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Item 9A. Controls and Procedures

2026-03-31 compared with 2025-03-31 · 2574 added, 2771 removed, 384 unchanged (93% of the section changed)

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures

that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act,

such as this annual report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules

Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated

to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding

required disclosure.

Our management evaluated, with the participation of our current chief executive officer and chief financial officer

(our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2024, pursuant

to Rule 13a-15(b) under the Exchange Act.

Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2024,

our disclosure controls and procedures were not effective.

The ineffectiveness of our disclosure controls and procedures was due to the

existence of the material weakness identified below.

● Lack of sufficient financial

reporting and accounting personnel with appropriate knowledge of U.S.

GAAP and the Securities and Exchange Commission (“SEC”)

reporting and compliance requirements to design, implement and operate key controls over financial reporting process to address complex

technical accounting issues and related disclosures in accordance with U.S.

GAAP and financial reporting requirements set forth by the

We do not expect that our

disclosure controls and procedures will prevent all errors and all instances of fraud.

Disclosure controls and procedures, no matter how

well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures

Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the

benefits must be considered relative to their costs.

Because of the inherent limitations in all disclosure controls and procedures, no

evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and

instances of fraud, if any.

The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood

of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future

Management’s Report on Internal Control

Over Financial Reporting

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems,

no matter how well designed, have inherent limitations and may not prevent or detect misstatements.

Therefore, even those systems determined

to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation

and presentation.

In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become

inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness

of the Company’s internal control over financial reporting as of December 31, 2024.

In making the assessment, management used the

criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal Control-Integrated

Based on its assessment, management concluded that, as of December 31, 2024, our Company’s internal control over financial

reporting was not effective.

Changes in Internal Control over Financial

There were no changes in our

internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three

months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over

financial reporting.

of Disclosure Controls and Procedures

controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed

under the Exchange Act, such as this annual report, is recorded, processed, summarized, and reported within the time period specified

in the SEC’s rules and forms.

Disclosure controls are also designed with the objective of ensuring that such information is accumulated

and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely

decisions regarding required disclosure.

Our management evaluated, with the participation of our current chief executive officer and

chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December

31, 2025, pursuant to Rule 13a-15(b) under the Exchange Act.

Based upon that evaluation, our Certifying Officers concluded that, as of

December 31, 2025, our disclosure controls and procedures were not effective.

The ineffectiveness of our disclosure controls

and procedures was due to the existence of the material weakness identified below.

of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S.

GAAP and the Securities and Exchange

Commission (“SEC”) reporting and compliance requirements to design, implement and operate key controls over financial

reporting process to address complex technical accounting issues and related disclosures in accordance with U.S.

GAAP and financial

reporting requirements set forth by the SEC.

do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud.

Disclosure controls and

procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the

disclosure controls and procedures are met.

Further, the design of disclosure controls and procedures must reflect the fact that there

are resource constraints, and the benefits must be considered relative to their costs.

Because of the inherent limitations in all disclosure

controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all

our control deficiencies and instances of fraud, if any.

The design of disclosure controls and procedures also is based partly on certain

assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated

goals under all potential future conditions.

Report on Internal Control Over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange

Act Rules 13a-15(f) and 14d-14(f).

Our internal control over financial reporting is designed to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles.

internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements.

even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and

financial statement preparation and presentation.

In addition, projections of any evaluation of effectiveness to future periods are subject

to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures

may deteriorate.

assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.

In making the assessment,

management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal

Control-Integrated Framework.

Based on its assessment, management concluded that, as of December 31, 2025, our Company’s internal

control over financial reporting was not effective.

in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange

Act) during the three months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our

internal control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORATE GOVERNANCE

Officers and Directors

The following table sets forth

the names and ages of the members of our Board of Directors and our executive officers and the positions held by each.

Each director’s

term continues until his or her successor is elected or qualified at the next annual meeting, unless such director earlier resigns or

Sumitaka Yamamoto

Chairman of Board, Chief Executive Officer and President

Chief Operating Officer and Director

Prakash Sadasivam

Chief Strategy Officer and Director

Hidekazu Miyata

Chief Technical Officer

Chief Financial Officer

CX Division Vice President

Ferdinand Groenewald

Heather Neville

Biographical information

concerning our directors and executive officers listed above is set forth below.

Sumitaka Yamamoto.

Yamamoto has served as our Chairman of the Board of Directors since August 16, 2021 and served as our Chief Executive Officer and

President and been a member of our Board of Directors since May 18, 2021.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

and Directors

following table sets forth, as of March 31, 2026, the names and ages of the members of our Board of Directors and our executive officers

and the positions held by each.

Each director’s term continues until his or her successor is elected or qualified at the next annual

meeting, unless such director earlier resigns or is removed.

of Board, Chief Executive Officer and President

Operating Officer and Director

Financial Officer

information concerning our directors and executive officers listed above is set forth below.

Yamamoto has served as our Chairman of the Board of Directors since August 16, 2021 and as our Chief Executive

Officer and President and been a member of our Board of Directors since May 18, 2021.

Yamamoto is also the founder of HeartCore Co.

and has served

as the Chief Executive Officer and member of the Board of Directors of HeartCore Co.

and has served as the Chief Executive Officer and member of the Board of Directors of HeartCore Co.

since June 2009.

Yamamoto is a seasoned information

technology software programmer.

Yamamoto graduated with a bachelor’s degree in Spanish from Kansai Gaidai University, Tokyo,

a seasoned information technology software programmer.

Yamamoto graduated with a bachelor’s degree in Spanish from Kansai Gaidai

University, Tokyo, Japan.

Yamamoto does not hold, and has not previously held, any directorships in any reporting companies.

We believe that Mr.

is qualified to serve on our Board of Directors due to his experience in all aspects of our business and his ability to provide an insider’s

perspective in board discussions about the business and strategic direction of the Company.

We believe that his experience gives him unique

insights into our opportunities, challenges and operations.

Kimio Hosaka.

Yamamoto is qualified to serve on our Board of Directors due to his experience in all aspects of our business and his ability

to provide an insider’s perspective in board discussions about the business and strategic direction of the Company.

that his experience gives him unique insights into our opportunities, challenges and operations.

Hosaka has served as our Chief Operating Officer and been a member of our Board of Directors since May 18, 2021.

Hosaka has served

as the Chief Operating Officer and member of the Board of Managers of HeartCore Co.

Hosaka has served as the Chief Operating Officer and member of the Board of Managers of HeartCore Co.

since August 2015.

Hosaka graduated with a bachelor’s

degree in physics from Chuo University, Tokyo, Japan.

Hosaka does not hold, and has not previously held, any directorships in any

reporting companies.

We believe that Mr.

Hosaka is qualified to serve on our Board of Directors due to his experience in business and

operations matters.

Prakash Sadasivam.

Sadasivam has served as our Chief Strategy Officer and been a member of our Board of Directors since February 1, 2023.

a technology entrepreneur and the founder of Sigmaways.

Under his leadership, Sigmaways has grown into a global organization with a diverse

team of experts in various technology fields.

Sadasivam completed his undergraduate studies in Computer Science and Engineering from

Vellore Institute of Technology in India.

He has also completed Management Development for Entrepreneurs from UCLA, Anderson School of

He has also been official member of Forbes Technology Council since 2020.

graduated with a bachelor’s degree in physics from Chuo University, Tokyo, Japan.

Hosaka does not hold, and has not previously

held, any directorships in any reporting companies.

We believe that Mr.

Sadasivam is qualified to serve

on our Board of Directors due to his experience in business, and technology.

Hidekazu Miyata.

Miyata has served as our Chief Technical Officer since June 1, 2021.

Miyata has also served as the head of the DX division of

HeartCore Co.

from October 1, 2019 to May 31, 2021.

Miyata graduated with a bachelor’s degree in economics from Doshisha University,

Miyata does not hold, and has not previously held, any directorships in any reporting companies.

Hosaka is qualified to serve on our Board of Directors due to

his experience in business and operations matters.

Gao has served as our Chief Financial Officer since May 18, 2021.

Gao has also served as the Chief Financial Officer of HeartCore

Gao has also served as the Chief Financial Officer

of HeartCore Co.

since May 2017.

From December 2007 through April 2017, Mr.

Gao served as the Group Leader, Finance & Accounting Department at

Marubishi Corporation in Tokyo, Japan.

Gao graduated with a bachelor’s degree in computer accounting from Chuo College of Information

and Accounting, Japan.

Gao does not hold, and has not previously held, any directorships in any reporting companies.

Keisuke Kuno.

Kuno has served as our CX division Vice President since October 1, 2019.

Since August 30, 2021, Mr.

Kuno has also served as the head

of the CX division and member of the Board of Directors of HeartCore Co.

Kuno graduated with a bachelor’s degree in business

administration from Hosei University, Tokyo, Japan.

Kuno does not hold, and has not previously held, any directorships in any reporting

Ferdinand Groenewald .

Gao served as the Group Leader, Finance & Accounting

Department at Marubishi Corporation in Tokyo, Japan.

Gao graduated with a bachelor’s degree in computer accounting from Chuo

College of Information and Accounting, Japan.

Gao does not hold, and has not previously held, any directorships in any reporting

Groenewald has been an independent member of our Board of Directors since January 24, 2022.

From January 2022 to July 2022, Mr.

served as the Chief Accounting Officer of Sadot Group, Inc.

From January 2022

to July 2022, Mr.

Groenewald served as the Chief Accounting Officer of Sadot Group, Inc.

(f/k/a Muscle Maker, Inc., a Nasdaq listed company).

From September 2018 to

January 2, 2022, Mr.

From September 2018 to January 2, 2022, Mr.

Groenewald served as the Chief Financial Officer of Muscle Maker, Inc.

From January 25, 2018 through May 29, 2018,

Groenewald served as the Vice President of Finance, Principal Financial Officer and Principal Accounting Officer of Muscle Maker,

Inc., Muscle Maker Development, LLC and Muscle Maker Corp., LLC.

In addition, from October 2017 through May 29, 2018, he served as the

controller of Muscle Maker, Inc.

Groenewald is a certified public accountant with significant experience in finance and accounting.

From July 2018 through August 2018, he served as senior financial reporting accountant of Wrinkle Gardner & Company, a full service

tax, accounting and business consulting firm.

From January 25, 2018

through May 29, 2018, Mr.

Groenewald served as the Vice President of Finance, Principal Financial Officer and Principal Accounting Officer

of Muscle Maker, Inc., Muscle Maker Development, LLC and Muscle Maker Corp., LLC.

In addition, from October 2017 through May 29, 2018,

he served as the controller of Muscle Maker, Inc.

Groenewald is a certified public accountant with significant experience in finance

and accounting.

From July 2018 through August 2018, he served as senior financial reporting accountant of Wrinkle Gardner & Company,

a full service tax, accounting and business consulting firm.

From February 2017 to October 2017, Mr.

Groenewald served as Senior Financial Accounting

Consultant at Pharos Advisors, Inc.

Groenewald served as Senior Financial

Accounting Consultant at Pharos Advisors, Inc.

serving a broad range of industries.

From November 2013 to February 2017, he served as a Senior Staff

Accountant at Financial Consulting Strategies, LLC where he provided a broad range of accounting, financial reporting, and pre-auditing

services to various industries.

From November 2013 to February 2017, he served as

a Senior Staff Accountant at Financial Consulting Strategies, LLC where he provided a broad range of accounting, financial reporting,

and pre-auditing services to various industries.

From August 2015 to December 2015, Mr.

Groenewald served as a Financial Reporting Analyst at Valley National

Groenewald served as a Financial Reporting Analyst

at Valley National Bank.

Groenewald holds a Bachelor of Science in accounting from the University of South Africa.

Groenewald does not hold, and

has not previously held, any directorships in any reporting companies.

Neville has served as Vice President of People Operations (Human Resources) at PlayStation since January 2021.

June 2019 to January 2021, she was Senior Director of People Operations (Human Resources) at StubHub, an eBay Inc.

EBAY) company,

and from 2018 to 2019, Ms.

Neville served as Senior Director of Go-to-Market Operations at Adobe Inc.

Prior to that time,

she served as Senior Director, North American Business Operations (2017-2018) and Senior Director, Head of HR operations & Chief of

Staff (2015-2017) at eBay Inc.

She also previously held various positions at Dell Inc.

Neville earned a Bachelor of

Arts from Ecole Superieure de Gestion in Paris, France, and a Master of Business Administration from Paris Graduate School of Management

in Paris, France.

We believe that Ms.

Neville is qualified to serve on our Board of Directors due to her experience in business, financial

and public company matters.

does not hold, and has not previously held, any directorships in any reporting companies.

Lee has served as a member of our Board since September 2025.

She is the Founder and CEO of CEEDA Inc., a Tokyo-based

HR search fund specializing in women executives and board-level talent.

She has served in this role since founding the company in 2022.

From 2023 to 2025, she also served as a member of the Board of DG Capital, a power digital grid company.

Prior to founding CEEDA Inc.,

Lee was a Business Development and Product Manager at KLKTN, a subsidiary of Animoca Brands KK, where she led strategy planning,

marketing, and regulatory communication for blockchain-related products.

From 2018 to 2022, she worked at JP Morgan Chase & Co.

part of the Corporate & Investment Banking Division, providing advisory services related to equity finance, cross-held shares, and

M&A for Japanese prime listed companies.

Lee received a B.A.

in Economics and Business from the University of Tokyo.

Lee is qualified to serve on our Board of Directors due to her experience in business development, financial advisory, and cross-border

human capital consulting.

Sato has served as a member of our Board since September 2023.

He is founder and Managing Partner of GIIP Global Advisory, Inc., a multi-country

accounting and CFO service business.

He is founder and Managing Partner of GIIP Global Advisory,

Inc., a multi-country accounting and CFO service business.

He has served as Managing Partner since its founding in 2009.

Sato previously served as Senior

Financial Officer and fund of funds manager for Japanese investors for AIFAM Inc.

and as Senior Consultant at KPMG, LLP and PricewaterhouseCoopers

Japan (Chuo-Aoyama Audit Corporation).

Sato received a Masters in Business Administration from University of Southern California,

Marshall School of Business, and a B.S.

Sato previously

served as Senior Financial Officer and fund of funds manager for Japanese investors for AIFAM Inc.

and as Senior Consultant at KPMG,

LLP and PricewaterhouseCoopers Japan (Chuo-Aoyama Audit Corporation).

Sato received a Masters in Business Administration from University

of Southern California, Marshall School of Business, and a B.S.

in Social Science from Hitotsubashi University in Tokyo, Japan.

We believe that Mr.

Sato is qualified

to serve on our Board of Directors due to his experience in business, financial and accounting matters.

Our Board of Directors elects

our executive officers annually by majority vote.

Each director’s term continues until his or her successor is elected or qualified

at the next annual meeting, unless such director earlier resigns or is removed.

Family Relationships

There are no family relationships

among any of our directors or executive officers.

Involvement in Certain Legal Proceedings

No executive officer, member

of the board of directors or control person of our Company has been involved in any legal proceeding listed in Item 401(f) of Regulation

S-K in the past 10 years.

Board Leadership Structure and Board’s

Role in Risk Oversight

We have not separated the

positions of Chairman of the Board and Chief Executive Officer.

Yamamoto has served as our Chairman of the Board of Directors since

August 16, 2021 and Chief Executive Officer since May 18, 2021.

We believe that combining the positions of Chairman and Chief Executive

Officer allows for focused leadership of our organization which benefits us in our relationships with investors, customers, suppliers,

employees and other constituencies.

Sato is qualified to serve on our Board of Directors due to his experience in business, financial and accounting matters.

Board of Directors elects our executive officers annually by majority vote.

Each director’s term continues until his or her successor

is elected or qualified at the next annual meeting, unless such director earlier resigns or is removed.

Relationships

are no family relationships among any of our directors or executive officers.

in Certain Legal Proceedings

executive officer, member of the board of directors or control person of our Company has been involved in any legal proceeding listed

in Item 401(f) of Regulation S-K in the past 10 years.

Leadership Structure and Board’s Role in Risk Oversight

have not separated the positions of Chairman of the Board and Chief Executive Officer.

Yamamoto has served as our Chairman of the

Board of Directors since August 16, 2021 and Chief Executive Officer since May 18, 2021.

We believe that combining the positions of Chairman

and Chief Executive Officer allows for focused leadership of our organization which benefits us in our relationships with investors,

customers, suppliers, employees and other constituencies.

We believe that consolidating the leadership of the Company under Mr.

Yamamoto is the appropriate

leadership structure for our Company and that any risks inherent in that structure are balanced by the oversight of our other independent

directors on our Board.

However, no single leadership model is right for all companies and at all times.

The Board recognizes that depending

on the circumstances, other leadership models, such as the appointment of a lead independent director, might be appropriate.

the Board may periodically review its leadership structure.

In addition, our Board holds executive sessions in which only independent

directors are present.

Our Board is generally responsible

for the oversight of corporate risk in its review and deliberations relating to our activities.

Our principal source of risk falls into

two categories, financial and product commercialization.

is the appropriate leadership structure for our Company at this time and that any risks inherent in that structure are balanced by the

oversight of our other independent directors on our Board.

However, no single leadership model is right for all companies and at all

The Board recognizes that depending on the circumstances, other leadership models, such as the appointment of a lead independent

director, might be appropriate.

Accordingly, the Board may periodically review its leadership structure.

In addition, our Board holds

executive sessions in which only independent directors are present.

Board is generally responsible for the oversight of corporate risk in its review and deliberations relating to our activities.

Our principal

source of risk falls into the financial category.

The audit committee oversees management of financial risks, and our Board regularly

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to our compensation plans, policies and practices for all employees including executives and directors, particularly whether our compensation

programs may create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect on

Change in Controlled Company Status and Director

Upon initially listing with

Nasdaq and during the fiscal year ended December 31, 2024, the Company qualified as a “controlled company” because more than

programs may create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect

on the Company.

in Controlled Company Status and Director Independence

initially listing with Nasdaq and until February 2025, the Company qualified as a “controlled company” because more than

50% of the voting power for the election of directors was held by Mr.

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Officer and President.

As a result of certain sales under the Company’s previously announced at-the-market offering, Mr.

no longer holds more than 50% of the voting power for the election of directors and therefore, the Company no longer qualifies as a “controlled

company.” As a result, the Company is required, subject to phase-in rules, to comply with Nasdaq requirements that:

a majority of the Board consist of “independent directors” as defined by Nasdaq’s applicable rules and regulations;

the compensation of the Company’s executive officers be determined, or recommended to the Board of Directors for determination, by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors participate or by a compensation committee comprised solely of independent directors;

director nominees be selected, or recommended to the Board of Directors for selection, by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised solely of independent directors.

The Company previously availed

itself of certain of the controlled company exemptions.

More specifically, the Company did not have a compensation committee or a nominating

As of February 2025, Mr.

Yamamoto no longer held more than 50% of the voting power for the election of directors

and therefore, the Company no longer qualifies as a “controlled company.” As a result, the Company is required, subject to

phase-in rules, to comply with Nasdaq requirements that:

majority of the Board consist of “independent directors” as defined by Nasdaq’s applicable rules and regulations;

compensation of the Company’s executive officers be determined, or recommended to the Board of Directors for determination,

by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors

participate or by a compensation committee comprised solely of independent directors;

nominees be selected, or recommended to the Board of Directors for selection, by independent directors constituting a majority of

the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised

solely of independent directors.

Company previously availed itself of certain of the controlled company exemptions.

More specifically, the Company did not have a compensation

committee or a nominating and corporate governance committee.

no longer qualify as a controlled company and accordingly, on February 14, 2025, we formed a compensation committee and a nominating

and corporate governance committee.

We no longer qualify as a

controlled company and accordingly, on February 14, 2025, we formed a compensation committee and a nominating and corporate governance

however, we currently utilize and presently intend to continue to utilize, the exemption relating to a majority independent

Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate

governance requirements of Nasdaq Capital Market.

Pursuant to Nasdaq’s phase-in rules, we have a period of one year from the date

on which we ceased to be a controlled company to comply with the majority independent board.

The Company’s Board

of Directors has affirmatively determined that three of its six directors (Ferdinand Groenewald, Heather Neville, and Koji Sato) are independent

directors of the Company within the meaning of Nasdaq Capital Market’s rules.

Committees of the Board of Directors

Our Board of Directors has established three standing

committees—the audit committee, compensation committee, and nominating and corporate governance committee—each of which operates

under a charter that has been approved by our Board of Directors.

Audit Committee

We have established an audit

committee, which consists of three independent directors:

Ferdinand Groenewald, Heather Neville and Koji Sato.

The Company’s Board of Directors has affirmatively determined that three of its five directors

(Ferdinand Groenewald, Yoonji Lee, and Koji Sato) are independent directors of the Company within the meaning of Nasdaq Capital Market’s

Accordingly, we comply with Nasdaq’s majority independent board requirement.

of the Board of Directors

Board of Directors has established three standing committees—the audit committee, compensation committee, and nominating and corporate

governance committee—each of which operates under a charter that has been approved by our Board of Directors.

Each charter is posted

on our website at https://heartcore-enterprises.com/documents-charters.html .

audit committee consists of three independent directors:

Ferdinand Groenewald, Yoonji Lee and Koji Sato.

Groenewald is the chair

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Our audit committee

adopted a written charter, a copy of which is posted on the Corporate Governance section of our website, at www.heartcore.co.jp.

Our audit committee is authorized

approve and retain the independent auditors to conduct the annual audit of our financial statements;

review the proposed scope and results of the audit;

review and pre-approve audit and non-audit fees and services;

review accounting and financial controls with the independent auditors and our financial and accounting staff;

review and approve transactions between us and our directors, officers and affiliates;

recognize and prevent prohibited non-audit services;

establish procedures for complaints received by us regarding accounting matters;

oversee internal audit functions, if any.

adopted a written charter, a copy of which is posted on the Corporate Governance section of our website, at https://heartcore-enterprises.com/documents-charters.html .

audit committee is authorized to:

and retain the independent auditors to conduct the annual audit of our financial statements;

the proposed scope and results of the audit;

and pre-approve audit and non-audit fees and services;

accounting and financial controls with the independent auditors and our financial and accounting staff;

and approve transactions between us and our directors, officers and affiliates;

and prevent prohibited non-audit services;

procedures for complaints received by us regarding accounting matters;

internal audit functions, if any.

we ceased to be a “controlled company” in February 2025, on February 14, 2025, we formed a compensation committee.

The compensation

committee is comprised of three independent directors:

Ferdinand Groenewald, Yoonji Lee and Koji Sato, with Ms.

Lee as the Chair of the

compensation committee.

Because we were a “controlled

company” within the meaning of the corporate governance standards of Nasdaq Capital Market, during the fiscal year ended December

31, 2024, we were not required to, and did not, have a compensation committee.

We no longer qualify as a controlled company and accordingly,

on February 14, 2025, we formed a compensation committee.

The compensation committee is comprised of three independent directors:

Groenewald, Heather Neville and Koji Sato, with Ms.

Neville as the Chair of the compensation committee.

Our compensation committee

assists our Board of Directors in the discharge of its responsibilities relating to the compensation of our executive officers.

Our compensation

committee is responsible for, among other things:

To review and approve the compensation of the Chief Executive Officer and to approve the compensation of all other executive officers.

To review, and approve and, when appropriate, recommend to the Board for approval, any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the CEO and other executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans.

To review our incentive compensation arrangements.

To review and recommend to the Board for approval the frequency with which we will conduct Say on Pay Votes.

To review director compensation for service on the Board and Board committees at least once a year and to recommend any changes to the Board.

To meet at least two times a year.

To review the compensation committee charter at least annually and recommend any proposed changes to the Board for approval.

Nominating and Corporate Governance Committee

Because we were a “controlled

company” within the meaning of the corporate governance standards of Nasdaq Capital Market, during the fiscal year ended December

31, 2024, we were not required to, and did not, have a nominating and corporate governance committee.

We no longer qualify as a controlled

company and accordingly, on February 14, 2025, we formed a nominating and corporate governance committee.

The nominating and corporate

governance committee is comprised of three independent directors:

Ferdinand Groenewald, Heather Neville and Koji Sato, with Mr.

the Chair of the nominating and corporate governance committee.

Our nominating and corporate

governance committee is responsible for, among other things:

To determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director.

To select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders.

To review the Board’s committee structure and composition and to appoint directors to serve as members of each committee and committee chairmen.

To develop and recommend to the Board for approval standards for determining whether a director has a relationship with us that would impair its independence.

To review and discuss with management the disclosure regarding the operations of the nominating and corporate governance committee and director independence, and to recommend that this disclosure be included in our proxy statement or annual report on Form 10-K, as applicable.

To monitor compliance with our Code of Ethics and Business Conduct (the “Code of Ethics”), to investigate any alleged breach or violation of the Code of Ethics and to enforce the provisions of the Code of Ethics.

To meet at least two times a year.

To review the nominating and corporate governance committee charter at least annually and recommend any proposed changes to the Board for approval

Procedures for Contacting the Board

The Board has established

a process for stockholders and other interested parties to send written communications to the Board, the independent directors, a particular

committee or to individual directors, as applicable.

Our compensation committee adopted a written charter, a copy of which is posted on the Corporate Governance section

of our website, at https://heartcore-enterprises.com/documents-charters.html .

compensation committee assists our Board of Directors in the discharge of its responsibilities relating to the compensation of our executive

Our compensation committee is responsible for, among other things:

review and approve the compensation of the Chief Executive Officer and to approve the compensation of all other executive officers.

review, and approve and, when appropriate, recommend to the Board for approval, any employment agreements and any severance arrangements

or plans, including any benefits to be provided in connection with a change in control, for the Chief Executive Officer and other

executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans.

review our incentive compensation arrangements.

review and recommend to the Board for approval the frequency with which we will conduct say-on-pay votes.

review director compensation for service on the Board and Board committees at least once a year and to recommend any changes to the

meet at least two times a year.

review the compensation committee charter at least annually and recommend any proposed changes to the Board for approval.

and Corporate Governance Committee

we ceased to be a “controlled company” in February 2025, on February 14, 2025, we formed a nominating and corporate governance

The nominating and corporate governance committee is comprised of three independent directors:

Ferdinand Groenewald, Yoonji

Lee and Koji Sato, with Mr.

Sato as the Chair of the nominating and corporate governance committee.

Our nominating and corporate governance

committee adopted a written charter, a copy of which is posted on the Corporate Governance section of our website, at https://heartcore-enterprises.com/documents-charters.html .

nominating and corporate governance committee is responsible for, among other things:

determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the

Board for its approval, criteria to be considered in selecting nominees for director.

select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders.

review the Board’s committee structure and composition and to appoint directors to serve as members of each committee and committee

develop and recommend to the Board for approval standards for determining whether a director has a relationship with us that would

impair its independence.

review and discuss with management the disclosure regarding the operations of the nominating and corporate governance committee and

director independence, and to recommend that this disclosure be included in our proxy statement or annual report on Form 10-K, as

monitor compliance with our Code of Ethics and Business Conduct (the “Code of Ethics”), to investigate any alleged breach

or violation of the Code of Ethics and to enforce the provisions of the Code of Ethics.

meet at least two times a year.

review the nominating and corporate governance committee charter at least annually and recommend any proposed changes to the Board

for Contacting the Board

Board has established a process for stockholders and other interested parties to send written communications to the Board, the independent

directors, a particular committee or to individual directors, as applicable.

Such communications should be addressed to:

Enterprises, Inc.

Board of Directors

HeartCore Enterprises, Inc.

c/o HeartCore Enterprises, Inc.

Corporate Secretary

1-2-33, Higashigotanda, Shinagawa-ku

The Board has instructed the

Corporate Secretary to promptly forward all communications so received to the full Board, the independent directors or the individual

Board member(s) specifically addressed in the communication.

Comments or questions regarding our accounting, internal controls or auditing

matters, our compensation and benefit programs, or the nomination of directors and other corporate governance matters will remain with

the full Board.

Depending on the subject matter,

the Company’s Corporate Secretary will:

Forward the communication to the director or directors to whom it is addressed;

Attempt to handle the inquiry directly, for example, where it is a request for information about our Company or if it is a stock-related matter;

Not forward the communication if it is primarily commercial in nature or if it relates to a topic that is not relevant to the Board or a particular committee or is otherwise improper.

Procedures for Recommending, Nominating and

Evaluating Director Candidates

A stockholder may nominate

one or more persons for election as a director at an annual meeting of stockholders if the stockholder complies with the notice and information

provisions contained in our bylaws.

Such notice must be in writing to our company not less than 90 days and not more than 120 days prior

to the anniversary date of the preceding year’s annual meeting of stockholders or as otherwise required by requirements of the Exchange

In addition, stockholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice and (ii)

the record date for the determination of stockholders entitled to vote at such meeting.

We have not formally established

any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.

In general, in identifying

and evaluating nominees for director, the Board of Directors considers educational background, diversity of professional experience, knowledge

of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.

Compensation Committee Interlocks and Insider

Participation

None of our executive officers

serve on the board of directors or compensation committee of a company that has an executive officer that serves on our board or compensation

No member of our board is an executive officer of a company in which one of our executive officers serves as a member of the

board of directors or compensation committee of that company.

Code of Ethics

The Company has adopted a

Code of Ethics and Business Conduct that applies to all of its directors, officers (including our principal executive officer, principal

Shibuya Sakura Stage Central Building

Sakuragaoka-cho

Tokyo, Japan 150-0031

Board has instructed the Corporate Secretary to promptly forward all communications so received to the full Board, the independent directors

or the individual Board member(s) specifically addressed in the communication.

Comments or questions regarding our accounting, internal

controls or auditing matters, our compensation and benefit programs, or the nomination of directors and other corporate governance matters

will remain with the full Board.

on the subject matter, the Company’s Corporate Secretary will:

the communication to the director or directors to whom it is addressed;

to handle the inquiry directly, for example, where it is a request for information about our Company or if it is a stock-related

forward the communication if it is primarily commercial in nature or if it relates to a topic that is not relevant to the Board or

a particular committee or is otherwise improper.

for Recommending, Nominating and Evaluating Director Candidates

stockholder may nominate one or more persons for election as a director at an annual meeting of stockholders if the stockholder complies

with the notice and information provisions contained in our bylaws.

Such notice must be in writing to our company not less than 90 days

and not more than 120 days prior to the anniversary date of the preceding year’s annual meeting of stockholders or as otherwise

required by requirements of the Exchange Act.

In addition, stockholders furnishing such notice must be a holder of record on both (i)

the date of delivering such notice and (ii) the record date for the determination of stockholders entitled to vote at such meeting.

have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.

In general, in identifying and evaluating nominees for director, the Board of Directors considers educational background, diversity of

professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent

the best interests of our stockholders.

Company adopted the Code of Ethics, which applies to all of its directors, officers (including our principal executive officer, principal

financial officer, principal accounting officer or controller, and any person performing similar functions) and employees.

Ethics and Business Conduct is available on our website at www.heartcore.co.jp.

We are required to disclose

any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial

officer, principal accounting officer, controller, or persons performing similar functions.

We intend to use our website as a method of

disseminating this disclosure, as permitted by applicable SEC rules.

Any such disclosure will be posted to our website within four business

days following the date of any such amendment to, or waiver from, a provision of our code of ethics.

Insider Trading Arrangements and Policies

We have adopted an insider trading policy that

governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees.

A copy of our insider

trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In addition, with

regard to us trading in our own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing

requirements in all respects.

Anti-Hedging Policy

Under the terms of our insider trading policy,

we prohibit each officer, director and employee, and each of their family members and controlled entities, from engaging in certain forms

of hedging or monetization transactions.

Such transactions include those, such as zero-cost collars and forward sale contracts, that would

allow them to lock in much of the value of their stock holdings, often in exchange for all or part of the potential for upside appreciation

in the stock, and to continue to own the covered securities but without the full risks and rewards of ownership.

Ethics is available on our website at https://heartcore-enterprises.com/documents-charters.html .

are required to disclose any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer,

principal financial officer, principal accounting officer, controller, or persons performing similar functions.

We intend to use our

website as a method of disseminating this disclosure, as permitted by applicable SEC rules.

Any such disclosure will be posted to our

website within four business days following the date of any such amendment to, or waiver from, a provision of our code of ethics.

Trading Arrangements and Policies

have adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors,

officers and employees.

A copy of our insider trading policy has been filed with the SEC.

In addition, with regard to us trading in our

own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing requirements in all respects.

the terms of our insider trading policy, we prohibit each officer, director and employee, and each of their family members and controlled

entities, from engaging in certain forms of hedging or monetization transactions.

Such transactions include those, such as zero-cost

collars and forward sale contracts, that would allow them to lock in much of the value of their stock holdings, often in exchange for

all or part of the potential for upside appreciation in the stock, and to continue to own the covered securities but without the full

risks and rewards of ownership.

Section 16(a) Reports

securities laws,

directors, certain officers and persons holding more than 10% of our common stock must report their initial ownership of our common stock

and any changes in their ownership to the SEC.

The SEC has designated specific due dates for these reports and we must identify in this

Report on Form 10-K those persons who did not file these reports when due.

Based solely on our review of copies of the reports filed with

the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for fiscal

year 2024 were complied with by each person who at any time during the 2024 fiscal year was a director or an executive officer or held

more than 10% of our common stock, except for the following:

Yamamoto failed to timely file a Form 4 relating to two transactions,

and each of Messrs.

Gao, Kuno and Hosaka failed to timely file a Form 4 relating to one transaction.

Limitation on Liability and Indemnification

of Officers and Directors

Our certificate of incorporation

provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists

or may in the future be amended.

In addition, our certificate of incorporation provides that our directors will not be personally liable

for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption from liability or limitation

thereof is not permitted by the General Corporation Law of the State of Delaware.

On June 1, 2023, the Company

entered into a Director Agreement with Heather Neville, and this Director Agreement was converted into an Independent Director Agreement

on November 1, 2023.

On September 29, 2023 the Company entered into an Independent Director Agreement as well as an Indemnification Agreement

with Koji Sato.

Previously, Ferdinand Groenewald entered into an indemnification agreement with the Company.

Each director agreement and

indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and our certificate

of incorporation and bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim.

indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to us if it

is found that such indemnitee is not entitled to such indemnification under applicable law and our certificate of incorporation and bylaws.

Our certificate of incorporation

also permits us to maintain insurance on behalf of any officer, director or employee for any liability arising out of his or her actions,

regardless of whether Delaware law would permit such indemnification.

We have purchased a policy of directors’ and officers’

liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances

and insures us against our obligations to indemnify our officers and directors.

These provisions may discourage

stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty.

These provisions also may have the effect

of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise

benefit us and our stockholders.

Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs

of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

We believe that these provisions

and the insurance are necessary to attract and retain talented and experienced officers and directors.

Any repeal or amendment of

provisions of our certificate of incorporation affecting indemnification rights, whether by our board of directors, stockholders or by

changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be

prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive

basis, and will not in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission

occurring prior to such repeal or amendment or adoption of such inconsistent provision.

Insofar as indemnification

for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions

described above, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed

in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other

than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action,

suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we

will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction

the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the

final adjudication of such issue.

securities laws, directors, certain officers and persons holding more than 10% of our common stock must report their initial

ownership of our common stock and any changes in their ownership to the SEC.

The SEC has designated specific due dates for these

reports and we must identify in this Annual Report on Form 10-K those persons who did not file these reports when due.

on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers,

we believe that all reporting requirements for fiscal year 2025 were complied with by each person who at any time during the 2025

fiscal year was a director or an executive officer or held more than 10% of our common stock, except for the following:

Daishin, a 10% stockholder, failed to timely file his Form 3 due in 2022, with such Form 3 being filed in 2025;

failed to timely file a Form 4 for two transactions in 2025, with such Form 4 being filed in 2025.

on Liability and Indemnification of Officers and Directors

Certificate of Incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware

law, as it now exists or may in the future be amended.

In addition, our Certificate of Incorporation provides that our directors will

not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption

from liability or limitation thereof is not permitted by the General Corporation Law of the State of Delaware.

independent directors have entered into independent director agreements and indemnification agreements with us.

Each independent director

agreement and indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and

our Certificate of Incorporation and bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement

of any claim.

The indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and for reimbursement

to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our Certificate of Incorporation

Certificate of Incorporation also permits us to maintain insurance on behalf of any officer, director or employee for any liability arising

out of his or her actions, regardless of whether Delaware law would permit such indemnification.

We have purchased a policy of directors’

and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of

a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.

provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty.

These provisions

also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action,

if successful, might otherwise benefit us and our stockholders.

Furthermore, a stockholder’s investment may be adversely affected

to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

believe that these provisions and the insurance are necessary to attract and retain talented and experienced officers and directors.

repeal or amendment of provisions of our Certificate of Incorporation affecting indemnification rights, whether by our board of directors,

stockholders or by changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise

required by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification

rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing thereunder with

respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons

pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is

against public policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification

against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful

defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities

being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court

of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act

and will be governed by the final adjudication of such issue.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following summary compensation

table provides information regarding the compensation paid during our fiscal years ended December 31, 2024 and 2023 to certain of our

executive officers, who we collectively refer to as our “named executive officers”, or “NEOs”.

Name and Position

following summary compensation table provides information regarding the compensation paid during our fiscal years ended December 31,

2025 and 2024 to certain of our executive officers, who we collectively refer to as our “Named Executive Officers.”

Non-qualified

1 unchanged sentence

Chief Executive Officer

Prakash Sadasivam

Chief Strategy Officer and Director

Chief Operating Officer

Employment Agreements

Executive Employment Agreement with Sumitaka

On October 28, 2022, we entered

in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement, Mr.

CX Division Vice President

Employment Agreement with Sumitaka Yamamoto

October 28, 2022, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Yamamoto’s annual salary increased from $381,000 to $450,000, effective November 1, 2022.

Executive Employment Agreement with Kimio Hosaka

On January 10, 2023, we entered

in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement, Mr.

Employment Agreement with Kimio Hosaka

January 10, 2023, we entered in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

the Amendment Agreement, Mr.

Hosaka’s annual salary increased from $95,459 to $164,770, effective January 1, 2023.

Employment Agreement with Prakash Sadasivam

On February 1, 2023, we entered

into an Employment Agreement with Prakash Sadasivam whereby Mr.

Sadasivam serves as our Chief Strategy Officer.

annual salary is $96,000.

Provisions Applicable to All Employment Agreements

Each of the Employment Agreements

as described above, has an initial term of one year, provided that the term of each agreement will automatically be extended for one or

more additional terms of one year each unless either the Company or applicable executive provides notice to the other of their desire

to not so renew the initial term or renewal term (as applicable) at least 30 days prior to the expiration of then-current initial term

or renewal term (as applicable).

Each of the agreements provide that the applicable executive’s employment with the Company shall

be “at will,” meaning that either applicable executive or the Company may terminate the applicable executive’s employment

at any time and for any reason, subject to the other provisions of the agreement.

Each of the agreements may

be terminated by the Company, either with or without “Cause”, or by the applicable executive, either with or without “Good

For purposes of each agreement,

“Cause” means:

a violation of any material written rule or policy of the Company for which violation any employee may be terminated pursuant to the written policies of the Company reasonably applicable to an executive employee;

misconduct by the applicable executive to the material detriment of the Company;

the applicable executive’s conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony;

the applicable executive’s gross negligence in the performance of the applicable executive’s duties and responsibilities to the Company as described in this Agreement;

the applicable executive’s material failure to perform the applicable executive’s duties and responsibilities to the Company as described in the agreement (other than any such failure resulting from the applicable executive’s incapacity due to physical or mental illness or any such failure subsequent to the applicable executive being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company), in either case after written notice from the Board to the applicable executive of the specific nature of such material failure and the applicable executive’s failure to cure such material failure within 10 days following receipt of such notice.

For purposes of each agreement,

“Good Reason” means:

at any time following a Change of Control (as defined below), a material diminution by the Company of compensation and benefits (taken as a whole) provided to the applicable executive immediately prior to a Change of Control;

a reduction in base salary or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management personnel;

the relocation of the applicable executive’s principal executive office to a location more than 50 miles further from the applicable executive’s principal executive office immediately prior to such relocation;

a material breach by the Company of any of the terms and conditions of the agreement which the Company fails to correct within 10 days after the Company receives written notice from the applicable executive of such violation.

For purposes of each agreement

a “Change of Control” of the Company will be deemed to have occurred if, after the effective date of the applicable agreement,

(i) the beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of securities representing more than 50% of the combined

voting power of the Company is acquired by any “person” as defined in sections 13(d) and 14(d) of the Exchange Act (other

than the Company, any subsidiary of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of

the Company), (ii) the merger or consolidation of the Company with or into another corporation where the shareholders of the Company,

immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such

term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the

combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate

parent corporation, if any) in substantially the same proportion as their ownership of the Company immediately prior to such merger or

consolidation, or (iii) the sale or other disposition of all or substantially all of the Company’s assets to an entity, other than

a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined

voting power of the voting securities of which are owned directly or indirectly by shareholders of the Company, immediately prior to the

sale or disposition, in substantially the same proportion as their ownership of the Company immediately prior to such sale or disposition.

In the event that the Company

terminates the term of the applicable agreement or the applicable executive’s employment with Cause, or if the applicable executive

terminates their agreement without good reason, then, subject to any other agreements between the company with respect to other equity

grants made to such executive:

the Company will pay to the applicable executive any unpaid base salary and benefits then owed or accrued, and any unreimbursed expenses;

any unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will immediately be forfeited;

all of the parties’ rights and obligations under the agreement will cease, other than those rights or obligations which arose prior to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

In the event that the Company

terminates the term of the applicable agreement or the applicable executive’s employment without Cause, or if the applicable executive

terminates their agreement with good reason, then, subject to any other agreements between the company with respect to other equity grants

made to such executive:

the Company will pay to the applicable executive any base salary, bonuses, and benefits then owed or accrued, and any unreimbursed expenses;

the Company will pay to the applicable executive, in one lump sum, an amount equal to the base salary that would have been paid to the applicable executive for the remainder of the initial term of the applicable agreement (if the termination occurs during the initial term of the applicable agreement) or renewal term of the applicable agreement (if the termination occurs during a renewal term of the applicable agreement);

any unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will, to the extent not already vested, be deemed automatically vested;

In the event of the applicable

executive’s death or total disability during the term of the applicable agreement, the term of the applicable agreement and the

applicable executive’s employment shall terminate on the date of death or total disability.

In the event of such termination, the

Company’s sole obligations hereunder to the applicable executive (or the applicable executive’s estate) shall be for unpaid

base salary, accrued but unpaid bonus and benefits (then owed or accrued and owed in the future), a pro-rata bonus for the year of termination

based on the applicable executive’s target bonus for such year and the portion of such year in which the applicable executive was

employed, and reimbursement of expenses pursuant to the terms hereon through the effective date of termination, and any unvested portion

of any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will immediately

be forfeited as of the termination date.

In the event that the term

of the applicable agreement is not renewed by either party, any unvested portion of any equity granted to the applicable executive under

the applicable agreement or any other agreements with the Company will immediately be forfeited as of the expiration of the term of the

applicable agreement without any further action of the parties.

If it is determined that any

payment provided to the applicable executive under the applicable agreement or otherwise, whether or not in connection with a Change of

Control (a “Payment”), would constitute an “excess parachute payment” within the meaning of section 280G of the

Internal Revenue Code of 1986, as amended (the “Code”), such that the Payment would be subject to an excise tax under section

4999 of the Code (the “Excise Tax”), the Company will pay to the applicable executive an additional amount (the “Gross-Up

Payment”) such that the net amount of the Gross-Up Payment retained by the applicable executive after the payment of any Excise

Tax and any federal, state and local income and employment tax on the Gross-Up Payment, shall be equal to the Excise Tax due on the Payment

and any interest and penalties in respect of such Excise Tax.

During the term of the applicable

agreement, the applicable executive is entitled to fringe benefits consistent with the practices of the Company, and to the extent the

Company provides similar benefits to the Company’s executive officers, and is entitled to reimbursement for all reasonable and necessary

out-of-pocket business, entertainment and travel expenses incurred by the applicable executive in connection with the performance of the

applicable executive’s duties hereunder and in accordance with the Company’s expense reimbursement policies and procedures.

Each of the agreements provides

that, during the term of the applicable agreement, the applicable executive will be entitled to indemnification and insurance coverage

for officers’ liability, fiduciary liability and other liabilities arising out of the applicable executive’s position with

the Company in any capacity, in an amount not less than the highest amount available to any other executive, and such coverage and protections,

with respect to the various liabilities as to which the applicable executive has been customarily indemnified prior to termination of

employment, shall continue for at least six years following the end of the term of the applicable agreement.

Any indemnification agreement

entered into between the Company and the applicable executive shall continue in full force and effect in accordance with its terms following

the termination of the applicable.

Each of the employment agreements

contains customary confidentiality provisions, and customary provisions related to Company ownership of intellectual property conceived

or made by the applicable executive in connection with the performance of their duties under the applicable agreement (i.e., a “work-made-for-hire”

Each of the agreements contains

a non-compete provision which provides that, for the term of the applicable agreement and for a period of two years thereafter, the applicable

executive shall not, directly or indirectly:

(i) engage in any other business, association or relationship of any kind with any business

which provides, in whole or in part, the same or similar services and/or products offered by the which directly or indirectly competes

with Company;

nor (ii) solicit or accept, or induce any person or entity to reduce goods or services to Company, or in any manner assist

others in the solicitation, acceptance, or inducement of, any business transactions with Company’s existing and prospective clients,

accounts, suppliers and/or other persons or entities with whom the Company has had business relationships (or whom Company had specifically

identified for a prospective business relationship).

These restrictions extend to the geographic area in which Company actively conducted

business immediately prior to termination of the applicable agreement.

Each of the agreements also

contains a customary non-solicitation provision, in which the applicable executive agrees that, for the term of the applicable agreement

and for a period of three years thereafter, the applicable executive will not, directly or indirectly solicit or discuss with any employee

of Company the employment of such Company employee by any other commercial enterprise other than Company, nor recruit, attempt to recruit,

hire or attempt to hire any such Company employee on behalf of any commercial enterprise other than Company, provided that this provision

does not prohibit the applicable executive from undertaking a general recruitment advertisement provided that the foregoing is not targeted

towards any person or entity identified above, or from hiring, employing or engaging any such person or entity who responds to such general

recruitment advertisement.

Due to the application of

various states’ laws, there is no assurance that the non-compete provisions or the non-solicitation provisions as set forth in each

of the agreements will be enforced.

Each of the agreements contains a “blue pencil” provision that, in the event that a court

determines that any of these restrictions are unenforceable, the parties to the agreement agreed that it is their desire that the court

substitute an enforceable restriction in place of any restriction deemed unenforceable, and that the substitute restriction be deemed

incorporated in the agreement and enforceable against the applicable executive.

Each of the agreements contains

customary representations and warranties by the applicable executive, relating to the agreement, and any securities of the Company that

may be issued to the executive, and contains other customary miscellaneous provisions relating to waivers, assignments, third party rights,

survival of provisions following termination, severability, notices, waiver of jury trials and other provisions.

Each of the agreements is

governed by and construed and enforced in accordance with the internal laws of the State of Delaware, and for all purposes shall be construed

in accordance with the laws of such state, without giving effect to the choice of law provisions of such state.

Each of the agreements

provide that all legal proceedings concerning the applicable agreement will be in the state and federal courts sitting in Santa Clara

County, California, provided that each agreement also includes a provision relating to any disputes being settled by arbitration.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth

information on outstanding options and stock awards held by the executive officers as of December 31, 2024.

Employment Agreement with Keisuke Kuno

January 10, 2023, we entered into an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022.

Pursuant to the Amendment Agreement, Mr.

Kuno’s annual salary increased from $103,535 to $145,831, effective January 1, 2023.

Kuno resigned in October 2025.

Applicable to All Employment Agreements

of the Employment Agreements as described above, has an initial term of one year, provided that the term of each agreement will automatically

be extended for one or more additional terms of one year each unless either the Company or applicable executive provides notice to the

other of their desire to not so renew the initial term or renewal term (as applicable) at least 30 days prior to the expiration of then-current

initial term or renewal term (as applicable).

Each of the agreements provide that the applicable executive’s employment with the

Company shall be “at will,” meaning that either applicable executive or the Company may terminate the applicable executive’s

employment at any time and for any reason, subject to the other provisions of the agreement.

of the agreements may be terminated by the Company, either with or without “Cause”, or by the applicable executive, either

with or without “Good Reason”.

purposes of each agreement, “Cause” means:

violation of any material written rule or policy of the Company for which violation any employee may be terminated pursuant to the

written policies of the Company reasonably applicable to an executive employee;

by the applicable executive to the material detriment of the Company;

applicable executive’s conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty

to, a felony;

applicable executive’s gross negligence in the performance of the applicable executive’s duties and responsibilities

to the Company as described in this Agreement;

applicable executive’s material failure to perform the applicable executive’s duties and responsibilities to the Company

as described in the agreement (other than any such failure resulting from the applicable executive’s incapacity due to physical

or mental illness or any such failure subsequent to the applicable executive being delivered a notice of termination without Cause

by the Company or delivering a notice of termination for Good Reason to the Company), in either case after written notice from the

Board to the applicable executive of the specific nature of such material failure and the applicable executive’s failure to

cure such material failure within 10 days following receipt of such notice.

purposes of each agreement, “Good Reason” means:

any time following a Change of Control (as defined below), a material diminution by the Company of compensation and benefits (taken

as a whole) provided to the applicable executive immediately prior to a Change of Control;

reduction in base salary or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management

relocation of the applicable executive’s principal executive office to a location more than 50 miles further from the applicable

executive’s principal executive office immediately prior to such relocation;

material breach by the Company of any of the terms and conditions of the agreement which the Company fails to correct within 10 days

after the Company receives written notice from the applicable executive of such violation.

purposes of each agreement a “Change of Control” of the Company will be deemed to have occurred if, after the effective date

of the applicable agreement, (i) the beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of securities representing

more than 50% of the combined voting power of the Company is acquired by any “person” as defined in sections 13(d) and 14(d)

of the Exchange Act (other than the Company, any subsidiary of the Company, or any trustee or other fiduciary holding securities under

an employee benefit plan of the Company), (ii) the merger or consolidation of the Company with or into another corporation where the

shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger,

beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate

50% or more of the combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger

(or of its ultimate parent corporation, if any) in substantially the same proportion as their ownership of the Company immediately prior

to such merger or consolidation, or (iii) the sale or other disposition of all or substantially all of the Company’s assets to

an entity, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at

least 50% of the combined voting power of the voting securities of which are owned directly or indirectly by shareholders of the Company,

immediately prior to the sale or disposition, in substantially the same proportion as their ownership of the Company immediately prior

to such sale or disposition.

the event that the Company terminates the term of the applicable agreement or the applicable executive’s employment with Cause,

or if the applicable executive terminates their agreement without good reason, then, subject to any other agreements between the company

with respect to other equity grants made to such executive:

Company will pay to the applicable executive any unpaid base salary and benefits then owed or accrued, and any unreimbursed expenses;

unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the

Company will immediately be forfeited;

of the parties’ rights and obligations under the agreement will cease, other than those rights or obligations which arose prior

to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

the event that the Company terminates the term of the applicable agreement or the applicable executive’s employment without Cause,

or if the applicable executive terminates their agreement with good reason, then, subject to any other agreements between the company

with respect to other equity grants made to such executive:

Company will pay to the applicable executive any base salary, bonuses, and benefits then owed or accrued, and any unreimbursed expenses;

Company will pay to the applicable executive, in one lump sum, an amount equal to the base salary that would have been paid to the

applicable executive for the remainder of the initial term of the applicable agreement (if the termination occurs during the initial

term of the applicable agreement) or renewal term of the applicable agreement (if the termination occurs during a renewal term of

the applicable agreement);

unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the

Company will, to the extent not already vested, be deemed automatically vested;

of the parties’ rights and obligations under the agreement will cease, other than those rights or obligations which arose prior

to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

the event of the applicable executive’s death or total disability during the term of the applicable agreement, the term of the

applicable agreement and the applicable executive’s employment shall terminate on the date of death or total disability.

event of such termination, the Company’s sole obligations hereunder to the applicable executive (or the applicable executive’s

estate) shall be for unpaid base salary, accrued but unpaid bonus and benefits (then owed or accrued and owed in the future), a pro-rata

bonus for the year of termination based on the applicable executive’s target bonus for such year and the portion of such year in

which the applicable executive was employed, and reimbursement of expenses pursuant to the terms hereon through the effective date of

termination, and any unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements

with the Company will immediately be forfeited as of the termination date.

the event that the term of the applicable agreement is not renewed by either party, any unvested portion of any equity granted to the

applicable executive under the applicable agreement or any other agreements with the Company will immediately be forfeited as of the

expiration of the term of the applicable agreement without any further action of the parties.

it is determined that any payment provided to the applicable executive under the applicable agreement or otherwise, whether or not in

connection with a Change of Control (a “Payment”), would constitute an “excess parachute payment” within the

meaning of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), such that the Payment would be subject

to an excise tax under section 4999 of the Code (the “Excise Tax”), the Company will pay to the applicable executive an additional

amount (the “Gross-Up Payment”) such that the net amount of the Gross-Up Payment retained by the applicable executive after

the payment of any Excise Tax and any federal, state and local income and employment tax on the Gross-Up Payment, shall be equal to the

Excise Tax due on the Payment and any interest and penalties in respect of such Excise Tax.

the term of the applicable agreement, the applicable executive is entitled to fringe benefits consistent with the practices of the Company,

and to the extent the Company provides similar benefits to the Company’s executive officers, and is entitled to reimbursement for

all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the applicable executive in connection

with the performance of the applicable executive’s duties hereunder and in accordance with the Company’s expense reimbursement

policies and procedures.

of the agreements provides that, during the term of the applicable agreement, the applicable executive will be entitled to indemnification

and insurance coverage for officers’ liability, fiduciary liability and other liabilities arising out of the applicable executive’s

position with the Company in any capacity, in an amount not less than the highest amount available to any other executive, and such coverage

and protections, with respect to the various liabilities as to which the applicable executive has been customarily indemnified prior

to termination of employment, shall continue for at least six years following the end of the term of the applicable agreement.

Any indemnification

agreement entered into between the Company and the applicable executive shall continue in full force and effect in accordance with its

terms following the termination of the applicable.

of the employment agreements contains customary confidentiality provisions, and customary provisions related to Company ownership of

intellectual property conceived or made by the applicable executive in connection with the performance of their duties under the applicable

agreement (i.e., a “work-made-for-hire” provision).

of the agreements contains a non-compete provision which provides that, for the term of the applicable agreement and for a period of

two years thereafter, the applicable executive shall not, directly or indirectly:

(i) engage in any other business, association or relationship

of any kind with any business which provides, in whole or in part, the same or similar services and/or products offered by the which

directly or indirectly competes with Company;

nor (ii) solicit or accept, or induce any person or entity to reduce goods or services

to Company, or in any manner assist others in the solicitation, acceptance, or inducement of, any business transactions with Company’s

existing and prospective clients, accounts, suppliers and/or other persons or entities with whom the Company has had business relationships

(or whom Company had specifically identified for a prospective business relationship).

These restrictions extend to the geographic area

in which Company actively conducted business immediately prior to termination of the applicable agreement.

of the agreements also contains a customary non-solicitation provision, in which the applicable executive agrees that, for the term of

the applicable agreement and for a period of three years thereafter, the applicable executive will not, directly or indirectly solicit

or discuss with any employee of Company the employment of such Company employee by any other commercial enterprise other than Company,

nor recruit, attempt to recruit, hire or attempt to hire any such Company employee on behalf of any commercial enterprise other than

Company, provided that this provision does not prohibit the applicable executive from undertaking a general recruitment advertisement

provided that the foregoing is not targeted towards any person or entity identified above, or from hiring, employing or engaging any

such person or entity who responds to such general recruitment advertisement.

to the application of various states’ laws, there is no assurance that the non-compete provisions or the non-solicitation provisions

as set forth in each of the agreements will be enforced.

Each of the agreements contains a “blue pencil” provision that,

in the event that a court determines that any of these restrictions are unenforceable, the parties to the agreement agreed that it is

their desire that the court substitute an enforceable restriction in place of any restriction deemed unenforceable, and that the substitute

restriction be deemed incorporated in the agreement and enforceable against the applicable executive.

of the agreements contains customary representations and warranties by the applicable executive, relating to the agreement, and any securities

of the Company that may be issued to the executive, and contains other customary miscellaneous provisions relating to waivers, assignments,

third party rights, survival of provisions following termination, severability, notices, waiver of jury trials and other provisions.

of the agreements is governed by and construed and enforced in accordance with the internal laws of the State of Delaware, and for all

purposes shall be construed in accordance with the laws of such state, without giving effect to the choice of law provisions of such

Each of the agreements provide that all legal proceedings concerning the applicable agreement will be in the state and federal

courts sitting in Santa Clara County, California, provided that each agreement also includes a provision relating to any disputes being

settled by arbitration.

Equity Awards at 2025 Fiscal Year-End

following table sets forth information on outstanding options and stock awards held by the Named Executive Officers as of December 31,

Option Awards

1 unchanged sentence

Sumitaka Yamamoto

Additional Narrative Disclosure

Narrative Disclosure

have not maintained, and do not currently maintain, a defined benefit pension plan, non-qualified deferred compensation plan, or other

retirement benefits.

We have not maintained, and

do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan, or other retirement benefits.

Potential Payments Upon Termination or Change

As described under “

Employment Agreements” above, each of the executives with whom the Company has entered into employment agreements are entitled severance

if their employment is terminated by the Company without “Cause” or is terminated by the applicable executive with “Good

Reason”, in each case as described above.

Policies and Practices Related to the Grant

of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

We do not have any formal policy that requires

us to grant, or avoid granting, stock options at particular times.

Consistent with its annual compensation cycle, if options are to be

granted, the Compensation Committee generally seeks to grant annual stock option awards after its Annual Report on Form 10-K has been

The timing of any stock option grants in connection with new hires, promotions, or other non-routine grants is tied to the event

giving rise to the award (such as an employee’s commencement of employment or promotion effective date).

As a result, in all cases,

the timing of grants of stock options occurs independent of the release of any material nonpublic information, and we do not time the

disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

No stock options were issued to executive officers

in 2024 during any period beginning four business days before the filing of a periodic report or current report disclosing material non-public

information and ending one business day after the filing or furnishing of such report with the SEC.

Payments Upon Termination or Change in Control

described under “Employment Agreements” above, each of the executive officers with whom the Company has entered into an employment

agreement is entitled severance if their employment is terminated by the Company without “Cause” or is terminated by the

applicable executive with “Good Reason”, in each case as described above.

and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

do not have any formal policy that requires us to grant, or avoid granting, stock options at particular times.

Consistent with its annual

compensation cycle, if options are to be granted, the Compensation Committee generally seeks to grant annual stock option awards after

its Annual Report on Form 10-K has been filed.

The timing of any stock option grants in connection with new hires, promotions,

or other non-routine grants is tied to the event giving rise to the award (such as an employee’s commencement of employment or

promotion effective date).

As a result, in all cases, the timing of grants of stock options occurs independent of the release of any

material nonpublic information, and we do not time the disclosure of material nonpublic information for the purpose of affecting the

value of executive compensation.

stock options were issued to executive officers in 2025 during any period beginning four business days before the filing of a periodic

report or current report disclosing material non-public information and ending one business day after the filing or furnishing of such

report with the SEC.

than as set forth in the table below and as described more fully below, we did not pay any compensation or make any equity awards or

non-equity awards to any of our non-employee directors during fiscal year 2025.

Board members received $50,000 for their service on our Board of Directors.

In addition, in exchange for their service on the Audit Committee,

the Chair of the Audit Committee receives an additional $7,000 annually, and the other Audit Committee members receives an additional

$4,000 annually.

In exchange for their service on the Compensation Committee, the Chair of the Compensation Committee receives an additional

$7,000 annually, and the other Compensation Committee members receive an additional $4,000 annually.

In exchange for their service on

the Nominating and Corporate Governance Committee, the Chair of the Nominating and Corporate Governance Committee receives an additional

$6,000 annually, and the other Nominating and Corporate Governance Committee members receive an additional $3,000 annually.

may be reimbursed for travel and other expenses directly related to their activities as directors.

Directors who also serve as employees

receive no additional compensation for their service as directors.

following table presents the total compensation for each person who served as a non-employee director of the Company during the fiscal

year ended December 31, 2025.

Director Compensation

Other than as set forth in

the table and described more fully below, we did not pay any compensation or make any equity awards or non-equity awards to any of our

non-employee directors during fiscal year 2024.

Non-employee Board members

received $50,000 for their service on our Board of Directors.

In addition, in exchange for their service on the Audit Committee, the Chair

of the Audit Committee receives an additional $7,000 annually, and the other Audit Committee members receives an additional $4,000 annually.

In exchange for their service on the Compensation Committee, the Chair of the Compensation Committee receives an additional $7,000 annually,

and the other Compensation Committee members receive an additional $4,000 annually.

In exchange for their service on the Nominating and

Corporate Governance Committee, the Chair of the Nominating and Corporate Governance Committee receives an additional $6,000 annually,

and the other Nominating and Corporate Governance Committee members receive an additional $3,000 annually.

Directors may be reimbursed

for travel and other expenses directly related to their activities as directors.

Directors who also serve as employees receive no additional

compensation for their service as directors.

During fiscal year 2024, each of Sumitaka Yamamoto, our Chief Executive Officer, Kimio Hosaka,

our Chief Operating Officer, and Prakash Sadasivam, our Chief Strategy Officer, was a member of our board of directors, as well as an

employee, and received no additional compensation for their services as a director.

See the section titled “Executive Compensation”

for more information about the compensation for these individuals for fiscal year 2024.

The following table presents

the total compensation for each person who served as a non-employee director of the Company during fiscal year 2024.

Fees Earned or Paid in Cash ($)

All Other Compensation ($)

Ferdinand Groenewald

Heather Marie Neville

Independent Director Agreements

On June 1, 2023, Heather Marie

Neville entered into a Director Agreement, and on November 1, 2023, Ms.

Neville entered into an Independent Director Agreement.

29, 2023, Koji Sato entered into an Independent Director Agreement.

Previously, Ferdinand Groenewald entered into the Company’s

form of Independent Director Agreement.

The Independent Director Agreements

provide that each non-employee director will be compensated as follows:

Each director will be paid the sum of $50,000 annually for director’s service as a director of the Company, to be paid $12,500 each calendar quarter, payable within five business days of the end of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated.

Each director shall be paid $4,000 annually for service as a member of the Audit Committee and an additional sum of $3,000 annually for service as the Chairman of the Audit Committee, with each of these payments to be paid quarterly in equal portions, within five business days of the end of each calendar quarter, and with any amount for any partial calendar quarter being appropriately prorated.

The Independent Director Agreements

contain additional terms.

During the term of the applicable director agreement, the Company will reimburse the applicable director for

all reasonable out-of-pocket expenses incurred by the applicable director in attending any in-person meetings, provided that the applicable

director complies with the generally applicable policies, practices and procedures of the Company for submission of expense reports, receipts

or similar documentation of such expenses.

Any reimbursements for allocated expenses (as compared to out-of-pocket expenses of the applicable

director in excess of $500) must be approved in advance by the Company.

Each of the agreements contains

customary confidentiality provisions, and customary provisions related to Company ownership of intellectual property conceived or made

by the applicable director in connection with the performance of their duties under the applicable agreement (i.e., a “work-made-for-hire”

Each of the agreements provide

that, during the term (which continues as long as the applicable director is serving as a director of the Company), the applicable director

is be entitled to indemnification and insurance coverage for officers’ liability, fiduciary liability and other liabilities arising

out of the applicable director’s position with the Company in any capacity, in an amount not less than the highest amount available

to any other director, and such coverage and protections, with respect to the various liabilities as to which the applicable director

has been customarily indemnified prior to termination of employment, shall continue for at least six years following the end of the term.

Any indemnification agreement entered into between the Company and the applicable director will continue in full force and effect in accordance

with its terms following the termination of the applicable agreement.

Each of the agreements contains

customary representations and warranties by the applicable director, relating to the agreement, and contains other customary miscellaneous

provisions relating to waivers, assignments, third party rights, survival of provisions following termination, severability, notices,

waiver of jury trials and other provisions.

Each of the agreements is

governed by and construed and enforced in accordance with the internal laws of the State of Delaware, and for all purposes shall be construed

in accordance with the laws of such state, without giving effect to the choice of law provisions of such state.

Each of the agreements

provide that all legal proceedings concerning the applicable agreement will be in the state and federal courts sitting in Santa Clara

County, California, provided that each agreement also includes a provision relating to any disputes being settled by arbitration.

Earned or Paid in Cash ($)

Other Compensation ($)

Lee joined the Company’s Board on September 26, 2025.

Neville resigned from the Company’s Board effective September 1, 2025.

Director Agreements

independent directors are parties to Independent Director Agreements with us.

Such agreements provide that each non-employee director

will be compensated as follows:

director will be paid the sum of $50,000 annually for director’s service as a director of the Company, to be paid $12,500 each

calendar quarter, payable within five business days of the end of each calendar quarter, and with such amount for any partial calendar

quarter being appropriately prorated.

director shall be paid $4,000 annually for service as a member of the Audit Committee and an additional sum of $3,000 annually for

service as the Chairman of the Audit Committee, with each of these payments to be paid quarterly in equal portions, within five business

days of the end of each calendar quarter, and with any amount for any partial calendar quarter being appropriately prorated.

Independent Director Agreements contain additional terms.

During the term of the applicable director agreement, the Company will reimburse

the applicable director for all reasonable out-of-pocket expenses incurred by the applicable director in attending any in-person meetings,

provided that the applicable director complies with the generally applicable policies, practices and procedures of the Company for submission

of expense reports, receipts or similar documentation of such expenses.

Any reimbursements for allocated expenses (as compared to out-of-pocket

expenses of the applicable director in excess of $500) must be approved in advance by the Company.

of the agreements contains customary confidentiality provisions, and customary provisions related to Company ownership of intellectual

property conceived or made by the applicable director in connection with the performance of their duties under the applicable agreement

(i.e., a “work-made-for-hire” provision).

of the agreements provide that, during the term (which continues as long as the applicable director is serving as a director of the Company),

the applicable director is be entitled to indemnification and insurance coverage for officers’ liability, fiduciary liability and

other liabilities arising out of the applicable director’s position with the Company in any capacity, in an amount not less than

the highest amount available to any other director, and such coverage and protections, with respect to the various liabilities as to

which the applicable director has been customarily indemnified prior to termination of employment, shall continue for at least six years

following the end of the term.

Any indemnification agreement entered into between the Company and the applicable director will continue

in full force and effect in accordance with its terms following the termination of the applicable agreement.

of the agreements contains customary representations and warranties by the applicable director, relating to the agreement, and contains

other customary miscellaneous provisions relating to waivers, assignments, third party rights, survival of provisions following termination,

severability, notices, waiver of jury trials and other provisions.

of the agreements is governed by and construed and enforced in accordance with the internal laws of the State of Delaware, and for all

purposes shall be construed in accordance with the laws of such state, without giving effect to the choice of law provisions of such

Each of the agreements provide that all legal proceedings concerning the applicable agreement will be in the state and federal

courts sitting in Santa Clara County, California, provided that each agreement also includes a provision relating to any disputes being

settled by arbitration.

Equity Incentive Plan

On August 1, 2023, the Board

approved, and proposed for stockholder approval, the 2023 Equity Incentive Plan (the “2023 Plan”).

The shareholders approved

the 2023 Plan at the Annual Shareholder’s meeting on September 29, 2023.

August 1, 2023, the Board approved, and proposed for stockholder approval, the 2023 Equity Incentive Plan (the “2023 Plan”).

The Company’s stockholders approved the 2023 Plan on September 29, 2023.

The 2023 Plan provides for various stock-based incentive

2 unchanged sentences

As of December 31, 2025, there were 1,776,865 shares available for award under the 2023 Plan.

Highlights of the 2023 Plan

are as follows:

The Board or a committee of the Board will administer the 2023 Plan.

The total number of shares of common stock authorized for issuance under the 2023 Plan is 2,000,000 shares, or approximately 9.60% of the common stock outstanding at the time of approval.

No non-employee director may be granted awards under the 2023 Plan during any calendar year if such awards would exceed a total value of $300,000 (calculated in accordance with the terms of the 2023 Plan).

The exercise price of options and SARs may not be less than the fair market value of the common stock on the date of grant.

In addition to other vesting requirements, the administrator may condition the vesting of awards on the achievement of specific performance targets.

Material features of the 2023

Plan are set forth below.

The 2023 Plan is effective

August 1, 2023 and will terminate on August 1, 2033, unless the Board terminates it earlier.

The purpose of the 2023 Plan

is to provide a means through with the Company and its subsidiaries may attract and retain key personnel, and to provide a means whereby

directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest

in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare of the Company and its subsidiaries

and aligning their interests with those of the Company’s stockholders.

of the 2023 Plan are as follows:

Board or a committee of the Board will administer the 2023 Plan.

total number of shares of common stock authorized for issuance under the 2023 Plan is 2,000,000 shares, or approximately 9.60% of

the common stock outstanding at the time of approval.

non-employee director may be granted awards under the 2023 Plan during any calendar year if such awards would exceed a total value

of $300,000 (calculated in accordance with the terms of the 2023 Plan).

exercise price of options and SARs may not be less than the fair market value of the common stock on the date of grant.

addition to other vesting requirements, the administrator may condition the vesting of awards on the achievement of specific performance

features of the 2023 Plan are set forth below.

2023 Plan was effective August 1, 2023 and will terminate on August 1, 2033, unless the Board terminates it earlier.

purpose of the 2023 Plan is to provide a means through with the Company and its subsidiaries may attract and retain key personnel, and

to provide a means whereby directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and

maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare

of the Company and its subsidiaries and aligning their interests with those of the Company’s stockholders.

Administration

Pursuant to the terms of the

2023 Plan, the Board or a committee of the Board shall administer the 2023 Plan.

The administrator will have the authority to, among other

things, (i) determine fair market value under the 2023 Plan;

(ii) select the service providers to whom awards may be granted;

(iii) determine

the number of shares to be covered by each award granted under the 2023 Plan;

(iv) approve forms of award agreements for use under the

(v) determine the terms and conditions, not inconsistent with the terms of the 2023 Plan, of any award, with such terms and

conditions including, but not being limited to, the exercise price, the time or times when awards may be exercised (which may be based

on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any

award or the shares relating thereto, based in each case on such factors as the administrator will determine;

(vi) determine whether an

award will be settled in shares, cash, other property or in any combination thereof;

(vii) construe and interpret the terms of the 2023

Plan and awards granted pursuant to the 2023 Plan;

(viii) prescribe, amend and rescind rules and regulations relating to the 2023 Plan,

including rules and regulations relating to sub-plans;

to the terms of the 2023 Plan, the Board or a committee of the Board shall administer the 2023 Plan.

The administrator will have the

authority to, among other things, (i) determine fair market value under the 2023 Plan;

(ii) select the service providers to whom awards

may be granted;

(iii) determine the number of shares to be covered by each award granted under the 2023 Plan;

(iv) approve forms of award

agreements for use under the 2023 Plan;

(v) determine the terms and conditions, not inconsistent with the terms of the 2023 Plan, of

any award, with such terms and conditions including, but not being limited to, the exercise price, the time or times when awards may

be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction

or limitation regarding any award or the shares relating thereto, based in each case on such factors as the administrator will determine;

(vi) determine whether an award will be settled in shares, cash, other property or in any combination thereof;

(vii) construe and interpret

the terms of the 2023 Plan and awards granted pursuant to the 2023 Plan;

(viii) prescribe, amend and rescind rules and regulations relating

to the 2023 Plan, including rules and regulations relating to sub-plans;

(ix) modify or amend awards;

(x) correct any defect, supply any omission or reconcile

any inconsistency in the 2023 Plan or any award agreement and make all other determinations and take such other actions with respect to

the 2023 Plan or any award as the administrator may deem advisable to the extent not inconsistent with the provisions of the 2023 Plan

or applicable law;

(x) correct any defect, supply

any omission or reconcile any inconsistency in the 2023 Plan or any award agreement and make all other determinations and take such other

actions with respect to the 2023 Plan or any award as the administrator may deem advisable to the extent not inconsistent with the provisions

of the 2023 Plan or applicable law;

and (xi) make all other determinations deemed necessary or advisable for administering the 2023 Plan.

The administrator will have

the discretion to select particular performance targets in connection with awards under the 2023 Plan.

Employees, directors and consultants

(except those performing services in connection with the offer or sale of the Company’s securities in a capital raising transaction,

or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiaries will be eligible to receive

awards under the 2023 Plan.

administrator will have the discretion to select particular performance targets in connection with awards under the 2023 Plan.

directors and consultants (except those performing services in connection with the offer or sale of the Company’s securities in

a capital raising transaction, or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiaries

will be eligible to receive awards under the 2023 Plan.

ISOs may only be granted to employees.

The administrator may, from

time to time, grant awards under the 2023 Plan to one or more eligible participants.

All awards will vest and become exercisable in such

manner and on such date or dates or upon such event or events as determined by the administrator and as set forth in any applicable award

agreement, including, without limitation, attainment of performance targets, consistent with the terms of the 2023 Plan.

Maximum Shares Available

Subject to the provisions

of the 2023 Plan, the maximum aggregate number of shares that may be subject to awards and sold under the 2023 Plan is 2,000,000.

shares may be authorized but unissued, or reacquired common stock.

If an award expires or becomes unexercisable without having been exercised

in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, RSUs, performance units or performance

shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for awards other than options

or SARs, the forfeited or repurchased shares) which were subject thereto will become available for future grant or sale under the 2023

Plan (unless the 2023 Plan has terminated).

In the event that any dividend

or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off,

combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure of the Company

affecting the Company’s common stock occurs, the administrator, in order to prevent diminution or enlargement of the benefits or

potential benefits intended to be made available under the 2023 Plan, will adjust the number and class of shares of stock that may be

delivered under the 2023 Plan and/or the number, class, and price of shares of stock covered by each outstanding award, and the numerical

share limits provided in the 2023 Plan.

Stock Options

The administrator may grant

options to purchase shares of common stock under the 2023 Plan to eligible participants for such numbers of shares and having such terms

as the administrator designates and consistent with the 2023 Plan.

However, ISOs may only be granted to employees of the Company or its

subsidiaries.

The administrator will also determine the type of option granted (e.g., ISO) or a combination of various types of options.

administrator may, from time to time, grant awards under the 2023 Plan to one or more eligible participants.

All awards will vest and

become exercisable in such manner and on such date or dates or upon such event or events as determined by the administrator and as set

forth in any applicable award agreement, including, without limitation, attainment of performance targets, consistent with the terms

of the 2023 Plan.

Shares Available

to the provisions of the 2023 Plan, the maximum aggregate number of shares that may be subject to awards and sold under the 2023 Plan

is 2,000,000.

The shares may be authorized but unissued, or reacquired common stock.

If an award expires or becomes unexercisable without

having been exercised in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, RSUs, performance

units or performance shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for

awards other than options or SARs, the forfeited or repurchased shares) which were subject thereto will become available for future grant

or sale under the 2023 Plan (unless the 2023 Plan has terminated).

the event that any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,

split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate

structure of the Company affecting the Company’s common stock occurs, the administrator, in order to prevent diminution or enlargement

of the benefits or potential benefits intended to be made available under the 2023 Plan, will adjust the number and class of shares of

stock that may be delivered under the 2023 Plan and/or the number, class, and price of shares of stock covered by each outstanding award,

and the numerical share limits provided in the 2023 Plan.

administrator may grant options to purchase shares of common stock under the 2023 Plan to eligible participants for such numbers of shares

and having such terms as the administrator designates and consistent with the 2023 Plan.

However, ISOs may only be granted to employees

of the Company or its subsidiaries.

The administrator will also determine the type of option granted (e.g., ISO) or a combination of

various types of options.

Each option granted under the 2023 Plan will be evidenced by an award agreement.

The exercise price for an

option may not be less than 100% of the fair market value of the Company’s common stock on the date the option is granted;

however, that in the case of an ISO granted to an employee who, at the time of the grant, owns stock representing more than 10% of the

voting power of all classes of stock of the Company or any subsidiary, the exercise price will be no less than 110% of the fair market

value on the grant date.

The term of each option will

be stated in the applicable award agreement.

In the case of an ISO, the term will be no more than 10 years from the date of grant.

the case of an ISO granted to a participant who, at the time the ISO is granted, owns stock representing more than 10% of the total combined

voting power of all classes of stock of the Company or any parent or subsidiary, the term of the ISO will be five years from the date

of grant or such shorter term as may be provided in the award agreement.

Stock Appreciation Rights

The administrator may grant

SARs under the 2023 Plan to eligible participants having such terms as the administrator designates and consistent with the 2023 Plan.

exercise price for an option may not be less than 100% of the fair market value of the Company’s common stock on the date the option

provided, however, that in the case of an ISO granted to an employee who, at the time of the grant, owns stock representing

more than 10% of the voting power of all classes of stock of the Company or any subsidiary, the exercise price will be no less than 110%

of the fair market value on the grant date.

term of each option will be stated in the applicable award agreement.

In the case of an ISO, the term will be no more than 10 years from

the date of grant.

In the case of an ISO granted to a participant who, at the time the ISO is granted, owns stock representing more than

10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary, the term of the ISO will be

five years from the date of grant or such shorter term as may be provided in the award agreement.

Appreciation Rights

administrator may grant SARs under the 2023 Plan to eligible participants having such terms as the administrator designates and consistent

with the 2023 Plan.

Each SAR granted under the 2023 Plan will be evidenced by a SAR agreement.

The exercise price for a SAR may not be less than 100% of the

fair market value of the Company’s common stock on the date the SAR is granted.

Restricted Stock

The administrator may grant

shares of restricted stock under the 2023 Plan to eligible participants in such amounts and upon such terms as the administrator determines

The exercise price for a SAR may not be

less than 100% of the fair market value of the Company’s common stock on the date the SAR is granted.

administrator may grant shares of restricted stock under the 2023 Plan to eligible participants in such amounts and upon such terms as

the administrator determines and consistent with the 2023 Plan.

as provided in the 2023 Plan or as the administrator determines, shares of restricted stock may not be sold, transferred, pledged, assigned,

or otherwise alienated or hypothecated until the end of the applicable period of restriction.

The administrator, in its sole discretion,

may impose such other restrictions on shares of restricted stock as it may deem advisable or appropriate.

Except as otherwise provided

in the 2023 Plan, shares of restricted stock will be released from escrow as soon as practicable after the last day of the period of

restriction or at such other time as the administrator may determine.

The administrator, in its discretion, may accelerate the time at

which any restrictions will lapse or be removed.

the period of restriction, grantees holding shares of restricted stock granted under the 2023 Plan may exercise full voting rights with

respect to those shares, unless the administrator determines otherwise.

During the period of restriction, grantees holding shares of

restricted stock will be entitled to receive all dividends and other distributions paid with respect to such shares, unless the administrator

provides otherwise.

If any such dividends or distributions are paid in shares of common stock, the shares will be subject to the same

restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid.

the date set forth in the award agreement, the restricted stock for which restrictions have not lapsed will revert to the Company and

again will become available for grant under the 2023 Plan.

administrator may grant RSUs under the 2023 Plan to eligible participants in such amounts and upon such terms as the administrator determines

and consistent with the 2023 Plan.

Except as provided in the

2023 Plan or as the administrator determines, shares of restricted stock may not be sold, transferred, pledged, assigned, or otherwise

alienated or hypothecated until the end of the applicable period of restriction.

The administrator, in its sole discretion, may impose

such other restrictions on shares of restricted stock as it may deem advisable or appropriate.

Except as otherwise provided in the 2023

Plan, shares of restricted stock will be released from escrow as soon as practicable after the last day of the period of restriction or

at such other time as the administrator may determine.

The administrator, in its discretion, may accelerate the time at which any restrictions

will lapse or be removed.

During the period of restriction,

grantees holding shares of restricted stock granted under the 2023 Plan may exercise full voting rights with respect to those shares,

unless the administrator determines otherwise.

During the period of restriction, grantees holding shares of restricted stock will be entitled

to receive all dividends and other distributions paid with respect to such shares, unless the administrator provides otherwise.

such dividends or distributions are paid in shares of common stock, the shares will be subject to the same restrictions on transferability

and forfeitability as the shares of restricted stock with respect to which they were paid.

On the date set forth in the

award agreement, the restricted stock for which restrictions have not lapsed will revert to the Company and again will become available

for grant under the 2023 Plan.

Restricted Stock Units

The administrator may grant

RSUs under the 2023 Plan to eligible participants in such amounts and upon such terms as the administrator determines and consistent with

the 2023 Plan.

The administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are

met, will determine the number of RSUs that will be paid out to the grantee.

The administrator may set vesting criteria based upon the

achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service),

applicable federal or state securities laws, or any other basis determined by the administrator in its discretion.

Upon meeting the applicable

vesting criteria, the grantee will be entitled to receive a payout as determined by the administrator or as set forth in the applicable

award agreement.

Notwithstanding the foregoing, at any time after the grant of RSUs, the administrator, in its sole discretion, may reduce

or waive any vesting criteria that must be met to receive a payout.

Payment of earned RSUs will be made as soon as practicable after the

date(s) determined by the administrator and set forth in the award agreement.

The administrator, in its sole discretion, may settle earned

RSUs in cash, shares of common stock, or a combination of both.

Grantees will have no voting

rights with respect to shares of common stock represented by RSUs until the date of the issuance of such shares.

However, the administrator,

in its discretion, may provide in the applicable award agreement that the grantee will be entitled to dividend equivalent rights with

respect to the payment of cash dividends on common stock during the period beginning on the date such award is granted and ending, with

respect to each share subject to the award, on the earlier of the date the award is settled or the date on which it is terminated.

equivalent rights, if any, shall be paid by crediting the grantee with a cash amount or with additional whole RSUs as of the date of payment

of such cash dividends on common stock, as determined by the administrator.

The number of additional RSUs (rounded to the nearest whole

number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with

respect to the number of shares of common stock represented by the RSUs previously credited to the grantee by (b) the fair market value

per share of common stock on such date.

Such cash amount or additional RSUs will be subject to the same terms and conditions and will

be settled in the same manner and at the same time as the RSUs originally subject to the RSU award.

In the event of a dividend or distribution

paid in shares of common stock or other property or any other adjustment made upon a change in the capital structure of the Company as

provided in the 2023 Plan, appropriate adjustments will be made in the grantee’s RSU award so that it represents the right to receive

upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends)

to which the grantee would be entitled by reason of the shares of common stock issuable upon settlement of the award, and all such new,

substituted or additional securities or other property shall be immediately subject to the same vesting conditions as are applicable to

On the date set forth in the

award agreement, all unearned RSUs will be forfeited to the Company.

Performance Units and Performance Shares

Performance awards may be

granted to eligible participants at any time and from time to time, as will be determined by the Administrator, in its sole discretion.

The administrator will set vesting criteria in its discretion, which, depending on the extent to which

the criteria are met, will determine the number of RSUs that will be paid out to the grantee.

The administrator may set vesting criteria

based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued

employment or service), applicable federal or state securities laws, or any other basis determined by the administrator in its discretion.

meeting the applicable vesting criteria, the grantee will be entitled to receive a payout as determined by the administrator or as set

forth in the applicable award agreement.

Notwithstanding the foregoing, at any time after the grant of RSUs, the administrator, in its

sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

Payment of earned RSUs will be made as

soon as practicable after the date(s) determined by the administrator and set forth in the award agreement.

The administrator, in its

sole discretion, may settle earned RSUs in cash, shares of common stock, or a combination of both.

will have no voting rights with respect to shares of common stock represented by RSUs until the date of the issuance of such shares.

However, the administrator, in its discretion, may provide in the applicable award agreement that the grantee will be entitled to dividend

equivalent rights with respect to the payment of cash dividends on common stock during the period beginning on the date such award is

granted and ending, with respect to each share subject to the award, on the earlier of the date the award is settled or the date on which

it is terminated.

Dividend equivalent rights, if any, shall be paid by crediting the grantee with a cash amount or with additional whole

RSUs as of the date of payment of such cash dividends on common stock, as determined by the administrator.

The number of additional RSUs

(rounded to the nearest whole number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on

the dividend payment date with respect to the number of shares of common stock represented by the RSUs previously credited to the grantee

by (b) the fair market value per share of common stock on such date.

Such cash amount or additional RSUs will be subject to the same

terms and conditions and will be settled in the same manner and at the same time as the RSUs originally subject to the RSU award.

the event of a dividend or distribution paid in shares of common stock or other property or any other adjustment made upon a change in

the capital structure of the Company as provided in the 2023 Plan, appropriate adjustments will be made in the grantee’s RSU award

so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other

than regular, periodic cash dividends) to which the grantee would be entitled by reason of the shares of common stock issuable upon settlement

of the award, and all such new, substituted or additional securities or other property shall be immediately subject to the same vesting

conditions as are applicable to the award.

the date set forth in the award agreement, all unearned RSUs will be forfeited to the Company.

Units and Performance Shares

awards may be granted to eligible participants at any time and from time to time, as will be determined by the Administrator, in its

sole discretion.

Each performance unit will have an initial value that is established by the administrator on or before the date of grant.

Each performance

share will have an initial value equal to the fair market value of a share of common stock on the date of grant.

The administrator will set

performance objectives or other vesting provisions in its discretion which, depending on the extent to which they are met, will determine

the number or value of performance units/shares that will be paid out to the grantees.

Each performance award will be evidenced by an

award agreement that will specify the performance period, and such other terms and conditions as the administrator, in its sole discretion,

will determine.

The administrator may set

performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited

to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the administrator

in its discretion (“Performance Goals”).

Performance Goals shall be established by the administrator on the basis of targets

to be attained (“Performance Targets”) with respect to one or more measures of business or financial performance (each, a

“Performance Measure”), subject to the terms of the 2023 Plan.

Performance measures may be

based upon one or more of the following, as determined by the administrator:

Each performance share will have an initial value equal to the fair market value of a share of common stock on the date of grant.

administrator will set performance objectives or other vesting provisions in its discretion which, depending on the extent to which they

are met, will determine the number or value of performance units/shares that will be paid out to the grantees.

Each performance award

will be evidenced by an award agreement that will specify the performance period, and such other terms and conditions as the administrator,

in its sole discretion, will determine.

administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals

(including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined

by the administrator in its discretion.

Performance goals shall be established by the administrator on the basis of targets to be attained

with respect to one or more measures of business or financial performance, subject to the terms of the 2023 Plan.

measures may be based upon one or more of the following, as determined by the administrator:

(3) expenses;

3 unchanged sentences

(7) earnings before any one or more of:

stock-based compensation expense, interest, taxes, depreciation

and amortization;

stock-based compensation expense, interest,

taxes, depreciation and amortization;

(8) pre-tax profit;

6 unchanged sentences

(15) stock price;

(16) earnings per share;

(16) earnings

(17) return on stockholder equity;

2 unchanged sentences

(20) return on investment;

(21) total stockholder return;

(21) total stockholder

(22) employee satisfaction;

3 unchanged sentences

(26) product development;

(27) research

and development expenses;

(27) research and development expenses;

(28) completion of an identified special project;

and (29) completion of a joint venture or other corporate

After the applicable performance

period has ended, the holder of performance units/shares will be entitled to receive a payout of the number of performance units/shares

earned by the participant over the performance period, to be determined as a function of the extent to which the corresponding performance

objectives or other vesting provisions have been achieved.

After the grant of a performance unit/share, the administrator, in its sole

discretion, may reduce or waive any performance objectives or other vesting provisions for such performance unit/share.

Payment of earned performance

units or performance shares will be made as soon as practicable after the expiration of the applicable performance period.

The administrator,

in its sole discretion, may pay earned performance units/shares in the form of cash, in shares of common stock (which have an aggregate

fair market value equal to the value of the earned performance units/shares at the close of the applicable performance period) or in a

combination thereof.

On the date set forth in the

award agreement, all unearned or unvested performance units or performance shares will be forfeited to the Company, and again will be

available for grant under the 2023 Plan.

Restricted stock and RSUs

granted to officers and employees may be granted with the intent that the award satisfy the “Performance-Based Exception”

and (29) completion of a joint venture or other

corporate transaction.

the applicable performance period has ended, the holder of performance units/shares will be entitled to receive a payout of the number

of performance units/shares earned by the participant over the performance period, to be determined as a function of the extent to which

the corresponding performance objectives or other vesting provisions have been achieved.

After the grant of a performance unit/share,

the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance

of earned performance units or performance shares will be made as soon as practicable after the expiration of the applicable performance

The administrator, in its sole discretion, may pay earned performance units/shares in the form of cash, in shares of common stock

(which have an aggregate fair market value equal to the value of the earned performance units/shares at the close of the applicable performance

period) or in a combination thereof.

the date set forth in the award agreement, all unearned or unvested performance units or performance shares will be forfeited to the

Company, and again will be available for grant under the 2023 Plan.

stock and RSUs granted to officers and employees may be granted with the intent that the award satisfy the “Performance-Based Exception”

(any such award intended to satisfy the Performance-Based Exception, a “Qualified Performance-Based Award”).

10 unchanged sentences

Exception, the performance measure(s) applicable to the Qualified Performance-Based Award and specific performance formula, goal or goals

(“targets”) must be established and approved by the administrator during the first 90 days of the applicable performance period

(and, in the case of performance periods of less than one year, in no event after 25% or more of the performance period has elapsed) and

while performance relating to such target(s) remains substantially uncertain within the meaning of Section 162(m) of the Code.

Participants shall have no

voting rights with respect to shares of common stock represented by performance share awards until the date of the issuance of such shares

of common stock, if any.

However, the administrator, in its discretion, may provide in the award agreement evidencing any performance

share award that the participant shall be entitled to dividend equivalent rights with respect to the payment of cash dividends on common

stock during the period beginning on the date the award is granted and ending, with respect to each share subject to the award, on the

earlier of the date on which the performance shares are settled or the date on which they are forfeited.

Such dividend equivalent rights,

if any, shall be credited to the participant either in cash or in the form of additional whole performance shares as of the date of payment

of such cash dividends on common stock, as determined by the administrator and as provided in the 2023 Plan.

Dividend equivalent rights

shall not be paid with respect to performance units.

Other Equity-Based Awards and Other Cash-Based

The administrator may grant

other equity-based awards and other cash-based awards under the 2023 Plan to eligible persons, pursuant to the terms of the 2023 Plan.

Amendment and Termination

The administrator may amend,

alter, suspend or terminate the 2023 Plan.

However, the Company will obtain stockholder approval of any amendment to the extent necessary

and desirable to comply with applicable laws.

Federal Income Tax Effects of the 2023 Plan

The federal income tax consequences

applicable to the Company in connection with ISOs, NQSOs, SARs, restricted stock, RSUs and performance awards are complex and depend,

in large part, on the surrounding facts and circumstances.

A participant should consult with his or her tax advisor regarding the taxation

of awards under the Plan.

Under current federal income tax laws, however, a participant will generally recognize income with respect to

grants of stock options, SARs, restricted stock, RSUs and performance awards as described below.

Stock Options

Stock options may be granted

in the form of ISOs or NQSOs.

(“targets”) must be established and approved by the administrator during the first 90 days of the applicable performance

period (and, in the case of performance periods of less than one year, in no event after 25% or more of the performance period has elapsed)

and while performance relating to such target(s) remains substantially uncertain within the meaning of Section 162(m) of the Code.

shall have no voting rights with respect to shares of common stock represented by performance share awards until the date of the issuance

of such shares of common stock, if any.

However, the administrator, in its discretion, may provide in the award agreement evidencing

any performance share award that the participant shall be entitled to dividend equivalent rights with respect to the payment of cash

dividends on common stock during the period beginning on the date the award is granted and ending, with respect to each share subject

to the award, on the earlier of the date on which the performance shares are settled or the date on which they are forfeited.

Such dividend

equivalent rights, if any, shall be credited to the participant either in cash or in the form of additional whole performance shares

as of the date of payment of such cash dividends on common stock, as determined by the administrator and as provided in the 2023 Plan.

Dividend equivalent rights shall not be paid with respect to performance units.

Equity-Based Awards and Other Cash-Based Awards

administrator may grant other equity-based awards and other cash-based awards under the 2023 Plan to eligible persons, pursuant to the

terms of the 2023 Plan.

and Termination

administrator may amend, alter, suspend or terminate the 2023 Plan.

However, the Company will obtain stockholder approval of any amendment

to the extent necessary and desirable to comply with applicable laws.

Income Tax Effects of the 2023 Plan

federal income tax consequences applicable to the Company in connection with ISOs, NQSOs, SARs, restricted stock, RSUs and performance

awards are complex and depend, in large part, on the surrounding facts and circumstances.

A participant should consult with his or her

tax advisor regarding the taxation of awards under the Plan.

Under current federal income tax laws, however, a participant will generally

recognize income with respect to grants of stock options, SARs, restricted stock, RSUs and performance awards as described below.

options may be granted in the form of ISOs or NQSOs.

ISOs are eligible for favorable tax treatment under the Code.

To meet the Code requirements, the maximum

value of ISOs that first become exercisable in any one year (determined as of the dates of grants of the ISOs) is limited to $100,000.

To meet the Code requirements,

the maximum value of ISOs that first become exercisable in any one year (determined as of the dates of grants of the ISOs) is limited

Under the Code, persons do not realize compensation income upon the grant of an ISO or NQSO.

At the time of exercise of a NQSO, the holder

realizes compensation income in the amount of the difference between the grant price and the fair market value of the Company stock on

the date of exercise multiplied by the number of shares for which the option is exercised.

At the time of exercise of an ISO, no compensation

income, however, is recognized but the difference between the grant price and the fair market value of the Company’s common stock

on the date of exercise multiplied by the number of shares for which the option is exercised is an item of tax preference which may require

the payment of alternative minimum tax.

The tax basis for determining capital gain or loss from the sale of stock acquired pursuant to

a NQSO is the fair market value of the stock or the date of exercise.

If the shares acquired on exercise of an ISO are held for at least

two years after grant of the option and one year after exercise, the excess of the amount realized on sale over the exercise price is

taxed as capital gains.

If the shares acquired on exercise of an ISO are disposed of, including disposition by gift, within two years

after grant or one year of exercise, the holder realizes compensation income equal to the excess of the fair market value of shares on

the date of exercise over the option price.

At the time of exercise of

a NQSO, the holder realizes compensation income in the amount of the difference between the grant price and the fair market value of

the Company stock on the date of exercise multiplied by the number of shares for which the option is exercised.

At the time of exercise

of an ISO, no compensation income, however, is recognized but the difference between the grant price and the fair market value of the

Company’s common stock on the date of exercise multiplied by the number of shares for which the option is exercised is an item

of tax preference which may require the payment of alternative minimum tax.

The tax basis for determining capital gain or loss from the

sale of stock acquired pursuant to a NQSO is the fair market value of the stock or the date of exercise.

If the shares acquired on exercise

of an ISO are held for at least two years after grant of the option and one year after exercise, the excess of the amount realized on

sale over the exercise price is taxed as capital gains.

If the shares acquired on exercise of an ISO are disposed of, including disposition

by gift, within two years after grant or one year of exercise, the holder realizes compensation income equal to the excess of the fair

market value of shares on the date of exercise over the option price.

Additional amounts realized are taxed as capital gains.

The Company generally is entitled

to a deduction under the Code at the time and equal to the amount of compensation income realized by the holder of an option under the

Compensation income recognized

by the exercise of NQSOs is subject to Federal Insurance Contributions Act (“FICA”) and Medicare taxes when the optionee is

an employer and self-employment tax when the optionee is a director.

Compensation income realized upon the premature disposition of stock

acquired pursuant to an ISO is not subject to FICA and Medicare taxes.

SARs and RSUs

SARs are taxed on the date

of exercise and RSUs are taxed on the date of vesting.

A participant is taxed on the amount he or she is paid upon exercise of an SAR

or vesting of an RSU.

generally is entitled to a deduction under the Code at the time and equal to the amount of compensation income realized by the holder

of an option under the 2023 Plan.

income recognized by the exercise of NQSOs is subject to Federal Insurance Contributions Act (“FICA”) and Medicare taxes

when the optionee is an employer and self-employment tax when the optionee is a director.

Compensation income realized upon the premature

disposition of stock acquired pursuant to an ISO is not subject to FICA and Medicare taxes.

are taxed on the date of exercise and RSUs are taxed on the date of vesting.

A participant is taxed on the amount he or she is paid upon

exercise of an SAR or vesting of an RSU.

The Company accrues a corresponding deduction.

The amount taxed is also subject to FICA and Medicare taxes in the

case of an employee and self-employment tax in the case of a director.

Restricted Stock

Participants recognize as

taxable income the fair market value of restricted stock on the date the restriction period ends.

The amount taxed is subject to FICA

and Medicare taxes in the case of an employee and self-employment tax in the case of a director.

The Company is entitled to a corresponding

tax deduction at the same time.

Dividends paid during the restricted period are taxable compensation/income to the participant and are

deductible by the Company.

The value of the stock on the date the restriction period ends becomes the participant’s tax basis for

determining subsequent capital gain or loss on the sale of the stock.

A participant may elect to have the fair market value of restricted

stock taxed to him or her at the time of grant.

In this event, the participant recognizes no income when the restrictions lapse.

The participant’s

tax basis in the stock, for determining capital gain or loss upon the subsequent sale of the stock, is the fair market value of the stock

on the date of grant.

In this event, the Company accrues a tax deduction equal to the amount of income recognized by the participant on

the grant date, and the participant does not accrue a tax deduction or benefit in the event the stock is subsequently forfeited.

Performance Awards

Cash payments pursuant to

performance awards are taxable as compensatory income to a participant when it is paid and the Company accrues a corresponding income

tax deduction in this amount.

The amount taxed is also subject to FICA and

Medicare taxes in the case of an employee and self-employment tax in the case of a director.

recognize as taxable income the fair market value of restricted stock on the date the restriction period ends.

The amount taxed is subject

to FICA and Medicare taxes in the case of an employee and self-employment tax in the case of a director.

The Company is entitled to a

corresponding tax deduction at the same time.

Dividends paid during the restricted period are taxable compensation/income to the participant

and are deductible by the Company.

The value of the stock on the date the restriction period ends becomes the participant’s tax

basis for determining subsequent capital gain or loss on the sale of the stock.

A participant may elect to have the fair market value

of restricted stock taxed to him or her at the time of grant.

In this event, the participant recognizes no income when the restrictions

The participant’s tax basis in the stock, for determining capital gain or loss upon the subsequent sale of the stock, is

the fair market value of the stock on the date of grant.

In this event, the Company accrues a tax deduction equal to the amount of income

recognized by the participant on the grant date, and the participant does not accrue a tax deduction or benefit in the event the stock

is subsequently forfeited.

payments pursuant to performance awards are taxable as compensatory income to a participant when it is paid and the Company accrues a

corresponding income tax deduction in this amount.

The amount taxed is subject to FICA and Medicare taxes.

Code Section 162(m)

Section 162(m) of the Code

limits the deductibility by the Company of compensation paid to the CEO and the other four most highly compensated executives.

162(m) of the Code provides an exception to this deduction limitation for certain “qualified performance-based compensation.”

Payments or grants under the 2023 Plan are intended to qualify as “qualified performance-based compensation” under the Code

and applicable regulations.

Code Section 280G and 4999

A 20% excise tax is imposed

under Code Section 4999 on participants who receive certain payments in connection with a change of control of the Company and the Company

cannot deduct such payments.

It is possible that the value of accelerated vesting and lapse of restrictions on 2023 Plan awards could

constitute change of control payments and that (i) the value of the acceleration could be subject to the excise tax, (ii) this could cause

other Company change of control payments to be subject to the tax, and (iii) in this event, the Company would not be able to deduct these

items for income tax purposes.

Section 162(m)

162(m) of the Code limits the deductibility by the Company of compensation paid to the CEO and the other four most highly compensated

Section 162(m) of the Code provides an exception to this deduction limitation for certain “qualified performance-based

compensation.” Payments or grants under the 2023 Plan are intended to qualify as “qualified performance-based compensation”

under the Code and applicable regulations.

Section 280G and 4999

20% excise tax is imposed under Code Section 4999 on participants who receive certain payments in connection with a change of control

of the Company and the Company cannot deduct such payments.

It is possible that the value of accelerated vesting and lapse of restrictions

on 2023 Plan awards could constitute change of control payments and that (i) the value of the acceleration could be subject to the excise

tax, (ii) this could cause other Company change of control payments to be subject to the tax, and (iii) in this event, the Company would

not be able to deduct these items for income tax purposes.

Equity Incentive Plan

The Board of Directors and

stockholders of the Company approved the 2021 Equity Incentive Plan (the “2021 Plan”) on August 6, 2021.

Under the 2021 Plan,

2,400,000 shares of common stock are authorized for issuance to employees, directors and independent contractors (except those performing

services in connection with the offer or sale of the Company’s securities in a capital raising transaction, or promoting or maintaining

a market for the Company’s securities) of the Company or its subsidiary.

The 2021 Plan authorizes equity-based and cash-based incentives

for participants.

There were 4,330 shares available for award as of December 31, 2024 under the 2021 Plan.

The purpose of 2021 Plan is

to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to

attract, motivate, retain and reward selected employees and other eligible persons.

The Board may, at any time, terminate or, from time

to time, amend, modify or suspend this 2021 Plan, in whole or in part.

To the extent then required by applicable law or any applicable

stock exchange or required under the Internal Revenue Code of 1986, as amended (the “Code”), to preserve the intended tax

consequences of the 2021 Plan, or deemed necessary or advisable by the Board, the 2021 Plan and any amendment to the 2021 Plan shall be

subject to stockholder approval.

Unless earlier terminated by the Board, the 2021 Plan will terminate 10 years from the date of adoption.

Authorized Shares

A total of 2,400,000 shares

of the Company’s common stock are authorized for issuance pursuant to the 2021 Plan.

Subject to adjustment as provided in the 2021

Plan, the maximum aggregate number of shares that may be issued under the 2021 Plan will be cumulatively increased on January 1, 2022

and on each subsequent January 1, by a number of shares equal to the smaller of (i) 3% of the number of shares of common stock issued

and outstanding on the immediately preceding December 31, or (ii) an amount determined by the Board.

Additionally, if any award

issued pursuant to the 2021 Plan expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an

exchange program, as provided in the 2021 Plan, or, with respect to restricted stock, restricted stock units (“RSUs”), performance

units or performance shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for

awards other than stock options or stock appreciation rights the forfeited or repurchased shares) which were subject thereto will become

available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).

With respect to stock appreciation rights,

only shares actually issued pursuant to a stock appreciation right will cease to be available under the 2021 Plan;

all remaining shares

under stock appreciation rights will remain available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).

Shares that have actually been issued under the 2021 Plan under any award will not be returned to the 2021 Plan and will not become available

for future distribution under the 2021 Plan;

provided, however, that if shares issued pursuant to awards of restricted stock, restricted

stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company due to the failure

to vest, such shares will become available for future grant under the 2021 Plan.

Shares used to pay the exercise price of an award or

to satisfy the tax withholdings related to an award will become available for future grant or sale under the 2021 Plan.

To the extent

an award under the 2021 Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares

available for issuance under the 2021 Plan.

Notwithstanding the foregoing

and, subject to adjustment as provided in the 2021 Plan, the maximum number of shares that may be issued upon the exercise of incentive

stock options will equal the aggregate share number stated above, plus, to the extent allowable under Section 422 of the Code and regulations

promulgated thereunder, any shares that become available for issuance under the 2021 Plan in accordance with the foregoing.

Plan Administration

The Board or one or more committees

appointed by the Board will administer the 2021 Plan.

In addition, if the Company determines it is desirable to qualify transactions under

the 2021 Plan as exempt under Rule 16b-3 of the Exchange Act, such transactions will be structured with the intent that they satisfy the

requirements for exemption under Rule 16b-3.

Subject to the provisions of the 2021 Plan, the administrator has the power to administer

the 2021 Plan and make all determinations deemed necessary or advisable for administering the 2021 Plan, including the power to determine

the fair market value of the Company’s common stock, select the service providers to whom awards may be granted, determine the number

of shares covered by each award, approve forms of award agreements for use under the 2021 Plan, determine the terms and conditions of

awards (including the exercise price, the time or times at which the awards may be exercised, any vesting acceleration or waiver or forfeiture

restrictions and any restriction or limitation regarding any award or the shares relating thereto), construe and interpret the terms of

the 2021 Plan and awards granted under it, prescribe, amend and rescind rules relating to the 2021 Plan, including creating sub-plans

and modify or amend each award, including the discretionary authority to extend the post-termination exercisability period of awards (provided

that no option or stock appreciation right will be extended past its original maximum term), and to allow a participant to defer the receipt

of payment of cash or the delivery of shares that would otherwise be due to such participant under an award.

The administrator also has

the authority to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity

selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered or cancelled in exchange

for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type or cash, or

by which the exercise price of an outstanding award is increased or reduced.

The administrator’s decisions, interpretations and

other actions are final and binding on all participants.

Awards under the 2021 Plan,

other than incentive stock options, may be granted to employees (including officers) of the Company or a subsidiary, members of the Company’s

Board, or consultants engaged to render bona fide services to the Company or a subsidiary.

Incentive stock options may be granted only

to employees of the Company or a subsidiary.

Stock Options

Stock options may be granted

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

Under the 2021 Plan, 2,400,000 shares of common stock are authorized for issuance to employees, directors and independent contractors

(except those performing services in connection with the offer or sale of the Company’s securities in a capital raising transaction,

or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiary.

The 2021 Plan authorizes equity-based

and cash-based incentives for participants.

There were 4,330 shares available for award as of December 31, 2025 under the

purpose of 2021 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through

the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.

The Board may, at any time,

terminate or, from time to time, amend, modify or suspend this 2021 Plan, in whole or in part.

To the extent then required by applicable

law or any applicable stock exchange or required under the Code to preserve the intended tax consequences of the 2021 Plan, or deemed

necessary or advisable by the Board, the 2021 Plan and any amendment to the 2021 Plan shall be subject to stockholder approval.

earlier terminated by the Board, the 2021 Plan will terminate 10 years from the date of adoption.

total of 2,400,000 shares of the Company’s common stock were initially authorized for issuance pursuant to the 2021 Plan.

to adjustment as provided in the 2021 Plan, the maximum aggregate number of shares that may be issued under the 2021 Plan will be cumulatively

increased on January 1, 2022 and on each subsequent January 1, by a number of shares equal to the smaller of (i) 3% of the number of

shares of common stock issued and outstanding on the immediately preceding December 31, or (ii) an amount determined by the Board.

Additionally,

if any award issued pursuant to the 2021 Plan expires or becomes unexercisable without having been exercised in full, is surrendered

pursuant to an exchange program, as provided in the 2021 Plan, or, with respect to restricted stock, RSUs, performance units or performance

shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for awards other than stock

options or stock appreciation rights the forfeited or repurchased shares) which were subject thereto will become available for future

grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).

With respect to stock appreciation rights, only shares actually

issued pursuant to a stock appreciation right will cease to be available under the 2021 Plan;

all remaining shares under stock appreciation

rights will remain available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).

Shares that have actually

been issued under the 2021 Plan under any award will not be returned to the 2021 Plan and will not become available for future distribution

under the 2021 Plan;

The exercise price of options granted under the 2021 Plan generally must at least be equal to the fair market value

of the Company’s common stock on the date of grant.

The term of each option will be as stated in the applicable award agreement;

provided, however, that if shares issued pursuant to awards of restricted stock, restricted stock units, performance

shares or performance units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such shares will

become available for future grant under the 2021 Plan.

Shares used to pay the exercise price of an award or to satisfy the tax withholdings

related to an award will become available for future grant or sale under the 2021 Plan.

To the extent an award under the 2021 Plan is

paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under

the 2021 Plan.

Notwithstanding

the foregoing and, subject to adjustment as provided in the 2021 Plan, the maximum number of shares that may be issued upon the exercise

of incentive stock options will equal the aggregate share number stated above, plus, to the extent allowable under Section 422 of the

Code and regulations promulgated thereunder, any shares that become available for issuance under the 2021 Plan in accordance with the

Administration

Board or one or more committees appointed by the Board will administer the 2021 Plan.

In addition, if the Company determines it is desirable

to qualify transactions under the 2021 Plan as exempt under Rule 16b-3 of the Exchange Act, such transactions will be structured with

the intent that they satisfy the requirements for exemption under Rule 16b-3.

Subject to the provisions of the 2021 Plan, the administrator

has the power to administer the 2021 Plan and make all determinations deemed necessary or advisable for administering the 2021 Plan,

including the power to determine the fair market value of the Company’s common stock, select the service providers to whom awards

may be granted, determine the number of shares covered by each award, approve forms of award agreements for use under the 2021 Plan,

determine the terms and conditions of awards (including the exercise price, the time or times at which the awards may be exercised, any

vesting acceleration or waiver or forfeiture restrictions and any restriction or limitation regarding any award or the shares relating

thereto), construe and interpret the terms of the 2021 Plan and awards granted under it, prescribe, amend and rescind rules relating

to the 2021 Plan, including creating sub-plans and modify or amend each award, including the discretionary authority to extend the post-termination

exercisability period of awards (provided that no option or stock appreciation right will be extended past its original maximum term),

and to allow a participant to defer the receipt of payment of cash or the delivery of shares that would otherwise be due to such participant

under an award.

The administrator also has the authority to allow participants the opportunity to transfer outstanding awards to a financial

institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards

may be surrendered or cancelled in exchange for awards of the same type which may have a higher or lower exercise price or different

terms, awards of a different type or cash, or by which the exercise price of an outstanding award is increased or reduced.

The administrator’s

decisions, interpretations and other actions are final and binding on all participants.

under the 2021 Plan, other than incentive stock options, may be granted to employees (including officers) of the Company or a subsidiary,

members of the Company’s Board, or consultants engaged to render bona fide services to the Company or a subsidiary.

Incentive stock

options may be granted only to employees of the Company or a subsidiary.

options may be granted under the 2021 Plan.

The exercise price of options granted under the 2021 Plan generally must at least be equal

to the fair market value of the Company’s common stock on the date of grant.

The term of each option will be as stated in the applicable

award agreement;

provided, however, that the term may be no more than 10 years from the date of grant.

The administrator will determine the methods of

payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well

as other types of consideration permitted by applicable law.

The administrator will determine

the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator,

as well as other types of consideration permitted by applicable law.

After the termination of service of an employee, director or consultant,

7 unchanged sentences

the other terms of options.

Stock Appreciation Rights

Stock appreciation rights

Appreciation Rights

may be granted under the 2021 Plan.

12 unchanged sentences

and whether to pay any increased appreciation in cash or with shares of the Company’s common stock, or a combination thereof, except

that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than

100% of the fair market value per share on the date of grant.

Restricted Stock

Restricted stock may be granted

that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less

than 100% of the fair market value per share on the date of grant.

stock may be granted under the 2021 Plan.

Restricted stock awards are grants of shares of the Company’s common stock that vest

in accordance with terms and conditions established by the administrator.

The administrator will determine the number of shares of restricted

stock granted to any employee, director or consultant and, subject to the provisions of the 2021 Plan, will determine the terms and conditions

of such awards.

The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator

may set restrictions based on the achievement of specific performance goals or continued service to the Company);

provided, however,

that the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.

of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting,

unless the administrator provides otherwise.

Shares of restricted stock that do not vest are subject to the Company’s right of

repurchase or forfeiture.

may be granted under the 2021 Plan.

RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of

the Company’s common stock.

Subject to the provisions of the 2021 Plan, the administrator determines the terms and conditions of

RSUs, including the vesting criteria and the form and timing of payment.

The administrator may set vesting criteria based upon the achievement

of Company-wide, divisional, business unit or individual goals (including continued employment or service), applicable federal or state

securities laws or any other basis determined by the administrator in its discretion.

The administrator, in its sole discretion, may

pay earned RSUs in the form of cash, in shares of the Company’s common stock or in some combination thereof.

Notwithstanding the

foregoing, the administrator, in its sole discretion, may accelerate the time at which any vesting requirements will be deemed satisfied.

Units and Performance Shares

units and performance shares may be granted under the 2021 Plan.

Performance units and performance shares are awards that will result

in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest.

administrator will establish performance objectives or other vesting criteria in its discretion, which, depending on the extent to which

they are met, will determine the number or the value of performance units and performance shares to be paid out to participants.

administrator may set performance objectives based on the achievement of Company-wide, divisional, business unit or individual goals

(including continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator

in its discretion.

After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce

or waive any performance criteria or other vesting provisions for such performance units or performance shares.

Performance units shall

have an initial dollar value established by the administrator on or prior to the grant date.

Performance shares shall have an initial

value equal to the fair market value of the Company’s common stock on the grant date.

The administrator, in its sole discretion,

may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.

2021 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options)

under the 2021 Plan.

Restricted stock awards are grants of shares of the Company’s common stock that vest in accordance with terms

and conditions established by the administrator.

The administrator will determine the number of shares of restricted stock granted to

any employee, director or consultant and, subject to the provisions of the 2021 Plan, will determine the terms and conditions of such

The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may

set restrictions based on the achievement of specific performance goals or continued service to the Company);

provided, however, that

the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.

Recipients of restricted

stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the

administrator provides otherwise.

Shares of restricted stock that do not vest are subject to the Company’s right of repurchase or

Restricted Stock Units

RSUs may be granted under

the 2021 Plan.

RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of the Company’s

common stock.

Subject to the provisions of the 2021 Plan, the administrator determines the terms and conditions of RSUs, including the

vesting criteria and the form and timing of payment.

The administrator may set vesting criteria based upon the achievement of Company-wide,

divisional, business unit or individual goals (including continued employment or service), applicable federal or state securities laws

or any other basis determined by the administrator in its discretion.

The administrator, in its sole discretion, may pay earned RSUs in

the form of cash, in shares of the Company’s common stock or in some combination thereof.

Notwithstanding the foregoing, the administrator,

in its sole discretion, may accelerate the time at which any vesting requirements will be deemed satisfied.

Performance Units and Performance Shares

Performance units and performance

shares may be granted under the 2021 Plan.

Performance units and performance shares are awards that will result in a payment to a participant

only if performance goals established by the administrator are achieved or the awards otherwise vest.

The administrator will establish

performance objectives or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine

the number or the value of performance units and performance shares to be paid out to participants.

The administrator may set performance

objectives based on the achievement of Company-wide, divisional, business unit or individual goals (including continued employment or

service), applicable federal or state securities laws or any other basis determined by the administrator in its discretion.

grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance criteria

or other vesting provisions for such performance units or performance shares.

Performance units shall have an initial dollar value established

by the administrator on or prior to the grant date.

Performance shares shall have an initial value equal to the fair market value of the

Company’s common stock on the grant date.

The administrator, in its sole discretion, may pay earned performance units or performance

shares in the form of cash, in shares or in some combination thereof.

Non-Employee Directors

The 2021 Plan provides that

all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2021 Plan.

2021 Plan includes a maximum limit of $750,000 of equity awards that may be granted to a non-employee director in any fiscal year, increased

to $1,500,000 in connection with his or her initial service.

For purposes of this limitation, the value of equity awards is based on the

grant date fair value (determined in accordance with accounting principles generally accepted in the United States).

Any equity awards

granted to a person for their services as an employee, or for their services as a consultant (other than as a non-employee director),

will not count for purposes of the limitation.

The maximum limit does not reflect the intended size of any potential compensation or equity

awards to the Company’s non-employee directors.

Non-transferability of Awards

Unless the administrator provides

otherwise, the 2021 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award

during their lifetime.

If the administrator makes an award transferrable, such award will contain such additional terms and conditions

as the administrator deems appropriate.

Certain Adjustments

In the event of certain changes

in the Company’s capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the

2021 Plan, the administrator will adjust the number and class of shares that may be delivered under the 2021 Plan or the number, and price

of shares covered by each outstanding award and the numerical share limits set forth in the 2021 Plan.

Dissolution or Liquidation

In the event of the Company’s

proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all awards will terminate immediately

prior to the consummation of such proposed transaction.

Merger or Change in Control

The 2021 Plan provides that

in the event of the Company’s merger with or into another corporation or entity or a “change in control” (as defined

in the 2021 Plan), each outstanding award will be treated as the administrator determines, including, without limitation, that (i) awards

will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof)

with appropriate adjustments as to the number and kind of shares and prices;

(ii) upon written notice to a participant, that the participant’s

awards will terminate upon or immediately prior to the consummation of such merger or change in control;

(iii) outstanding awards will

vest and become exercisable, realizable or payable, or restrictions applicable to an award will lapse, in whole or in part, prior to or

upon consummation of such merger or change in control and, to the extent the administrator determines, terminate upon or immediately prior

to the effectiveness of such merger or change in control;

(iv) (A) the termination of an award in exchange for an amount of cash or property,

if any, equal to the amount that would have been attained upon the exercise of such award or realization of the participant’s rights

as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction

the administrator determines in good faith that no amount would have been attained upon the exercise of such award or realization of the

participant’s rights, then such award may be terminated by the Company without payment) or (B) the replacement of such award with

other rights or property selected by the administrator in its sole discretion;

or (v) any combination of the foregoing.

The administrator

will not be obligated to treat all awards, all awards a participant holds, or all awards of the same type, similarly.

In the event that

awards (or portion thereof) are not assumed or substituted for in the event of a merger or change in control, the participant will fully

vest in and have the right to exercise all of their outstanding options and stock appreciation rights, including shares as to which such

awards would not otherwise be vested or exercisable, all restrictions on restricted stock and RSUs will lapse and, with respect to awards

with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all

other terms and conditions met, in all cases, unless specifically provided otherwise under the applicable award agreement or other written

agreement between the participant and the Company or any of the Company’s subsidiary or parents, as applicable.

If an option or

stock appreciation right is not assumed or substituted in the event of a merger or change in control, the administrator will notify the

participant in writing or electronically that the option or stock appreciation right will be exercisable for a period of time determined

by the administrator in its sole discretion and the vested option or stock appreciation right will terminate upon the expiration of such

For awards granted to an outside

director, the outside director will fully vest in and have the right to exercise all of their outstanding options and stock appreciation

rights, all restrictions on restricted stock and RSUs will lapse and, for awards with performance-based vesting, unless specifically provided

for in the award agreement, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other

terms and conditions met.

Awards will be subject to

any Company clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange

or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and

Consumer Protection Act or other applicable laws.

The administrator also may specify in an award agreement that the participant’s

rights, payments or benefits with respect to an award will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence

of certain specified events.

The Board may require a participant to forfeit, return or reimburse the Company all or a portion of the award

or shares issued under the award, any amounts paid under the award and any payments or proceeds paid or provided upon disposition of the

shares issued under the award in order to comply with such clawback policy or applicable laws.

Amendment and Termination

The administrator has the

authority to amend, suspend or terminate the 2021 Plan provided such action does not impair the existing rights of any participant.

2021 Plan automatically will terminate on August 6, 2031, unless it is terminated sooner.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth

information regarding the beneficial ownership of our common stock as of December 31, 2024 by:

each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

each of our executive officers and directors that beneficially owns shares of our common stock;

all our executive officers and directors as a group.

In the table below, percentage

ownership is based on 21,937,987 shares of our common stock issued and outstanding as of December 31, 2024.

Unless otherwise

noted below, the address for each beneficial owner listed on the table is c/o HeartCore Enterprises, Inc., 1-2-33, Higashigotanda, Shinagawa-ku,

Tokyo, Japan.

We have determined beneficial ownership in accordance with the rules of the SEC.

We believe, based on the information furnished

to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common

stock that they beneficially own, subject to applicable community property laws.

The 2021 Plan includes a maximum limit of $750,000 of equity awards that may be granted to a non-employee director

in any fiscal year, increased to $1,500,000 in connection with his or her initial service.

For purposes of this limitation, the value

of equity awards is based on the grant date fair value (determined in accordance with accounting principles generally accepted in the

United States).

Any equity awards granted to a person for their services as an employee, or for their services as a consultant (other

than as a non-employee director), will not count for purposes of the limitation.

The maximum limit does not reflect the intended size

of any potential compensation or equity awards to the Company’s non-employee directors.

Non-transferability

the administrator provides otherwise, the 2021 Plan generally does not allow for the transfer of awards and only the recipient of an

award may exercise an award during their lifetime.

If the administrator makes an award transferrable, such award will contain such additional

terms and conditions as the administrator deems appropriate.

the event of certain changes in the Company’s capitalization, to prevent diminution or enlargement of the benefits or potential

benefits available under the 2021 Plan, the administrator will adjust the number and class of shares that may be delivered under the

2021 Plan or the number, and price of shares covered by each outstanding award and the numerical share limits set forth in the 2021 Plan.

or Liquidation

the event of the Company’s proposed liquidation or dissolution, the administrator will notify participants as soon as practicable

and all awards will terminate immediately prior to the consummation of such proposed transaction.

or Change in Control

2021 Plan provides that in the event of the Company’s merger with or into another corporation or entity or a “change in control”

(as defined in the 2021 Plan), each outstanding award will be treated as the administrator determines, including, without limitation,

that (i) awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or

an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices;

(ii) upon written notice to a participant,

that the participant’s awards will terminate upon or immediately prior to the consummation of such merger or change in control;

(iii) outstanding awards will vest and become exercisable, realizable or payable, or restrictions applicable to an award will lapse,

in whole or in part, prior to or upon consummation of such merger or change in control and, to the extent the administrator determines,

terminate upon or immediately prior to the effectiveness of such merger or change in control;

(iv) (A) the termination of an award in

exchange for an amount of cash or property, if any, equal to the amount that would have been attained upon the exercise of such award

or realization of the participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt,

if as of the date of the occurrence of the transaction the administrator determines in good faith that no amount would have been attained

upon the exercise of such award or realization of the participant’s rights, then such award may be terminated by the Company without

payment) or (B) the replacement of such award with other rights or property selected by the administrator in its sole discretion;

(v) any combination of the foregoing.

The administrator will not be obligated to treat all awards, all awards a participant holds, or

all awards of the same type, similarly.

In the event that awards (or portion thereof) are not assumed or substituted for in the event

of a merger or change in control, the participant will fully vest in and have the right to exercise all of their outstanding options

and stock appreciation rights, including shares as to which such awards would not otherwise be vested or exercisable, all restrictions

on restricted stock and RSUs will lapse and, with respect to awards with performance-based vesting, all performance goals or other vesting

criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, in all cases, unless specifically provided

otherwise under the applicable award agreement or other written agreement between the participant and the Company or any of the Company’s

subsidiary or parents, as applicable.

If an option or stock appreciation right is not assumed or substituted in the event of a merger

or change in control, the administrator will notify the participant in writing or electronically that the option or stock appreciation

right will be exercisable for a period of time determined by the administrator in its sole discretion and the vested option or stock

appreciation right will terminate upon the expiration of such period.

awards granted to an outside director, the outside director will fully vest in and have the right to exercise all of their outstanding

options and stock appreciation rights, all restrictions on restricted stock and RSUs will lapse and, for awards with performance-based

vesting, unless specifically provided for in the award agreement, all performance goals or other vesting criteria will be deemed achieved

at 100% of target levels and all other terms and conditions met.

will be subject to any Company clawback policy that the Company is required to adopt pursuant to the listing standards of any national

securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall

Street Reform and Consumer Protection Act or other applicable laws.

The administrator also may specify in an award agreement that the

participant’s rights, payments or benefits with respect to an award will be subject to reduction, cancellation, forfeiture or recoupment

upon the occurrence of certain specified events.

The Board may require a participant to forfeit, return or reimburse the Company all

or a portion of the award or shares issued under the award, any amounts paid under the award and any payments or proceeds paid or provided

upon disposition of the shares issued under the award in order to comply with such clawback policy or applicable laws.

and Termination

administrator has the authority to amend, suspend or terminate the 2021 Plan provided such action does not impair the existing rights

of any participant.

The 2021 Plan automatically will terminate on August 6, 2031, unless it is terminated sooner.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth information regarding the beneficial ownership of our common stock as of March 31, 2026 by:

person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

of our Named Executive Officers and directors that beneficially owns shares of our common stock;

of our executive officers and directors as a group.

the table below, percentage ownership is based on 25,419,807 shares of our common stock issued and outstanding as of December 31, 2025.

Unless otherwise noted below, the address for each beneficial owner listed on the table is c/o HeartCore Enterprises, Inc., 14F, Shibuya

Sakura Stage Central Building, 1-2 Sakuragaoka-cho, Shibuya-ku, Tokyo, Japan 150-0031.

We have determined beneficial ownership in accordance

with the rules of the SEC.

We believe, based on the information furnished to us, that the persons and entities named in the tables below

have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community

property laws.

Name and Address of Beneficial Owner

8 unchanged sentences

Other 5% Stockholders:

Daishin Yasui

less than 1%.

The percentages in the table have been calculated based on 21,937,987 shares of our common stock outstanding on December 31, 2024.

To calculate a stockholder’s percentage of beneficial ownership, we include in the numerator and denominator the common stock outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other derivative securities owned by that person which are exercisable within 60 days of December 31, 2024.

Common stock options and derivative securities held by other stockholders are disregarded in this calculation.

Therefore, the denominator used in calculating beneficial ownership among our stockholders may differ.

Unless we have indicated otherwise, each person named in the table has sole voting power and sole investment power for the shares listed opposite such person’s name.

Includes the directors and named executive officers listed above, as well as (i) 72,048 shares beneficially owned by Hidekazu Miyata, our Chief Technical Officer, and (ii) 21,620 shares beneficially owned by Qizhi Gao, our Chief Financial Officer.

Securities Authorized for Issuance under Equity

Compensation Plans

The following table provides

information as of December 31, 2024, regarding our compensation plans under which equity securities are authorized for issuance:

percentages in the table have been calculated based on 25,419,807 shares of our common stock outstanding on December 31, 2025.

calculate a stockholder’s percentage of beneficial ownership, we include in the numerator and denominator the common stock

outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other

derivative securities owned by that person which are exercisable within 60 days of December 31, 2025.

Common stock options and derivative

securities held by other stockholders are disregarded in this calculation.

Therefore, the denominator used in calculating beneficial

ownership among our stockholders may differ.

Unless we have indicated otherwise, each person named in the table has sole voting power

and sole investment power for the shares listed opposite such person’s name.

the directors and Named Executive Officers listed above, as well as 14,945 shares beneficially owned by Toru Oyama, a director of

Higgs Field Co., Ltd.

Authorized for Issuance under Equity Compensation Plans

following table provides information as of December 31, 2025, regarding our compensation plans under which equity securities are authorized

for issuance:

Plan Category

4 unchanged sentences

Equity compensation plans not approved by security holders

(1) This represents shares of common stock issuable pursuant to

the 2023 Plan and the 2021 Plan.

There were an aggregate of

1,934,677 shares available for award under the 2021 and 2023 Plans as of December 31, 2024.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Policies and Procedures for Related Party Transactions

Under Item 404 of SEC Regulation

S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions,

arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiary

were or are a party, or in which we or our subsidiary were or are a participant, in which the amount involved exceeded or exceeds the

lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which any of our

directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a “significant

shareholder”), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material

We recognize that transactions

between us and any of our directors or executives or with a third party in which one of our officers, directors or significant shareholders

has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations

other than the best interests of our Company and stockholders.

The Audit Committee of the

Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any

related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such transactions,

as reported or disclosed to the Audit Committee by the independent auditors, employees, officers, members of the Board of Directors or

otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated

From time to time, we engage

in transactions with related parties.

The following is a summary of the related party transactions during the fiscal years ended December

31, 2024 and 2023, and any proposed transactions, requiring disclosure pursuant to Item 404 of Regulation S-K.

We believe the terms obtained

or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms

available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Related Party Transactions

As of December 31, 2024 and

2023, the Company had a due to related parties balance of $47 and $1,476, respectively, from Sumitaka Yamamoto, the Chief Executive Officer

(“CEO”) and major shareholder of the Company.

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

year ended December 31, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company

in a net amount of $1,338.

During the year ended December 31, 2023, the related party paid operating expenses on behalf of the Company

and received the payments in a net amount of $1,123.

As of December 31, 2024 and

2023, the Company had a due to related parties balance of $885 and nil, respectively, from Luvina Software Joint Stock Company (“Luvina

Software”), the non-controlling interest shareholder of HeartCore Luvina.

The balance is unsecured, non-interest bearing and due

During the year ended December 31, 2024, the related party paid operating expenses on behalf of the Company in the amount of

As of December 31, 2024 and 2023, the Company had an accounts payable and accrued expenses balance of $47,199 and nil, respectively,

to Luvina Software.

During the year ended December 31, 2024, the Company engaged the related party for software development and other

support services in the amount of $202,288.

As of December 31, 2024 and

2023, the Company had a loan receivable balance of $164,067 and $227,704, respectively, from Heartcore Technology Inc., a company controlled

by the CEO of the Company.

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

The balance is unsecured, bears an annual interest

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

During the years ended December 31, 2024 and 2023, the

Company received repayments of $42,104 and $45,404, respectively, from this related party.

As of December 31, 2024 and

2023, the Company had a short-term debt balance of $75,000 and nil, respectively, to Prakash Sadasivam, the CEO of Sigmaways and Chief

Strategy Officer (“CSO”) of the Company.

represents shares of common stock issuable pursuant to the 2023 Plan and the 2021 Plan.

Board of Directors and stockholders approved the 2021 Plan on August 6, 2021.

Under the 2021 Plan, 2,400,000 shares of common stock are

authorized for issuance to employees, directors and independent contractors (except those performing services in connection with the

offer or sale of the Company’s securities in a capital raising transaction or promoting or maintaining a market for the Company’s

securities) of the Company or its subsidiary.

The 2021 Plan authorizes equity-based and cash-based incentives for participants.

December 31, 2025, there were 4,330 shares available for award under the 2021 Plan.

August 1, 2023 and September 29, 2023, the Board and stockholders, respectively, approved the 2023 Plan.

The 2023 Plan provides for various

stock-based incentive awards, including ISOs and NQSOs, SARs, restricted stock and RSUs, and other equity-based or cash-based awards.

As of December 31, 2025, there were 1,776,865 shares available for award under the 2023 Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

and Procedures for Related Party Transactions

Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series

of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business,

to which we or our subsidiary were or are a party, or in which we or our subsidiary were or are a participant, in which the amount involved

exceeded or exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years

and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting

securities (a “significant shareholder”), or any member of the immediate family of any of the foregoing persons, had or will

have a direct or indirect material interest.

recognize that transactions between us and any of our directors or executives or with a third party in which one of our officers, directors

or significant shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our

decisions are based on considerations other than the best interests of our Company and stockholders.

Audit Committee of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between

the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any

such transactions, as reported or disclosed to the Audit Committee by the independent auditors, employees, officers, members of the Board

of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained

from an unaffiliated party.

time to time, we engage in transactions with related parties.

The following is a summary of the related party transactions during the

fiscal years ended December 31, 2025 and 2024, and any proposed transactions, requiring disclosure pursuant to Item 404 of Regulation

We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described

below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Party Transactions

of December 31, 2025 and 2024, the Company had due to related party balances of $285 and nil, respectively, from Sumitaka Yamamoto, the

Chief Executive Officer (“CEO”) and major shareholder of the Company.

The balance is unsecured, non-interest bearing and

due on demand.

During the years ended December 31, 2025 and 2024, the related party paid operating expenses on behalf of the Company

and received the payments in a net amount of $299 and nil, respectively.

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

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

The balance is unsecured, non-interest

bearing and due on demand.

During the year ended December 31, 2025, the Company repaid to the related party for operating expenses

the related party paid on behalf of the Company of $884.

During the year ended December 31, 2024, the related party paid operating

expenses on behalf of the Company in the amount of $899.

As of December 31, 2025 and 2024, the Company had accounts

payable and accrued expenses balances of $124,618 and $47,199, respectively, to Luvina Software.

During the years ended December 31,

2025 and 2024, the Company engaged the related party for software development and other support services of $290,305 and $202,288, respectively.

of December 31, 2025 and 2024, the Company had a short-term debt balance of $75,000 to Prakash Sadasivam, the CEO and non-controlling

shareholder of Sigmaways.

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

is unsecured, bears an annual interest of 7.5%, and matures on June 30, 2025.

Director Independence

The Company’s Board

of Directors has affirmatively determined that three of its six directors (Ferdinand Groenewald, Heather Neville, and Koji Sato) are independent

directors of the Company within the meaning of Nasdaq Capital Market’s rules.

During the fiscal year ended December 31, 2024, we

were a “controlled company” under Nasdaq Capital Market rules and therefore, were not required to have a majority of independent

directors on the Board.

As a controlled company during

2024, the Company was not required to comply with certain corporate governance requirements under Nasdaq Capital Market rules, including,

but not limited to, the requirement that a majority of the Company’s Board of Directors consist of “independent directors”

as defined by the applicable rules and regulations of Nasdaq Capital Market.

Because we no longer qualify as a controlled company, on

February 14, 2025, we formed a compensation committee and a nominating and corporate governance committee, and we are required, subject

to a phase-in period, to have a majority of independent directors on the Board.

We expect to comply with the majority independent director

requirement no later than the end of the phase-in period, which ends one year after we ceased to be a controlled company.

The balance is unsecured, bears an

annual interest of 7.5% and due on demand.

Company’s Board of Directors has affirmatively determined that three of its five directors (Ferdinand Groenewald, Yoonji Lee, and

Koji Sato), representing a majority of the Company’s directors, are independent directors of the Company within the meaning of

Nasdaq Capital Market’s rules.

Until February 14, 2025, we were a “controlled company” under Nasdaq Capital Market

rules and therefore, were not required to have a majority of independent directors on the Board.

a controlled company until February 14, 2025, the Company was not required to comply with certain corporate governance requirements under

Nasdaq Capital Market rules, including, but not limited to, the requirement that a majority of the Company’s Board of Directors

consist of “independent directors” as defined by the applicable rules and regulations of Nasdaq Capital Market.

no longer qualify as a controlled company, on February 14, 2025, we formed a Compensation Committee and a Nominating and Corporate Governance

Committee, and we are required, subject to a phase-in period, to have a majority of independent directors on the Board.

comply with the majority independent director requirement.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The following is a summary

of fees paid or to be paid to MaloneBailey, LLP, our independent registered public accounting firm, for the fiscal years ended December

31, 2024 and 2023.

following is a summary of fees paid or to be paid to MaloneBailey, LLP, our independent registered public accounting firm, for the fiscal

years ended December 31, 2025 and 2024.

Years Ended December 31,

1 unchanged sentence

All Other Fees

consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally

provided by our independent registered public accounting firm in connection with regulatory filings.

The above amounts include interim

procedures and audit fees, as well as attendance at Board meetings.

Audit-Related Fees.

Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit

or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that

are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

consist of fees billed for tax planning services and tax advice.

The board of directors must specifically approve all other tax services.

All Other Fees .

services are services provided by the independent registered public accounting firm that do not fall within the established audit, audit-related,

and tax services categories.

The board of directors preapproves specified other services that do not fall within any of the specified

prohibited categories of services.

Pre-Approval Policy

Since formation of our audit

committee, all of the foregoing services were pre-approved by our audit committee.

Our audit committee will pre-approve all auditing services

and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis

exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the

Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and

services that are normally provided by our independent registered public accounting firm in connection with regulatory filings.

amounts include interim procedures and audit fees, as well as attendance at Board meetings.

Audit-Related

Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance

of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest

services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

Tax fees consist of fees billed for tax planning services and tax advice.

The board of directors must specifically approve

all other tax services.

Other services are services provided by the independent registered public accounting firm that do not fall within the

established audit, audit-related, and tax services categories.

The board of directors preapproves specified other services that do not

fall within any of the specified prohibited categories of services.

formation of our audit committee, all of the foregoing services were pre-approved by our audit committee.

Our audit committee will pre-approve

all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject

to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to

the completion of the audit).

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this annual report:

Financial Statements

See Index to Financial Statements on page F-1.

Financial Statements Schedules

All financial statements schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto beginning on page F-1 of this annual report.

We hereby file as part of this annual report the exhibits listed in the Exhibit Index immediately before the signature page to this Annual Report on Form 10-K.

Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.

Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C.

20549, at prescribed rates or on the SEC website at www.sec.gov.

following documents are filed as part of this annual report:

Index to Financial Statements on page F-1.

Statements Schedules

financial statements schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the

required information is presented in the financial statements and notes thereto beginning on page F-1 of this annual report.

hereby file as part of this annual report the exhibits listed in the Exhibit Index immediately before the signature page to this

Annual Report on Form 10-K.

Exhibits which are incorporated herein by reference can be inspected and copied at the public reference

facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.

Copies of such material can also be obtained

from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C.

20549, at prescribed rates or on the SEC website

at www.sec.gov.

Form 10-K Summary

Not applicable.

HEARTCORE ENTERPRISES, INC.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID 206 ) F-2

Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023 F-4

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6

Notes to Consolidated Financial Statements F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

HeartCore Enterprises, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of HeartCore Enterprises, Inc.

and its subsidiaries (collectively, the “Company”) as of December 31, 2024 and

2023, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows

for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023,

and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted

in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

ENTERPRISES, INC.

TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID 206 )

Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Shareholders and Board of Directors of

Enterprises, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of HeartCore Enterprises, Inc.

and its subsidiaries (collectively, the “Company”)

as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’

equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ MaloneBailey, LLP

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

MaloneBailey, LLP

www.malonebailey.com

We have served as the Company’s auditor since 2021.

Houston, Texas

March 31, 2025

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

have served as the Company’s auditor since 2021.

Enterprises, Inc.

Balance Sheets

and cash equivalents

in marketable securities

portion of long-term note receivable

offering costs

current assets

Cash and cash equivalents

Accounts receivable

Investments in marketable securities

Investment in equity securities

Prepaid expenses

Current portion of long-term

note receivable

Due from related party

assets of discontinued operations

Proceeds receivable from sale of

discontinued operations

current assets

Total current

and equipment, net

lease right-of-use assets

investment in warrants

note receivable

non-current assets

receivable, non-current

Property and equipment, net

Operating lease right-of-use

Intangible asset, net

Long-term investment in warrants

Long-term note receivable

Deferred tax assets

Security deposits

Long-term loan receivable from

related party

assets of discontinued operations

Long-term proceeds receivable from sale

of discontinued operations

non-current assets

Total non-current

LIABILITIES AND SHAREHOLDERS’

AND SHAREHOLDERS’ EQUITY

payable and accrued expenses

payable and accrued expenses - related party

payroll and other employee costs

to related party

debt - related party

portion of long-term debts

premium financing

lease liabilities, current

current liabilities

Accounts payable and accrued

expenses – related party

Accrued payroll and other employee

Due to related parties

Short-term debt

Short-term debt – related

Current portion of long-term

Insurance premium financing

Factoring liability

Operating lease liabilities,

Finance lease liabilities, current

Income tax payables

Deferred revenue

liabilities of discontinued operations

current liabilities

Total current

Non-current liabilities:

Long-term debts

Operating lease liabilities,

Finance lease liabilities, non-current

Deferred tax liabilities

lease liabilities, non-current

retirement obligations

liabilities of discontinued operations

non-current liabilities

Total non-current

Total liabilities

Shareholders’ equity:

Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of December 31, 2024 and 2023)

Common shares ($ 0.0001 par value, 200,000,000 shares authorized;

21,937,987 and 20,842,690 shares issued and outstanding as of December 31, 2024 and 2023, respectively)

Shareholders’

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

Series A convertible preferred shares, 4,000 and no shares designated, 1,017

and no shares issued and outstanding as of December 31, 2025 and 2024, respectively;

aggregate liquidation preference of $ 1,158,362

and nil as of December 31, 2025 and 2024, respectively

shares, $ 0.0001 par value, 200,000,000 shares authorized, 25,419,807 and 21,937,987 shares issued and outstanding as of December

31, 2025 and 2024, respectively

paid-in capital

1 unchanged sentence

( 16,244,843 )

other comprehensive income

Total HeartCore Enterprises, Inc.

other comprehensive income (loss)

HeartCore Enterprises, Inc.

shareholders’ equity

1 unchanged sentence

( 1,497,272 )

Total shareholders’

Total liabilities

and shareholders’ equity

The accompanying

notes are an integral part of these consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

For the Years Ended

Cost of revenues

( 1,191,482 )

shareholders’ equity

liabilities and shareholders’ equity

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

Enterprises, Inc.

Statements of Operations and Comprehensive Income (Loss)

the Years Ended December 31,

of revenues (including cost of revenues resulting from transactions with a related party of $ 261,257 and $ 160,502 for the years ended

December 31, 2025 and 2024, respectively)

and administrative expenses (including general and administrative expenses resulting from transactions with a related party of $ 29,048

and $ 41,786 for the years ended December 31, 2025 and 2024, respectively)

and development expenses

of intangible asset

operating expenses

Selling expenses

General and administrative expenses

Research and development expenses

Impairment of intangible asset

Impairment of goodwill

Total operating expenses

Income (loss) from operations

from continuing operations

( 3,121,317 )

Other income (expenses):

Changes in fair value of investments in marketable securities

income (expenses):

in fair value of investments in marketable securities

( 1,494,234 )

Changes in fair value of investment in warrants

Loss on sale of warrants

( 2,412,385 )

Impairment of investment in equity securities

Loss on forgiveness of note receivable

Interest income

Interest expenses

Government grants

in fair value of investment in warrants

on sale of warrants

( 3,970,628 )

of investment in equity securities

in fair value of derivative liability

on forgiveness of note receivable

other expenses

Total other expenses

( 1,017,788 )

Loss before income tax benefit

( 5,350,096 )

from continuing operations before income tax expense (benefit)

( 4,139,105 )

Income tax benefit

( 5,511,807 )

tax expense (benefit)

loss from continuing operations

( 4,184,005 )

net loss attributable to non-controlling interests

( 5,148,651 )

Net loss attributable to HeartCore Enterprises, Inc.

(loss) from discontinued operations, net of income tax

income (loss)

( 5,212,900 )

net loss attributable to non-controlling interests

( 3,731,526 )

Other comprehensive loss:

Foreign currency translation adjustment

Total comprehensive loss

income (loss) attributable to HeartCore Enterprises, Inc.

( 1,481,374 )

accrued on Series A convertible preferred shares

income (loss) attributable to HeartCore Enterprises, Inc.

common shareholders

$ ( 1,481,374 )

comprehensive loss attributable to non-controlling interests

comprehensive loss:

currency translation adjustment

comprehensive income (loss)

( 5,229,514 )

Comprehensive loss attributable to HeartCore Enterprises, Inc.

comprehensive loss attributable to non-controlling interests

( 3,760,195 )

Comprehensive

income (loss) attributable to HeartCore Enterprises, Inc.

$ ( 1,469,319 )

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

Weighted average common shares outstanding

The accompanying notes are an integral part of

these consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Common Shares

Accumulated Other

Total HeartCore

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

per common share

(loss) from discontinued operations per common share

income (loss) attributable to HeartCore Enterprises, Inc.

per common share

average common shares outstanding

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

Enterprises, Inc.

Statements of Changes in Shareholders’ Equity

HeartCore Enterprises,

Comprehensive

Shareholders’

Non-controlling

Shareholders’

Balance, December 31, 2022

December 31, 2023

$ ( 14,763,469 )

2 unchanged sentences

( 3,731,526 )

Foreign currency translation adjustment

Issuance of common shares for acquisition of subsidiary

Non-controlling interest arising from acquisition of subsidiary

Stock-based compensation

Balance, December 31, 2023

( 5,212,900 )

currency translation adjustment

contribution from non-controlling shareholder

Issuance of common shares related to at the market offering agreement

paid for common shares

December 31, 2024

( 16,244,843 )

2 unchanged sentences

( 1,191,482 )

Foreign currency translation adjustment

Capital contribution from non-controlling shareholder

Issuance of common shares

Distribution of dividends

Stock-based compensation

Balance, December 31, 2024

currency translation adjustment

Cumulative translation adjustment reclassified into earnings due to disposal

of discontinued operations

of common shares related to at the market offering agreement

of subscription receivable

of Series A convertible preferred shares

of common shares related to securities purchase agreement

of common shares related to equity purchase agreement

A convertible preferred shares converted to common shares

of common shares for dividends on Series A convertible preferred shares

accrued on Series A convertible preferred shares

paid for common shares

( 3,304,575 )

1 unchanged sentence

( 3,304,575 )

The accompanying notes are an integral part of

these consolidated financial statements.

HEARTCORE ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

Cash flows from operating activities:

of stock options

December 31, 2025

$ ( 13,755,534 )

$ ( 1,497,272 )

Adjustments to reconcile net loss to net cash flows used in

operating activities:

Depreciation and amortization expenses

Loss (gain) on disposal of property and equipment

Amortization of debt issuance costs

Non-cash lease expense

Loss (gain) on termination of lease

Impairment of intangible asset

Impairment of goodwill

Deferred income taxes

$ ( 13,755,534 )

Stock-based compensation

Marketable securities received as noncash consideration

Warrants received as noncash consideration

$ ( 1,497,272 )

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

Enterprises, Inc.

Statements of Cash Flows

the year ended December 31,

flows from operating activities of continuing operations:

income (loss)

$ ( 5,212,900 )

Changes in fair value of investments in marketable securities

Changes in fair value of investment in warrants

(loss) from discontinued operations, net of income tax

loss from continuing operations

( 4,184,005 )

Loss on sale of warrants

Impairment of investment in equity securities

Impairment of investment in SAFE

Loss on forgiveness of note receivable

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses

Accounts payable and accrued expenses

Accounts payable and accrued expenses – related party

Accrued payroll and other employee costs

Due to related parties

Operating lease liabilities

Income tax payables

Deferred revenue

Other liabilities

Net cash flows used in operating activities

( 5,148,651 )

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

and amortization expenses

on disposal of property and equipment

lease expense

on termination of lease

of intangible asset

( 1,297,495 )

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from disposal of property and equipment

Advances on note receivable

Purchase of investment in SAFE

Net proceeds from sale of warrants

Proceeds from sale of marketable securities

Repayment of loan provided to related party

Payment for acquisition of subsidiary, net of cash acquired

Net cash flows provided by (used in) investing activities

securities received as noncash consideration

received as noncash consideration

( 12,969,683 )

Cash flows from financing activities:

Payments for finance leases

Proceeds from short-term and long-term debts

Proceeds from related party debt

Repayment of short-term and long-term debts

Repayment of insurance premium financing

Net proceeds from factoring arrangement

Net repayment of factoring arrangement

Payments for debt issuance costs

Distribution of dividends

Capital contribution from non-controlling shareholder

Proceeds from issuance of common shares

Net cash flows provided by (used in) financing activities

Effect of exchange rate changes

Net change in cash and cash equivalents

in fair value of investments in marketable securities

in fair value of investment in warrants

( 1,657,699 )

Cash and cash equivalents – beginning of the year

Cash and cash equivalents – end of the year

Supplemental cash flow disclosure:

Interest paid

Income taxes paid

Non-cash investing and financing transactions:

Finance lease right-of-use assets obtained in exchange for finance

on sale of warrants

of investment in equity securities

of investment in SAFE

in fair value of derivative liability

on forgiveness of note receivable

on settlement of asset retirement obligations

in assets and liabilities:

payable and accrued expenses

payable and accrued expenses - related party

payroll and other employee costs

to related party

lease liabilities

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

Remeasurement of operating lease liabilities and right-of-use assets

due to lease modification

Insurance premium financing

Common shares issued for acquisition of subsidiary

Warrants converted to marketable securities

Note receivable converted to investment in equity securities

The accompanying notes are an integral part of

these consolidated financial statements.

HEARTCORE ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION

HeartCore Enterprises, Inc.

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

On July 16, 2021, HeartCore USA executed a share

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

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

Japan on June 12, 2009.

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

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

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

On February 24, 2022, HeartCore USA purchased the

remaining 278 shares of common shares of HeartCore Japan.

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

The share exchange on July 16, 2021 has been accounted

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

before and after the transaction.

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

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

consolidated financial statements.

HeartCore USA, via its wholly-owned operating

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

Beginning from early

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

United States capital market.

On September 6, 2022, HeartCore USA entered into

a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51 % of the outstanding shares of Sigmaways, Inc.

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

Sigmaways B.V.

cash flows used in operating activities of continuing operations

( 3,117,101 )

( 3,890,317 )

flows from investing activities of continuing operations:

of investment in SAFE

proceeds from sale of warrants

from sale of marketable securities

from sale of discontinued operations, net of cash divested

cash flows provided by investing activities of continuing operations

flows from financing activities of continuing operations:

for finance lease

from related party debt

of long-term debts

of insurance premium financing

repayment of factoring arrangement

contribution from non-controlling shareholder

paid for common shares

( 3,304,575 )

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

from collection of subscription receivable

from exercise of stock options

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

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

( 1,493,076 )

flows from discontinued operations:

cash flows used in operating activities of discontinued operations

cash flows provided by investing activities of discontinued operations

cash flows used in financing activities of discontinued operations

cash flows used in discontinued operations

( 1,034,279 )

( 1,302,740 )

of exchange rate changes

change in cash and cash equivalents

and cash equivalents - beginning of the year

and cash equivalents - end of the year

cash flow disclosures:

investing and financing transactions:

premium financing

converted to marketable securities

of common shares related to equity purchase agreement

accrued on Series A convertible preferred shares

of common shares for dividends on Series A convertible preferred shares

A convertible preferred shares converted to common shares

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

ENTERPRISES, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Enterprises, Inc.

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

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

(“HeartCore Japan”),

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

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

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

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

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

As a result, HeartCore Japan became a

wholly-owned operating subsidiary of HeartCore USA.

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

shareholders controlled these two entities before and after the transaction.

The consolidation of HeartCore USA and its subsidiary has

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

earliest period presented in the consolidated financial statements.

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

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

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

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

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

subsidiaries, Sigmaways B.V.

and Sigmaways Technologies Ltd.

1 unchanged sentence

Sigmaways B.V.

was incorporated in Netherlands

in November 2019.

was incorporated

in Netherlands in November 2019.

Sigmaways Technologies was incorporated in Canada in August 2020.

Sigmaways and its wholly-owned subsidiaries are primarily

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

The acquisition was closed on February 1, 2023.

In January 2023, HeartCore USA incorporated a

wholly-owned subsidiary, HeartCore Financial, Inc.

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

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

In February 2023, HeartCore USA incorporated a

wholly-owned subsidiary, HeartCore Capital Advisors, Inc.

(“HeartCore Capital Advisors”), in Japan.

HeartCore Capital Advisors

is engaged in the business of providing financial consulting services to Japanese companies.

In November 2023, HeartCore Japan established

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

business of providing software development and other services.

HeartCore Luvina started its operations from February 2024.

On November 17, 2023, HeartCore Japan and HeartCore

Capital Advisors entered into a merger agreement to merge the two entities into one with HeartCore Japan being the surviving entity.

January 1, 2024, the merger was completed and HeartCore Capital Advisors transferred all of its assets and liabilities to HeartCore Japan.

The merger has been accounted for as a recapitalization between entities under common control since the same controlling shareholders

controlled the two entities before and after the transaction.

In April 2024, HeartCore Financial incorporated

a branch office, HeartCore Financial, Inc.

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

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

HeartCore USA, HeartCore Japan, Sigmaways, Sigmaways

B.V., Sigmaways Technologies, HeartCore Financial, HeartCore Capital Advisors, HeartCore Luvina and HeartCore Financial – Japan

are hereafter referred to as the “Company”.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements

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

and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The consolidated financial statements

include the accounts of the Company and its subsidiaries.

Sigmaways and its wholly-owned subsidiaries

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

The acquisition was

closed on February 1, 2023.

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

(“HeartCore Financial”), under

the laws of the State of Delaware.

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

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

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

HeartCore Luvina started its operations

from February 2024.

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

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

– Japan Branch Office (“HeartCore

Financial – Japan”), in Japan.

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

On July 24, 2025, the Board of Directors of the Company approved entry into a non-binding letter of intent to sell

100% of the outstanding shares of HeartCore Japan.

The sale of HeartCore Japan represented a strategic shift that had a major impact on

the results of operations and has been accounted for as a discontinued operation (see NOTE 15).

The sale transaction closed on October

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

(“Higgs Field”), in Japan.

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

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

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

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and Principles of Consolidation

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

of America (“U.S.

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

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

The Company has presented the assets

and liabilities of HeartCore Japan and its results of operations and cash flows as discontinued operations in the consolidated financial

statements as of and for all periods presented.

All footnotes exclude balances and activities of HeartCore Japan unless otherwise noted.

All significant intercompany accounts and transactions have been eliminated.

Non-controlling Interests

The portion of the income or loss applicable to

the non-controlling interests in subsidiaries is separately reflected in the consolidated statements of operations and comprehensive loss.

Use of Estimates

In preparing the consolidated financial

statements in conformity U.S.

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

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial

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

Non-controlling

portion of the income or loss applicable to the non-controlling interests in Sigmaways and its wholly-owned subsidiaries and HeartCore Luvina is separately reflected in the consolidated

statements of operations and comprehensive income (loss).

preparing the consolidated financial statements in conformity U.S.

GAAP, the management is required to make certain estimates and assumptions

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

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

These estimates are based on information

available as of the date of the consolidated financial statements.

Significant estimates required to be made by management include,

but are not limited to, useful lives of property and equipment and intangible asset, the impairment of long-lived assets and

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

finance leases, valuation of asset retirement obligations, valuation of investment in warrants, revenue recognition with respect to

fair value of noncash consideration and allocation of transaction price, and purchase price allocation with respect to business

Significant estimates required to be made by management include, but

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

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

valuation of investment in warrants, revenue recognition with respect to fair value of noncash consideration, and valuation of derivative

Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand

and deposits in banks and other financial institutions that are unrestricted as to withdrawal or use.

Accounts Receivable

Accounts receivable represents the amounts that

the Company has an unconditional right to consideration, which are stated at the original amount less an allowance for credit losses.

The allowance for credit losses reflects the Company’s current estimate of credit losses expected to be incurred over the life of

the receivables.

The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including

the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers.

also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect

a customer’s ability to pay in establishing and adjusting its allowance for credit losses.

Accounts receivable balances are written

off after all collection efforts have ceased.

The allowance is recorded against accounts receivable balances, with a corresponding charge

recorded in the consolidated statements of operations and comprehensive loss.

In circumstances in which the Company receives payment for

accounts receivable that have previously been written off, the Company reverses the allowance and credit losses.

Property and Equipment, Net

Property and equipment are stated at cost less

accumulated depreciation.

Depreciation is calculated using the straight-line and declining methods over the estimated useful lives, as

more details follow:

Leasehold improvements

Straight-line method

Shorter of estimated useful life or lease term

Machinery and equipment

Straight-line or declining balance method

Straight-line method

Expenditures for maintenance and repairs, which

do not materially extend the useful lives of the assets, are charged to expense as incurred.

Expenditures for major renewals and betterments,

which substantially extend the useful lives of the assets, are capitalized.

The cost and related accumulated depreciation of assets retired

or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and

comprehensive loss.

Asset Retirement Obligations

Pursuant to the lease agreements for the office

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

The Company recognizes

an obligation related to these restorations as asset retirement obligation included in other non-current liabilities in the consolidated

balance sheets, in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification

(“ASC”) Topic 410, “Asset Retirement Obligation Accounting”.

The Company capitalizes the associated asset retirement

cost by increasing the carrying amount of the related property and equipment.

The following table presents changes in asset retirement

Beginning balance

Liabilities incurred

Accretion expense

Liabilities settled

Foreign currency translation adjustment

Ending balance

Lease – Lessee

The Company determines whether a contract is or

contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease.

Lease terms of certain operating leases include the non-cancellable period for which the Company has the right to use the underlying asset,

together with renewal option periods when the exercise of the renewal option is reasonably certain.

The Company leases office facilities, which are

classified as operating leases and leases office equipment and vehicles, which are classified as finance leases in accordance with ASC

Topic 842, “Leases”.

Under ASC Topic 842, lessees are required to recognize the following for all leases on the commencement

(i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted

and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified

asset for the lease term.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current,

and operating lease liabilities, non-current, and finance leases are included in property and equipment, net, finance lease liabilities,

current, and finance lease liabilities, non-current in the consolidated balance sheets.

As most of the Company’s leases do not provide

an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining

the present value of future payments.

The Company has elected the short-term lease exception,

and therefore operating lease right-of-use assets and liabilities do not include leases with a lease term of twelve months or less.

Software Development Costs

Software development costs are expensed as incurred

until the point the Company establishes technological feasibility.

Technological feasibility is established upon completion of a detailed

program design or the completion of a working model.

Costs incurred by the Company between establishment of technological feasibility

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

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

all software development costs have been expensed as incurred.

In the years ended December 31, 2024 and 2023,

software development costs expensed as incurred amounted to $ 729,584 and $ 1,019,141 , respectively.

These software development costs were

included in the research and development expenses.

Investment in Warrants

Investment in warrants represents stock warrants

earned from its consulting service customers.

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

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

Investments in Marketable Securities

Investments in marketable securities represent

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

The marketable securities are obtained through stocks

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

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

Investment in Equity Securities

Investment in equity securities represents investment

in a privately held entity that does not have a readily determinable fair value or report net asset value.

Investment in equity securities

is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes

and impairments, with changes recognized in other income (expenses).

Investment in equity securities is classified as current asset if

the Company anticipates to dispose of the investment within one year from the date of receipt.

Intangible Asset, Net

Intangible asset represents the customer relationship

acquired from business acquisition of Sigmaways and its subsidiaries.

The acquired intangible asset is recognized and measured at fair

value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective asset.

The estimated useful life of the customer relationship is 8 years.

Impairment of Long-Lived Assets Other Than

Long-lived assets with finite lives, primarily

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

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

If the estimated cash flows from the use of the

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

to its fair value.

Goodwill represents the excess of the purchase

price over the fair value of the net identifiable assets acquired in a business combination.

In accordance with ASC Topic 350, “Intangibles

– Goodwill and Others”, goodwill is subject to assessment for impairment at the reporting unit level at least annually or

more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test.

is generally determined using a discounted cash flow analysis.

Foreign Currency Translation

The functional currency of HeartCore Japan, HeartCore

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

The functional currency of HeartCore USA,

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

The functional currency of Sigmaways B.V.

and Cash Equivalents

and cash equivalents include cash on hand and deposits in banks and other financial institutions that are unrestricted as to withdrawal

receivable represents the amounts that the Company has an unconditional right to consideration, which are stated at the original amount

less an allowance for credit losses.

The allowance for credit losses reflects the Company’s current estimate of credit losses expected

to be incurred over the life of the receivables.

The Company considers various factors in establishing, monitoring, and adjusting its

allowance for credit losses including the aging of receivables and aging trends, customer creditworthiness and specific exposures related

to particular customers.

The Company also monitors other risk factors and forward-looking information, such as country specific risks

and economic factors that may affect a customer’s ability to pay in establishing and adjusting its allowance for credit losses.

Accounts receivable balances are written off after all collection efforts have ceased.

The allowance is recorded against accounts receivable

balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income (loss).

In circumstances

in which the Company receives payment for accounts receivable that have previously been written off, the Company reverses the allowance

and credit losses.

and Equipment, Net

and equipment are stated at cost less accumulated depreciation.

Depreciation is calculated using the straight-line method over the estimated

useful lives, as more details follow:

SCHEDULE OF PROPERTY AND EQUIPMENT

Straight-line

of estimated useful life or lease term

and equipment

Straight-line

for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.

for major renewals and betterments, which substantially extend the useful lives of the assets, are capitalized.

The cost and related

accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the

consolidated statements of operations and comprehensive income (loss).

Development Costs

development costs are expensed as incurred until the point the Company establishes technological feasibility.

Technological feasibility

is established upon completion of a detailed program design or the completion of a working model.

Costs incurred by the Company between

establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized

over the economic life of the related products.

The Company’s software development costs incurred subsequent to achieving technological

feasibility have not been significant and all software development costs have been expensed as incurred.

the years ended December 31, 2025 and 2024, software development costs expensed as incurred amounted to nil and $ 179,762 , respectively.

These software development costs were included in the research and development expenses.

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

The warrants are measured at fair value and any changes

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

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

over one year after the date of receipt.

in Marketable Securities

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

The marketable

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

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

of Long-Lived Assets

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

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

If the estimated cash flows

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

and written down to its fair value.

There were no impairments of these assets during the years ended December 31, 2025 and 2024.

Currency Translation

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

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

The functional

currency of Sigmaways B.V.

is the Euro (“EUR”).

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

The functional currency

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

Transactions denominated in currencies other than the functional currency

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

Monetary assets and liabilities

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

rates at the balance sheet dates.

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

The reporting currency of the Company is the US$,

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

In accordance with ASC Topic 830-30, “Translation

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

the exchange rate on the balance sheet date.

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

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

income (loss) within the consolidated statements of changes in shareholders’ equity.

Translation of amounts from the functional currency

of the Company into US$ 1 has been made at the following exchange rates:

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

Transactions denominated in currencies other than

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

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

using the applicable exchange rates at the balance sheet dates.

The resulting exchange differences are recorded in the consolidated statements

of operations and comprehensive income (loss).

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

In accordance with

the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 830-30,

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

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

Revenues and expenses are translated at average rates prevailing during

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

other comprehensive income (loss) within the consolidated statements of changes in shareholders’ equity.

of amounts from the functional currency of the Company into US$1 has been made at the following exchange rates:

SCHEDULE OF TRANSLATION AMOUNTS FROM THE FUNCTIONAL CURRENCY OF EXCHANGE RATES

US$1 exchange rate

6 unchanged sentences

US$1 exchange rate

Revenue Recognition

The Company recognizes revenues under ASC Topic

606, “Revenue from Contracts with Customers”.

To determine revenue recognition for contracts

with customers, the Company performs the following five steps:

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

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

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

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

Revenues amount represents the invoiced

value, net of a value-added tax (“Consumption Tax”) and applicable local government levies.

The Consumption Tax on sales are

calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross

sales in the United States.

The Company currently generates its revenues from

the following main sources:

Revenues from On-premise Software

Licenses for on-premise software provide the customers

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

The Company provides on-premise software in the form

of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term.

Revenues from on-premise

licenses are recognized upfront at the point in time when the software is made available to the customers.

Licenses for on-premise software

are typically sold to the customers with maintenance and support services in a bundle.

Revenues under the bundled arrangements are allocated

based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support services.

for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis.

The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise

licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly

variable) and a representative SSP is not discernible from past transactions or other observable evidence.

Revenues from Maintenance and Support Services

Maintenance and support services provided with

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

during the subscription.

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

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

Revenues from Software as a Service (“SaaS”)

The Company’s software is available for

use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers.

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

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

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

Revenues from Software Development and Other

Miscellaneous Services

The Company provides customers with software development

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

and workflow development.

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

The Company generally

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

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

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

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

(i) identify the contract(s)

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

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

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

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

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

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

Company currently generates its revenues from the following main sources:

from Software Development Services

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

of consulting, integration, training, custom application and workflow development.

The Company recognizes revenues at a point in time

when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered

and accepted by the customers.

from Customized Software Development and Services

The Company’s

customized software development and services revenues primarily include revenues from providing software development solutions and other

support services to its customers.

Company’s customized software development and services revenues primarily include revenues from providing software development

solutions and other support services to its customers.

The contract pricing is at stated billing rates per hour.

These contracts are generally short-term

in nature and not longer than one year in duration.

For services provided under the contracts that result in the transfer of control over

time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create an asset with an alternative

use to the Company.

The Company recognizes revenues on rate per hour contracts based on the amount billable to the customers, as the Company

has the right to invoice the customers in an amount that directly corresponds with the value to the customers of the Company’s performance

These contracts are

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

For services provided under the contracts that result in the

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

an asset with an alternative use to the Company.

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

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

customers of the Company’s performance to date.

from Consulting Services

The Company provides public listing related consulting

services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary

parties, preparing required documents related to the initial public offering and supporting the listing process.

The consulting services

contracts normally include both cash and noncash considerations.

Cash consideration is paid in installment payments and is recognized

in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation.

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

Noncash consideration

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

constraint on variable consideration.

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

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

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

Sales Returns and Allowances

The Company records reduction to revenues for

estimated customer returns and allowances.

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

as the specific identification of outstanding returns.

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

may differ from the Company’s estimates.

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

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

which it makes such a determination.

Reserves for customer refunds are included within other current liabilities on the consolidated balance

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

Contract Balances

The timing of revenue recognition may differ from

the timing of invoicing to the customers.

The Company determines that its contracts do not include a significant financing component.

The Company records a contract asset, which is included in accounts receivable, current or non-current, in the consolidated balance sheets,

when revenues are recognized prior to invoicing.

The Company factors certain accounts receivable upon or after the performance obligation

is being met.

The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash

collection for an invoice.

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

The amount of revenues recognized during the years ended December 31, 2024 and 2023 that were included in the opening deferred revenue

balance are approximately $ 1.8 million and $ 1.6 million, respectively.

Disaggregation of Revenues

The Company disaggregates its revenues from contracts

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

flows are affected by economic factors.

The Company’s disaggregation of revenues by revenue stream for the years ended December

31, 2024 and 2023 is as following:

For the Years Ended

Revenues from on-premise software

Revenues from maintenance and support services

Revenues from software as a service (“SaaS”)

Revenues from software development and other miscellaneous services

Revenues from customized software development and services

Revenues from consulting services

Total revenues

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

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

and supporting the listing process.

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

Cash consideration

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

satisfaction of that performance obligation.

Noncash consideration is in the form of stocks and warrants of the customers and is measured

at fair value at contract inception.

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

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

The Company assesses the estimated

amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable

that a significant reversal of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration

is subsequently resolved.

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

be included in revenues.

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

consideration is recognized in revenues until the underlying uncertainties have been resolved.

Returns and Allowances

Company records reduction to revenues for estimated customer returns and allowances.

The Company bases its estimates on historical rates

of customer returns and allowances as well as the specific identification of outstanding returns.

The actual amount of customer returns

and allowances, which is inherently uncertain, may differ from the Company’s estimates.

If the Company determines that actual or

expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase,

as appropriate, to revenues in the period in which it makes such a determination.

Reserves for customer refunds are included within other

current liabilities on the consolidated balance sheets.

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

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

The Company determines that its contracts do

not include a significant financing component.

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

consolidated balance sheets, when revenues are recognized prior to invoicing.

The Company factors certain accounts receivable upon or

after the performance obligation is being met.

The Company records deferred revenue in the consolidated balance sheets when revenues

are recognized subsequent to cash collection for an invoice.

Deferred revenue is reported net of related uncollected deferred revenue

in the consolidated balance sheets.

The amounts of revenues recognized during the years ended December 31, 2025 and 2024 that were included

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

Disaggregation

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

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

The Company’s disaggregation of revenues

by product/service for the years ended December 31, 2024 and 2023 is as following:

For the Years Ended

Revenues from customer experience management platform $ 6,880,708 $ 5,602,473

Revenues from process mining 214,085 399,300

Revenues from robotic process automation 256,796 325,986

Revenues from task mining 285,643 376,682

Revenues from customized software development and services 7,854,285 8,784,239

Revenues from consulting services 14,736,774 6,212,319

Revenues from others 178,938 144,831

by revenue stream for the years ended December 31, 2025 and 2024 is as follows:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Years

Revenues from software development

Revenues from customized software development

Revenues from consulting

Total revenues

Cost of Revenues

Cost of revenues primarily consists of salaries

and outsourcing expenses (e.g., bonuses, employee benefits, payroll taxes, outsourcing professional fees) for personnel and parties directly

involved in the delivery of products and services to customers.

Cost of revenues also includes royal/license payments to vendors, and

hosting and infrastructure costs related to the delivery of the Company’s products and services.

Advertising Expenses

Advertising expenses consist primarily of costs

of promotion and marketing for the Company’s image and products and services, and costs of direct advertising, and are included

in selling expenses.

The Company expenses advertising costs as incurred or the first time the advertising takes place, whichever is earlier,

in accordance with the ASC Topic 720-35, “Advertising Costs”.

The advertising expenses are $ 473,132 and $ 832,491 for the years

ended December 31, 2024 and 2023, respectively.

Concentration of Credit Risk

Financial instruments that potentially subject

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

The Company usually does not

require collateral or other security to support these receivables.

The Company conducts periodic reviews of the financial condition and

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

For the year ended December 31, 2024, customer

A represents 43.8 % of the Company’s total revenues.

For the year ended December 31, 2023, customer B, C and D represent 15.1 %, 10.4 %

and 10.1 %, respectively, of the Company’s total revenues.

For the years ended December 31, 2024 and 2023,

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

Segment Reporting

ASC Topic 280, “Segment Reporting”,

requires use of the management approach model for segment reporting.

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

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

and allocating resources.

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

any other manner in which management disaggregates a company (see NOTE 20).

Comprehensive Income or Loss

ASC Topic 220, “Comprehensive

Income”, establishes standards for reporting and display of comprehensive income or loss, its components and accumulated

of revenues primarily consists of salaries and outsourcing expenses for personnel and parties directly involved in the delivery of services

to customers.

expenses consist primarily of costs of promotion and marketing for the Company’s image and services, and costs of direct advertising,

and are included in selling expenses.

The Company expenses advertising costs as incurred or the first time the advertising takes place,

whichever is earlier, in accordance with the ASC Topic 720-35, “Advertising Costs”.

The advertising expenses were $ 310,572

and $ 426,457 for the years ended December 31, 2025 and 2024, respectively.

Concentration

of Credit Risk

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

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

The Company conducts periodic reviews

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

the years ended December 31, 2025 and 2024, customers account for 10% or more of the Company’s revenues are as follows:

OF CONCENTRATION OF CREDIT RISK

For the Years

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

the years ended December 31, 2025 and 2024, no vendor accounts for 10% or more of the Company’s purchases.

of December 31, 2025 and 2024, vendors account for 10% or more of the Company’s accounts payable and accrued expenses are as follows:

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

The management approach

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

for making operating decisions, assessing performance and allocating resources.

Reportable segments are based on services, geography,

legal structure, management structure, or any other manner in which management disaggregates a company (see NOTE 16).

Comprehensive

Income or Loss

Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income or loss, its components

and accumulated balances.

Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources.

other comprehensive income (loss), as presented in the accompanying consolidated statements of changes in shareholders’ equity,

Accumulated other comprehensive income (loss), as presented in the consolidated statements of changes in shareholders’ equity,

consists of changes in unrealized gains and losses on foreign currency translation.

Loss Per Share

The Company computes basic and diluted loss per

share in accordance with ASC Topic 260, “Earnings Per Share”.

Basic loss per share is computed by dividing net loss by the

weighted average number of common shares outstanding during the reporting period.

Diluted loss per share is computed by dividing net loss

by the weighted average number of common shares and potentially dilutive common shares outstanding during the reporting period.

dilutive common shares are not included in the calculation of diluted loss per share if their effect would be anti-dilutive.

Stock-based Compensation

The Company accounts for stock-based compensation

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

The cost of services received from employees

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

loss based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service

period or vesting period.

Income (Loss) Per Share

Company computes basic and diluted net income (loss) per share in accordance with ASC Topic 260, “Earnings Per Share”.

net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during

the reporting period.

Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of

common shares and potentially dilutive common shares outstanding during the reporting period.

Potentially dilutive common shares are

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

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

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

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

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

The Company records forfeitures as they occur.

Related Parties and Transactions

The Company identifies related parties, and accounts

for and discloses related party transactions in accordance with ASC Topic 850, “Related Party Disclosures” and other relevant

ASC standards.

Parties, which can be an entity or individual,

are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence

over the Company in making financial and operational decisions.

Entities are also considered to be related if they are subject to common

control or common significant influence.

Transactions involving related parties cannot

be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive and free market dealings may

Representations about transactions with related parties, if made, shall not imply that the related party transactions are consummated

on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Income taxes are accounted for using an asset

and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes”.

Under this method, income

tax expense is recognized for the amount of:

(i) taxes payable or refundable for the current period and (ii) deferred tax consequences

of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns.

tax assets also include the prior years’ net operating losses carried forward.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the

period that includes the enactment date.

A valuation allowance is provided to reduce the deferred tax assets reported if based on the

weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will

not be realized.

The Company follows ASC Topic 740, which prescribes

a more-likely-than-not threshold for financial statements recognition and measurement of a tax position taken or expected to be taken

in a tax return.

ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and

deferred tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes

in interim periods, and income tax disclosures.

Under the provisions of ASC Topic 740, when tax

returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others

are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.

benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence,

management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals

or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not

recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement

with the applicable taxing authority.

The portion of the benefits associated with tax positions taken that exceeds the amount measured

as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated

interest and penalties that would be payable to the taxing authorities upon examination.

Interest associated with unrecognized tax benefits

is classified as interest expenses and penalties are classified in general and administrative expenses in the consolidated statements

of operations and comprehensive loss.

Business Combinations

The Company accounts its business combinations

using the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations”.

The purchase price of

the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and non-controlling interests,

if any, based on their estimated fair values as of the acquisition date.

The excess of the purchase price over those fair values is recorded

Acquisition-related expenses are expensed as incurred.

Consideration transferred in a business combination

is measured at the fair value as of the acquisition date.

Where the consideration in an acquisition includes contingent consideration,

and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is

recognized and measured at its fair value at the acquisition date and is recorded as a liability.

It is subsequently carried at fair value

with changes in fair value reflected in earnings.

In a business combination achieved in stages,

the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date

fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of operations and comprehensive loss.

Fair value is determined based upon the guidance

of ASC Topic 820, “Fair Value Measurements and Disclosures”, and generally are determined using Level 2 inputs and Level 3

The determination of fair value involves the use of significant judgments and estimates.

The Company utilizes the assistance of

a third-party valuation appraiser to determine the fair value as of the acquisition date.

Fair Value Measurements

The Company performs fair value measurements in

accordance with ASC Topic 820.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date.

ASC Topic 820 establishes a fair value hierarchy that requires

an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the

fair value measurement.

Parties and Transactions

Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC Topic 850, “Related

Party Disclosures” and other relevant ASC standards.

which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company

or exercise significant influence over the Company in making financial and operational decisions.

Entities are also considered to be

related if they are subject to common control or common significant influence.

involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive

and free market dealings may not exist.

Representations about transactions with related parties, if made, shall not imply that the related

party transactions are consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations

can be substantiated.

taxes are accounted for using an asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income

Under this method, income tax expense is recognized for the amount of:

(i) taxes payable or refundable for the current

period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s

financial statements or tax returns.

Deferred tax assets also include the prior years’ net operating losses carried forward.

tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary

differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized

in the results of operations in the period that includes the enactment date.

A valuation allowance is provided to reduce the deferred

tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or

all of the deferred tax assets will not be realized.

Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statements recognition and measurement

of a tax position taken or expected to be taken in a tax return.

ASC Topic 740 also provides guidance on recognition of income tax assets

and liabilities, classification of current and deferred tax assets and liabilities, accounting for interest and penalties associated

with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

the provisions of ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination

by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position

that would be ultimately sustained.

The benefit of a tax position is recognized in the consolidated financial statements in the period

during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon

examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with

other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit

that is more than 50% likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated

with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits

in the consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon

Interest associated with unrecognized tax benefits is classified as interest expenses and penalties are classified in general

and administrative expenses in the consolidated statements of operations and comprehensive income (loss).

A Convertible Preferred Shares and Derivative Liability

the Company issues the Series A convertible preferred shares (see NOTE 13), it first evaluates the balance sheet classification of the

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

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

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

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

under ASC Topic 815, “Derivatives and Hedging”.

Generally, characteristics that require derivative treatment include, among

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

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

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

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

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

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

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

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

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

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

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

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

of a third-party valuation appraiser.

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

related to forecasted cash flows and discount rate.

Value Measurements

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

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

market participants at the measurement date.

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

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

An asset’s or a liability’s

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

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

1 unchanged sentence

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

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

As of December 31, 2024 and 2023, the carrying

values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported

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

Assets measured at fair value on a recurring basis

as of December 31, 2024 and 2023 are summarized below (see NOTE 6):

Fair Value Measurements as of December 31, 2024

Quoted Prices in Active Markets for Identical Assets

Significant Other

Fair Value at

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

or liabilities.

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

except for derivative liability, approximated their fair values reported in the consolidated balance sheets due to the short-term maturities

of these instruments.

and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are summarized below (also see NOTE 5 for

investments):

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Value Measurements as of December 31, 2025

Markets for Identical

December 31, 2025

Investments in marketable securities

Long-term investment in warrants

Fair Value Measurements as of December 31, 2023

Quoted Prices in Active Markets for Identical Assets

Significant Other

Fair Value at

Derivative liability

Value Measurements as of December 31, 2024

Markets for Identical

December 31, 2024

Investments in marketable securities

Long-term investment in warrants

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

In November 2023, the FASB issued Accounting Standards

Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which expands annual

and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

2023-07 is effective for public companies for annual reporting periods beginning after December 15, 2023, on a retrospective basis.

The Company adopted ASU No.

2023-07 on January 1, 2024 (see NOTE 20).

New Accounting Pronouncements Not Yet Effective

In December 2023, the FASB issued ASU No.

Held for Sale and Discontinued Operations

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

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

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

(ii) the entity to be sold

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

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

be sold have been initiated;

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

qualify for recognition as a completed sale within one year;

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

that is reasonable in relation to its current fair value;

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

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

A component or a group of components of an entity

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

If the fair value of the

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

as appropriate.

Assets held for sale are not depreciated or amortized.

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

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

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

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

balance sheets for all periods presented.

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

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

Prior periods have been adjusted to

conform to the current presentation.

The required disclosures are included in NOTE 15.

Accounting Pronouncements

Accounting Pronouncements Recently Adopted

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

2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures,

primarily related to the rate reconciliation and income taxes paid information.

2023-09 is effective for public companies for

annual reporting periods beginning after December 15, 2024, on a prospective basis.

For all other entities, it is effective for annual

reporting periods beginning after December 15, 2025, on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating

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

In November 2024, the FASB issued ASU No.

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

Disaggregation of

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

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

2024-03 is effective for fiscal years beginning after

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

Early adoption is permitted.

Improvements to

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

reconciliation and income taxes paid information.

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

after December 15, 2024, on a prospective basis.

The Company adopted ASU No.

2023-09 for the year ended December 31, 2025 (see NOTE 11).

Accounting Pronouncements Not Yet Effective

November 2024, the FASB issued ASU No.

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

Disclosures (Subtopic 220-40):

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

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

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

Early adoption

is permitted.

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

July 2025, the FASB issued ASU No.

2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for

Accounts Receivable and Contract Assets.

The amendments in ASU No.

2025-05 provide entities with a practical expedient to simplify the

estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted

for under ASC Topic 606 by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining

life of the asset.

2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within

those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its consolidated financial

statements and related disclosures.

December 2025, the FASB issued ASU No.

2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, which clarifies the

guidance in Topic 270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required

interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual

reporting period that have a material impact on the entity.

2025-11 is effective for fiscal years beginning after December

15, 2027, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating

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

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

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

3 – ACCOUNTS RECEIVABLE

receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

Accounts receivable – non-factored

Accounts receivable – factored with recourse

Accounts receivable –

factored with recourse

Total accounts receivable, gross

allowance for credit losses

allowance for credit

Total accounts receivable

current portion

( 1,950,050 )

( 2,623,682 )

Accounts receivable, non-current

NOTE 4 – PREPAID EXPENSES

Prepaid expenses consist of the following:

Prepayments to software and consulting services vendors

Prepaid marketing fees

Prepaid subscription fees

Prepaid insurance premium

Total prepaid expenses

NOTE 5 – RELATED PARTY TRANSACTIONS

As of December 31, 2024 and 2023, the Company

had a due to related parties balance of $ 47 and $ 1,476 , respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”)

and major shareholder of the Company.

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

During the year ended December

31, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company in a net amount

During the year ended December 31, 2023, the related party paid operating expenses on behalf of the Company and received the

payments in a net amount of $ 1,123 .

As of December 31, 2024 and 2023, the Company

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

the non-controlling interest shareholder of HeartCore Luvina.

4 – RELATED PARTY TRANSACTIONS

of December 31, 2025 and 2024, the Company had due to related party balances of $ 285 and nil , respectively, from Sumitaka Yamamoto, the

Chief Executive Officer (“CEO”) and major shareholder of the Company.

The balance is unsecured, non-interest bearing and

due on demand.

During the years ended December 31, 2025 and 2024, the related party paid operating expenses on behalf of the Company

and received the payments in a net amount of $ 299 and nil , respectively.

of December 31, 2025 and 2024, the Company had due to related party balances of nil and

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

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

the year ended December 31, 2024, the related party paid operating expenses on behalf of the Company in the amount of $ 899 .

As of December

31, 2024 and 2023, the Company had an accounts payable and accrued expenses balance of $ 47,199 and nil , respectively, to Luvina Software.

During the year ended December 31, 2024, the Company engaged the related party for software development and other support services in

the amount of $ 202,288 .

As of December 31, 2024 and 2023, the Company

had a loan receivable balance of $ 164,067 and $ 227,704 , respectively, from Heartcore Technology Inc., a company controlled by the CEO

of the Company.

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

The balance is unsecured, bears an annual interest of

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

During the years ended December 31, 2024 and 2023, the Company

received repayments of $ 42,104 and $ 45,404 , respectively, from this related party.

As of December 31, 2024 and 2023, the Company

had a short-term debt balance of $ 75,000 and nil , respectively, to Prakash Sadasivam, the CEO of Sigmaways and Chief Strategy Officer

(“CSO”) of the Company.

During the year ended December 31, 2025, the Company

repaid to the related party for operating expenses the related party paid on behalf of the Company of $ 884 .

During the year ended December 31, 2024, the related party paid operating expenses on behalf of the Company in the amount of $ 899 .

As of December 31, 2025 and 2024, the Company had accounts payable and accrued expenses balances of $ 124,618 and

respectively, to Luvina Software.

During the years ended December 31, 2025 and 2024, the Company engaged the related party for

software development and other support services of $ 290,305 and

respectively.

of December 31, 2025 and 2024, the Company had a short-term debt balance of $ 75,000 to Prakash Sadasivam, the CEO and non-controlling

shareholder of Sigmaways.

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

The balance is unsecured,

bears an annual interest of 7.5 %, and matures on June 30, 2025.

NOTE 6 – INVESTMENTS

Investment in Equity Securities

On May 2, 2023, the Company purchased a $ 300,000

promissory note from a non-related company.

The note bears an interest rate of 8 % per annum and matures on the earlier of 1) the date

of the closing of capital-raising transactions in the amount of $ 300,000 or more consummated by the promissory note issuer, 2) the date

on which the promissory note issuer completes its initial public offering on the Nasdaq Capital Market or New York Stock Exchange, or

3) 180 days following the note issuance.

The interest rate would be 12 % per annum for any amount that is unpaid when due.

2023, the Company entered into a note exchange agreement with the promissory note issuer to convert all of the promissory note principal

amount and accrued interest into 600,000 shares of common shares of the promissory note issuer.

The Company recognized impairment loss

on investment in equity securities of $ 300,000 and nil for the years ended December 31, 2024 and 2023, respectively.

Investment in Warrants

The Company received warrants from its customers

as noncash consideration from consulting services.

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

value at contract inception using the Black-Scholes model and binomial model with the assistance of a third-party valuation appraiser.

The following table summarizes the inputs to the models used to estimate the fair value of the warrants received and recognized as consulting

services revenues for the years ended December 31, 2024 and 2023:

For the Years Ended

$ 3.38 – 439.99

The balance is unsecured, bears an

annual interest of 7.5 % and due on demand.

5 – INVESTMENTS

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

The warrants are not registered for public

sale and are initially measured at fair value at contract inception using the binomial model with the assistance of a third-party valuation

The following table summarizes the inputs to the model used to estimate the fair value of the warrants received and recognized

as consulting services revenues for the years ended December 31, 2025 and 2024:

SCHEDULE OF ESTIMATE THE FAIR VALUE OF WARRANTS RECEIVED AND RECOGNIZED AS CONSULTING SERVICES REVENUES

the Years Ended

Exercise price

Expected volatility

52.57 % – 96.30 %

Time to maturity (in years)

Risk-free interest rate

3.52 % – 4.12 %

The Company’s investment in warrants is

measured on a recurring basis and carried on the balance sheets at an estimated fair value at the end of the year.

The valuation of investment

in warrants is determined using the Black-Scholes model.

The following table summarizes the inputs to the model used to estimate the fair

value of the investment in warrants as of December 31, 2024 and 2023:

Company’s investment in warrants is measured on a recurring basis and carried on the consolidated balance sheets at an estimated

fair value at the end of the year.

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

The following

table summarizes the inputs to the model used to estimate the fair value of the investment in warrants as of December 31, 2025 and 2024:

Exercise price

2 unchanged sentences

Risk-free interest rate

The following table summarizes the Company’s

investment in warrants activities for the years ended December 31, 2024 and 2023:

For the Years Ended

Fair value of investment in warrants at beginning of the year

Warrants and Rights Outstanding, Measurement Input

following table summarizes the Company’s investment in warrants activities for the years ended December 31, 2025 and 2024:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

the Years Ended

Fair value of investment in warrants

at beginning of the year

Warrants received as noncash consideration

5 unchanged sentences

( 9,610,628 )

Fair value of investment in warrants at end of the year

Fair value of investment

in warrants at end of the year

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

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

The warrants to be transferred are exercisable only upon its Consulting Customer’s consummation of the Merger with a special purpose

acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

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

Investments in Marketable Securities

The Company’s investments in marketable

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

exercise of warrants described above.

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

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

The following table summarizes the Company’s investments in marketable securities

activities for the years ended December 31, 2024 and 2023:

For the Years Ended

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

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

The warrants to be transferred are exercisable only upon its Consulting Customer’s consummation of the merger with

a special purpose acquisition company or the occurrence of other fundamental events defined in the warrants agreement it had with

the Consulting Customer.

The Company completed its sale of warrants in September 2024 and recorded $ 3,970,628 in loss on sale of

warrants from this transaction.

in Marketable Securities

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

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

They are registered for public sale with readily determinable

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

following table summarizes the Company’s investments in marketable securities activities for the years ended December 31, 2025

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

the Years Ended

Fair value of investments in marketable

securities at beginning of the year

Marketable securities received as noncash consideration

Marketable securities converted from warrants **

Changes in fair value of investments in marketable securities

Changes in fair value of investments in marketable

( 1,494,234 )

Marketable securities sold

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

NOTE 7 – LONG-TERM NOTE RECEIVABLE

On September 1, 2023, the Company purchased a

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

The note bears an interest rate of 4 % per annum and matures on September 2, 2026 .

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

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

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

The interest rate would be 10 % per annum for

any amount that is unpaid when due.

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

of long-term note receivable of $ 100,000 during the year ended December 31, 2024.

NOTE 8 – PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

( 2,412,385 )

Marketable securities

( 1,071,732 )

Fair value of investments

in marketable securities at end of the year

For the years ended December 31, 2025 and 2024, the Company exercised a total of 490,674 and 813,871 shares of warrants in exchange for

490,674 and 813,871 shares of common shares, respectively.

6 – PROPERTY AND EQUIPMENT, NET

and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

Leasehold improvements

1 unchanged sentence

accumulated depreciation

Property and equipment, net

Depreciation expenses are $ 112,139 and $ 98,644

for the years ended December 31, 2024 and 2023, respectively.

NOTE 9 – INTANGIBLE ASSET, NET

Intangible asset, net is as follows:

Customer relationship

accumulated amortization

( 1,221,875 )

accumulated impairment

( 3,878,125 )

Intangible asset, net

Amortization expenses are $ 637,500 and $ 584,375

for the years ended December 31, 2024 and 2023, respectively.

NOTE 10 – LEASES

The Company has entered into operating leases

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

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

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

Right-of-use assets of finance leases of $ 60,440 and $ 85,613 are included in property and equipment, net as of December 31,

2024 and 2023, respectively.

Operating lease costs for lease payments are recognized

on a straight-line basis over the lease term.

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

over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method.

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

The components of lease costs are as follows:

For the Years Ended

Finance lease costs

Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease costs

Operating lease costs

Short-term lease costs

Total lease costs

The following table presents supplemental information

related to the Company’s leases:

For the Years Ended December 31,

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

Operating cash flows from finance leases $ 937 $ 388

Operating cash flows from operating leases 408,962 361,929

Financing cash flows from finance leases 16,766 22,422

Finance lease right-of-use assets obtained in exchange for finance lease liabilities -

Operating lease right-of-use assets obtained in exchange for operating lease liabilities 125,735 317,040

Remeasurement of operating lease liabilities and right-of-use assets due to lease modification 23,956 30,186

Weighted average remaining lease term (years)

Finance leases 3.8 4.7

Operating leases 6.8 7.5

Weighted-average discount rate (per annum)

Finance leases 1.32 % 1.32 %

Operating leases 1.37 % 1.34 %

As of December 31, 2024, the future maturity of

lease liabilities is as follows:

Year Ended December 31,

Total lease payments

imputed interest

Total lease liabilities

current portion

Non-current lease liabilities

Pursuant to the operating lease agreements, the

Company made security deposits to the lessors.

The security deposits amounted to $ 307,996 and $ 348,428 as of December 31, 2024 and 2023,

respectively.

NOTE 11 – OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

Accrued consumption taxes

Total property and equipment,

the years ended December 31, 2025 and 2024, the Company recognized depreciation expenses of $ 46,373 and $ 70,218 , respectively.

7 – OTHER CURRENT LIABILITIES

current liabilities consist of the following:

OF OTHER CURRENT LIABILITIES

Customer refund liability *

Total other current liabilities

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

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

NOTE 12 – FACTORING LIABILITY

Sigmaways, the subsidiary acquired by the Company

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

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

Under the terms of the

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

Sigmaways (“Purchased Receivable”).

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

Selected accounts receivable is submitted to the

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

Upon payment by the customers, the remainder

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

The Factoring Agreement specifies that eligible

accounts receivable is factored with recourse.

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

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

The performance of all obligations and payments to the

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

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

The Factoring Agreement has an initial term of

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

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

early termination fee.

The Factoring Agreement contains covenants that

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

for agreements of this type.

As of December 31, 2024 and 2023, there were $ 172,394

and $ 562,767 borrowed and outstanding under the Factoring Agreement, respectively.

There are various fees charged by the Factor, including

initial discount purchase fee, factoring fee and interest expense.

During the years ended December 31, 2024 and 2023, the Company recorded

$ 60,451 and $ 67,257 in interest expenses related to the Factoring Agreement, respectively.

NOTE 13 – INSURANCE PREMIUM FINANCING

In January 2024, the Company entered into an insurance

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

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

In January 2023, the Company entered into an insurance

premium financing agreement with BankDirect Capital Finance for $ 389,035 at an annual interest rate of 16.04 % for ten months from February

1, 2023, payable in ten monthly installments of principal and interest.

As of December 31, 2024 and 2023, the balances

of the insurance premium financing were $ 16,626 and nil , respectively.

During the years ended December 31, 2024 and 2023, the Company

recorded $ 12,047 and $ 29,171 , respectively, in interest expenses related to the insurance premium financing.

NOTE 14 – DEBTS

Short-term Debt

The Company’s short-term debt represents

a loan borrowed from a financial institution as follows:

Name of Financial Institutions Original Amount

Borrowed Loan

Duration Annual

Interest Rate Balance as of

2024 Balance as of

Biz Forward Co., Ltd.

JPY 19,280,001 (a) 12/26/2023 – 1/31/2024 36.840 % $ -

(a) The debt is secured by accounts receivable of HeartCore Japan in the amount of JPY 23,882,562 .

Total other current

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

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

As of the date of this report,

the Company did not make payment to the customer.

8 – FACTORING LIABILITY

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

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

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

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

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

in Purchased Receivable.

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

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

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

Pursuant to the terms of the recourse provision,

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

The performance

of all obligations and payments to the Factor is secured by all Sigmaways’ now owned and hereafter assets and any sums maintained

by the Factor that are identified as payable to Sigmaways.

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

terminates pursuant to the terms of the Factoring Agreement.

Sigmaways may terminate the Factoring Agreement with sixty days’ written

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

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

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

of December 31, 2025 and 2024, there were $ 135,982 and $ 172,394 borrowed and outstanding under the Factoring Agreement, respectively.

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

For the years

ended December 31, 2025 and 2024, the Company recorded $ 46,475 and $ 60,451 in interest expenses related to Factoring Agreement, respectively.

9 – INSURANCE PREMIUM FINANCING

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

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

and interest.

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

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

of December 31, 2025 and 2024, the balances of the insurance premium financing were $ 13,430 and $ 16,626 , respectively.

For the years

ended December 31, 2025 and 2024, the Company recorded $ 9,917 and $ 12,047 in interest expenses related to insurance premium financing,

respectively.

10 – LONG-TERM DEBTS

The Company’s long-term debts included bond

payable and loans borrowed from banks and financial institutions, which consist of the following:

Name of Banks/Financial Institutions Original Amount

Borrowed Loan

Duration Annual

Rate Balance as of

2024 Balance as of

Corporate bond issued through Resona Bank, Limited JPY 100,000,000 (b)(d) 1/10/2019 – 1/10/2024 0.430 % $ - $ 70,507

Loans with banks and financial institutions

Resona Bank, Limited JPY 50,000,000 (b)(c) 12/29/2017 – 12/29/2024 0.675 % - 54,678

Resona Bank, Limited JPY 10,000,000 (b)(c) 9/30/2020 – 9/30/2027 1.000 % 29,440 38,624

Resona Bank, Limited JPY 40,000,000 (b)(c) 9/30/2020 – 9/30/2027 1.000 % 117,762 154,495

Resona Bank, Limited JPY 20,000,000 (b)(c) 11/13/2020 – 10/31/2027 1.600 % 60,386 78,925

Sumitomo Mitsui Banking Corporation JPY 100,000,000 (b) 12/28/2018 – 7/1/2024 1.475 % - 11,612

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (b)(c) 12/30/2019 – 12/30/2026 1.975 % 22,441 31,072

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (b)(c) 10/4/2023 – 9/30/2028 0.600 % 54,062 68,152

Sumitomo Mitsui Banking Corporation JPY 10,000,000 (b)(c) 10/4/2023 – 9/30/2028 0.000 % 54,062 68,152

The Shoko Chukin Bank, Ltd.

JPY 50,000,000 7/27/2020 – 6/30/2027 1.290 % 141,638 183,319

The Shoko Chukin Bank, Ltd.

JPY 30,000,000 7/25/2023 – 6/30/2028 Tokyo Interbank Offered Rate +

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

SCHEDULE OF LONG-TERM DEBTS

of Bank/Financial Institution

as of December 31, 2025

December 31, 2024

First Home Bank

$ 350,000 (a)

4/18/2019 – 4/18/2029

Japan Finance Corporation JPY 80,000,000 11/17/2020 – 11/30/2027 0.210 % 256,971 327,152

Higashi-Nippon Bank JPY 30,000,000 (b) 3/31/2022 – 3/31/2025 1.550 % 51,597 93,070

Higashi-Nippon Bank JPY 30,000,000 (b)(c) 10/11/2023 – 9/30/2028 1.600 % 164,401 204,471

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

Wall Street Journal U.S.

Rate + 2.75 %

Small Business Administration

$ 350,000 (a)

5/30/2020 – 5/30/2050

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

Aggregate outstanding principal balances

unamortized debt issuance costs ( 12,000 ) ( 18,238 )

current portion

Non-current portion

(b) These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder.

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

(d) The bond is guaranteed by Resona Bank, Limited.

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

Interest expenses for short-term debt and long-term

debts are $ 3,245 and $ 68,290 , respectively, for the year ended December 31, 2024.

Interest expenses for short-term debt and long-term

debts are $ 5,150 and $ 61,390 , respectively, for the year ended December 31, 2023.

During the year ended December 31, 2023, the Company

entered into amended loan agreements with banks and a financial institution for certain debts.

The amended terms mainly include changes

of installment payment amount and maturity date.

The Company analyzed the amendments under ASC Topic 470 and concluded that the amended

debts are not considered substantially different and the transactions are accounted for as debt modifications with no gain or loss recognized.

As of December 31, 2024, future minimum principal

payments for long-term debts are as follows:

Year Ended December 31,

NOTE 15 – INCOME TAXES

United States

HeartCore USA, Sigmaways and HeartCore Financial,

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

the United States.

Sigmaways B.V.

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

the years ended December 31, 2025 and 2024, the Company recorded $ 31,268 and $ 46,291 in interest expenses related to long-term debts,

respectively.

of December 31, 2025, future minimum principal payments for long-term debts are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

Ended December 31,

11 – INCOME TAXES

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

with respect to the profit generated from the United States.

is a company incorporated in Netherlands.

in November 2019.

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

subject to a statutory tax rate of 25.80 %.

Sigmaways Technologies is a company incorporated

in British Columbia in Canada in August 2020.

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

in British Columbia it operates.

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

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

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

are 2 % and 12 %, respectively.

HeartCore Luvina is a company incorporated in

Vietnam in November 2023.

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

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

Technologies is a company incorporated in British Columbia in Canada.

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

the tax jurisdiction in British Columbia it operates.

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

tax abatement.

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

The provincial and territorial lower and higher tax

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

Luvina is a company incorporated in Vietnam.

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

The Company conducts its major businesses in Japan

and is subject to tax in this jurisdiction.

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

examination by the local tax authority.

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

governments, and in the aggregate result in an effective statutory tax rate of approximately 34.59 % for the years ended December 31, 2024

For the years ended December 31, 2024 and 2023,

the Company’s income tax benefit are as follows:

For the Years Ended

Financial – Japan and Higgs Field are companies incorporated in Japan.

Income taxes in Japan are imposed by the national, prefectural

and municipal governments, and in the aggregate result in an effective statutory tax rate of approximately 34.59 %.

the years ended December 31, 2025 and 2024, the Company’s income tax expense (benefit) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

the Years Ended

( 1,297,495 )

Income tax benefit

Income tax expense

$ ( 363,156 )

the adoption of ASU No.

2023-09 on a prospective basis, a reconciliation of the provision for income taxes to the amount computed by

applying the 21% U.S.

federal statutory income tax rate to loss from continuing operations before income tax expense (benefit) for the

year ended December 31, 2025 is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

the Year Ended

December 31, 2025

federal statutory

$ ( 869,212 )

A reconciliation of the effective income tax rates

reflected in the accompanying consolidated statements of operations and comprehensive loss to the Japanese statutory tax rate for the

years ended December 31, 2024 and 2023 is as follows:

For the Years Ended

Japanese statutory tax rate

Effect of income tax difference under different tax jurisdictions

State and local income tax, net of federal

income tax effect

Foreign tax effects:

Other foreign jurisdictions

Effect of expenses not deductible for tax

Change in valuation allowance

Other adjustments

Effective income

the year ended December 31, 2024, prior to the adoption of ASU No.

2023-09, a reconciliation of the effective income tax rate to the

federal statutory income tax rate is as follows:

the Year Ended December 31, 2024

federal statutory rate

State and local income tax, net of federal

income tax effect

Effect of income tax difference under different

tax jurisdictions

Effect of expenses not deductible for tax purpose

2 unchanged sentences

Other adjustments

Effective income tax rate

The tax effects of temporary differences that

give rise to the deferred tax assets and liabilities at December 31, 2024 and 2023 are presented below:

Effective income tax

tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2025 and 2024 are presented

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets

1 unchanged sentence

Expense adjustments

Research and development – costs capitalized for tax purposes

Lease liabilities

6 unchanged sentences

( 1,625,379 )

Total deferred tax assets, net

Total deferred tax assets,

Deferred tax liabilities

Right-of-use assets

$ ( 683,775 )

$ ( 880,157 )

Asset retirement costs

Intangible asset acquired through business combination

( 1,264,375 )

Fair value change on derivative

Total deferred tax liabilities

$ ( 715,525 )

$ ( 2,192,145 )

Deferred tax assets, net

Deferred tax liabilities, net

$ ( 1,264,375 )

The realization of deferred tax assets is dependent

upon the generation of sufficient taxable income of the appropriate character in future periods.

The Company regularly assesses the ability

to realize its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred

tax assets will not be realized.

The Company weighs all available positive and negative evidence, including its earnings history and results

of recent operations, projected future taxable income, and tax planning strategies.

The amount of the deferred tax asset considered

realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or

if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective

evidence such as the Company’s projections for growth.

The adjustments of a valuation allowance against deferred tax assets may

cause greater volatility in the effective income tax rate in the periods in which the valuation allowance is adjusted.

Uncertain Tax Positions

The Company evaluates each uncertain tax position

(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits

associated with the tax positions.

As of December 31, 2024 and 2023, the management considered the Company did not have any significant

unrecognized uncertain tax positions.

The Company did not incur any interest or penalties tax for the years ended December 31, 2024 and

The Company does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months from

December 31, 2024.

The Company’s Japan subsidiaries income tax returns filed for the tax years ending from May 31, 2020 through

December 31, 2024 are subject to examination by the relevant taxing authorities.

The Company files income tax returns in the U.S.

and state jurisdictions.

The tax years ending from December 31, 2021 through December 31, 2023 generally remain subject to examination

by the Internal Revenue Service and various state taxing authorities.

Deferred tax assets,

realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future

The Company regularly assesses the ability to realize its deferred tax assets and establishes a valuation allowance if it is

more-likely-than-not that some portion of the deferred tax assets will not be realized.

The Company weighs all available positive and

negative evidence, including its earnings history and results of recent operations, projected future taxable income, and tax planning

amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the

carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present

and additional weight may be given to subjective evidence such as the Company’s projections for growth.

The adjustments of a valuation

allowance against deferred tax assets may cause greater volatility in the effective income tax rate in the periods in which the valuation

allowance is adjusted.

following table presents income taxes paid, net of refunds:

SCHEDULE OF INCOME TAXES PAID, NET OF REFUNDS

the Year Ended December 31, 2025

State and local

Tax Positions

Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical

merits, and measures the unrecognized benefits associated with the tax positions.

As of December 31, 2025 and 2024, the management considered

the Company did not have any significant unrecognized uncertain tax positions.

The Company did not incur any interest or penalties tax

for the years ended December 31, 2025 and 2024.

The Company does not anticipate any significant increases or decreases in unrecognized

tax benefits in the next twelve months from December 31, 2025.

The Company files U.S.

federal, state and foreign tax returns.

years ending from December 31, 2022 through December 31, 2024 generally remain subject to examination by the Internal Revenue Service

and various state taxing authorities.

The tax years ending from December 31, 2021 through December 31, 2024 generally remain subject

to examination by various foreign jurisdictions.

The Company is not currently under examination in any jurisdictions.

NOTE 16 – STOCK-BASED COMPENSATION

On August 6, 2021, the Board of Directors and

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

are authorized for issuance.

On August 2, 2022, the Company awarded options

to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $ 2.94 per share to an employee of the Company.

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

with the expiration date on August 2, 2032 .

On August 9, 2022, the Company awarded options

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

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

On February 3, 2023, the Company awarded options

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

The options vest 50 % on the grant date and February 1, 2024, respectively, with the expiration date on February 3, 2033 .

On August 25, 2023, the Company awarded options

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

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

with the expiration date on August 25, 2033 .

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

Company approved a 2023 Equity Incentive Plan (“2023 Plan”), under which 2,000,000 shares of common shares are authorized

for issuance.

The following table summarizes the stock options

activity and related information for the years ended December 31, 2024 and 2023:

12 – STOCK-BASED COMPENSATION

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

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

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

shares of common shares are authorized for issuance.

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

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

The stock options vest on each annual

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

December 25, 2031 .

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

to three prior employees of the Company.

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

on August 9, 2026 .

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

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

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

with the expiration date on February 3, 2033 .

following table summarizes the stock options activities and related information for the years ended December 31, 2025 and 2024:

SCHEDULE OF STOCK OPTION ACTIVITY

As of January 1, 2024

Granted 102,000 1.17 9.11 -

Forfeited ( 21,500 ) 2.54 - -

As of December 31, 2024

Forfeited ( 40,500 ) 2.43 - -

As of December 31, 2025

Vested and exercisable as of December

The Company calculated the fair value of options

granted in the year ended December 31, 2023 using the Black-Scholes model.

The following table summarizes the inputs to the model used

to estimate the fair value of the options granted for the year ended December 31, 2023:

For the Year Ended December 31,

Expected volatility

54.63 % – 178.13 %

Risk-free interest rate

3.67 % – 4.37 %

Dividend yield

Exercise term (in years)

The Company recognized stock-based compensation

related to options of $ 247,859 and $ 612,937 during the years ended December 31, 2024 and 2023, respectively.

The outstanding unamortized

stock-based compensation related to options was $ 121,550 (which will be recognized through December 2025) as of December 31, 2024.

Restricted Stock Units (“RSUs”)

On February 9, 2022, the Company entered into

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

The RSUs vest on each annual anniversary

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

The fair value of the RSUs

at grant date is $ 424,809 .

On March 22, 2023, the Company entered into agreements

with employees and service providers of Sigmaways and granted 671,350 RSUs pursuant to the 2021 Plan.

The RSUs are fully vested upon issuance.

the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation related to stock options of $( 286,000 ) and

$ 247,859 , respectively.

There was no outstanding unamortized stock-based compensation related to stock options as of December 31, 2025.

Stock Units (“RSUs”)

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

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

shares of common shares.

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

On October 1, 2024, the Company granted 69,653

RSUs pursuant to the 2023 Plan to four executives of the Company.

The RSUs are fully vested upon issuance.

The fair value of the RSUs

at grant date is $ 52,944 .

The following table summarizes the RSUs activity

for the years ended December 31, 2024 and 2023:

Number of RSUs

Weighted Average

October 1, 2024, the Company granted 69,653 RSUs pursuant to the 2023 Plan to four executives of the Company.

The RSUs are fully vested

upon issuance.

The fair value of the RSUs at grant date is $ 52,944 .

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

The RSUs are fully vested

on the grant date.

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

following table summarizes the RSUs activities and related information for the years ended December 31, 2025 and 2024:

SCHEDULE OF RESTRICTED STOCK UNITS

Grant Date Fair

Value Per Share

Unvested as of January 1, 2024

1 unchanged sentence

Unvested as of December 31, 2025

The Company recognized stock-based compensation

related to RSUs of $ 120,885 and $ 817,576 during the years ended December 31, 2024 and 2023, respectively.

The outstanding unamortized

stock-based compensation related to RSUs was $ 33,169 (which will be recognized through February 2026) as of December 31, 2024.

NOTE 17 – SHAREHOLDERS’ EQUITY

The Company is authorized to issue 200,000,000

shares of common shares, par value of $ 0.0001 per share, and 20,000,000 shares of preferred shares, par value of $ 0.0001 per share.

On February 1, 2023, 2,500,000 shares of common

shares were issued for the acquisition of 51 % of the outstanding shares of Sigmaways and its subsidiaries with fair value of $ 3,150,000

(see NOTE 19).

On October 23, 2023, the Company entered into an at the market offering

agreement (“ATM Agreement”) with H.C.

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

the Company may offer and sell, from time to time, through Wainwright, shares of the Company’s common shares, par value of $ 0.0001

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

The Company pays commission

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

During the years ended December 31, 2024 and 2023,

the Company sold a total of 1,004,190 and nil shares of the ATM Shares for net proceeds of approximately $ 1.4 million and nil after deducting

commission fees and other transaction costs, respectively.

In November 2023, the Company established a 51 %

owned subsidiary in Vietnam.

On February 16, 2024, the Company received capital contribution of VND1, 646.4 million in cash, equivalent

to $ 67,195 , from the non-controlling shareholder of the subsidiary.

On March 29, 2024, the Board of Directors approved

a dividend declaration of $ 0.02 per share of common share for the shareholders of record at the close of business on April 26, 2024.

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

On July 22, 2024, the Board of Directors approved

a dividend declaration of $ 0.02 per share of common share for the shareholders of record at the close of business on August 19, 2024.

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

As of December 31, 2024 and 2023, there were 21,937,987

and 20,842,690 shares of common shares issued and outstanding, respectively.

No preferred shares were issued and outstanding

as of December 31, 2024 and 2023.

NOTE 18 – NET LOSS PER SHARE

Basic net loss per share is calculated on the

basis of weighted average outstanding common shares.

Diluted net loss per share is computed on the basis of basic weighted average outstanding

common shares adjusted for the dilutive effect of stock options and RSUs.

Potentially dilutive common shares are determined by applying

the treasury stock method to the assumed conversion of share repurchase liability to common shares related to the early exercised stock

options and unvested RSUs, and are not included in the calculation of diluted loss per share if their effect would be anti-dilutive.

The computation of basic and diluted net loss

per share for the years ended December 31, 2024 and 2023 is as follows:

For the Years Ended

Net loss per share – basic and diluted

Net loss attributable to HeartCore Enterprises, Inc.

the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation related to RSUs of $ 134,861 and $ 120,885 ,

respectively.

The outstanding unamortized stock-based compensation related to RSUs was $ 2,031 (which will be recognized through February

2026) as of December 31, 2025.

13 – SHAREHOLDERS’ EQUITY

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

shares, par value of $ 0.0001 per share.

the Market Offering Agreement (“ATM Agreement”)

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

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

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

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

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

During the years

ended December 31, 2025 and 2024, the Company sold a total of 15,892 and 1,004,190 shares of the ATM Shares for net proceeds of $ 30,445

and $ 1,423,342 after deducting commission fees and other transaction costs, respectively.

The subscription receivable of $ 103,942 related

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

of Series A Convertible Preferred Shares and Securities Purchase Agreement

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

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

Pursuant to the Series A COD, the Company designated 2,000 shares of preferred shares as Series A convertible preferred shares and each

share of Series A convertible preferred shares has a stated value of $ 1,100 .

On October 22, 2025, the Board of Directors of the Company

approved to amend the number of designated shares of Series A convertible preferred shares to 4,000 shares pursuant to the Series A COD.

The following summarizes the material terms of the Series A convertible preferred shares:

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

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

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

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

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

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

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

or winding up.

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

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

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

that each such Holder is entitled to receive.

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

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

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

However, as long as any shares of Series A convertible

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

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

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

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

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

the foregoing.

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

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

The number of shares of common shares issuable

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

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

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

conversion notice delivery date.

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

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

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

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

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

to Crom Structured for no consideration.

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

deducting share issuance transaction fees.

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

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

the year ended December 31, 2025, there were 983 shares of Series A convertible preferred shares converted into 1,619,164 shares of common

the year ended December 31, 2025, the Company paid dividends on Series A convertible preferred shares of $ 220,000 through issuance of

336,391 shares of common shares.

Dividends accrued on Series A convertible preferred shares amounted to $ 94,357 for the year ended December

Purchase Agreement

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

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

limitations and conditions set forth in the equity purchase agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

consolidated balance sheets.

the year ended December 31, 2025, no common shares were sold pursuant to the terms of the equity purchase agreement.

Contribution for Non-controlling Shareholder

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

On February 16, 2024, the Company received

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

Paid for Common Shares

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

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

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

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

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

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

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

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

The dividends of $ 3,304,575 was paid on November 17, 2025.

Issued and Outstanding

of December 31, 2025 and 2024, there were 25,419,807 and 21,937,987 shares of common shares issued and outstanding, respectively.

of December 31, 2025 and 2024, there were 1,017 and no shares of preferred shares (designated as Series A convertible preferred shares)

issued and outstanding, respectively.

14 – NET INCOME (LOSS) PER SHARE

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

Diluted net income (loss) per share

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

and Series A convertible preferred shares.

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

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

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

if-converted method.

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

their effect would be anti-dilutive.

computation of basic and diluted net income (loss) per share for the years ended December 31, 2025 and 2024 is as follows:

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

the Years Ended

Net loss from continuing

operations attributable to HeartCore Enterprises, Inc.

per common share – basic

Net loss from continuing operations

$ ( 4,184,005 )

$ ( 5,148,651 )

net loss from continuing

operations attributable to non-controlling interests

( 3,731,526 )

Net loss from continuing operations attributable

to HeartCore Enterprises, Inc.

( 3,883,409 )

( 1,417,125 )

Dividends accrued on Series

A convertible preferred shares

Net loss from continuing operations attributable

to HeartCore Enterprises, Inc.

common shareholders

1 unchanged sentence

( 1,417,125 )

Weighted average number of common shares outstanding used in calculating net loss per share

Net loss per share – basic and diluted

For the years ended December 31, 2024 and 2023,

the weighted average common shares outstanding are the same for basic and diluted net loss per share calculations, as the inclusion of

common share equivalents would have an anti-dilutive effect.

NOTE 19 – BUSINESS COMBINATION AND GOODWILL

On September 6, 2022, HeartCore USA entered into

the Sigmaways Agreement to acquire 51 % of the outstanding shares of Sigmaways, a company incorporated under the laws of the State of California,

and its subsidiaries.

The Sigmaways Agreement was further amended on December 23, 2022 and February 1, 2023, respectively, and the transaction

was closed on February 1, 2023.

The Company aims to expand the business of software development and sales in the United States through

this acquisition.

The purchase consideration is $ 4,150,000 , consisted of $ 1,000,000 in cash and 2,500,000 shares of common shares of the

Company with fair value of $ 3,150,000 at the closing date.

The total purchase price is allocated to the tangible

and identifiable intangible assets acquired and liabilities assumed and non-controlling interest based on their estimated fair values

as of the acquisition date.

The excess of the purchase price over those fair values is recorded as goodwill.

The purchase price is allocated on the acquisition

date as follows:

Current assets

Acquired intangible asset

Non-current assets

Current liabilities

Weighted average number of common shares

outstanding – basic

Net loss from continuing

operations attributable to HeartCore Enterprises, Inc.

per common share – basic

Net loss from continuing

operations attributable to HeartCore Enterprises, Inc.

per common share – diluted

Net loss from continuing operations attributable

to HeartCore Enterprises, Inc.

common shareholders

$ ( 3,977,766 )

Deferred tax liabilities

$ ( 1,417,125 )

Non-current liabilities

Non-controlling interest

dividends accrued on unconverted Series

A convertible preferred shares

changes in fair

value of derivative liability, net of income tax

Net loss from continuing operations attributable

to HeartCore Enterprises, Inc.

( 4,002,661 )

Total purchase consideration

The results of operations, financial position

and cash flows of Sigmaways and its subsidiaries have been included in the Company’s consolidated financial statements since the

date of acquisition.

Pro forma results of operations for the business

combination have not been presented because they are not material to the consolidated statements of operations and comprehensive loss

for the years ended December 31, 2024 and 2023.

The Company’s policy is to perform its annual

impairment testing on goodwill for its reporting unit on December 31 of each fiscal year or more frequently if events or changes in circumstances

indicate that an impairment may exist.

As a result of the assessment over the operating results of Sigmaways and its subsidiaries due

to changes in long-term financial plan assumptions, the Company recognized impairment loss on goodwill of $ 3,276,441 and intangible asset

of $ 3,878,125 for the year ended December 31, 2024.

The Company used the income approach with the discounted cash flow valuation method

to estimate the fair value of Sigmaways and its subsidiaries, and used the multi-period excess earnings method to estimate the fair value

of intangible asset with the assistance of a third-party valuation appraiser.

The determination of fair value requires management to make

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

NOTE 20 – SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

Operating segments are defined as components of

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

decisions regarding resource allocation and performance assessment.

The Company determines its operations constitute a single operating

segment and reportable segment in accordance with ASC Topic 280.

The CODM assesses financial performance and decides how to allocate resources

based on consolidated net income.

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

The following table summarizes selected financial

information with respect to the Company’s single operating segment and reportable segment for the years ended December 31, 2024

For the Years Ended

( 1,417,125 )

Weighted average number of common shares

outstanding – diluted

Net loss from continuing

operations attributable to HeartCore Enterprises, Inc.

per common share – diluted

the Years Ended

Income (loss) from discontinued

operations per common share – basic

Income (loss) from discontinued

operations, net of income tax

Weighted average number of common shares

outstanding – basic

Income (loss) from discontinued

operations per common share – basic

Income (loss) from discontinued

operations per common share – diluted

Income (loss) from discontinued operations,

net of income tax

Weighted average number of common shares outstanding – basic

Dilutive effect of stock

options, RSUs and Series A convertible preferred shares

Weighted average number of common shares

outstanding – diluted

Income (loss) from discontinued

operations per common share – diluted

the Years Ended

Net income (loss) attributable

to HeartCore Enterprises, Inc.

per common share – basic

Net income (loss) attributable

to HeartCore Enterprises, Inc.

common shareholders

$ ( 1,481,374 )

Weighted average number of common shares

outstanding – basic

Net income (loss) attributable

to HeartCore Enterprises, Inc.

per common share – basic

Net income (loss) attributable

to HeartCore Enterprises, Inc.

per common share – diluted

Net income (loss) attributable to HeartCore

Enterprises, Inc.

common shareholders

$ ( 1,481,374 )

dividends accrued on unconverted Series

A convertible preferred shares

changes in fair

value of derivative liability, net of income tax

Net income (loss) attributable to HeartCore

Enterprises, Inc.

( 1,481,374 )

Weighted average number of common shares outstanding – basic

Dilutive effect of stock

options, RSUs and Series A convertible preferred shares

Weighted average number of common shares

outstanding – diluted

Net income (loss) attributable

to HeartCore Enterprises, Inc.

per common share – diluted

15 – DISCONTINUED OPERATIONS

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

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

The sale transaction was closed

on October 31, 2025.

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

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

Additionally, the Company

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

Accordingly, all results of operations of HeartCore Japan have been removed from continuing operations and presented as discontinued

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

All assets and

liabilities of HeartCore Japan have been presented separately as assets and liabilities of discontinued operations in the

consolidated balance sheets as of December 31, 2025 and 2024.

On October 31, 2025, the Company entered into a purchase agreement to

of the outstanding shares of HeartCore Japan to Smith Japan Holdings KK for a cash consideration of approximately $ 12

million, subject to price adjustment.

For the year ended December 31, 2025, the Company received gross proceeds from sale of discontinued operations of

$ 6,575,860 , net of cash divested of $ 2,056,992 .

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

operations and comprehensive income (loss) for the years ended December 31, 2025 and 2024:

SCHEDULE OF OPERATIONS, ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

the Years Ended

Cost of revenues

Operating expenses:

Selling expenses

General and administrative expenses

Research and development

Total operating expenses

Income from discontinued operations

Other expenses

Gain on sale of discontinued

Income from discontinued operations before

income tax expense

Income tax expense

Income (loss) from discontinued

operations, net of income tax

following table summarizes the assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31,

2025 and 2024:

Assets of discontinued operations

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Due from related party

Other current assets

Accounts receivable, non-current

Property and equipment, net

Operating lease right-of-use assets

Deferred tax assets

Security deposits

Long-term loan receivable from related party

Other non-current assets

Total assets of discontinued

Liabilities of discontinued

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Current portion of long-term debts

Operating lease liabilities, current

Income tax payables

Deferred revenue

Other current liabilities

Long-term debts

Operating lease liabilities, non-current

Asset retirement obligations

liabilities of discontinued operations

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

valuation allowance against the assets classified as held for sale.

As of the closing date of the sale of HeartCore Japan, the assets

and liabilities classified as held for sale were derecognized and gain on sale of discontinued operations was recorded.

16 – SEGMENT AND GEOGRAPHIC INFORMATION

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

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

The Company determines its

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

The CODM assesses financial

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

Segment assets are reported

on the Company’s consolidated balance sheets.

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

segment for the years ended December 31, 2025 and 2024:

SCHEDULE OF SINGLE OPERATING SEGMENT AND REPORTABLE SEGMENT

the Years Ended

Software related cost of revenues

Consulting related cost of revenues

Related cost of revenues

Selling expenses

3 unchanged sentences

Impairment of goodwill

Income (loss) from operations

Loss from continuing operations

( 3,121,317 )

1 unchanged sentence

( 1,017,788 )

Loss before income tax benefit

( 5,350,096 )

Loss from continuing operations before income

tax expense (benefit)

( 4,139,105 )

Income tax benefit

( 5,511,807 )

Income tax expense (benefit)

Net loss from continuing

$ ( 4,184,005 )

Geographic Information

The following table summarizes the breakdown of

revenues by geography for the years ended December 31, 2024 and 2023:

For the Years Ended

$ ( 5,148,651 )

following table summarizes the breakdown of revenues by geography for the years ended December 31, 2025 and 2024:

SCHEDULE OF SUMMARIZES THE BREAKDOWN OF REVENUES BY GEOGRAPHY

the Years Ended

United States

1 unchanged sentence

Total revenues

The following table summarizes the breakdown of

long-lived assets by geography as of December 31, 2024 and 2023:

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

SCHEDULE OF SUMMARIZES THE BREAKDOWN OF LONG-LIVED ASSETS BY GEOGRAPHY

United States

1 unchanged sentence

Total long-lived assets

NOTE 21 – SUBSEQUENT EVENTS

In January 2025, the Company entered into an insurance

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

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

During the subsequent period, the Company sold

marketable securities for proceeds of approximately $ 460,000 .

EXHIBIT INDEX

Certificate of Incorporation of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Bylaws of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-1 (File No.

17 – SUBSEQUENT EVENTS

January 2026, the Company entered into an insurance premium financing agreement with AFCO Direct, a division of AFCO Credit Corporation,

for $ 108,000 at an annual interest rate of 13.9 % for ten months from February 1, 2026, payable in ten monthly installments of principal

and interest.

February 18, 2026, the Board of Directors of the Company approved a share repurchase program, pursuant to which the Company is authorized

to repurchase up to $ 2 million of its outstanding common shares.

The timing and amount of repurchases under the program are determined

by the Company’s management based on its evaluation of market conditions and other factors.

This program has not set termination

date and may be suspended or discontinued by at any time.

March 5, 2026, the Board of Directors of the Company approved to sell 51 % of the outstanding shares of Sigmaways and its wholly-owned

subsidiaries to a non-related company.

As of the date of this report, the Company has not entered into a definitive

agreement with respect to the sale of Sigmaways and its wholly-owned subsidiaries.

of Incorporation of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.1 to the registrant’s Registration

Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Description of Securities (incorporated by reference to Exhibit 4.1 to the registrant’s Amended Annual Report on Form 10-K/A filed with the SEC on October 23, 2023).

Memorandum to Share Exchange Agreement dated July 15, 2021, among HeartCore Co., Sumitaka.

Yamamoto, and Information Services International-Dentsu Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-1 (File No.

Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K/A filed with the SEC on July 7, 2025).

Certificate of Amendment to Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 18, 2025).

of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form

S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Share Exchange Agreement dated July 16, 2021, among HeartCore Enterprises, Inc., all shareholders of HeartCore Co., Ltd., and Sumitaka Yamamoto as representative of the shareholders of HeartCore Co., Ltd.

Description of Securities.

to Share Exchange Agreement dated July 15, 2021, among HeartCore Co., Sumitaka.

Yamamoto, and Information Services International-Dentsu

(incorporated by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-1 (File No.

filed with the SEC on January 3, 2022).

Stock Purchase Agreement dated August 10, 2021, between HeartCore Enterprises, Inc.

and Dentsu Digital Investment Limited (incorporated by reference to Exhibit 10.3 to the registrant’s Registration Statement on Form S-1 (File No.

Exchange Agreement dated July 16, 2021, among HeartCore Enterprises, Inc., all shareholders of HeartCore Co., Ltd., and Sumitaka

Yamamoto as representative of the shareholders of HeartCore Co., Ltd.

(incorporated by reference to Exhibit 10.2 to the registrant’s

Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

HeartCore Enterprises, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Registration Statement on Form S-1 (File No.

Purchase Agreement dated August 10, 2021, between HeartCore Enterprises, Inc.

and Dentsu Digital Investment Limited (incorporated

by reference to Exhibit 10.3 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC

on January 3, 2022).

Enterprises, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Registration Statement

on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Kimio Hosaka (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Keisuke Kuno (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Qizhi Gao (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Employment Agreement, dated February 9, 2022, between the Company and Hidekazu Miyata (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on February 14, 2022).

Form of Independent Director Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 (File No.

Agreement, dated February 9, 2022, between the Company and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

Agreement, dated February 9, 2022, between the Company and Kimio Hosaka (incorporated by reference to Exhibit 10.3 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

Agreement, dated February 9, 2022, between the Company and Keisuke Kuno (incorporated by reference to Exhibit 10.5 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

Agreement, dated February 9, 2022, between the Company and Qizhi Gao (incorporated by reference to Exhibit 10.2 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

Agreement, dated February 9, 2022, between the Company and Hidekazu Miyata (incorporated by reference to Exhibit 10.4 to the registrant’s

Current Report on Form 8-K filed with the SEC on February 14, 2022).

of Independent Director Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to

Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3,

Form of Indemnification Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to Exhibit 10.11 to the registrant’s Registration Statement on Form S-1 (File No.

of Indemnification Agreement between HeartCore Enterprises, Inc.

and each independent director (incorporated by reference to Exhibit

10.11 to the registrant’s Registration Statement on Form S-1 (File No.

333-261984) filed with the SEC on January 3, 2022).

Consulting and Services Agreement, dated as of March 31, 2022, by and between the registrant and Moveaction Co., Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

Common Stock Purchase Warrant issued by Moveaction Co., Ltd.

and Services Agreement, dated as of March 31, 2022, by and between the registrant and Moveaction Co., Ltd.

(incorporated by reference

to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

Stock Purchase Warrant issued by Moveaction Co., Ltd.

to the registrant.

(incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

Consulting and Services Agreement, dated as of April 13, 2022, by and between the registrant and A.L.I.

(incorporated by reference to Exhibit 10.2 to the registrant’s

Current Report on Form 8-K filed with the SEC on April 6, 2022).

and Services Agreement, dated as of April 13, 2022, by and between the registrant and A.L.I.

Technologies Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2022).

Common Stock Purchase Warrant issued by A.L.I.

(incorporated by reference

to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2022).

Stock Purchase Warrant issued by A.L.I.

Technologies Inc.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 11, 2022).

Consulting and Services Agreement, dated as of May 13, 2022, by and between the registrant and SYLA Holdings Co.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2022).

Common Stock Purchase Warrant issued by SYLA Holdings Co.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2022).

Amendment No.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s

Current Report on Form 8-K filed with the SEC on May 11, 2022).

and Services Agreement, dated as of May 13, 2022, by and between the registrant and SYLA Holdings Co.

(incorporated by reference

to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2022).

Stock Purchase Warrant issued by SYLA Holdings Co.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s

Current Report on Form 8-K filed with the SEC on May 25, 2022).

1 to Consulting and Services Agreement, dated as of August 17, 2022, by and between the registrant and Syla Technologies Co.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on August

Common Stock Purchase Warrant issued on August 17, 2022 by Syla Technologies Co.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on August 18, 2022).

Share Exchange and Purchase Agreement, dated as of September 6, 2022, by and among the registrant, Sigmaways, Inc.

and Prakash Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on September 8, 2022).

Consulting and Services Agreement, dated as of October 20, 2022, by and between HeartCore Enterprises, Inc.

Stock Purchase Warrant issued on August 17, 2022 by Syla Technologies Co.

to the registrant (incorporated by reference to Exhibit

10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on August 18, 2022).

Exchange and Purchase Agreement, dated as of September 6, 2022, by and among the registrant, Sigmaways, Inc.

and Prakash Sadasivam

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on September 8,

and Services Agreement, dated as of October 20, 2022, by and between HeartCore Enterprises, Inc.

and Metros Development Co., Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26,

Common Stock Purchase Warrant, issued on October 20, 2022, by Metros Development Co., Ltd.

Stock Purchase Warrant, issued on October 20, 2022, by Metros Development Co., Ltd.

in favor of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

Consulting and Services Agreement, dated as of October 20, 2022, by and between HeartCore Inc.

(incorporated

by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

and Services Agreement, dated as of October 20, 2022, by and between HeartCore Inc.

and Metros Development Co., Ltd.

(incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

Common Stock Purchase Warrant, issued on October 20, 2022, by Metros Development Co., Ltd.

(incorporated

by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

Stock Purchase Warrant, issued on October 20, 2022, by Metros Development Co., Ltd.

in favor of HeartCore Inc.

(incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

Termination of Consulting and Services Agreement and Warrant, dated as of October 26, 2022, by and between HeartCore Inc.

and Metros Development Co., Ltd.

(incorporated by reference

to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

of Consulting and Services Agreement and Warrant, dated as of October 26, 2022, by and between HeartCore Inc.

and Metros Development

(incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the SEC on October

Amendment No.

1 to Consulting and Services Agreement, dated as of October 26, 2022, by and between HeartCore Enterprises, Inc.

and Metros Development Co., Ltd.

and Metros Development

(incorporated by reference to Exhibit 10.6 to the registrant’s Current Report on Form 8-K filed with the SEC on October

Common Stock Purchase Warrant, issued on October 26, 2022, by Metros Development Co., Ltd.

Stock Purchase Warrant, issued on October 26, 2022, by Metros Development Co., Ltd.

in favor of HeartCore Enterprises, Inc.

(incorporated by reference to Exhibit 10.7 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

Amendment No.

1 to Executive Employment Agreement, dated as of October 28, 2022, by and between the registrant and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on November 4, 2022).

9th Stock Acquisition Rights Allotment Agreement, dated as of November 9, 2022, by and between the registrant and SYLA Technologies Co., Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2022).

Amendment No.

2 to Consulting and Services Agreement, dated as of November 15, 2022, by and between the registrant and SYLA Technologies Co., Ltd.

(incorporated

by reference to Exhibit 10.7 to the registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2022).

1 to Executive Employment Agreement, dated as of October 28, 2022, by and between the registrant and Sumitaka Yamamoto (incorporated

by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on November 4, 2022).

Stock Acquisition Rights Allotment Agreement, dated as of November 9, 2022, by and between the registrant and SYLA Technologies Co.,

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on November

Consulting and Services Agreement, dated as of November 18, 2022, by and between the registrant and SBC Medical Group, Inc.

2 to Consulting and Services Agreement, dated as of November 15, 2022, by and between the registrant and SYLA Technologies Co.,

(incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on November

Common Stock Purchase Warrant, issued on November 18, 2022, by SBC Medical Group, Inc.

in favor of the registrant (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2022).

Consulting and Services Agreement, dated as of January 11, 2023, by and between the registrant and kk.BloomZ (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on January 17, 2023).

Common Stock Purchase Warrant, issued on January 11, 2023, by kk.BloomZ in favor of the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on January 17, 2023).

Amendment No.

and Services Agreement, dated as of November 18, 2022, by and between the registrant and SBC Medical Group, Inc.

(incorporated by

reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2022).

Stock Purchase Warrant, issued on November 18, 2022, by SBC Medical Group, Inc.

in favor of the registrant (incorporated by reference

to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2022).

and Services Agreement, dated as of January 11, 2023, by and between the registrant and kk.BloomZ (incorporated by reference to Exhibit

10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on January 17, 2023).

Stock Purchase Warrant, issued on January 11, 2023, by kk.BloomZ in favor of the registrant (incorporated by reference to Exhibit

10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on January 17, 2023).

2 to Share Exchange and Purchase Agreement, dated as of February 1, 2023, by and among the registrant, Sigmaways, Inc.

and Prakash Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on February 6, 2023).

Common Stock Purchase Warrant, dated February 1, 2023 (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on February 6, 2023).

Employment Agreement, dated February 1, 2023, by and between the registrant and Prakash Sadasivam (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on February 6, 2023).

Amended and Restated Common Stock Purchase Warrant, dated February 6, 2023 (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K/A (Amendment No.

Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on February

Stock Purchase Warrant, dated February 1, 2023 (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report

on Form 8-K filed with the SEC on February 6, 2023).

Agreement, dated February 1, 2023, by and between the registrant and Prakash Sadasivam (incorporated by reference to Exhibit 10.3

to the registrant’s Current Report on Form 8-K filed with the SEC on February 6, 2023).

and Restated Common Stock Purchase Warrant, dated February 6, 2023 (incorporated by reference to Exhibit 10.4 to the registrant’s

Current Report on Form 8-K/A (Amendment No.

1) filed with the SEC on February 9, 2023).

Addendum to Share Exchange and Purchase Agreement, dated as of February 8, 2023, by and among the registrant, Sigmaways, Inc.

and Prakash Sadasivam.

to Share Exchange and Purchase Agreement, dated as of February 8, 2023, by and among the registrant, Sigmaways, Inc.

(incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K/A (Amendment No.

1) filed with the SEC on February 10, 2023)

Consulting and Services Agreement, dated as of March 13, 2023, by and between the registrant and Libera Gaming Operations, Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Common Stock Purchase Warrant, dated March 13, 2023, issued by Libera Gaming Operations, Inc.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Consulting and Services Agreement, dated as of March 13, 2023, by and between the registrant and ICheck Co., Ltd.

(incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Common Stock Purchase Warrant, dated March 13, 2023, issued by ICheck Co., Ltd.

to the registrant (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Hidekazu Miyata (incorporated by reference to Exhibit 10.44 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024) .

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Keisuke Kuno (incorporated by reference to Exhibit 10.45 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Kimio Hosaka (incorporated by reference to Exhibit 10.46 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

Amendment No.

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Qizhi Gao (incorporated by reference to Exhibit 10.47 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

Service Agreement, dated as of October 2, 2023, by and between the registrant and GATES GROUP Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).

Common Stock Purchase Warrant, dated October 2, 2023, issued by GATES GROUP Inc.

to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).

At The Market Offering Agreement, dated October 23, 2023, by and between HeartCore Enterprises, Inc.

Wainwright & Co., LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 23, 2023).

Director Agreement, dated June 1, 2023, by and between the registrant and Heather Neville (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2023).

Indemnification Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 5, 2023).

Independent Director Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 5, 2023).

Independent Director Agreement dated November 1, 2023, by and between the registrant and Heather Neville (incorporated by reference to Exhibit 10.54 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

Code of Ethics and Business Conduct.

Insider Trading Policy.

with the SEC on February 10, 2023)

and Services Agreement, dated as of March 13, 2023, by and between the registrant and Libera Gaming Operations, Inc.

(incorporated

by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Stock Purchase Warrant, dated March 13, 2023, issued by Libera Gaming Operations, Inc.

to the registrant (incorporated by reference

to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

and Services Agreement, dated as of March 13, 2023, by and between the registrant and ICheck Co., Ltd.

(incorporated by reference

to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

Stock Purchase Warrant, dated March 13, 2023, issued by ICheck Co., Ltd.

to the registrant (incorporated by reference to Exhibit

10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on March 16, 2023).

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Hidekazu Miyata (incorporated

by reference to Exhibit 10.44 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Keisuke Kuno (incorporated

by reference to Exhibit 10.45 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Kimio Hosaka (incorporated

by reference to Exhibit 10.46 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Qizhi Gao (incorporated

by reference to Exhibit 10.47 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

Agreement, dated as of October 2, 2023, by and between the registrant and GATES GROUP Inc.

(incorporated by reference to Exhibit

10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).

Stock Purchase Warrant, dated October 2, 2023, issued by GATES GROUP Inc.

to the registrant (incorporated by reference to Exhibit

10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).

The Market Offering Agreement, dated October 23, 2023, by and between HeartCore Enterprises, Inc.

Wainwright & Co.,

LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October

Agreement, dated June 1, 2023, by and between the registrant and Heather Neville (incorporated by reference to Exhibit 10.1 to the

registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2023).

Indemnification

Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.1 to the

registrant’s Current Report on Form 8-K filed with the SEC on October 5, 2023).

Director Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.2

to the registrant’s Current Report on Form 8-K filed with the SEC on October 5, 2023).

Director Agreement dated November 1, 2023, by and between the registrant and Heather Neville (incorporated by reference to Exhibit

10.54 to the registrant’s Annual Report on Form 10-K filed with the SEC on April 9, 2024).

Finder’s Agreement, dated May 23, 2025, by and between HeartCore Enterprises, Inc.

and Moody Capital Solutions, Inc.

(incorporated by reference to Exhibit 10.61 to Pre-Effective Amendment No.

1 to the registrant’s Registration Statement on Form S-1 (File No.

333-288937) filed with the SEC on August 29, 2025).

Consulting and Services Agreement, dated as of May 30, 2025, by and between the registrant and tmsuk Co.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 3, 2025).

OEM Sales Agreement, dated as of June 23, 2025, by and between HeartCore Co., Ltd.

and Silver Egg Technology CO., Ltd.

(incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 30, 2025).

Equity Purchase Agreement, dated June 30, 2025, by and between Heartcore Enterprises Inc.

and Crom Structured Opportunities Fund I, LP (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K/A filed with the SEC on July 7, 2025).

Registration Rights Agreement for Advance Shares, dated June 30, by and between Heartcore Enterprises Inc.

and Crom Structured Opportunities Fund I, LP (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K/A filed with the SEC on July 7, 2025).

Share Purchase Agreement, dated June 30, 2025, by and between Heartcore Enterprises Inc.

and Crom Structured Opportunities Fund I, LP (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K/A filed with the SEC on July 7, 2025).

Registration Rights Agreement for Conversion Shares, dated June 30, 2025, by and between Heartcore Enterprises Inc.

and Crom Structured Opportunities Fund I, LP (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K/A filed with the SEC on July 7, 2025).

Purchase Agreement, dated as of October 31, 2025, by and between HeartCore Enterprises, Inc.

and Smith Japan Holdings KK (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 31, 2025).

Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14.1 to the registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2025).

Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2025).

List of Subsidiaries

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Compensation Recovery Policy.

INLINE XBRL INSTANCE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

** Furnished herewith.

† Management contracts and compensation plans and arrangements

Pursuant to the requirements of Section 13 or

15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,

thereunto duly authorized.

HEARTCORE ENTERPRISES, INC.

Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2025).

XBRL INSTANCE DOCUMENT

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

contracts and compensation plans and arrangements

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

ENTERPRISES, INC.

March 31, 2026

/s/ Sumitaka Yamamoto

Sumitaka Yamamoto

Chief Executive Officer and President

POWER OF ATTORNEY

Each person whose signature appears below hereby

appoints Sumitaka Yamamoto and Qizhi Gao, and each of them, as attorneys-in-fact with full power of substitution to execute in the name

and on behalf of the registrant and each such person, individually and in each capacity stated below, one or more amendments to the annual

report on Form 10-K, which amendments may make such changes in the report as the attorney-in-fact acting deems appropriate and to file

any such amendment to the annual report on Form 10-K with the Securities and Exchange Commission.

Pursuant to the requirements of the

Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities

and on the dates indicated.

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

/s/ Sumitaka Yamamoto

Chairman of Board, Chief Executive Officer and President

March 31, 2025

Executive Officer and President

person whose signature appears below hereby appoints Sumitaka Yamamoto and Qizhi Gao, and each of them, as attorneys-in-fact with full

power of substitution to execute in the name and on behalf of the registrant and each such person, individually and in each capacity

stated below, one or more amendments to the annual report on Form 10-K, which amendments may make such changes in the report as the attorney-in-fact

acting deems appropriate and to file any such amendment to the annual report on Form 10-K with the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Sumitaka Yamamoto

(Principal Executive Officer)

/s/ Qizhi Gao

Chief Financial Officer (Principal Financial Officer and

Principal Accounting Officer)

March 31, 2025

/s/ Kimio Hosaka

March 31, 2025

/s/ Ferdinand Groenewald

March 31, 2025

of Board, Chief Executive Officer and President

Executive Officer)

Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Ferdinand Groenewald

/s/ Prakash Sadasivam

March 31, 2025

Prakash Sadasivam

/s/ Heather Neville

March 31, 2025

Heather Neville

/s/ Koji Sato

March 31, 2025

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-K

Item 9A. Controls and Procedures