What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-18 · 273 added, 441 removed, 50 unchanged (93% of the section changed)

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

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

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

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

1 unchanged sentence

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

including statements contained in this report and other filings with the Securities and Exchange Commission (“SEC”) and in

our reports and presentations to stockholders or potential stockholders.

including statements contained in this Quarterly Report on Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”)

and in our reports and presentations to stockholders or potential stockholders.

In some cases, forward-looking statements can be identified

9 unchanged sentences

The forward-looking

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

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

under the circumstances.

statements in this Quarterly Report on Form 10-Q are made on the basis of management’s assumptions and analyses, as of the time

the statements are made, in light of their experience and perception of historical conditions, expected future developments and other

factors believed to be appropriate under the circumstances.

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

2 unchanged sentences

on which any statement is based.

2022, HeartCore Enterprises, Inc.

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

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

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

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

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

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

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

We provide software through two business units.

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

existence for over 15 years.

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

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

We also provide education,

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

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

the context otherwise requires, references herein to “we,” “us” or the “Company” refer to HeartCore

Enterprises, Inc.

(“HeartCore USA”) and its consolidated subsidiaries, including HeartCore Financial, Inc.

branch office in Japan, Higgs Field Co., Ltd., HeartCore Luvina Vietnam Company Limited (“HeartCore Luvina”), and Sigmaways,

(“Sigmaways”) and its subsidiaries.

2022, HeartCore USA started the Go IPO business, which supports Japanese companies listing on The Nasdaq Stock Market (“Nasdaq”)

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

As of March 31, 2026, we have entered into consulting agreements

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

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

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

to November 2025, we were also a leading software development company based in Tokyo, Japan.

We provided software through two business

The first business unit, our CX division, included a customer experience management business (the “CXM Platform”).

The second business unit, our DX division, was a digital transformation business which provided customers with robotics process automation,

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

We also have an ongoing technology innovation

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

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

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

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

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

subsidiary of the Company (“HeartCore Japan”).

See “Recent Events” below.

January 2023, we formed HeartCore Financial, Inc.

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

as part of our GO IPO consulting business.

In November 2023, we formed HeartCore Luvina Vietnam Company

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

other services.

HeartCore Luvina started operations in February 2024.

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

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

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

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

In October 2025, HeartCore USA incorporated

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

(“Higgs Field”), in Japan.

Higgs Field is engaged in the business of providing

business and management consulting services.

of HeartCore Japan

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

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

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

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

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

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

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

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

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

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

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

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

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

Japan Agreement (the “Holdback Release Date”).

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

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

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

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

Subject to the provisions of the HeartCore Japan Agreement,

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

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

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

Within five business days following the final determination

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

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

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

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

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

with certain human resources transition services.

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

a transaction of this type.

HeartCore Japan Sale closed on October 31, 2025.

Distribution to Stockholders

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

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

federal tax purposes, this payment to stockholders will

be deemed to be a distribution.

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

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

Notice Regarding Minimum Bid Price Requirement

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

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

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

The notification of

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

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

the deficiency and regain compliance with this rule.

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

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

The Bid Price Notice indicated that we will be provided

In 2025, we made the strategic decision to sell

our software business assets in Japan and to concentrate our efforts on our Go IPO consulting business.

On October 31, 2025, the Company

entered into a Purchase Agreement (the “HeartCore Japan Agreement”) with Smith Japan Holdings KK (“Smith Japan”),

pursuant to which the Company agreed to sell to Smith Japan, and Smith Japan agreed to purchase (the “HeartCore Japan Sale”),

all of the outstanding equity interests of HeartCore Co., Ltd., a then-wholly owned subsidiary of the Company (“HeartCore Japan”).

The HeartCore Japan Sale closed on October 31, 2025.

IPO Consulting Services

February 2022, we have been offering Go IPO consulting services, which include the following (collectively, the “Services”):

with introductions to law firms, underwriters and auditing firms, in order that clients can

make their selections, at their sole discretion;

in the preparation of documentation for internal controls required for an initial public

offering and simultaneous listing on the Nasdaq, the NYSE or the NYSE American;

support services to remove problematic accounting accounts upon listing support;

● Translation

of requested documents into English;

and, if requested by the other party, lead, meetings of management and employees;

support services related to the Nasdaq, the NYSE or the NYSE American listing;

of accounting data from Japanese standards to accounting principles generally accepted in

in the preparation of S-1 or F-1 filings;

of English web page;

an investor presentation/deck and executive summary of the operations.

providing the Services, we do not provide investment advice regarding the value of securities, nor do we engage in the solicitation of

investors or the negotiation of securities transactions.

We do not provide accounting or legal advice, and we do not act as an investment

advisor or broker-dealer.

to the terms of the consulting agreements with our clients, the parties agree that we will not provide the following services, among

negotiation of the sale of the issuers’ securities;

participation in discussions between the issuers and potential investors;

assisting in structuring any transactions involving the sale of the issuers’ securities;

pre-screening of potential investors;

due diligence activities;

and providing advice relating to valuation of or financial advisability of any investments in the issuers.

Additionally, we do not take part in the selection of, or negotiation of terms with, law firms, underwriters or audit firms.

Such selection

and negotiation is the sole responsibility of the client.

to the terms of the consulting agreements with the issuers, the issuers agree to compensate us as follows in return for the provision

of Services during the initial term of the consulting agreements:

cash fee payable in installment payments;

by issuers to us of warrants or stock acquisition rights to acquire a number of shares of

capital stock of the issuer, to initially be equal to a designated percentage of the fully

diluted share capital of the issuer, subject to adjustment as set forth in the warrants or

stock acquisition rights.

Share Repurchase Program

During the first quarter of 2026, the Company’s

Board of Directors (the “Board”) authorized a share repurchase program, pursuant to which the Company may repurchase up to

$2.0 million of its outstanding shares of common stock.

The Board authorized the Company to purchase its common stock from time to time

on a discretionary basis through open market purchases, privately negotiated transactions or other means, including trading plans intended

to qualify under Rule 10b5-1 of the Exchange Act, in accordance with applicable federal securities laws and other applicable legal requirements.

The Company expects to fund these repurchases through existing cash balances.

Decisions regarding the amount and the timing of purchases

under the program will be influenced by the Company’s cash on hand, cash flows from operations, general market conditions and other

factors, and the program may be modified, suspended or discontinued at any time.

The Company is not obligated to acquire any particular

amount of its common stock.

This program has no set termination date.

Bylaws Amendment

On March 24, 2026, the Board

adopted an amendment (the “Amendment”) to the Company’s bylaws (the “Bylaws”).

Prior to adoption of the

Amendment, the second sentence of Section 7.4 of the Bylaws provided that “[i]f any action is brought by any party against another

party, relating to or arising out of [the] Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the

other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action”,

and Section 7.5 of the Bylaws provided (and continues to provide following adoption of the Amendment) that “[a]ll powers, duties

and responsibilities provided for in [the] Bylaws, whether or not explicitly so qualified, are qualified by the provisions of the [Company’s

certificate of incorporation] and applicable law.”

The Amendment had the effect

of amending and restating the second sentence of Section 7.4 of the Bylaws to read as follows:

“If any action is brought by any

party against another party, relating to or arising out of these Bylaws, or the enforcement hereof, the prevailing party shall be entitled

to recover from the other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense

of such action, provided that the provisions of this sentence shall not apply with respect to “internal corporate claims”

as defined in Section 115 of the DGCL or in connection with any other claim that a stockholder, acting in its capacity as a stockholder

or in the right of the Corporation, has brought in an action, suit or proceeding.”

The Amendment was intended

to clarify that, consistent with Section 7.5 of the Bylaws and the provisions of the Delaware General Corporation Law, including Section

109(b) thereof, the Bylaws do not contain any provision that would impose liability on a stockholder for the attorneys’ fees or

expenses of the Company or any other party in connection with an internal corporate claim, or in connection with any other claim that

a stockholder, acting in its capacity as a stockholder or in the right of the Company, has brought in an action, suit or proceeding.

Reverse Stock Split

As previously

disclosed, on June 30, 2025, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation,

as amended (the “Certificate of Incorporation”), to effectuate a reverse stock split of the Company’s outstanding shares

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

of the Board.

On March 4, 2026, the Board approved a 1-for-20 reverse stock split of the Company’s issued and outstanding common

stock (the “Reverse Split”).

Subsequently, the Company filed a certificate of amendment (the “Certificate of Amendment”)

to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effectuate the Reverse Split.

The Certificate

of Amendment was effective for state law purposes at 4:00 p.m.

Eastern Time on April 2, 2026 (the “Effective Time”), after

the close of trading on the Nasdaq Capital Market (“Nasdaq”), such that the Company’s common stock began trading on

Nasdaq at market open on April 6, 2026, on a post-Reverse Split basis.

the Effective Time, issued and outstanding shares of the Company’s common stock were automatically reclassified such that each 20

shares of pre-Reverse Split common stock became one share of common stock, with any fractional shares of common stock resulting being

rounded up to the nearest whole share of common stock.

The authorized number of shares, and par value per share, of the Company’s

common stock were not affected by the Reverse Split.

with Nasdaq Minimum Bid Price Requirement

As previously disclosed,

on May 6, 2025, the Company received written notice (the “Bid Price Notice”) from the Nasdaq Staff indicating that the Company

was not in compliance with the Minimum Bid Price Requirement.

The notification of noncompliance had no immediate effect on the listing

or trading of the Company’s common stock on the Nasdaq Capital Market.

The Bid Price Notice indicated that the Company was provided

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

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

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

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

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

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

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

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

If at any time during this additional time period the

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

close the matter.

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

At that time,

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

There can be no assurance that we will be able to

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

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

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

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

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

respectively.

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

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

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

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

On November 4, 2025, the Nasdaq Staff notified the Company

of its determination that the Company was eligible for an additional 180-day period, or until May 1, 2026, to regain compliance with the

Minimum Bid Price Requirement.

On April 20, 2026, the Company

received written notice from the Nasdaq Staff that the Company has regained compliance with the Minimum Bid Price Requirement and the

matter has now been closed.

Accordingly, the Company’s common stock continues to be listed and traded on the Nasdaq Capital Market.

For the three months ended March 31, 2026 and 2025, we generated revenues

of $1,245,844 and $2,093,413, respectively, and reported a net loss from continuing operations of $1,976,715 and $3,070,031, respectively,

and had net cash flows used in operating activities of continuing operations of $1,153,590 and $1,691,459, respectively.

As noted in our

unaudited consolidated financial statements, as of March 31, 2026, we had an accumulated deficit of $15,627,241.

of Operations

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

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

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

For the Three Months Ended September 30,

$ (13,250,536 )

of Results of Operations for the Three Months Ended March 31, 2026 and 2025

following table summarizes our operating results as reflected in our unaudited consolidated statements of operations and

comprehensive loss for the three months ended March 31, 2026 and 2025, respectively, and provides information regarding the dollar

and percentage increase (or decrease) during such periods.

For the Three Months Ended March 31,

Cost of revenues

(12,541,707 )

Operating expenses:

1 unchanged sentence

General and administrative expenses

Research and development expenses

Total operating expenses

Income (loss) from continuing operations

(12,352,168 )

Loss from continuing operations

Other expenses

Income (loss) from continuing operations before income tax expense

(11,443,066 )

Loss from continuing operations before income tax expense

Income tax expense

Net income (loss) from continuing

(11,256,714 )

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

(10,465,755 )

net loss attributable to non-controlling interests

Net income attributable to HeartCore Enterprises, Inc.

(10,623,734 )

Dividends accrued on Series A convertible preferred shares

Net income attributable to HeartCore Enterprises, Inc.

$ (10,679,956 )

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

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

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

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

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

the software market in the U.S.

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

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

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

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

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

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

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

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

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

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

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

more than revenue did.

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

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

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

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

activities and cancelled promotion campaigns with lower advertising performance.

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

30, 2025 and 2024, respectively.

and Administrative Expenses

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

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

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

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

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

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

current period;

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

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

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

30, 2025 and 2024, respectively.

and Development Expenses

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

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

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

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

2025 and 2024, respectively.

Other Expenses, Net

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

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

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

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

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

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

quarter of 2025;

offset by a decrease of

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

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

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

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

Income (Loss) from Continuing Operations

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

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

Net loss from continuing operations

Loss from discontinued operations, net of income tax

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

shares of HeartCore Japan.

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

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

The sale transaction was closed on October 31, 2025.

We reported an income from discontinued operations, net of income

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

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

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

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

Loss Attributable to Non-controlling Interests

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

of HeartCore Luvina.

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

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

Income Attributable to HeartCore Enterprises, Inc.

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

of $434,072 for the three months ended

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

of $11,057,806

for the three months ended September 30, 2024.

Accrued on Series A Convertible Preferred Shares

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

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

Income Attributable to HeartCore Enterprises, Inc.

Common Shareholders

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

common shareholders of $377,850 for the

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

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

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

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

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

For the Nine Months Ended September 30,

$ (14,218,092 )

Cost of revenues

(12,462,942 )

Operating expenses:

Selling expenses

General and administrative expenses

Research and development expenses

Total operating expenses

Income (loss) from continuing operations

(11,428,111 )

Other expenses

Income (loss) from continuing operations before income tax expense

Income tax expense

Net income (loss) from continuing operations

Income from discontinued operations, net of income tax

Net income (loss)

net loss attributable to non-controlling interests

Net income (loss) attributable to HeartCore Enterprises,

Net loss attributable to HeartCore Enterprises, Inc.

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 unchanged sentence

$ (3,086,992 )

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

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

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

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

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

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

$ (1,187,317 )

Our revenues decreased by $847,569, or 40.5%, to $1,245,844 for the three

months ended March 31, 2026 from $2,093,413 for the three months ended March 31, 2025, mainly attributable to a decreased revenue of $827,435

from customized software development and services in connection with the intense competition in the U.S.

software market.

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

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

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

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

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

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

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

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

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

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

offset by (ii) an increase of

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

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

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

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

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

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

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

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

cancelled promotion campaigns with lower advertising performance.

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

30, 2025 and 2024, respectively.

cost of revenues decreased by $377,840, or 24.4%, to $1,171,799 for the three months ended March 31, 2026 from $1,549,639 for the

three months ended March 31, 2025, mainly attributable to a decrease of $539,614 in the cost of customized software development and

services, which was in light of the decrease in sales of respective revenues.

gross profit decreased by $469,729, or 86.4%, to $74,045 for the three months ended March 31, 2026 from $543,774 for the three

months ended March 31, 2025, mainly attributable to (i) a decrease of $298,720 in gross profit from our Go IPO consulting services,

as we as spent more efforts and resources and incurred more outsourcing fees for Go IPO consulting services to enhance our Go IPO

consulting customers experience with us, resulted in lower gross profit for our Go IPO consulting services;

(ii) a decrease of

$287,821 in customized software development and services in light of the decrease in customized software development and services

revenues and the increase in respective cost in connection with the increasing subcontracting fees for outsourced software engineers

due to the salary level increase in the overall software market;

and offset by (iii) an increase of $116,812 in software development

and other services provided by HeartCore Luvina due to the increase in software development and other services revenues and decrease

in respective cost due to the cost control policy we implemented.

the reasons discussed above, our overall gross profit margin decreased by 20.1% to 5.9% for the three months ended March 31,

2026 from 26.0% for the three months ended March 31, 2025.

Our selling expenses decreased by $110,110, or 72.0%,

to $42,812 for the three months ended March 31, 2026 from $152,922 for the three months ended March 31, 2025, primarily attributable

to a decrease of $95,668 in advertising and referral expenses, as we reduced certain marketing and referral activities and cancelled

promotion campaigns with lower advertising performance.

and Administrative Expenses

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

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

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

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

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

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

30, 2025 and 2024, respectively.

and Development Expenses

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

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

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

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

2025 and 2024, respectively.

Expenses, Net

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

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

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

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

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

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

there was no such activity in the current period;

offset by (ii) a

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

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

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

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

Income (Loss) from Continuing Operations

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

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

Income from Discontinued Operations, Net of Income Tax

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

outstanding shares of HeartCore Japan.

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

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

and financial results.

The sale transaction was closed on October 31, 2025.

We reported an income from discontinued operations, net

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

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

Income (Loss)

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

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

Our general and administrative expenses were $1,571,734

and $1,581,205 for the three months ended March 31, 2026 and 2025, respectively, and remained stable across periods with minor decrease.

Other Expenses, Net

Our other income (expenses) includes changes in fair value of investments

in marketable securities, changes in fair value of investment in warrants, changes in fair value of derivative liability, interest income

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

Total other expenses, net decreased by $1,421,325,

or 77.2%, to $418,745 for the three months ended March 31, 2026, from total other expenses, net of $1,840,070 for the three months ended

March 31, 2025, primarily attributable to a decrease of $1,485,667 in changes of fair value of investments in marketable securities due

to fair value measurement across periods.

Our income tax expense were minimal, which were $17,496 and $39,608 for

the three months ended March 31, 2026 and 2025, respectively, as we incurred pre-tax loss positions across periods.

Loss from Discontinued Operations, Net of Income Tax

On July 24, 2025, the Board of Directors of the Company approved to enter

into a non-binding letter of intent to sell 100% of the outstanding shares of HeartCore Co., Ltd.

On October 31, 2025, the Company entered

into the HeartCore Japan Agreement with Smith Japan in relation to the sale of HeartCore Co., Ltd.

The results of operations of HeartCore

are reported as discontinued operations for all periods presented, as the sale of HeartCore Co., Ltd.

represents a strategic

shift that has a major impact on the Company’s operations and financial results.

The HeartCore Co., Ltd.

sale closed on October

We reported a loss from discontinued operations, net of income tax of $67,350 for the three months ended March 31, 2025.

Loss Attributable to Non-controlling Interests

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

of HeartCore Luvina.

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

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

Income (Loss) Attributable to HeartCore Enterprises, Inc.

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

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

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

of $7,773,356

for the nine months ended September 30, 2024.

We owned a 51% equity interest of Sigmaways and its subsidiaries and a

51% equity interest of HeartCore Luvina.

Accordingly, we recorded net loss attributable to non-controlling interests of $105,008 and $50,389

for the three months ended March 31, 2026 and 2025, respectively.

Accrued on Series A Convertible Preferred Shares

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

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

Income (Loss) Attributable to HeartCore Enterprises, Inc.

On June 30, 2025, we issued 2,000 shares of Series A convertible preferred

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

Accordingly, we recorded dividends accrued on Series A convertible

preferred shares of $27,968 and nil for the three months ended March 31, 2026 and 2025, respectively.

Loss Attributable to HeartCore Enterprises, Inc.

Common Shareholders

1 unchanged sentence

common shareholders of $1,899,675 for the

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

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

three months ended March 31, 2026, representing a $1,187,317, or 38.5%, decrease from a net loss attributable to HeartCore Enterprises,

common shareholders of $3,086,992 for the three months ended March 31, 2025.

and Capital Resources

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

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

Our accounts receivable primarily include the balance due from

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

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

For the Nine Months Ended

September 30,

Net cash flows used in operating activities of continuing operations

$ (2,980,958 )

$ (3,027,115 )

Net cash flows provided by investing activities of continuing operations

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

Net cash flows used in discontinued operations

Effect of exchange rate changes

of March 31, 2026, we had $774,033 in cash and cash equivalents, as compared to $1,985,962 as of December 31, 2025.

We also had $572,547

in accounts receivable as of March 31, 2026.

Our accounts receivable primarily include the balance due from customers for our customized

software development and services accepted by customers.

of March 31, 2026, our working capital was $1,010,549.

In assessing our liquidity, management monitors and analyzes our cash, our ability

to generate sufficient revenues in the future, and our operating and capital expenditure commitments.

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

the Three Months

Ended March 31,

cash flows used in operating activities of continuing operations

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

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

cash flows used in discontinued operations

Effect of exchange rate

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

Cash and cash equivalents,

beginning of the period

Cash and cash equivalents,

end of the period

Flows from Operating Activities of Continuing Operations

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

primarily consisting of the following:

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

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

A decrease of $304,033

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

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

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

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

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

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

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

primarily consisting of the following:

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

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

customers completed the IPO during th is period.

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

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

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

on sale of warrants to a third party.

by depreciation and amortization expenses of $532,958.

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

the customer.

Flows from Investing Activities of Continuing Operations

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

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

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

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

Flows from Financing Activities of Continuing Operations

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

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

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

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

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

Flows from Discontinued Operations

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

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

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

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

cash flows used in operating activities of continuing operations was $1,153,590 for the three months ended March 31, 2026, primarily

consisting of the following:

Net loss from continuing

operations of $1,976,715 for the three months ended March 31, 2026.

Offset by loss of $295,997 on fair value changes in investments in marketable securities due to fair value measurement.

Offset by a decrease of $135,238 in accounts receivable in line with the

decrease in revenues.

by an increase of $154,736 in accrued payroll and other employee costs, primarily resulting from Sigmaways’s payroll delayed

arrangement in response to its sales slowdown.

Cash Flows from Investing Activities of Continuing Operations

cash flows used in investing activities of continuing operations amounted to $954 for the three months ended March 31, 2026, for

purchase of property and equipment.

Cash Flows from Financing Activities of Continuing Operations

cash flows used in financing activities of continuing operations amounted to $53,513 for the three months ended March 31, 2026,

primarily consisting of $23,657 for repayment of insurance premium financing, $12,382 for repayment of long-term debts, and

$11,474 for net repayment of factoring arrangement.

Company has entered into operating leases for office space.

As of March 31, 2026, the future maturity of lease liabilities is

Year Ended December 31,

Remaining of 2026

Total lease payments

imputed interest

Total lease liabilities

current portion

Non-current lease liabilities

The Company’s debts included long-term debts borrowed from a bank

and a financial institution.

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

Ended December 31,

Sheet Arrangements

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

did not have any off-balance sheet arrangements as of March 31, 2026.

Accounting Policies and Estimates

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

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

States (“U.S.

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

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

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

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

We rely on these

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

other sources.

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

from those estimates.

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

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

financial statements.

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

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

the listing process.

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

Cash consideration is paid

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

of that performance obligation.

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

at contract inception.

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

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

We assess the estimated amount of the variable noncash

consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal

of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved.

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

Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized

in revenues until the underlying uncertainties have been resolved.

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

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

valuation appraisers.

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

Management applies

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

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

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

These significant assumptions are forward-looking and could

be affected by future changes in economic and market conditions.

We believe the accounting estimate for revenue recognition in connection

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

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

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

Our discussion and analysis of our financial condition and results of operations

are based upon our unaudited consolidated financial statements.

These unaudited consolidated financial statements are prepared in accordance

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

GAAP”), which requires us to make estimates

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

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

incurred during the financial reporting period.

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

under the circumstances.

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

that are not readily apparent from other sources.

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

actual results could differ from those estimates.

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

ended March 31, 2026.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis