenses, net, of $776,077 for the

three months ended June 30, 2024 increased by $1,726,556, or 222.5%, to total other income, net, of $950,479 for the three months ended

June 30, 2025, primarily attributable to (i) an increase of $1,048,958 in changes in fair value of investments in marketable securities

due to fluctuations in stock price of investees;

and (ii) an increase of $683,101 in changes in fair value of investment in warrants due

to fair value measurement.

Income Tax Benefit

Income tax benefit was $3,562 for the three months

ended June 30, 2025, representing a decrease of $68,601, or 95.1%, from income tax benefit of $72,163 in the three months ended June 30,

2024, mainly because we recognized deferred income tax benefit in connection with amortization expense for intangible asset raised from

acquisition of Sigmaways in the three months ended June 30, 2024, whereas, the intangible asset was fully impaired in the fourth quarter

of 2024, and thus no such deferred income tax benefit recorded in current quarter.

Net Income (Loss)

As a result of the foregoing, we reported a net

income of $1,061,506 for the three months ended June 30, 2025, representing a $3,272,624, or 148.0%, increase from a net loss of $2,211,118

for the three months ended June 30, 2024.

Net Loss Attributable to Non-controlling

During the three months ended June 30, 2025 and 2024, we owned a 51%

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

Accordingly, we recorded net loss attributable

to the non-controlling interests of $38,396 and $260,018 in the three months ended June 30, 2025 and 2024, respectively.

Net Income (Loss) Attributable to HeartCore Enterprises,

As a result of the foregoing, we reported a net

total revenues decreased by $13,250,536, or 81.6%, to $2,990,329 for the three months ended September 30, 2025, from $16,240,865 for

the three months ended September 30, 2024, primarily attributable to (i) a decreased revenue of $12,641,365 from GO IPO consulting

services as only one IPO consulting customer completed IPO in the third quarter 2025 compared with two customers completed IPO in

the third quarter 2024 and we generated significant noncash consideration revenue from one large IPO deal in third quarter 2024;

(ii) a decreased revenue of $505,168 from customized software development and services in connection with the intense competition of

the software market in the U.S.

total cost of revenues decreased by $708,829, or 31.8%, to $1,521,920 for the three months ended September 30, 2025, from $2,230,749

for the three months ended September 30, 2024, mainly attributable to the decrease of $610,130 in the cost of customized software development

and services, which was in light of the decrease in sales and the decrease was also attributable to Sigmaways cut down its subcontracting

cost in the current period by ending cooperation with certain costly vendors for cost saving purpose.

total gross profit decreased by $12,541,707, or 89.5%, to $1,468,409 for the three months ended September 30, 2025, from $14,010,116

for the three months ended September 30, 2024, mainly attributable to (i) a decrease of $12,589,606 in gross profit from GO IPO

consulting services, as we generated a significant noncash consideration of from one large IPO deal in the prior period and the

significant decrease in noncash consideration revenue caused the decrease in gross profit as we did not incur cost when revenue

recognized from noncash consideration as cost incurred throughout the consulting service period before IPO completion;

(ii) an increase of $104,962 in gross profit from customized software development and services, as Sigmaways reduced outsourcing

costs by ending cooperation with costly vendors to save operating cash flows in the current quarter, resulting in costs decreased

more than revenue did.

the reasons discussed above, our overall gross profit margin decreased by 37.1%, to 49.1%, for the three months ended September 30, 2025

from 86.2% for the three months ended September 30, 2024.

selling expenses decreased by $67,654, or 41.7%, to $94,718 for the three months ended September 30, 2025 from $162,372 in the three

months ended September 30, 2024, primarily attributable to a decrease of $42,557 in advertising expenses as we reduced certain marketing

activities and cancelled promotion campaigns with lower advertising performance.

a percentage of revenues, our selling expenses accounted for 3.2% and 1.0% of our total revenues for the three months ended September

30, 2025 and 2024, respectively.

and Administrative Expenses

general and administrative expenses decreased by $58,176, or 4.0%, to $1,384,838 for the three months ended September 30, 2025 from

$1,443,014 in the three months ended September 30, 2024, primarily attributable to (i) a decrease of $168,711 in depreciation and

amortization expenses, primarily because we fully impaired intangible asset arose from acquisition of Sigmaways at the end of last

fiscal year, resulting in no amortization expenses were recorded in current quarter;

(ii) a decrease of $70,983 in salaries and

welfare expenses, mainly resulting from Sigmaways cut down salary expense and recruiting expenses to save operating cash flow in the

current period;

offset by an increase of $206,002 in consultant and professional service fees, mainly because as we incurred legal service fee in relation to the registration statement for the registration of Series A convertible

preferred shares in the third quarter of 2025, and there was no such activity in the third quarter of 2024.

a percentage of revenues, general and administrative expenses were 46.3% and 8.9% of our revenues for the three months ended September

30, 2025 and 2024, respectively.

and Development Expenses

research and development expenses decreased by $63,709, or 100.0%, to nil in the three months ended September 30, 2025, from $63,709

in the three months ended September 30, 2024, primarily attributable to a decrease of $63,000 in outsourcing expenses as we cut down

outsourcing research and development expenses for cash flows saving purpose in the current period.

a percentage of revenues, research and development expenses were 0.0% and 0.4% of our revenues for the three months ended September 30,

2025 and 2024, respectively.

Other Expenses, Net

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

in warrants, loss on sale of warrants, changes in fair value of derivative liability, interest income generated from bank deposits,

interest expenses for bank loans, other income and other expenses.

Total other expenses, net, of $1,031,704 for the three months

ended September 30, 2024 decreased by $909,102, or 88.1%, to total other expenses, net, of $122,602 for the three months ended

September 30, 2025, primarily attributable to (i) a decrease of $3,970,628 in loss on sale of warrants as we sold partial of warrants received in the third quarter of 2024, and there was no such activity in the third

quarter of 2025;

offset by a decrease of

$3,016,176 in changes in fair value of investments in warrants due to fair value measurement.

tax expense was $3,373 for the three months ended September 30, 2025, representing a decrease of $186,352, or 98.2%, from income tax

expense of $189,725 in the three months ended September 30, 2024, mainly because we recognized income tax expense due to the large pre-tax income position generated for the three months ended September

30, 2024, while we incurred pre-tax loss position in current quarter.

Income (Loss) from Continuing Operations

a result of the foregoing, we reported a net loss from continuing operations of $137,122 for the three months ended September 30,

2025, representing a $11,256,714, or 101.2%, decrease from a net income from continuing operations of $11,119,592 for the three months ended September 30, 2024.

(Loss) from Discontinued Operations, Net of Income Tax

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.

The results of operations of HeartCore Japan are reported as discontinued operations for all periods presented

as the sale of HeartCore Japan represents a strategic shift that has or will have a major impact on its operations and financial results.

The sale transaction was closed on October 31, 2025.

We reported an income from discontinued operations, net of income

tax of $488,297 for the three months ended September 30, 2025, representing a $790,959, or 261.3%, increase from a loss from discontinued

operations, net of income tax of $302,662 for the three months ended September 30, 2024.

a result of the foregoing, we reported a net income of $351,175 for the three months ended September 30, 2025, representing a $10,465,755,

or 96.8%, decrease from a net income of $10,816,930 for the three months ended September 30, 2024.

Loss Attributable to Non-controlling Interests

the three months ended September 30, 2025 and 2024, we owned a 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest

of HeartCore Luvina.

Accordingly, we recorded net loss attributable to non-controlling interests of $82,897 and $240,876 in the

three months ended September 30, 2025 and 2024, respectively.

Income Attributable to HeartCore Enterprises, Inc.

of $1,099,902 for the three months ended June 30, 2025, representing a $3,051,002,

or 156.4%, increase from a net loss attributable to HeartCore Enterprises, Inc.

of $1,951,100 for the three months ended June 30, 2024.

Dividends Accrued on Series A Convertible

Preferred Shares

During the three months ended June 30, 2025, we issued 2,000 shares

of Series A convertible preferred shares, which were granted a cumulative dividend of 10% per annum.

Accordingly, we recorded dividends

of $611 on Series A convertible preferred shares.

Net Income (Loss) Attributable to HeartCore

Enterprises, Inc.

Common Shareholders

As a result of the foregoing, we reported a net

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

of $434,072 for the three months ended

September 30, 2025, representing a $10,623,734, or 96.1%, decrease from a net income attributable to HeartCore Enterprises, Inc.

of $11,057,806

for the three months ended September 30, 2024.

Accrued on Series A Convertible Preferred Shares

June 30, 2025, we issued 2,000 shares of Series A convertible preferred shares, which were granted a cumulative dividend of 10% per

Accordingly, we recorded dividends accrued on Series A convertible preferred shares of $56,222 during the three months ended September 30, 2025.

Income Attributable to HeartCore Enterprises, Inc.

common shareholders of $1,099,291 for the three months ended June 30, 2025, representing

a $3,050,391, or 156.3%, increase from a net loss attributable to HeartCore Enterprises, Inc.

Common Shareholders

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

common shareholders of $377,850 for the

three months ended June 30, 2024.

Comparison of Results of Operations for the

Six Months Ended June 30, 2025 and 2024

The following table summarizes our operating results

as reflected in our unaudited statements of operations for the six months ended June 30, 2025 and 2024, respectively, and provides

information regarding the dollar and percentage increase (or decrease) during such periods.

For the Six Months Ended June 30,

three months ended September 30, 2025, representing a $10,679,956, or 96.6%, decrease from a net income attributable to HeartCore Enterprises,

common shareholders of $11,057,806 for the three months ended September 30, 2024.

of Results of Operations for the Nine Months Ended September 30, 2025 and 2024

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

30, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

For the Nine Months Ended September 30,

$ (14,218,092 )

Cost of revenues

(12,462,942 )

Operating expenses:

3 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from continuing operations

(11,428,111 )

Other expenses

Loss before income tax expense (benefit)

Income tax expense (benefit)

Income (loss) from continuing operations before income tax expense

Income tax expense

Net income (loss) from continuing operations

Income from discontinued operations, net of income tax

Net income (loss)

net loss attributable to non-controlling interests

Net loss attributable to HeartCore Enterprises, Inc.

Net income (loss) attributable to HeartCore Enterprises,

Dividends accrued on Series A convertible preferred shares

Net loss attributable to HeartCore Enterprises, Inc.

Net income (loss) attributable to HeartCore

Enterprises, Inc.

common shareholders

1 unchanged sentence

$ (9,383,207 )

$ (1,296,749 )

Our total revenues decreased by $781,848, or 8.6%,

to $8,331,272 for the six months ended June 30, 2025, from $9,113,120 for the six months ended June 30, 2024, primarily attributable to

(i) a decreased revenue of $677,091 from customized software development and services in connection with a slowdown in revenue of Sigmaways,

driven by intensified competition in the U.S.

total revenues decreased by $14,218,092, or 66.8%, to $7,052,799 for the nine months ended September 30, 2025, from $21,270,891 for

the nine months ended September 30, 2024, primarily attributable to (i) a decreased revenue of $12,944,124 from GO IPO consulting

services mainly due to we generated significant revenue from noncash consideration of $12,641,365 from one large IPO deal in the

prior period, and there was no such large amount of revenue recognized from noncash consideration in the same period in 2025;

and (ii) a decreased revenue of $1,182,259 from customized software development and services in connection with a

slowdown in revenue of Sigmaways, driven by intense competition in the U.S.

software market.

(ii) a decreased revenue of $302,759 from GO IPO consulting services mainly

due to fewer ongoing IPO consulting projects in the six months ended June 30, 2025 when compared with same period in last fiscal year;

(iii) a decreased revenue of $341,497 from software development and other services, mainly as the Company shifted its business strategies

to focus more on development and expansion its on-premise software revenue and SaaS revenue in the six months ended June 30, 2025, resulting

in less resources and efforts were put on software development and other services, partially offset by (iv) an increased revenue of $411,694

from sale on-premise software, primarily because the Company obtained several large CMS license orders in the current period.

Cost of Revenues

Our total cost of revenues decreased by $1,261,657,

or 20.1%, to $5,013,393 for the six months ended June 30, 2025, from $6,275,050 for the six months ended June 30, 2024, mainly attributable

to (i) the decrease of $954,627 in the cost of customized software development and services, which was in light of the decrease in sales

and the decrease was also attributable to Sigmaways cut down its subcontracting cost in the current quarter by ending cooperation with

certain costly vendors for cost saving purpose;

and (ii) the decrease of $346,943 in the cost of GO IPO consulting services as fewer IPO

projects were ongoing in the six months ended June 30, 2025 when compared with the six months ended June 30, 2024, and the Company also

improved its operational efficiency in managing of IPO consulting projects, leading to costs decreased.

Our total gross profit increased by $479,809,

or 16.9%, to $3,317,879 for the six months ended June 30, 2025, from $2,838,070 for the six months ended June 30, 2024, mainly attributable

to (i) an increase of $335,670 in gross profit from sale of on-premises software, as sales rose significantly while related costs remained

largely unchanged since the product was independently developed with fixed costs not proportional to sales;

(ii) an increase of $277,536

in gross profit from customized software development and services, as Sigmaways reduced outsourcing costs by ending cooperation with costly

vendors in the current period, resulting in costs decreased more than revenue did;

and (iii) an increase of $190,583 in gross profit from

SaaS in light of the increase in corresponding revenue, partially offset by (iv) a decrease of $313,105 in gross profit from software

development and other services in light of the decrease in corresponding revenue.

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

by 8.7%, to 39.8%, for the six months ended June 30, 2025, from 31.1% for the six months ended June 30, 2024.

Selling Expenses

Our selling expenses increased by $277,667, or 69.6%, to $676,782 for

the six months ended June 30, 2025, from $399,115 in the six months ended June 30, 2024, primarily attributable to an increase of $321,760

in sales salaries, commissions and welfare, resulting from the employee restructuring in late 2024 by transferring certain administrative

and management department employees to sales department to promote selling activities for software business in Japan.

As a percentage of revenues, our selling expenses

accounted for 8.1% and 4.4% of our total revenues for the six months ended June 30, 2025 and 2024, respectively.

General and Administrative Expenses

Our general and administrative expenses decreased

by $936,297, or 21.1%, to $3,492,415 for the six months ended June 30, 2025, from $4,428,712 in the six months ended June 30, 2024, primarily

attributable to (i) a decrease of $274,084 in salaries and welfare expenses, mainly resulting from the employee restructuring in late

2024 as mentioned above;

(ii) a decrease of $329,377 in depreciation and amortization expenses, primarily because we fully impaired intangible

asset arose from the acquisition of Sigmaways at the end of the 2024 fiscal year, resulting in no amortization expenses recorded in current

and (iii) a decrease of $292,771 in consultant and professional service fees, mainly because we incurred broker fees in connection

with termination of the IPO consulting services in the six months ended June 30, 2024, while no such expenses incurred in the current

As a percentage of revenues, general and administrative

expenses were 41.9% and 48.6% of our revenues for the six months ended June 30, 2025 and 2024, respectively.

Research and Development Expenses

Our research and development expenses increased by $84,972, or 42.4%,

to $285,374 in the six months ended June 30, 2025, from $200,402 in the six months ended June 30, 2024, primarily attributable to an increase

of $161,767 in salaries and welfare expenses for the employees assigned to the development of a new product, Global CMS, which started

in late 2024, partially offset by a decrease of $76,266 in outsourcing costs due to the expiration of certain outsourcing contracts in

the current period.

As a percentage of revenues, research and development

expenses were 3.4% and 2.2% of our revenues for the six months ended June 30, 2025 and 2024, respectively.

Other Income (Expenses), Net

Our other income (expenses) primarily includes

changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated

from bank deposits, interest expenses for bank loans, other income and other expenses.

Total other expenses, net, of $1,651,291 for the

six months ended June 30, 2024 decreased by $765,182, or 46.3%, to total other expenses, net, of $886,109 for the six months ended June

30, 2025, primarily attributable to (i) a decrease of $1,310,367 in changes in fair value of investment in warrants due to fair value

measurement, partially offset by (ii) an increase of $498,624 in changes in fair value of investments in marketable securities due to

fluctuations in stock price of investees.

Income Tax Expense (Benefit)

Income tax expense was $53,074 for the six months

ended June 30, 2025, representing an increase of $205,404, or 134.8%, from income tax benefit of $152,330 for the six months ended June

30, 2024, mainly because we recognized deferred income tax benefit in connection with amortization expense for intangible asset raised

from the acquisition of Sigmaways in the six months ended June 30, 2024, whereas the intangible asset was fully impaired in the fourth

quarter of 2024, and thus no such deferred income tax benefit recorded in current period.

Meanwhile, the income tax expenses incurred

in the six months ended June 30, 2025 was mainly attributable to the decrease of deferred tax assets due to various revenue and expenses

As a result of the foregoing, we reported a net loss of $2,075,875

for the six months ended June 30, 2025, representing a $1,613,245, or 43.7%, decrease from a net loss of $3,689,120 for the six months

ended June 30, 2024.

Net Loss Attributable to Non-controlling

During the six months ended June 30, 2025 and 2024, we owned a 51%

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

Accordingly, we recorded net loss attributable

to the non-controlling interests of $88,785 and $404,670 in the six months ended June 30, 2025 and 2024, respectively.

Net Loss Attributable to HeartCore Enterprises,

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

HeartCore Enterprises, Inc.

of $1,987,090 for the six months ended June 30, 2025, representing a $1,297,360, or 39.5%, decrease from a

net loss attributable to HeartCore Enterprises, Inc.

of $3,284,450 for the six months ended June 30, 2024.

Dividends Accrued on Series A

Convertible Preferred Shares

In the six months ended June 30, 2025, we issued 2,000 shares of Series

A convertible preferred shares, which were granted a cumulative dividend of 10% per annum.

Accordingly, we recorded dividends of $611

on Series A convertible preferred shares.

Net Loss Attributable to HeartCore Enterprises,

total cost of revenues decreased by $1,755,150, or 28.3%, to $4,453,735 for the nine months ended September 30, 2025, from

$6,208,885 for the nine months ended September 30, 2024, mainly attributable to (i) the decrease of $1,564,757 in the cost of

customized software development and services, which was in light of the decrease in sales and the decrease was also attributable to

Sigmaways cut down its subcontracting cost in the current period by ending cooperation with certain costly vendors for cost saving

and (ii) a decrease of $117,810 in the cost of software development services in light of the decrease of sale.

total gross profit decreased by $12,462,942, or 82.7%, to $2,599,064 for the nine months ended September 30, 2025, from $15,062,006 for

the nine months ended September 30, 2024, mainly attributable to (i) a decrease of $12,871,541 in gross profit from GO IPO consulting

services, as we generated a significant noncash consideration of from one large IPO deal in the prior period and the significant

decrease in noncash consideration revenue caused the decrease in gross profit as we did not incur cost when revenue recognized from noncash

consideration as cost incurred throughout the consulting service period before IPO completion;

offset by (ii) an increase of

$382,498 in gross profit from customized software development and services, as Sigmaways reduced outsourcing costs by ending cooperation

with costly vendors in the current period, resulting in costs decreased more than revenue did.

the reasons discussed above, our overall gross profit margin decreased by 33.9%, to 36.9%, for the nine months ended September 30, 2025,

from 70.8% for the nine months ended September 30, 2024.

selling expenses decreased by $180,012, or 34.7%, to $338,615 for the nine months ended September 30, 2025, from $518,627 in the

nine months ended September 30, 2024, primarily attributable to (i) a decrease of $66,306 in stock-based compensation for sales

staffs in the current period due to the graded vesting feature of stock options and RSUs;

and (ii) a decrease of $51,753 in advertising expenses as we reduced certain marketing activities and

cancelled promotion campaigns with lower advertising performance.

a percentage of revenues, our selling expenses accounted for 4.8% and 2.4% of our total revenues for the nine months ended September

30, 2025 and 2024, respectively.

and Administrative Expenses

general and administrative expenses decreased by $682,679, or 14.2%, to $4,119,851 for the nine months ended September 30, 2025, from

$4,802,530 in the nine months ended September 30, 2024, primarily attributable to (i) a decrease of $146,578 in salaries and welfare

expenses, mainly resulting from Sigmaways cut down salary expense and recruiting expenses to save operating cash flow in the current period;

(ii) a decrease of $489,590 in depreciation and amortization expenses, primarily because we fully impaired intangible asset arose from

the acquisition of Sigmaways at the end of the 2024 fiscal year, resulting in no amortization expenses recorded in current period.

a percentage of revenues, general and administrative expenses were 58.4% and 22.6% of our revenues for the nine months ended September

30, 2025 and 2024, respectively.

and Development Expenses

research and development expenses decreased by $172,140, or 100.0%, to nil in the nine months ended September 30, 2025, from

$172,140 in the nine months ended September 30, 2024, primarily attributable to a decrease of $170,389 in outsourcing expenses as we

cut down outsourcing research and development expenses for cash flows saving purpose in the current period.

a percentage of revenues, research and development expenses were 0.0% and 0.8% of our revenues for the nine months ended September 30,

2025 and 2024, respectively.

Expenses, Net

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

investments in warrants, loss on sale of warrants, changes in fair value of derivative liability, interest income generated from bank

deposits, interest expenses for bank loans, other income and other expenses.

Total other expenses, net, of $2,762,892 for the nine

months ended September 30, 2024 decreased by $1,763,999, or 63.8%, to total other expenses, net, of $998,893 for the nine months

ended September 30, 2025, primarily attributable to (i) an decrease of $3,970,628 in loss on sale of warrants as we sold partial of warrants received in the third quarter of 2024, and

there was no such activity in the current period;

offset by (ii) a

decrease of $1,705,809 in changes in fair value of investments in warrants due to fair value measurement.

tax expense was $54,886 for the nine months ended September 30, 2025, representing a decrease of $45,589, or 45.4%, from income tax expense

of $100,475 for the nine months ended September 30, 2024, mainly because we recognized income tax expense due to the large pre-tax income position generated for the nine months

ended September 30, 2024, while we incurred pre-tax loss position in current period.

Income (Loss) from Continuing Operations

a result of the foregoing, we reported a net loss from continuing operations of $2,913,181 for the nine months ended September 30,

2025, representing a $9,618,523, or 143.4%, decrease from a net income from continuing operations of $6,705,342 for the nine months ended September 30, 2024.

Income from Discontinued Operations, Net of Income Tax

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.

The results of operations of HeartCore Japan are reported as discontinued operations for all

periods presented as the sale of HeartCore Japan represents a strategic shift that has or will have a major impact on its operations

and financial results.

The sale transaction was closed on October 31, 2025.

We reported an income from discontinued operations, net

of income tax of $1,188,481 for the nine months ended September 30, 2025, representing a $766,013, or

181.3%, increase from an income from discontinued operations, net of income tax of $422,468 for the nine months ended September

Income (Loss)

a result of the foregoing, we reported a net loss of $1,724,700 for the nine months ended September 30, 2025, representing a $8,852,510,

or 124.2%, decrease from a net income of $7,127,810 for the nine months ended September 30, 2024.

Loss Attributable to Non-controlling Interests

the nine months ended September 30, 2025 and 2024, we owned a 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest

of HeartCore Luvina.

Accordingly, we recorded net loss attributable to non-controlling interests of $171,682 and $645,546 in the

nine months ended September 30, 2025 and 2024, respectively.

Income (Loss) Attributable to HeartCore Enterprises, Inc.

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

of $1,553,018 for the nine months ended

September 30, 2025, representing a $9,326,374, or 120.0%, decrease from a net income attributable to HeartCore Enterprises, Inc.

of $7,773,356

for the nine months ended September 30, 2024.

Accrued on Series A Convertible Preferred Shares

June 30, 2025, we issued 2,000 shares of Series A convertible preferred shares, which were granted a cumulative dividend of 10% per

Accordingly, we recorded dividends accrued on Series A convertible preferred shares of $56,833 in the current period.

Income (Loss) Attributable to HeartCore Enterprises, Inc.

Common Shareholders

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

HeartCore Enterprises, Inc.

common shareholders of $1,987,701 for the six months ended June 30, 2025, representing a $1,296,749, or 39.5%,

decrease from a net loss attributable to HeartCore Enterprises, Inc.

common shareholders of $3,284,450 for the six months ended June 30,

Liquidity and Capital Resources

As of June 30, 2025, we had $2,347,622 in cash and cash equivalents,

as compared to $2,121,089 as of December 31, 2024.

We also had $3,000,337 in accounts receivable as of June 30, 2025.

Our accounts receivable

primarily include the balance due from customers for our on-premise software sold and services provided and accepted by customers, as

well as amounts billable to the customers for customized software development and services.

The following table sets forth summary of our

cash flows for the periods indicated:

For the Six Months Ended

Net cash flows used in operating activities

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

common shareholders of $1,609,851 for the

nine months ended September 30, 2025, representing a $9,383,207, or 120.7%, decrease from a net income attributable to HeartCore Enterprises,

common shareholders of $7,773,356 for the nine months ended September 30, 2024.

and Capital Resources

of September 30, 2025, we had $1,451,019 in cash and cash equivalents, as compared to $1,973,810 as of December 31, 2024.

had $1,107,187 in accounts receivable as of September 30, 2025.

Our accounts receivable primarily include the balance due from

customers for our customized software development and services accepted by customers.

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

For the Nine Months Ended

September 30,

Net cash flows used in operating activities of continuing operations

$ (2,980,958 )

$ (3,027,115 )

Net cash flows provided by investing activities

Net cash flows provided by (used in) financing activities

Net cash flows provided by investing activities of continuing operations

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

Net cash flows used in discontinued operations

Effect of exchange rate changes

2 unchanged sentences

Cash and cash equivalents, end of the period

Operating Activities

Net cash flows used in operating activities was

$2,674,892 for the six months ended June 30, 2025, primarily consisting of the following:

Net loss of $2,075,875 for the six months ended June 30, 2025.

An increase of $1,145,166 in accounts receivable due to increased sale of on-premise software in the current period.

A decrease of $320,566 in accounts payable and accrued expenses as we continuously paid off such liabilities and decreased purchases to save operating expenses.

A decrease of $282,704 in deferred revenue, due to more revenue was recognized than the upfront payment received in the current period.

Flows from Operating Activities of Continuing Operations

cash flows used in operating activities of continuing operations was $2,980,958 for the nine months ended September 30, 2025,

primarily consisting of the following:

loss from continuing operations of $2,913,181 for the nine months ended September 30, 2025.

received as noncash consideration of $837,913 as one of our IPO consulting customers completed the IPO during the current period.

A decrease of $304,033

in accounts payable and accrued expenses as we continuously paid off such liabilities and decreased purchases to save operating expenses.

decrease of $278,421 in deferred revenue, due to more revenue was recognized than the upfront payment received in the current

by a loss of $908,416 on fair value changes in investments in marketable securities.

by a loss of $116,981 on disposal of property and equipment.

Offset by an increase of $116,399 in other assets mainly

resulted from the decrease of security deposits in connection with the early termination of an office lease.

cash flows used in operating activities of continuing operations was $3,027,115 for the nine months ended September 30, 2024,

primarily consisting of the following:

income from continuing operations of $6,705,342 for the nine months ended September 30, 2024.

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

customers completed the IPO during th is period.

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

Offset by a loss of $308,059 on fair value changes in investments in marketable securities.

Offset by non-cash lease expense of $163,354.

Investing Activities

Net cash flows provided by investing activities amounted to $1,091,636

for the six months ended June 30, 2025, primarily attributable to the proceeds of $1,071,732 received from sale of marketable securities.

Financing Activities

Net cash flows provided by financing activities amounted to $1,770,767

for the six months ended June 30, 2025, primarily attributable to the proceeds of $1,800,000 received from issuance of Series A convertible

preferred stock and common shares related to Securities Purchase Agreement after net against related share issuance costs.

Contractual Obligations

Lease Commitment

We entered into operating leases for office space with terms ranging

from two to fifteen years, and a finance lease for vehicle with the term of five years.

As of June 30, 2025, future minimum lease payments

under the non-cancelable lease agreements are as follows:

Year Ended December 31,

Remaining of 2025

Total lease payments

imputed interest

Total lease liabilities

current portion

Non-current lease liabilities

The Company’s debts included

long-term debts borrowed from banks and financial institutions.

As of June 30, 2025, future minimum principal

payments for long-term debts are as follows:

Offset by a loss of $3,970,628 recognized

on sale of warrants to a third party.

by depreciation and amortization expenses of $532,958.

by an increase of $428,522 in other liabilities, mainly because we terminated the consulting service agreement with a GO IPO customer and will refund $500,000 to

the customer.

Flows from Investing Activities of Continuing Operations

cash flows provided by investing activities of continuing operations amounted to $1,071,732 for the nine months ended September 30,

2025, attributable to the proceeds of $1,071,732 received from sale of marketable securities.

cash flows provided by investing activities of continuing operations amounted to $5,565,000 for the nine months ended September 30,

2024, primarily attributable to the net proceeds of $5,640,000 received from sale of warrants.

Flows from Financing Activities of Continuing Operations

cash flows provided by financing activities of continuing operations amounted to $1,953,032 for the nine months ended September 30,

2025, primarily attributable to the proceeds of $1,800,000 received from issuance of Series A convertible preferred shares and

common shares related to securities purchase agreement after net against related share issuance costs.

cash flows used in financing activities of continuing operations amounted to $1,168,769 for the nine months ended September 30,

2024, primarily attributable to the dividend distribution of $834,566, and net repayment of $257,295 for factoring arrangement.

Flows from Discontinued Operations

cash flows used in discontinued operations amounted to $166,736 and $1,080,748 in the nine months ended September 30, 2025 and 2024, respectively.

entered into operating leases for office space and a finance lease for vehicle for operating purpose.

Company’s debts included long-term debts borrowed from a bank and a financial institution.

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

Year Ended December 31,

Remaining of 2025

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements

as of June 30, 2025.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition

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

These financial statements are prepared in accordance

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

GAAP”), which requires us to make estimates

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

and liabilities on the date of the unaudited consolidated financial statements, and to disclose the reported amounts of revenues and expenses

incurred during the financial reporting period.

We continue to evaluate the estimates and assumptions that we believe to be reasonable

under the circumstances.

We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Since the use of estimates is an integral component of the financial reporting process,

actual results could differ from those estimates.

We believe there are no critical accounting policies and estimates for the six months

ended June 30, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not applicable.

Sheet Arrangements

did not have any off-balance sheet arrangements as of September 30, 2025.

Accounting Policies and Estimates

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

These financial statements are prepared in accordance with the generally accepted accounting principles in the United

States (“U.S.

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

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

financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period.

We continue to evaluate the estimates and assumptions that we believe to be reasonable under the circumstances.

We rely on these

evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from

other sources.

Since the use of estimates is an integral component of the financial reporting process, actual results could differ

from those estimates.

Some of our accounting policies require higher degrees of judgment than others in their application.

believe critical accounting policies reflect the more significant judgments and estimates used in preparation of our consolidated

financial statements.

provide public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which

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

the listing process.

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

Cash consideration is paid

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

of that performance obligation.

Noncash consideration is primarily in the form of warrants of the customers and is measured at fair value

at contract inception.

Noncash consideration that is variable for reasons other than only the form of the consideration is included in

the transaction price, but is subject to the constraint on variable consideration.

We assess 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.

valuation of noncash consideration in the form of warrants of the customers are estimates are based on all available information and

in some cases assumptions with respect to the timing and amount of future revenues and expenses and are reviewed by consulting with third-party

valuation appraisers.

The fair value of the warrants received from the customers are estimated using the binomial model.

Management applies

significant judgement related to the valuation model and approach, such as stock price, volatility, selection of comparable companies,

These significant assumptions are based on company specific information and projections, which may not be observable in the

market, and, therefore, are considered Level 2 and Level 3 measurements.

These significant assumptions are forward-looking and could

be affected by future changes in economic and market conditions.

We believe the accounting estimate for revenue recognition in connection

with the valuation of the warrants received by the Company as part of the consideration for consulting services is a critical accounting

estimate because it requires estimates and judgement as to expectations that are highly subjective, but which are inherently uncertain

and, as a result, actual results may differ from estimates.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis