What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-15 compared with 2025-11-18 · 452 added, 544 removed, 666 unchanged (60% of the section changed)

FINANCIAL STATEMENTS

ENTERPRISES, INC.

BALANCE SHEETS

September 30,

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

Current assets:

2 unchanged sentences

Investments in marketable securities

Investment in warrants

Prepaid expenses

2 unchanged sentences

Other current assets

Current assets of discontinued operations

Proceeds receivable from sale of discontinued operations

Total current assets

3 unchanged sentences

Long-term investment in warrants

Long-term note receivable

Deferred tax assets

1 unchanged sentence

Other non-current assets

Non-current assets of discontinued operations

Long-term proceeds receivable from sale of discontinued operations

Total non-current assets

11 unchanged sentences

Operating lease liabilities, current

Finance lease liabilities, current

Income tax payables

2 unchanged sentences

Other current liabilities

Current liabilities of discontinued operations

Total current liabilities

2 unchanged sentences

Operating lease liabilities, non-current

Finance lease liabilities, non-current

Asset retirement obligations

Non-current liabilities of discontinued operations

Total non-current liabilities

2 unchanged sentences

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

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

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

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

Subscription receivable

Series A convertible preferred shares, 4,000 shares designated, 1,017 shares issued and outstanding as of March 31, 2026 and December 31, 2025;

aggregate liquidation preference of $ 1,262,686 and $ 1,158,362 as of March 31, 2026 and December 31, 2025, respectively

Common shares, $ 0.0001

par value, 200,000,000 shares authorized,

1,288,812 and 1,270,991

shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively *

Additional paid-in capital

2 unchanged sentences

( 13,755,534 )

Accumulated other comprehensive income

Accumulated other comprehensive loss

Total HeartCore Enterprises, Inc.

5 unchanged sentences

Total liabilities and shareholders’ equity

April 2, 2026, the Company effected a 1-for-20 reverse stock split of the Company’s issued and outstanding common shares.

to share and per share information of common shares in the unaudited consolidated financial statements have been retroactively adjusted.

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

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS )

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

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

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months

Ended March 31,

Cost of revenues (including cost of revenues resulting from transactions with a related party of $ 114,535 and $ 25,195 for the three months ended March 31, 2026 and 2025, respectively)

Operating expenses:

Selling expenses

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

Research and development expenses

General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of nil and $ 17,615 for the three months ended March 31, 2026 and 2025, respectively)

Total operating expenses

Income (loss) from continuing operations

Loss from continuing operations

( 1,540,501 )

( 1,190,353 )

Other income (expenses):

Changes in fair value of investments in marketable securities

Changes in fair value of investments in warrants

Loss on sale of warrants

( 1,781,664 )

( 3,970,628 )

Changes in fair value of investment in warrants

Changes in fair value of derivative liability

4 unchanged sentences

( 1,840,070 )

Loss from continuing operations before income tax expense

( 1,959,246 )

Income (loss) from continuing operations before income tax expense

( 3,030,423 )

Income tax expense

Net income (loss) from continuing operations

Net loss from continuing operations

( 1,976,715 )

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

Net income (loss)

( 3,070,031 )

Loss from discontinued operations, net of income tax

( 1,976,715 )

( 3,137,381 )

net loss attributable to non-controlling interests

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

Net loss attributable to HeartCore Enterprises, Inc.

( 1,871,707 )

( 3,086,992 )

Dividends accrued on Series A convertible preferred shares

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

Net loss attributable to HeartCore Enterprises, Inc.

common shareholders

$ ( 1,899,675 )

Other comprehensive income (loss):

$ ( 3,086,992 )

Other comprehensive loss:

Foreign currency translation adjustment

Total comprehensive income (loss)

Total comprehensive loss

( 1,992,855 )

( 3,145,395 )

comprehensive loss attributable to non-controlling interests

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

Comprehensive loss attributable to HeartCore Enterprises, Inc.

$ ( 1,879,309 )

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

$ ( 3,096,243 )

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

per common share*

Income (loss) from discontinued operations per common share

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

Loss from discontinued operations per common share*

Net loss attributable to HeartCore Enterprises, Inc.

per common share*

Weighted average common shares outstanding*

April 2, 2026, the Company effected a 1-for-20 reverse stock split of the Company’s issued and outstanding common shares.

to share and per share information of common shares in the unaudited consolidated financial statements have been retroactively adjusted.

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

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

Preferred Shares

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

Common Shares

Accumulated Other

Total HeartCore Enterprises, Inc.

HeartCore Enterprises, Inc.

Comprehensive

Shareholders’

Non-controlling

Shareholders’

Balance, December 31, 2024

Balance, January 1, 2025

$ ( 103,942 )

12 unchanged sentences

$ ( 1,240,634 )

Net income (loss)

Foreign currency translation adjustment

Issuance of Series A convertible preferred shares

Issuance of common shares related to securities purchase agreement

Issuance of common shares related to equity purchase agreement

Dividends accrued on Series A convertible preferred shares

Stock-based compensation

Balance, June 30, 2025

( 18,231,933 )

( 1,281,417 )

Net income (loss)

Foreign currency translation adjustment

Dividends accrued on Series A convertible preferred shares

Stock-based compensation

Balance, September 30, 2025

$ ( 17,797,861 )

$ ( 1,366,835 )

HeartCore Enterprises, Inc.

Preferred Shares

Common Shares

Enterprises, Inc.

Comprehensive

Shareholders’

Non-controlling

Shareholders’

December 31, 2023

$ ( 14,763,469 )

( 1,333,350 )

( 1,478,002 )

currency translation adjustment

contribution from non-controlling shareholder

March 31, 2024

( 16,096,819 )

Balance, January 1, 2026

$ ( 13,755,534 )

1 unchanged sentence

( 1,871,707 )

currency translation adjustment

June 30, 2024

( 1,871,707 )

( 1,976,715 )

income (loss)

currency translation adjustment

September 30, 2024

Foreign currency translation adjustment

Dividends accrued on Series A convertible preferred shares

Stock-based compensation

Reverse stock split rounding adjustment

Balance, March 31, 2026

$ ( 15,627,241 )

$ ( 1,610,818 )

April 2, 2026, the Company effected a 1-for-20 reverse stock split of the Company’s issued and outstanding common shares.

to share and per share information of common shares in the unaudited consolidated financial statements have been retroactively adjusted.

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

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months

Ended March 31,

Cash flows from operating activities of continuing operations:

Net income (loss)

$ ( 1,976,715 )

Income from discontinued operations, net of income tax

Net income (loss) from continuing operations

$ ( 3,137,381 )

Adjustments to reconcile net income (loss) from continuing

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

Depreciation and amortization expenses

Loss from discontinued operations, net of income tax

Net loss from continuing operations

( 1,976,715 )

( 3,070,031 )

Adjustments to reconcile net loss from continuing operations to net cash flows used in operating activities of continuing operations:

Depreciation expense

Loss on disposal of property and equipment

3 unchanged sentences

Stock-based compensation

Marketable securities received as noncash consideration

Warrants received as noncash consideration

( 12,969,683 )

Changes in fair value of investments in marketable securities

Changes in fair value of investments in warrants

( 1,631,700 )

Loss on sale of warrants

Changes in fair value of investment in warrants

Changes in fair value of derivative liability

16 unchanged sentences

Cash flows from investing activities of continuing operations:

Purchase of investment in SAFE

Net proceeds from sale of warrants

Purchases of property and equipment

Proceeds from sale of marketable securities

Net cash flows provided by investing activities of continuing operations

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

Cash flows from financing activities of continuing operations:

Payments for finance lease

Repayment of related party debt

Repayment of long-term debts

Repayment of related party debt

Repayment of insurance premium financing

Net proceeds from factoring arrangement

Net repayment of factoring arrangement

Capital contribution from non-controlling shareholder

Distribution of dividends

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

1 unchanged sentence

Proceeds from exercise of stock options

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

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

( 1,168,769 )

Cash flows from discontinued operations:

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

Net cash flows used in operating activities of discontinued operations

Net cash flows provided by investing activities of discontinued operations

1 unchanged sentence

Net cash flows used in discontinued operations

( 1,080,748 )

Effect of exchange rate changes

Net change in cash and cash equivalents

( 1,211,929 )

( 1,382,105 )

Cash and cash equivalents – beginning of the period

2 unchanged sentences

Interest paid

Income taxes paid

Income taxes paid (received), net

Non-cash investing and financing transactions:

Insurance premium financing

Warrants converted to marketable securities

Issuance of common shares related to equity purchase agreement

Dividends accrued on Series A convertible preferred shares

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

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

49 unchanged sentences

HeartCore Japan.

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

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

The sale 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 16).

The sale transaction was closed on October 31, 2025.

8 unchanged sentences

States of America (“U.S.

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

and Exchange Commission (“SEC”).

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

its subsidiaries.

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

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

All footnotes exclude

balances and activities of HeartCore Japan unless otherwise noted.

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

of the Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements include the accounts of

the Company and its subsidiaries.

The Company has presented the results of operations and cash flows of HeartCore Japan as discontinued

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

All footnotes exclude activities of

HeartCore Japan unless otherwise noted.

All significant intercompany accounts and transactions have been eliminated.

7 unchanged sentences

should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2025.

and Going Concern

unaudited consolidated financial statements have been prepared in accordance with U.S.

GAAP assuming the Company will continue as a going

concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company assesses

whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability

to continue as a going concern within one year after the date that the unaudited consolidated financial statements are issued.

the three months ended March 31, 2026, the Company incurred net loss from continuing operations of $ 2.0 million and net cash flows used

in operating activities of continuing operations of $ 1.2 million, primarily due to the macroeconomic downturn environment.

31, 2026, the Company had cash and cash equivalents of $ 0.8 million, working capital of $ 1.0 million and accumulated deficit of $ 15.6

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Company’s plan is to continue exploring strategic alternatives for raising additional funding for future operations through a combination

of obtaining equity financing, entering into debt or other financing arrangements, and restructuring of operations to grow revenues and

decrease expenses to supplement the Company’s liquidity.

The Company’s ability to raise capital may be constrained by the

price of and demand for the Company’s equity shares.

Additional funding may not be available on favorable terms or at all, and

could further dilute the Company’s current shareholders.

Management cannot conclude as of the date of this report that its plans

are probable of being successfully implemented.

There can be no assurance that the Company will be able to obtain sufficient additional

liquidity when needed or under acceptable terms, if at all.

unaudited consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities,

and reported expenses that may be necessary if the Company is unable to continue as a going concern.

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

4 unchanged sentences

Significant estimates

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

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

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

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

Actual results could differ from those estimates.

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

required to be made by management include, but are not limited to, allowance for credit losses, useful life of property and equipment,

impairment of long-lived assets, valuation of stock-based compensation, valuation allowance of deferred tax assets, uncertain tax positions,

implicit interest rate of operating and finance leases, valuation of investment in warrants, and valuation of derivative liability.

results could differ from those estimates.

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).

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

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

over one year after the date of receipt.

10 unchanged sentences

and written down to its fair value.

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

There were no impairments of these assets during the three months ended March 31, 2026 and 2025.

Currency Translation

11 unchanged sentences

The resulting exchange differences are recorded in the unaudited consolidated

statements of operations and comprehensive income (loss).

statements of operations and comprehensive loss.

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

6 unchanged sentences

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

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

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

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

69 unchanged sentences

in the consolidated balance sheets.

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

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

The amounts of revenues recognized during the three months ended March 31, 2026 and 2025 that were

included in the opening deferred revenue balances were approximately $ 0.1 million and $ 0.2 million, respectively.

Disaggregation

2 unchanged sentences

The Company’s disaggregation of revenues

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

by revenue stream for the three months ended March 31, 2026 and 2025 is as follows:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Revenues from software development services

8 unchanged sentences

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

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

the three months ended March 31, 2026 and 2025, customers account for 10% or more of the Company’s revenues are as follows:

OF CONCENTRATION OF CREDIT RISK

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

September 30,

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

Ended March 31,

of March 31, 2026 and December 31, 2025, customers account for 10% or more of the Company’s accounts receivable are as follows:

the three months ended March 31, 2026 and 2025, vendor accounts for 10% or more of the Company’s purchases is as follows:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

are as follows:

September 30,

Ended March 31,

of March 31, 2026 and December 31, 2025, vendor accounts for 10% or more of the Company’s accounts payable and accrued expenses

is as follows:

Less than 10%.

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

2 unchanged sentences

for making operating decisions, assessing performance and allocating resources.

Reportable segments are based on products and services,

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

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

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

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

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

The Company records forfeitures as they

Reportable segments are based on services, geography,

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

A Convertible Preferred Shares and Derivative Liability

30 unchanged sentences

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

quoted prices in active markets for identical assets or liabilities;

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

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

or liabilities.

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

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

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

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

see NOTE 5 for investments):

quoted prices

in active markets for identical assets or liabilities;

inputs other than

Level 1 that are observable, either directly or indirectly;

unobservable inputs

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

of March 31, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025 are summarized below (also see

NOTE 5 for investments):

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Fair Value Measurements as of September 30, 2025

Fair Value Measurements as of March 31, 2026

Quoted Prices

Markets for Identical

Assets or Liabilities

Significant Other

Fair Value at

September 30, 2025

March 31, 2026

Investments in marketable securities

Investment in warrants

Long-term investment in warrants

8 unchanged sentences

Long-term investment in warrants

Held for Sale and Discontinued Operations

Derivative liability

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

16 unchanged sentences

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

1 unchanged sentence

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

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

balance sheets for all periods presented.

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

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

Prior periods have been adjusted

to conform to the current presentation.

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

and comprehensive loss for all periods presented.

Prior periods have been adjusted to conform to the current presentation.

disclosures are included in NOTE 16.

Accounting Pronouncements

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

2023-09, Income Taxes (Topic 740):

Improvement to

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

reconciliation and income taxes paid information.

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

after December 15, 2024, on a prospective basis.

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

December 15, 2025, on a prospective basis.

November 2024, the FASB issued Accounting Standards Update (“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.

2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning

after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this ASU on

its unaudited consolidated financial statements and related disclosures.

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 unaudited consolidated financial statements and related

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 unaudited

interim consolidated financial statements and related disclosures.

3 – ACCOUNTS RECEIVABLE

1 unchanged sentence

SCHEDULE OF ACCOUNTS RECEIVABLE NET

September 30,

Accounts receivable – non-factored

4 unchanged sentences

4 – RELATED PARTY TRANSACTIONS

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

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

The balance is unsecured,

non-interest bearing and due on demand.

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

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

As of September 30, 2025 and December

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

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

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

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

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

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

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

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

of March 31, 2026 and December 31, 2025, the Company had due to related party balances of $ 401 and $ 285 , 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 three months ended March 31, 2026 and 2025, the related party paid operating expenses on behalf

of the Company and received the payments in a net amount of $ 125 and nil , respectively.

of March 31, 2026 and December 31, 2025, the Company had accounts payable and accrued expenses balances of $ 96,333 and $ 124,618 , respectively,

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

three months ended March 31, 2026 and 2025, the Company engaged the related party for software development and other support services

of $ 114,535 and $ 42,810 , respectively.

During the three months ended March 31, 2026 and 2025, the Company repaid to the related party

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

of March 31, 2026 and December 31, 2025, the Company had short-term debt balances of $ 69,000 and $ 75,000 , respectively, to Prakash Sadasivam,

the CEO and non-controlling shareholder of Sigmaways and its subsidiaries.

The debt is borrowed from the related party for working capital

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

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

During the three months ended March 31, 2026 and

2025, the Company repaid to the related party of $ 6,000 and nil , respectively.

3 unchanged sentences

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

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

The Company’s investment in warrants is measured on a recurring

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

The valuation of investments

The valuation of investment

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

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

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

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

following table summarizes the Company’s investment in warrants activities for the three months ended March 31, 2026 and 2025:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

For the Nine Months

Ended September 30,

Fair value of investments in warrants at beginning of the period

Warrants received as noncash consideration

Changes in fair value of investments in warrants

Warrants converted to marketable securities

( 6,443,276 )

Warrants sold *

( 9,610,628 )

Fair value of investments in warrants at end of the period

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

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

The warrants to be transferred are exercisable only upon its Consulting Customer’s consummation of the merger with

a special purpose acquisition company or the occurrence of other fundamental events defined in the warrants agreement it had with

the Consulting Customer.

The Company completed its sale of warrants in September 2024 and recorded $ 3,970,628 in loss on sale of

warrants from this transaction.

the Three Months

Ended March 31,

Fair value of investment in warrants at beginning of the period

Changes in fair value of investment in warrants

Fair value of investment in warrants at end of the period

in Marketable Securities

3 unchanged sentences

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

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

2025 and 2024:

following table summarizes the Company’s investments in marketable securities activities for the three months ended March 31, 2026

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

For the Nine Months

Ended September 30,

the Three Months

Ended March 31,

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

Marketable securities received as noncash consideration

Marketable securities converted from warrants

Changes in fair value of investments in marketable securities

Marketable securities sold

( 1,781,664 )

Marketable securities sold

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

6 – LONG-TERM NOTE RECEIVABLE

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

The promissory note bears an interest

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

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

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

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

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

The Company forgave the first annual payment

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

As of the date

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

6 – PROPERTY AND EQUIPMENT, NET

1 unchanged sentence

SCHEDULE OF PROPERTY AND EQUIPMENT NET

September 30,

Leasehold improvements

Machinery and equipment

1 unchanged sentence

Total property and equipment, net

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

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

the three months ended March 31, 2026 and 2025, the Company recognized depreciation expenses of $ 7,720 and $ 20,289 , respectively.

Company has entered into operating leases for office space with terms ranging from 2 two to three years , and finance lease for vehicle

with terms of five years .

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

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

in the unaudited consolidated financial statements.

leases costs for lease payments are recognized on a straight-line basis over the lease term.

Finance lease costs include amortization,

which is recognized on a straight-line basis over the expected life of the leased assets, and interest expense, which is recognized following

an effective interest rate method.

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

components of lease costs for the three months ended March 31, 2026 and 2025 are as follows:

OF COMPONENTS OF LEASE COST

the Three Months

Ended March 31,

Finance lease costs

Amortization of finance lease right-of-use assets

Interest on finance lease liabilities

Total finance lease costs

Operating leases costs

Total leases costs

following table presents supplemental information related to the Company’s leases for the three months ended March 31, 2026 and

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY LEASE

the Three Months

Ended March 31,

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

Operating cash flows from finance lease

Operating cash flows from operating leases

Financing cash flows from finance lease

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

Weighted average remaining lease term (years):

Finance lease

Operating leases

Weighted average discount rate (per annum):

Finance lease

Operating leases

of March 31, 2026, the future maturity of lease liabilities is as follows:

SCHEDULE OF FUTURE MINIMUM MATURITIES OF OPERATING LEASE LIABILITIES

Year Ended December 31,

Remaining of 2026

Total lease payments

imputed interest

Total lease liabilities

current portion

Non-current lease liabilities

to the operating lease agreements, the Company made security deposits to the lessors.

The security deposits amounted to $ 278,154 and

$ 282,958 as of March 31, 2026 and December 31, 2025, respectively.

8 – OTHER CURRENT LIABILITIES

1 unchanged sentence

OF OTHER CURRENT LIABILITIES

September 30,

Customer refund liability *

Cumulative dividends accrued on Series A convertible preferred shares

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 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.

On June 28, 2024, the Company

entered into a settlement agreement with a customer, pursuant to which the consulting services agreement with the customer was terminated

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

As of the date of this report, the Company did not make payment

to the customer.

9 – FACTORING LIABILITY

11 unchanged sentences

The performance

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

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

as payable to Sigmaways.

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

4 unchanged sentences

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

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

respectively.

of March 31, 2026 and December 31, 2025, there were $ 124,508 and $ 135,982 borrowed and outstanding under the Factoring Agreement, respectively.

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

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

Agreement, respectively.

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

expenses related to Factoring Agreement, respectively.

For the three

months ended March 31, 2026 and 2025, the Company recorded $ 10,142 and $ 8,901 in interest expenses related to Factoring Agreement, respectively.

10 – INSURANCE PREMIUM FINANCING

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.

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

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

and interest.

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

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

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

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

premium financing, respectively.

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

interest expenses related to insurance premium financing, respectively.

of March 31, 2026 and December 31, 2025, the balances of the insurance premium financing were $ 97,773 and $ 13,430 , respectively.

the three months ended March 31, 2026 and 2025, the Company recorded $ 1,423 and $ 1,832 in interest expenses related to insurance premium

financing, respectively.

11 – LONG-TERM DEBTS

2 unchanged sentences

Name of Bank/Financial Institution

Original Amount

Balance as of

September 30, 2025

March 31, 2026

Balance as of

6 unchanged sentences

Small Business Administration

$ 350,000 (a)

5/30/2020 – 5/30/2050

2 unchanged sentences

Non-current portion

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

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

debts, respectively.

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

expenses related to long-term debts, respectively.

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

These debts are guaranteed

by Prakash Sadasivam, the CEO and non-controlling shareholder of Sigmaways and its subsidiaries, and secured by all assets of Sigmaways.

the three months ended March 31, 2026 and 2025, the Company recorded $ 5,060 and $ 7,061 in interest expenses related to long-term debts,

respectively.

of March 31, 2026, future minimum principal payments for long-term debts are as follows:

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

17 unchanged sentences

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

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

As a result of its business activities, the

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

Income taxes in Japan applicable to the Company

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

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

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

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 three months ended March 31, 2026 and 2025, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

the Three Months

Ended March 31,

Income tax expense

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

For the three and nine

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

the three months ended March 31, 2026 and 2025, the effective tax rate were 0.89 % and 1.31 %, respectively.

13 – STOCK-BASED COMPENSATION

1 unchanged sentence

under which 120,000 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 100,000

shares of common shares are authorized for issuance.

December 25, 2021, the Company awarded stock options to purchase 76,725 shares of common shares pursuant to the 2021 Plan at an exercise

3 unchanged sentences

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.

August 9, 2022, the Company awarded stock options to purchase 725 shares of common shares at an exercise price of $ 49.60 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

4 unchanged sentences

with the expiration date on February 3, 2033 .

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

shares of common shares are authorized for issuance.

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

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

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

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

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

following table summarizes the stock options activities and related information for the three months ended March 31, 2026 and 2025:

SCHEDULE OF STOCK OPTION ACTIVITY

Stock Options

As of January 1, 2025

As of September 30, 2024

As of March 31, 2025

As of January 1, 2026

As of September 30, 2025

Vested and exercisable as of September 30, 2025

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

and $ 55,714 , respectively.

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

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

The outstanding unamortized stock-based compensation related to stock options

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

As of March 31, 2026

Vested and exercisable as of March 31, 2026

the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation related to stock options of nil and $ 30,676 ,

respectively.

There was no outstanding unamortized stock-based compensation related to stock options as of March 31, 2026.

Stock Units (“RSUs”)

3 unchanged sentences

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

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

following table summarizes the RSUs activities and related information for the three months ended March 31, 2026 and 2025:

SCHEDULE OF RESTRICTED STOCK UNITS

Number of RSUs

Weighted Average

Grant Date Fair

Value Per Share

Unvested as of January 1, 2025

Unvested as of September 30, 2024

Unvested as of March 31, 2025

Unvested as of January 1, 2026

Unvested as of September 30, 2025

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

Unvested as of March 31, 2026

the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation related to RSUs of $ 2,031 and $ 1,604 ,

respectively.

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

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

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

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

There was no outstanding unamortized stock-based compensation related to RSUs as of March 31, 2026.

14 – SHAREHOLDERS’ EQUITY

7 unchanged sentences

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

During the nine

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

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

The subscription receivable of $ 103,942 related to

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

For the three months

ended March 31, 2026 and 2025, the Company sold a total of nil and 794 shares of the ATM Shares for net proceeds of nil and $ 30,445 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

3 unchanged sentences

share of Series A convertible preferred shares has a stated value of $ 1,100 .

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.

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:

Dividends – Each

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

stated value of each share of Series A convertible preferred shares.

Liquidation – In

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

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

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

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

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

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.

Voting – The Series

A convertible preferred shares shall have no voting rights.

However, as long as any shares of Series A convertible preferred shares

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

A convertible preferred shares, and with each share of Series A convertible preferred shares having one vote on (i) alter or change

adversely the powers, preferences or rights given to the Series A convertible preferred shares or alter or amend the Series A COD,

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

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

Conversion – Each

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

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

The number of shares of common shares issuable upon conversion

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

all accrued and unpaid dividends thereon by (ii) 90 % of the average of the two lowest 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.

Redemption – No share

of Series A convertible preferred shares shall be redeemable under any circumstances.

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

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

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

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

to Crom Structured for no consideration.

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

deducting share issuance transaction fees.

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

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

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

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

$ 56,833 , respectively.

2,000 shares of the Company’s designated Series A convertible preferred shares for net proceeds of $ 1,800,000 after deducting share

issuance transaction fees.

the three months ended March 31, 2026, no shares of Series A convertible preferred shares were converted into common shares.

the three months ended March 31, 2026, dividends accrued on Series A convertible preferred shares amounted to $ 27,968 .

Purchase Agreement

14 unchanged sentences

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

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

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

consolidated balance sheets.

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

Contribution for Non-controlling Shareholder

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

On February 16, 2024, the Company received

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

of Dividends on Common Shares

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.

the three months ended March 31, 2026, no common shares were sold pursuant to the terms of the equity purchase agreement.

Repurchase Program for Common Shares

February 18, 2026, the Board of Directors of the Company approved a share repurchase program (“2026 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

This program has not set termination date and may be suspended or discontinued by at any time.

the three months ended March 31, 2026, no common shares were repurchased pursuant to the 2026 Share Repurchase Program.

Stock Split for Common Shares

March 4, 2026, the Board of Directors of the Company approved a reverse stock split (“2026 Reverse Stock Split”) of the Company’s

issued and outstanding common shares at a 1-for-20 ratio.

The 2026 Reverse Stock Split was effective on April 2, 2026.

The Company’s

authorized number of shares and par value per share of common shares were not affected by the 2026 Reverse Stock Split.

References made

to share and per share information of common shares disclosed for all periods presented have been retroactively adjusted to reflect the

effect of the 2026 Reverse Stock Split.

Issued and Outstanding

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

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

shares) issued and outstanding, respectively.

15 – NET INCOME (LOSS) PER SHARE

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

Diluted net income (loss) per share

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

and Series A convertible preferred shares.

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

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

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

if-converted method.

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

their effect would be anti-dilutive.

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

of March 31, 2026 and December 31, 2025, there were 1,288,812 and 1,270,991 shares of common shares issued and outstanding, respectively.

of March 31, 2026 and December 31, 2025, there were 1,017 shares of preferred shares (designated as Series A convertible preferred shares)

issued and outstanding.

15 – NET LOSS PER SHARE

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

Diluted net 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.

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

Potentially dilutive common shares are not included in the calculation of diluted net loss per share if their effect would be

anti-dilutive.

computation of basic and diluted net loss per share for the three months ended March 31, 2026 and 2025 is as follows:

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

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

Ended March 31,

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

per common share – basic

Net income (loss) from continuing operations

Net loss from continuing operations

$ ( 1,976,715 )

1 unchanged sentence

net loss from continuing operations attributable to non-controlling interests

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

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

( 1,871,707 )

( 3,019,642 )

Dividends accrued on Series A convertible preferred shares

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

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

common shareholders

( 1,899,675 )

( 3,019,642 )

Weighted average number of common shares outstanding – basic

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

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

per common share – basic

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

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

per common share – diluted

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

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

$ ( 1,871,707 )

changes in fair value derivative liability

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

$ ( 3,019,642 )

Weighted average number of common shares outstanding – diluted

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

per common share – diluted

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

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

changes in fair value of derivative liability, net of income tax

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

( 1,871,081 )

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

( 3,019,642 )

Weighted average number of common shares outstanding – basic

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

Weighted average number of common shares outstanding – diluted

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

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

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

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

per common share – diluted

the Three Months

Ended March 31,

Loss from discontinued operations per common share – basic and diluted

Loss from discontinued operations, net of income tax

Weighted average number of common shares outstanding – basic and diluted

Loss from discontinued operations per common share – basic and diluted

the Three Months

Ended March 31,

Net loss attributable to HeartCore Enterprises, Inc.

per common share – basic

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

Net loss attributable to HeartCore Enterprises, Inc.

common shareholders

$ ( 1,899,675 )

$ ( 3,086,992 )

Weighted average number of common shares outstanding – basic

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

Net loss attributable to HeartCore Enterprises, Inc.

per common share – basic

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

Net loss attributable to HeartCore Enterprises, Inc.

per common share – diluted

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

Net loss attributable to HeartCore Enterprises, Inc.

$ ( 1,871,707 )

changes in fair value derivative liability

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

$ ( 3,086,992 )

Weighted average number of common shares outstanding – basic

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

changes in fair value of derivative liability, net of income tax

Net loss attributable to HeartCore Enterprises, Inc.

( 1,871,081 )

( 3,086,992 )

Weighted average number of common shares outstanding – diluted

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

Net loss attributable to HeartCore Enterprises, Inc.

per common share – diluted

2 unchanged sentences

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

The sale transaction was closed

on October 31, 2025.

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

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

September 30, 2025.

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

a major impact on its operations and financial results.

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

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

income (loss) for all periods presented.

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

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

On October 31, 2025, the

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

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

The Company does not expect to have

any continuing involvement in HeartCore Japan subsequent to the closing.

The Company determines the sale 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 unaudited consolidated statements of operations and comprehensive

loss for all periods presented.

On October 31, 2025, the sale transaction was closed.

The Company entered into a purchase agreement to

sell 100 % of the outstanding shares of HeartCore Japan to Smith Japan Holdings KK for a cash consideration of approximately $ 12 million,

subject to price adjustment.

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

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

OF OPERATIONS, ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

of operations and comprehensive loss for the three months ended March 31, 2025:

SCHEDULE OF OPERATIONS, ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

the Three Months

Ended March 31,

Cost of revenues

4 unchanged sentences

Total operating expenses

Income (loss) from discontinued operations

Total other income (expenses)

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

Income tax expense (benefit)

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

$ ( 302,662 )

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

2025 and December 31, 2024:

September 30,

Assets of discontinued operations

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Due from related party

Other current assets

Accounts receivable, non-current

Property and equipment, net

Operating lease right-of-use assets

Deferred tax assets

Security deposits

Long-term loan receivable from related party

Other non-current assets

Total assets of discontinued operations

Liabilities of discontinued operations

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Current portion of long-term debts

Operating lease liabilities, current

Income tax payables

Deferred revenue

Other current liabilities

Long-term debts

Operating lease liabilities, non-current

Asset retirement obligations

Total liabilities of discontinued operations

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

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

As of the closing date of the sale of HeartCore

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

and any gain or loss on sale will be recorded.

Loss from discontinued operations

Loss from discontinued operations before income tax expense

Income tax expense

Loss from discontinued operations, net of income tax

17 – SEGMENT AND GEOGRAPHIC INFORMATION

4 unchanged sentences

The CODM assesses financial

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

Segment assets

are reported on the Company’s consolidated balance sheets.

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 three and nine months ended September 30, 2025 and 2024:

OF SINGLE OPERATING SEGMENT AND REPORTABLE SEGMENT

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

segment for the three months ended March 31, 2026 and 2025:

SCHEDULE OF SINGLE OPERATING SEGMENT AND REPORTABLE SEGMENT

the Three Months

Ended March 31,

Software related cost of revenues

Consulting related cost of revenues

Related cost of revenues

Selling expenses

General and administrative expenses

Research and development expenses

Income (loss) from continuing operations

Loss from continuing operations

( 1,540,501 )

( 1,190,353 )

Total other expenses

( 1,840,070 )

Loss from continuing operations before income tax expense

( 1,959,246 )

Income (loss) from continuing operations before income tax expense

( 3,030,423 )

Income tax expense

Net income (loss) from continuing operations

Net loss from continuing operations

$ ( 1,976,715 )

$ ( 3,070,031 )

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

OF SUMMARIZES THE BREAKDOWN OF REVENUES BY GEOGRAPHY

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

following table summarizes the breakdown of revenues by geography for the three months ended March 31, 2026 and 2025:

SCHEDULE OF SUMMARIZES THE BREAKDOWN OF REVENUES BY GEOGRAPHY

the Three Months

Ended March 31,

United States

1 unchanged sentence

Total revenues

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

OF SUMMARIZES THE BREAKDOWN OF LONG-LIVED ASSETS BY GEOGRAPHY

September 30,

following table summarizes the breakdown of long-lived assets by geography as of March 31, 2026 and December 31, 2025:

SCHEDULE OF SUMMARIZES THE BREAKDOWN OF LONG-LIVED ASSETS BY GEOGRAPHY

United States

2 unchanged sentences

18 – SUBSEQUENT EVENTS

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

The RSUs are fully vested

on the grant date.

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

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

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

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

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

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

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

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

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

The sale transaction was closed on the

On November 3, 2025, Crom Structured converted 503

shares of Series A convertible preferred shares into 811,825 shares of common shares.

April 1, 2026, the Company converted partial of the warrants it received from a customer as noncash consideration from consulting services

into marketable securities.

April 9, 2026, the Company sold marketable securities for proceeds of approximately $ 202,000 .

the subsequent period, there were 400 shares of Series A convertible preferred shares converted into 152,753 shares of common shares.

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

What changed 10-Q

Item 1. Financial Statements