What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-15 · 526 added, 456 removed, 662 unchanged (60% of the section changed)

FINANCIAL STATEMENTS

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

ENTERPRISES, INC.

BALANCE SHEETS

and cash equivalents

in marketable securities

offering costs

current assets

Cash and cash equivalents

Accounts receivable

Investments in marketable securities

Prepaid expenses

Current portion of long-term note receivable

Deferred offering costs

Other current assets

assets of discontinued operations

Proceeds receivable from sale of discontinued

current assets

and equipment, net

lease right-of-use assets

investment in warrants

non-current assets

assets of discontinued operations

proceeds receivable from sale of discontinued operations

Total current assets

non-current assets

Property and equipment, net

Operating lease right-of-use assets

Long-term investment in warrants

Deferred tax assets

Security deposits

Other non-current assets

Long-term proceeds receivable from sale of discontinued operations

Total non-current assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

AND SHAREHOLDERS’ EQUITY

payable and accrued expenses

payable and accrued expenses – related party

payable and accrued expenses

payroll and other employee costs

to related party

premium financing

lease liabilities, current

current liabilities

Accounts payable and accrued expenses

Accounts payable and accrued expenses – related party

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Due to related party

Short-term debt – related party

Current portion of long-term debts

Insurance premium financing

Factoring liability

Operating lease liabilities, current

Income tax payables

Deferred revenue

Derivative liability

Other current liabilities

Total current liabilities

liabilities of discontinued operations

current liabilities

lease liabilities, non-current

liabilities of discontinued operations

non-current liabilities

Long-term debts

Operating lease liabilities, non-current

Total non-current liabilities

Total liabilities

Shareholders’ equity:

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

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

Accumulated deficit

Shareholders’

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

Series A convertible preferred shares, 4,000 shares designated, 617 and

1,017 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively;

aggregate liquidation preference of

$ 748,228 and $ 1,158,362 as of June 30, 2026 and December 31, 2025, respectively

shares, $ 0.0001 par value, 200,000,000 shares authorized, 1,441,565 and 1,270,991 shares issued and outstanding as of June 30, 2026

and December 31, 2025, respectively *

paid-in capital

( 17,650,321 )

( 13,755,534 )

Accumulated other comprehensive loss

Total HeartCore Enterprises, Inc.

other comprehensive loss

HeartCore Enterprises, Inc.

shareholders’ equity

Non-controlling interests

( 1,610,818 )

Non-controlling

( 1,497,272 )

Total shareholders’ equity

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.

shareholders’ equity

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.

References 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.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (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)

For the Six Months

Ended June 30,

Cost of revenues (including cost of revenues resulting from transactions with a related party of $ 151,143 and $ 265,678 for the three and six months ended June 30, 2026, respectively, and of $ 31,328 and $ 56,523 for the three and six months ended June 30, 2025, respectively)

Gross profit (loss)

Operating expenses:

Selling 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)

General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of nil for the three and six months ended June 30, 2026, and of $ 11,433 and $ 29,048 for the three and six months ended June 30, 2025, respectively)

Total operating expenses

4 unchanged sentences

Changes in fair value of investments in marketable securities

( 1,781,664 )

Changes in fair value of investment in warrants

3 unchanged sentences

Other expenses

Total other expenses

Total other income (expenses)

( 1,108,949 )

Loss from continuing operations before income tax expense

Income (loss) from continuing operations before income tax expense

( 1,529,417 )

( 3,245,170 )

( 2,685,378 )

Income tax expense

Net loss from continuing operations

Net income (loss) from continuing operations

( 1,550,289 )

( 3,283,511 )

Loss from discontinued operations, net of income tax

( 2,730,959 )

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

Net income (loss)

( 2,039,519 )

net loss attributable to non-controlling interests

Net loss attributable to HeartCore Enterprises, Inc.

( 4,016,234 )

( 2,075,875 )

net income from continuing operations attributable to non-controlling interests

loss from discontinued operations attributable to non-controlling interests

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

( 2,023,080 )

( 3,894,787 )

( 1,987,090 )

Dividends accrued on Series A convertible preferred shares

Net loss attributable to HeartCore Enterprises, Inc.

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

common shareholders

1 unchanged sentence

$ ( 3,942,111 )

Other comprehensive loss:

$ ( 1,987,701 )

Other comprehensive income (loss):

Foreign currency translation adjustment

Total comprehensive loss

Total comprehensive income (loss)

( 2,057,892 )

( 4,050,747 )

( 2,027,837 )

comprehensive loss attributable to non-controlling interests

Comprehensive loss attributable to HeartCore Enterprises, Inc.

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

$ ( 2,041,054 )

$ ( 3,920,363 )

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

$ ( 1,937,902 )

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

per common share*

Loss from discontinued operations per common share*

Net loss attributable to HeartCore Enterprises, Inc.

Income (loss) from discontinued operations per common share*

Net income (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.

April 2, 2026, the Company effected a 1-for-20 reverse stock split of the Company’s issued

and outstanding common shares.

References 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.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

Common Shares

HeartCore Enterprises, Inc.

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

Enterprises, Inc.

Comprehensive

9 unchanged sentences

( 3,137,381 )

Foreign currency translation adjustment

Issuance of common shares related to at the market offering agreement

Collection of subscription receivable

currency translation adjustment

of common shares related to at the market offering agreement

of subscription receivable

Exercise of stock options

Stock-based compensation

Balance, March 31, 2025

1 unchanged sentence

( 1,240,634 )

Preferred Shares

Common Shares

income (loss)

currency translation adjustment

of Series A convertible preferred shares

of common shares related to securities purchase agreement

of common shares related to equity purchase agreement

accrued on Series A convertible preferred shares

June 30, 2025

$ ( 18,231,933 )

$ ( 1,281,417 )

Enterprises, Inc.

9 unchanged sentences

( 1,976,715 )

Foreign currency translation adjustment

Dividends accrued on Series A convertible preferred shares

Stock-based compensation

Reverse stock split rounding adjustment

currency translation adjustment

accrued on Series A convertible preferred shares

Balance, March 31, 2026

1 unchanged sentence

( 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.

( 2,023,080 )

( 2,039,519 )

income (loss )

( 2,023,080 )

( 2,039,519 )

currency translation adjustment

translation adjustment reclassified into earnings due to disposal of discontinued operations

Derecognition

of non-controlling interests upon sale of discontinued operations

A convertible preferred shares converted to common shares

accrued on Series A convertible preferred shares

stock split rounding adjustment

June 30, 2026

$ ( 17,650,321 )

April 2, 2026, the Company effected a 1-for-20 reverse stock split of the Company’s issued

and outstanding common shares.

References 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.

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months

Ended March 31,

ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months

Ended June 30,

Cash flows from operating activities of continuing operations:

1 unchanged sentence

$ ( 2,075,875 )

Loss from discontinued operations, net of income tax

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

Net loss from continuing operations

17 unchanged sentences

Accounts payable and accrued expenses – related party

Accounts payable and accrued expenses

Accrued payroll and other employee costs

10 unchanged sentences

Proceeds from sale of marketable securities

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

Net cash flows provided by investing activities of continuing operations

Cash flows from financing activities of continuing operations:

Payments for finance lease

Repayment of long-term debts

Repayment of related party debt

Repayment of insurance premium financing

Net repayment of factoring arrangement

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

3 unchanged sentences

Net cash flows used in financing activities of discontinued operations

Net cash flows used in discontinued operations

Net cash flows provided by (used in) discontinued operations

Effect of exchange rate changes

1 unchanged sentence

( 1,398,888 )

( 1,382,105 )

Cash and cash equivalents – beginning of the period

5 unchanged sentences

Insurance premium financing

Dividends accrued on Series A convertible preferred shares

Warrants converted to marketable securities

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

Dividends accrued on Series A convertible preferred shares

Series A convertible preferred shares converted to common shares

Issuance of common shares related to equity purchase agreement

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

ENTERPRISES, INC.

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

HEARTCORE ENTERPRISES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

40 unchanged sentences

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

In August 2026, HeartCore USA entered into a purchase agreement to sell 51 % of the outstanding shares of HeartCore Luvina to its non-controlling

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

10 unchanged sentences

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

March 5, 2026, the Board of Directors approved to sell 51 % of the outstanding shares of Sigmaways and its wholly-owned subsidiaries.

The sale of Sigmaways and its wholly-owned subsidiaries 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 12).

The sale transaction was closed on June 22, 2026.

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

7 unchanged sentences

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.

HeartCore USA and its subsidiaries.

The Company has presented the assets and liabilities of HeartCore Japan and Sigmaways and its wholly-owned

subsidiaries and their 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 and Sigmaways and its wholly-owned

subsidiaries unless otherwise noted.

All significant intercompany accounts and transactions have been eliminated.

14 unchanged sentences

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 incurred net loss from continuing operations of $ 1.6 million and $ 3.3 million for the three and six months ended June 30, 2026,

respectively, and net cash flows used in operating activities of continuing operations of $ 2.5 million for the six months ended June

30, 2026, primarily due to the macroeconomic downturn environment.

As of June 30, 2026, the Company had cash and cash equivalents of

$ 0.6 million, working capital of $ 0.6 million and accumulated deficit of $ 17.7 million.

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

37 unchanged sentences

and written down to its fair value.

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

There were no impairments of these assets during the three and six months ended June 30, 2026 and

Currency Translation

11 unchanged sentences

The resulting exchange differences are recorded in the unaudited consolidated

statements of operations and comprehensive loss.

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

In accordance

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

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

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

Revenues and expenses are translated at average rates prevailing

during the periods.

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

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

statements of operations and comprehensive income (loss).

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

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

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

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

Revenues and expenses are translated at average rates

prevailing during the periods.

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

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

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

5 unchanged sentences

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

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

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

The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam and nil of gross sales in the United States.

Company currently generates its revenues from the following main sources:

5 unchanged sentences

and accepted by the customers.

from Customized Software Development and Services

Company’s customized software development and services revenues primarily include revenues from providing software development

solutions and other support services to its customers.

The contract pricing is at stated billing rates per hour.

These contracts are

generally short-term in nature and not longer than one year in duration.

For services provided under the contracts that result in the

transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create

an asset with an alternative use to the Company.

The Company recognizes revenues on rate per hour contracts based on the amount billable

to the customers, as the Company has the right to invoice the customers in an amount that directly corresponds with the value to the

customers of the Company’s performance to date.

from Consulting Services

35 unchanged sentences

consolidated balance sheets, when revenues are recognized prior to invoicing.

The Company factors certain accounts receivable upon or

after the performance obligation is being met.

The Company records deferred revenue in the consolidated balance sheets when revenues

are recognized subsequent to cash collection for an invoice.

Deferred revenue is reported net of related uncollected deferred revenue

in the consolidated balance sheets.

The amounts of revenues recognized during the 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.

The Company records deferred revenue in the consolidated

balance sheets when revenues are recognized subsequent to cash collection for an invoice.

Deferred revenue is reported net of related

uncollected deferred revenue in the consolidated balance sheets.

The amounts of revenues recognized during the six months ended June

30, 2026 and 2025 that were included in the opening deferred revenue balances were approximately $ 0.1 million and $ 0.4 million, respectively.

Disaggregation

2 unchanged sentences

The Company’s disaggregation of revenues

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

by revenue stream for the three and six months ended June 30, 2026 and 2025 is as follows:

SCHEDULE OF DISAGGREGATION OF REVENUES

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Revenues from software development services

Revenues from customized software development and services

Revenues from consulting services

2 unchanged sentences

of Credit Risk

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

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

The Company conducts periodic reviews

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

the three 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

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

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

The Company conducts periodic reviews of the financial

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

the three and six months ended June 30, 2026 and 2025, customers account for 10% or more of the Company’s revenues are as follows:

SCHEDULE OF CONCENTRATION OF CREDIT RISK

For the Three Months

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:

Ended June 30,

For the Six Months

Ended June 30,

of June 30, 2026 and December 31, 2025, customers account for 10% or more of the Company’s accounts receivable are as follows:

the three and six months ended June 30, 2026 and 2025, vendors account for 10% or more of the Company’s purchases from

continuing operations are as follows:

For the Three Months

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%.

Ended June 30,

For the Six Months

Ended June 30,

of June 30, 2026 and December 31, 2025, vendors account for 10% or more of the Company’s accounts payable and accrued expenses

are as follows:

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

36 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 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

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 June 30, 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 June 30, 2026 and December 31, 2025 are summarized below (also see

NOTE 4 for investments):

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Fair Value Measurements as of March 31, 2026

Fair Value Measurements as of June 30, 2026

Quoted Prices

Markets for Identical

Assets or Liabilities

Significant Other

Fair Value at

March 31, 2026

June 30, 2026

Investments in marketable securities

4 unchanged sentences

Markets for Identical

Assets or Liabilities

Significant Other

4 unchanged sentences

Derivative liability

Held for Sale and Discontinued Operations

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

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

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

The 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.

Company assesses the sales of HeartCore Japan and Sigmaways and its wholly-owned subsidiaries and determines they meet the held for sale

criteria and the discontinued operations criteria.

The assets and liabilities of Sigmaways and its wholly-owned subsidiaries have been

reflected as assets and liabilities of discontinued operations in the consolidated balance sheets for all periods presented.

of operations of HeartCore Japan and Sigmaways and its wholly-owned subsidiaries 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 required disclosures are included in NOTE 12.

Accounting Pronouncements

21 unchanged sentences

interim consolidated financial statements and related disclosures.

3 – ACCOUNTS RECEIVABLE

receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

Accounts receivable – non-factored

Accounts receivable – factored with recourse

Total accounts receivable, gross

allowance for credit losses

Total accounts receivable

3 – RELATED PARTY TRANSACTIONS

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,

of June 30, 2026 and December 31, 2025, the Company had due to related party balances of $ 460 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 six months ended June 30, 2026 and 2025, the related party paid operating expenses on behalf of the Company

and received the payments in a net amount of $191 and nil, respectively.

of June 30, 2026 and December 31, 2025, the Company had accounts payable and accrued expenses balances of $ 33,946 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 three months ended March 31, 2026 and

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

three and six months ended June 30, 2026, the Company engaged the related party for software development services of $ 151,143 and $ 265,678 ,

respectively.

During the three and six months ended June 30, 2025, the Company engaged the related party for software development and

other support services of $ 42,761 and $ 85,571 , respectively.

During the six months ended June 30, 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.

4 – INVESTMENTS

7 unchanged sentences

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:

following table summarizes the Company’s investment in warrants activities for the six months ended June 30, 2026 and 2025:

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY

the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Fair value of investment in warrants at beginning of the period

Changes in fair value of investment in warrants

Warrants converted to marketable securities

Fair value of investment in warrants at end of the period

4 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 three months ended March 31, 2026

following table summarizes the Company’s investments in marketable securities activities for the six months ended June 30, 2026

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

the Three Months

Ended March 31,

For the Six Months

Ended June 30,

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

Marketable securities converted from warrants *

Changes in fair value of investments in marketable securities

( 1,781,664 )

Marketable securities sold

( 1,071,732 )

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

the six months ended June 30, 2026 and 2025, the Company exercised 63,558 and nil shares of warrants in exchange for 63,558 and nil

shares of common shares, respectively.

5 – PROPERTY AND EQUIPMENT, NET

4 unchanged sentences

Total property and equipment, net

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.

the three and six months ended June 30, 2026, the Company recognized depreciation expenses of $ 7,674 and $ 15,394 , respectively.

three and six months ended June 30, 2025, the Company recognized depreciation expenses of $ 8,439 and $ 28,728 , 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

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.

3 unchanged sentences

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,

components of lease costs for the three and six months ended June 30, 2026 and 2025 are as follows:

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Finance lease costs

4 unchanged sentences

Total leases costs

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

following table presents supplemental information related to the Company’s leases for the six months ended June 30, 2026 and 2025:

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY LEASE

the Three Months

Ended March 31,

For the Six Months

Ended June 30,

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

10 unchanged sentences

Operating leases

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

of June 30, 2026, the future maturity of lease liabilities is as follows:

SCHEDULE OF FUTURE MINIMUM MATURITIES OF OPERATING LEASE LIABILITIES

8 unchanged sentences

The security deposits amounted to $ 270,525 and

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

$ 281,313 as of June 30, 2026 and December 31, 2025, respectively.

7 – OTHER CURRENT LIABILITIES

current liabilities consist of the following:

OF OTHER CURRENT LIABILITIES

SCHEDULE OF OTHER CURRENT LIABILITIES

Customer refund liability *

Total other current liabilities

On June 28, 2024, the Company

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

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

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

to the customer.

9 – FACTORING LIABILITY

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

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

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

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

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

in Purchased Receivable.

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

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

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

Pursuant to the terms of the recourse provision,

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

The performance

of all obligations and payments to the Factor is secured by all Sigmaways’ now owned and hereafter assets and any sums maintained

by the Factor that are identified as payable to Sigmaways.

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

terminates pursuant to the terms of the Factoring Agreement.

Sigmaways may terminate the Factoring Agreement with sixty days’ written

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

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

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

of 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.

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.

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

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

SCHEDULE OF LONG-TERM DEBTS

Name of Bank/Financial Institution

Balance as of

March 31, 2026

Balance as of

December 31, 2025

First Home Bank

$ 350,000 (a)

4/18/2019 – 4/18/2029

Wall Street Journal U.S.

Prime Rate + 2.75 %

Small Business Administration

5/30/2020 – 5/30/2050

Aggregate outstanding principal balances

current portion

Non-current portion

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

Year Ended December 31,

Remaining of 2026

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

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

As of the date of this report,

the Company did not make payment to the customer.

8 – INCOME TAXES

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

with respect to the profit generated from the United States.

is a company incorporated in Netherlands.

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

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

Technologies is a company incorporated in British Columbia in Canada.

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

the tax jurisdiction in British Columbia it operates.

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

tax abatement.

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

The provincial and territorial lower and higher tax

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

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

to the profit generated from the United States.

Luvina is a company incorporated in Vietnam.

3 unchanged sentences

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:

the three and six months ended June 30, 2026 and 2025, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

the Three Months

Ended March 31,

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Income tax expense

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

the three and six months ended June 30, 2026, the effective tax rate were 1.36 % and 1.18 %, respectively.

For the three and six months

ended June 30, 2025, the effective tax rate were 2.71 % and 1.70 %, respectively.

9 – 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.

August 1, 2023, the Board of Directors of the Company approved a 2023 Equity Incentive 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

11 unchanged sentences

with the expiration date on February 3, 2033 .

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

following table summarizes the stock options activities and related information for the six months ended June 30, 2026 and 2025:

SCHEDULE OF STOCK OPTION ACTIVITY

Stock Options

As of January 1, 2025

As of March 31, 2025

As of June 30, 2025

As of January 1, 2026

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.

As of June 30, 2026

Vested and exercisable as of June 30, 2026

the three and six months ended June 30, 2026, there was no stock-based compensation related to stock options.

For the three and six months

ended June 30, 2025, the Company recognized stock-based compensation related to stock options of $ 22,006 and $ 52,682 , respectively.

was no outstanding unamortized stock-based compensation related to stock options as of June 30, 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 three months ended March 31, 2026 and 2025:

following table summarizes the RSUs activities and related information for the six months ended June 30, 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 March 31, 2025

Unvested as of June 30, 2025

Unvested as of January 1, 2026

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 ,

Unvested as of June 30, 2026

the three and six months ended June 30, 2026, the Company recognized stock-based compensation related to RSUs of nil and $ 2,031 , respectively.

For the three and six months ended June 30, 2025, the Company recognized stock-based compensation related to RSUs of $ 5,918 and $ 7,522 ,

respectively.

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

There was no outstanding unamortized stock-based compensation related to RSUs as of June 30, 2026.

10 – SHAREHOLDERS’ EQUITY

2 unchanged sentences

the Market Offering Agreement (“ATM Agreement”)

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

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

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

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

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

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.

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

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

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

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

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

months ended June 30, 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

6 unchanged sentences

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.

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

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

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

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

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

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

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

or winding up.

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

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

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

that each such Holder is entitled to receive.

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

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

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.

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

However, as long as any shares of Series A convertible

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

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

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

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

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

the foregoing.

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

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

The number of shares of common shares issuable

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

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

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

conversion notice delivery date.

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

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

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

2,000 shares of the Company’s designated Series A convertible preferred shares for 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 .

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 37,500 shares of common shares (“ 37,500 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 37,500 Common Shares based on their relative fair values.

the three and six months ended June 30, 2026, there were 400 and 400 shares of Series A convertible preferred shares converted into 152,753

and 152,753 shares of common shares, respectively.

For the three and six months ended June 30, 2025, no shares of Series A convertible

preferred shares were converted into common shares.

the three and six months ended June 30, 2026, dividends accrued on Series A convertible preferred shares amounted to $ 19,356 and $ 47,324 ,

respectively.

For the three and six months ended June 30, 2025, dividends accrued on Series A convertible preferred shares amounted to

$ 611 and $ 611 , respectively.

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.

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

with the signing of the equity purchase agreement, the Company issued 24,272 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 six months ended June 30, 2026 and 2025, no common shares were sold pursuant to the terms of the equity purchase agreement.

Repurchase Program for Common Shares

4 unchanged sentences

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.

the three and six months ended June 30, 2026, no common shares were repurchased pursuant to the 2026 Share Repurchase Program.

Stock Split for Common Shares

8 unchanged sentences

Issued and Outstanding

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:

of June 30, 2026 and December 31, 2025, there were 1,441,565 and 1,270,991 shares of common shares issued and outstanding, respectively.

of June 30, 2026 and December 31, 2025, there were 617 and 1,017 shares of preferred shares (designated as Series A convertible preferred

shares) issued and outstanding, respectively.

11 – 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 six months ended June 30, 2026 and 2025 is as follows:

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

For the Three Months

Ended March 31,

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

Ended June 30,

For the Six Months

Ended June 30,

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

per common share – basic

Net loss from continuing operations

$ ( 1,976,715 )

$ ( 3,070,031 )

net loss from continuing operations attributable to non-controlling interests

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 loss from continuing operations attributable to HeartCore Enterprises, Inc.

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

common shareholders

1 unchanged sentence

$ ( 3,360,909 )

$ ( 2,750,458 )

Weighted average number of common shares outstanding – basic

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

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

per common share – basic

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

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

per common share – diluted

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

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

common shareholders

$ ( 1,585,415 )

$ ( 3,360,909 )

$ ( 2,750,458 )

dividends accrued on unconverted Series A convertible preferred shares

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

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

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

( 1,602,911 )

( 3,360,811 )

( 2,749,847 )

Weighted average number of common shares outstanding – diluted

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

Net income (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.

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Income (loss) from discontinued operations attributable to HeartCore Enterprises, Inc.

per common share – basic

Net loss attributable to HeartCore Enterprises, Inc.

Income (loss) from discontinued operations attributable to HeartCore Enterprises, Inc.

$ ( 457,021 )

$ ( 581,202 )

Weighted average number of common shares outstanding – basic

Income (loss) from discontinued operations attributable to HeartCore Enterprises, Inc.

per common share – basic

Income (loss) from discontinued operations attributable to HeartCore Enterprises, Inc.

per common share – diluted

Income (loss) from discontinued operations attributable to HeartCore Enterprises, Inc.

$ ( 457,021 )

$ ( 581,202 )

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 attributable to HeartCore Enterprises, Inc.

per common share – diluted

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

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

per common share – basic

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

common shareholders

1 unchanged sentence

$ ( 3,942,111 )

$ ( 1,987,701 )

Weighted average number of common shares outstanding – basic

Net loss attributable to HeartCore Enterprises, Inc.

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

per common share – basic

Net loss attributable to HeartCore Enterprises, Inc.

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

per common share – diluted

Net loss attributable to HeartCore Enterprises, Inc.

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

common shareholders

$ ( 2,042,436 )

$ ( 3,942,111 )

$ ( 1,987,701 )

dividends accrued on unconverted Series A convertible preferred shares

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

Net loss attributable to HeartCore Enterprises, Inc.

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

( 2,059,932 )

( 3,942,013 )

( 1,987,090 )

Weighted average number of common shares outstanding – basic

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

Weighted average number of common shares outstanding – diluted

Net loss attributable to HeartCore Enterprises, Inc.

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

per common share – diluted

10 unchanged sentences

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

loss for all periods presented.

income (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,

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 loss for the three months ended March 31, 2025:

For the six months ended June 30, 2026, the Company received proceeds from sale of discontinued operations

for HeartCore Japan of $ 871,549 .

following table summarizes the results of operations from discontinued operations, net of income tax for HeartCore Japan in the unaudited

consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2025:

SCHEDULE OF OPERATIONS, ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

the Three Months

Ended March 31,

For the Three Months Ended

For the Six Months Ended

June 30, 2025

Cost of revenues

4 unchanged sentences

Total operating expenses

Income from discontinued operations

Other expenses

Loss on sale of discontinued operations

Income from discontinued operations before income tax expense (benefit)

Income tax expense (benefit)

Income from discontinued operations, net of income tax

and Its Wholly-owned Subsidiaries

March 5, 2026, in light of the intense competition of the software market in the United States, the Board of Directors of the

Company approved to sell 51 %

of the outstanding shares of Sigmaways and its wholly-owned subsidiaries.

The Company does not expect to have any continuing

involvement in Sigmaways and its wholly-owned subsidiaries subsequent to the closing.

The Company determines the assets of Sigmaways

and its wholly-owned subsidiaries met the criteria for classification as held for sale.

Additionally, the Company determines the

sale of Sigmaways and its wholly-owned subsidiaries represents a strategic shift that has a major impact on its operations and

financial results.

Accordingly, all results of operations of Sigmaways and its wholly-owned subsidiaries 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 Sigmaways and its wholly-owned subsidiaries

have been presented separately as assets and liabilities of discontinued operations in the consolidated balance sheets as of

December 31, 2025.

On June 22, 2026, the sale transaction was closed.

The Company entered into a purchase agreement to sell 51 %

of the outstanding shares of Sigmaways and its wholly-owned subsidiaries to Semaphore Technologies, Inc.

for a cash consideration of

up to $ 650,000 ,

consisting of (i) closing cash consideration of $ 1,000 ,

and (ii) additional cash consideration of up to $ 649,000 ,

upon achievement of certain financial performance milestones.

The Company assesses the collection risk from time to time and

determines the collection of additional cash consideration is not probable based on the current financial performance of Sigmaways

and its wholly-owned subsidiaries.

For the six months ended June 30, 2026, the Company received gross proceeds from sale of

discontinued operations for Sigmaways and its wholly-owned subsidiaries of $ 1,000 ,

net of cash divested of $ 28,351 .

following table summarizes the results of operations from discontinued operations, net of income tax for Sigmaways and its wholly-owned

subsidiaries in the unaudited consolidated statements of operations and comprehensive income (loss) for the three and six months ended

June 30, 2026 and 2025:

SCHEDULE OF OPERATIONS, ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Cost of revenues

Operating expenses:

Selling expenses

General and administrative expenses

Total operating expenses

Loss from discontinued operations

Other expenses

Loss on sale of discontinued operations

Loss from discontinued operations before income tax expense

1 unchanged sentence

Loss from discontinued operations, net of income tax

loss from discontinued operations attributable to non-controlling interests

Loss from discontinued operations attributable to HeartCore Enterprises, Inc.

$ ( 457,021 )

$ ( 581,202 )

$ ( 112,067 )

following table summarizes the assets and liabilities of discontinued operations and non-controlling interests for Sigmaways and its

wholly-owned subsidiaries in the consolidated balance sheets as of December 31, 2025:

Assets of discontinued operations

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Current portion of long-term note receivable

Property and equipment, net

Operating lease right-of-use assets

Security deposits

Total assets of discontinued operations

Liabilities of discontinued operations

Accounts payable and accrued expenses

Accrued payroll and other employee costs

Short-term debt – related party

Current portion of long-term debts

Factoring liability

Operating lease liabilities, current

Other current liabilities

Long-term debts

Total liabilities of discontinued operations

Non-controlling interests

$ ( 1,633,871 )

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

valuation allowance against the assets classified as held for sale.

As of the closing date of the sale of Sigmaways and its wholly-owned

subsidiaries, the assets and liabilities classified as held for sale and non-controlling interests were derecognized and loss on sale

of discontinued operations was recorded.

13 – SEGMENT AND GEOGRAPHIC INFORMATION

4 unchanged sentences

The CODM assesses financial

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

Segment assets are reported

on the Company’s consolidated balance sheets.

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

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

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

Segment assets

are reported on the Company’s consolidated balance sheets.

following table summarizes the selected financial information with respect to the Company’s 1 single operating segment and

reportable segment for the three and six months ended June 30, 2026 and 2025:

SCHEDULE OF SINGLE OPERATING SEGMENT AND REPORTABLE SEGMENT

the Three Months

Ended March 31,

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Software related cost of revenues

Consulting related cost of revenues

Related cost of revenues

Selling expenses

3 unchanged sentences

( 1,848,735 )

Total other expenses

Total other income (expenses)

( 1,108,949 )

Loss from continuing operations before income tax expense

Income (loss) from continuing operations before income tax expense

( 1,529,417 )

( 3,245,170 )

( 2,685,378 )

Income tax expense

Net loss from continuing operations

Net income (loss) from continuing operations

$ ( 1,550,289 )

$ ( 3,283,511 )

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

$ ( 2,730,959 )

following table summarizes the breakdown of revenues by geography for the three and six months ended June 30, 2026 and 2025:

SCHEDULE OF SUMMARIZES THE BREAKDOWN OF REVENUES BY GEOGRAPHY

the Three Months

Ended March 31,

United States

International

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Total revenues

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

following table summarizes the breakdown of long-lived assets by geography as of June 30, 2026 and December 31, 2025:

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

United States

International

Total long-lived assets

14 – SUBSEQUENT EVENTS

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.

July 10, 2026, the Company paid dividends on Series A convertible preferred shares of $ 67,870 through issuance of 24,686 shares of common

July 23, 2026, Crom Structured converted 100 shares of Series A convertible preferred shares into 49,077 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