HTCR HeartCore Enterprises Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______, 20___, to _____, 20___.

 

Commission File Number 001-41272

 

HeartCore Enterprises, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		87-0913420
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

 

1-2-33, Higashigotanda, Shinagawa-ku

Tokyo, Japan

(Address of Principal Executive Offices) (Zip Code)

 

(206) 385-0488, ext. 100

(Registrant’s Telephone Number, Including Area Code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each Exchange on which Registered
Common Stock		HTCR		The Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☒		Smaller reporting company	☒
Emerging growth company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 13, 2023, there were 20,842,690 shares of outstanding common stock, par value $0.0001 per share, of the registrant.

 

 

 

HeartCore Enterprises, Inc.

 

Contents

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II – OTHER INFORMATION		17
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
Signatures		19

 

 

Item 1. Financial Statements.

 

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

 

		September 30,				December 31,
		2023				2022
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	2,199,565			$	7,177,326
Accounts receivable			2,562,239				551,064
Investments in marketable securities			757,106				-
Prepaid expenses			683,327				538,230
Note receivable			300,000				-
Current portion of long-term note receivable			100,000				-
Due from related party			42,439				48,447
Other current assets			111,326				220,070
Total current assets			6,756,002				8,535,137
Non-current assets:
Property and equipment, net			752,940				203,627
Operating lease right-of-use assets			2,413,814				2,644,957
Intangible asset, net			4,675,000				-
Goodwill			3,276,441				-
Long-term investments in warrants			2,456,902				-
Long-term note receivable			200,000				-
Deferred tax assets			222,172				263,339
Security deposits			338,220				244,395
Long-term loan receivable from related party			184,076				246,472
Other non-current assets			67				661
Total non-current assets			14,519,632				3,603,451
Total assets		$	21,275,634			$	12,138,588
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	1,779,953			$	497,742
Accrued payroll and other employee costs			558,394				360,222
Due to related party			7,859				402
Current portion of long-term debts			525,440				697,877
Insurance premium financing			122,279				-
Factoring liability			217,250				-
Operating lease liabilities, current			365,241				291,863
Finance lease liabilities, current			17,076				19,294
Income tax payables			103,935				2,747
Deferred revenue			1,740,877				1,724,519
Other current liabilities			222,089				53,027
Total current liabilities			5,660,393				3,647,693
Non-current liabilities:
Long-term debts			1,351,830				1,123,735
Operating lease liabilities, non-current			2,113,917				2,421,054
Finance lease liabilities, non-current			68,535				459
Deferred tax liabilities			1,309,000				-
Other non-current liabilities			197,817				138,018
Total non-current liabilities			5,041,099				3,683,266
Total liabilities			10,701,492				7,330,959
Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)			-				-
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,842,690 and 17,649,886 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)			2,083				1,764
Additional paid-in capital			19,431,987				15,014,607
Accumulated deficit			(11,910,310	)			(10,573,579	)
Accumulated other comprehensive income			282,734				364,837
Total HeartCore Enterprises, Inc. shareholders’ equity			7,806,494				4,807,629
Non-controlling interest			2,767,648				-
Total shareholders’ equity			10,574,142				4,807,629
Total liabilities and shareholders’ equity		$	21,275,634			$	12,138,588

 

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

 

 

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Revenues		$	4,688,908			$	1,872,476			$	18,518,431			$	6,818,774
Cost of revenues			3,860,241				1,543,256				10,548,245				3,935,908
Gross profit			828,667				329,220				7,970,186				2,882,866
Operating expenses:
Selling expenses			274,043				771,496				1,330,747				1,706,250
General and administrative expenses			2,172,298				1,513,028				7,305,392				5,832,276
Research and development expenses			170,071				58,275				289,303				583,762
Total operating expenses			2,616,412				2,342,799				8,925,442				8,122,288
Loss from operations			(1,787,745	)			(2,013,579	)			(955,256	)			(5,239,422	)
Other income (expenses):
Changes in fair value of investments in marketable securities			(271,740	)			-				(500,762	)			-
Changes in fair value of investments in warrants			(460,672	)			-				(294,565	)			-
Interest income			14,363				21,707				64,633				32,256
Interest expenses			(42,619	)			(10,500	)			(125,073	)			(39,361	)
Other income			52,640				15,195				176,641				40,645
Other expenses			(25,947	)			(2,826	)			(62,701	)			(58,050	)
Total other income (expenses)			(733,975	)			23,576				(741,827	)			(24,510	)
Loss before income tax provision			(2,521,720	)			(1,990,003	)			(1,697,083	)			(5,263,932	)
Income tax expense (benefit)			19,413				(19,069	)			58,859				(10,906	)
Net loss			(2,541,133	)			(1,970,934	)			(1,755,942	)			(5,253,026	)
Less: net loss attributable to non-controlling interest			(233,913	)			-				(419,211	)			-
Net loss attributable to HeartCore Enterprises, Inc.		$	(2,307,220	)		$	(1,970,934	)		$	(1,336,731	)		$	(5,253,026	)
Other comprehensive income (loss):
Foreign currency translation adjustment			(90,743	)			128,705				(85,244	)			428,118
Total comprehensive loss			(2,631,876	)			(1,842,229	)			(1,841,186	)			(4,824,908	)
Less: comprehensive loss attributable to non-controlling interest			(235,094	)			-				(422,352	)			-
Comprehensive loss attributable to HeartCore Enterprises, Inc.		$	(2,396,782	)		$	(1,842,229	)		$	(1,418,834	)		$	(4,824,908	)
Net loss per common share attributable to HeartCore Enterprises, Inc.
Basic		$	(0.11	)		$	(0.11	)		$	(0.07	)		$	(0.29	)
Diluted		$	(0.11	)		$	(0.11	)		$	(0.07	)		$	(0.29	)
Weighted average common shares outstanding
Basic			20,842,690				17,835,027				20,257,020				18,014,483
Diluted			20,842,690				17,835,027				20,257,020				18,014,483

 

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

 

 

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

 

		Common Shares								Additional				Treasury Shares												Accumulated Other						Total Shareholders’
		Number of Shares				Amount				Paid-in Capital				Number of Shares				Amount				Accumulated Deficit				Comprehensive Income (Loss)						Equity (Deficit)
Balance, December 31, 2021			15,546,454			$	1,554			$	3,350,779				-			$	-			$	(3,896,113	)		$	(15,172	)	-	-		$	(558,952	)
Net loss			-				-				-				-				-				(1,578,451	)			-						(1,578,451	)
Foreign currency translation adjustment			-				-				-				-				-				-				80,053						80,053
Issuance of common shares for cash			3,096,000				310				13,643,969				-				-				-				-		-	-			13,644,279
Issuance of common shares from exercise of share options			273,489				27				(11	)			-				-				-				-						16
Stock-based compensation			-				-				422,164				-				-				-				-		-	-			422,164
Balance, March 31, 2022			18,915,943				1,891				17,416,901				-				-				(5,474,564	)			64,881		-	-			12,009,109
Net loss			-				-				-				-				-				(1,703,641	)			-						(1,703,641	)
Foreign currency translation adjustment			-				-				-				-				-				-				219,360		-	-			219,360
Stock-based compensation			83,333				8				466,654				-				-				-				-						466,662
Repurchase of common shares			-				-				-				(558,809	)			(1,336,762	)			-				-						(1,336,762	)
Balance, June 30, 2022			18,999,276				1,899				17,883,555				(558,809	)			(1,336,762	)			(7,178,205	)			284,241		-	-			9,654,728
Net loss			-				-				-				-				-				(1,970,934	)			-						(1,970,934	)
Foreign currency translation adjustment			-				-				-				-				-				-				128,705						128,705
Stock-based compensation			-				-				336,651				-				-				-				-		-	-			336,651
Repurchase of common shares			-				-				-				(790,581	)			(2,163,238	)			-				-						(2,163,238	)
Balance, September 30, 2022			18,999,276			$	1,899			$	18,220,206				(1,349,390	)		$	(3,500,000	)		$	(9,149,139	)		$	412,946		-	-		$	5,985,912

 

 

		Common Shares								Additional								Accumulated Other				Total HeartCore Enterprises, Inc.				Non-				Total
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Comprehensive Income				Shareholders’ Equity				controlling Interest				Shareholders’ Equity
Balance, December 31, 2022			17,649,886			$	1,764			$	15,014,607			$	(10,573,579	)		$	364,837			$	4,807,629			$	-			$	4,807,629
Net income (loss)			-				-				-				1,882,289				-				1,882,289				(74,252	)			1,808,037
Foreign currency translation adjustment			-				-				-				-				(22,744	)			(22,744	)			(2,290	)			(25,034	)
Issuance of common shares for acquisition of subsidiary			2,500,000				250				3,149,750				-				-				3,150,000				-				3,150,000
Non-controlling interests arising from acquisition of subsidiary			-				-				-				-				-				-				3,190,000				3,190,000
Stock-based compensation			692,804				69				915,159				-				-				915,228				-				915,228
Balance, March 31, 2023			20,842,690				2,083				19,079,516				(8,691,290	)			342,093				10,732,402				3,113,458				13,845,860
Net loss			-				-				-				(911,800	)			-				(911,800	)			(111,046	)			(1,022,846	)
Foreign currency translation adjustment			-				-				-				-				30,203				30,203				330				30,533
Stock-based compensation			-				-				179,165				-				-				179,165				-				179,165
Balance, June 30, 2023			20,842,690				2,083				19,258,681				(9,603,090	)			372,296				10,029,970				3,002,742				13,032,712
Balance			20,842,690				2,083				19,258,681				(9,603,090	)			372,296				10,029,970				3,002,742				13,032,712
Net loss			-				-				-				(2,307,220	)			-				(2,307,220	)			(233,913	)			(2,541,133	)
Foreign currency translation adjustment			-				-				-				-				(89,562	)			(89,562	)			(1,181	)			(90,743	)
Stock-based compensation			-				-				173,306				-				-				173,306				-				173,306
Balance, September 30, 2023			20,842,690			$	2,083			$	19,431,987			$	(11,910,310	)		$	282,734			$	7,806,494			$	2,767,648			$	10,574,142
Balance			20,842,690			$	2,083			$	19,431,987			$	(11,910,310	)		$	282,734			$	7,806,494			$	2,767,648			$	10,574,142

 

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

 

 

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		For the Nine Months Ended September 30,
		2023				2022
Cash flows from operating activities:
Net loss		$	(1,755,942	)		$	(5,253,026	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expenses			495,200				64,398
Gain on disposal of property and equipment			(4,737	)			-
Amortization of debt issuance costs			2,257				3,051
Non-cash lease expense			254,876				207,549
Loss on termination of lease			76				-
Deferred income taxes			(109,690	)			(5,843	)
Stock-based compensation			1,267,699				1,225,477
Warrants received as noncash consideration			(4,009,335	)			-
Changes in fair value of investments in marketable securities			500,762				-
Changes in fair value of investments in warrants			294,565				-
Changes in assets and liabilities:
Accounts receivable			(322,583	)			168,021
Prepaid expenses			187,269				(56,553	)
Other assets			(23,982	)			(142,967	)
Accounts payable and accrued expenses			597,247				(96,238	)
Accrued payroll and other employee costs			7,471				59,059
Due to related party			7,562				3,098
Operating lease liabilities			(231,499	)			(213,691	)
Finance lease liabilities			-				(370	)
Income tax payables			101,058				(7,704	)
Deferred revenue			200,256				45,938
Other liabilities			83,809				(206,569	)
Net cash flows used in operating activities			(2,457,661	)			(4,206,370	)
Cash flows from investing activities:
Purchases of property and equipment			(516,658	)			(41,672	)
Proceeds from disposal of property and equipment			24,935				-
Advances on note receivable			(600,000	)			-
Repayment of loan provided to related party			34,823				33,042
Payment for acquisition of subsidiary, net of cash acquired			(724,910	)			-
Net cash flows used in investing activities			(1,781,810	)			(8,630	)
Cash flows from financing activities:
Proceeds from initial public offering, net of issuance cost			-				13,602,554
Proceeds from issuance of common shares prior to initial public offering			-				220,572
Repurchase of common shares			-				(3,500,000	)
Payments for finance leases			(16,537	)			(29,051	)
Proceeds from long-term debt			219,427				258,087
Repayment of long-term debts			(584,779	)			(699,407	)
Repayment of insurance premium financing			(266,756	)			(298,886	)
Net proceeds from factoring arrangement			217,250				-
Payments for debt issuance costs			(656	)			(1,030	)
Payment for mandatorily redeemable financial interest			-				(430,489	)
Net cash flows provided by (used in) financing activities			(432,051	)			9,122,350
Effect of exchange rate changes			(306,239	)			(200,981	)
Net change in cash and cash equivalents			(4,977,761	)			4,706,369
Cash and cash equivalents - beginning of the period			7,177,326				3,136,839
Cash and cash equivalents - end of the period		$	2,199,565			$	7,843,208
Supplemental cash flow disclosure:
Interest paid		$	59,290			$	38,387
Income taxes paid		$	91,657			$	3,013
Non-cash investing and financing transactions:
Payroll withheld as repayment of loan receivable from employees		$	-			$	12,034
Liabilities assumed in connection with purchase of property and equipment		$	9,602			$	17,731
Share repurchase liability settled by issuance of common shares		$	-			$	16
Deferred offering costs recognized against the proceeds from the offering		$	-			$	178,847
Insurance premium financing		$	389,035			$	388,538
Common shares issued for acquisition of subsidiary		$	3,150,000			$	-
Investments in warrants converted to marketable securities		$	1,257,868			$	-
Finance lease right-of-use asset obtained in exchange for finance lease liability		$	93,117			$	-
Operating lease right-of-use asset obtained in exchange for operating lease liability		$	317,040			$	-
Remeasurement of operating lease liability and right-of-use asset due to lease modification		$	12,579			$	-

 

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

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

HeartCore Enterprises, Inc. (“HeartCore USA” or the “Company”), a holding company, was incorporated under the laws of the State of Delaware on May 18, 2021.

 

On July 16, 2021, the Company executed a Share Exchange Agreement with certain shareholders of HeartCore Co., Ltd. (“HeartCore Japan”), a company that was incorporated in Japan on June 12, 2009. Pursuant to the terms of the Share Exchange Agreement, the Company issued 15,999,994 shares of its common shares to the shareholders of HeartCore Japan in exchange for 10,706 shares out of 10,984 shares of common shares issued by HeartCore Japan, representing approximately 97.5% of HeartCore Japan’s outstanding common shares. On February 24, 2022, the Company purchased the remaining 278 shares of common shares of HeartCore Japan. As a result, HeartCore Japan became a wholly-owned operating subsidiary of the Company.

 

The share exchange on July 16, 2021 has been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled these two entities before and after the transaction. The consolidation of the Company and its subsidiary has been accounted for at historical cost and prepared on the basis as if the transaction had become effective as of the beginning of the earliest period presented in the accompanying unaudited consolidated financial statements.

 

The Company, via its wholly-owned operating subsidiary, HeartCore Japan, is mainly engaged in the business of developing and sales of comprehensive software. Beginning from early 2022, HeartCore USA is engaged in business of providing consulting services to Japanese companies with intention to go public in the United States capital market.

 

On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V. and Sigmaways Technologies Ltd. (“Sigmaways Technologies”). Sigmaways B.V. was incorporated in Netherlands in November 2019. Sigmaways Technologies was incorporated in Canada in August 2020. Sigmaways and its wholly-owned subsidiaries are primarily engaged in the business of developing and sales of software in the United States. The acquisition was closed on February 1, 2023.

 

In January 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Financial, Inc. (“HeartCore Financial”), under the laws of the State of Delaware. HeartCore Financial is engaged in the business of providing financial consulting services.

 

In February 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Capital Advisors, Inc. (“HeartCore Capital Advisors”), in Japan. HeartCore Capital Advisors is engaged in the business of providing financial consulting services to Japanese companies.

 

HeartCore USA, HeartCore Japan, Sigmaways, Sigmaways B.V., Sigmaways Technologies, HeartCore Financial and HeartCore Capital Advisors are hereafter referred to as the Company.

 

F-5

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Principles of Consolidation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

 

These unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022.

 

Use of Estimates

 

In preparing the unaudited consolidated financial statements in conformity U.S. GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses, useful lives of property and equipment, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and financing leases, valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates.

 

COVID-19

 

While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the unaudited consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s unaudited consolidated financial statements.

 

F-6

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Asset Retirement Obligations

 

Pursuant to the lease agreements for the office space, the Company is responsible to restore these spaces back to its original statute at the time of leaving. The Company recognizes an obligation related to these restorations as asset retirement obligation included in other non-current liabilities in the consolidated balance sheets, in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset Retirement Obligation Accounting”. The Company capitalizes the associated asset retirement cost by increasing the carrying amount of the related property and equipment. The following table presents changes in asset retirement obligations:

 

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

		September 30,				December 31,
		2023				2022
Beginning balance		$	138,018			$	155,666
Liabilities incurred			83,821				-
Accretion expense			328				459
Foreign currency translation adjustment			(24,350	)			(18,107	)
Ending balance		$	197,817			$	138,018

 

Software Development Costs

 

Software development costs are expensed as incurred until the point the Company establishes technological feasibility. Technological feasibility is established upon completion of a detailed program design or the completion of a working model. Costs incurred by the Company between establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products. The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred.

 

In the nine months ended September 30, 2023 and 2022, software development costs expensed as incurred amounted to $289,303 and $583,762, respectively. These software development costs were included in the research and development expenses.

 

Investments in Warrants

 

Investments in warrants represent stock warrants of its consulting service customers and are not registered for public sale. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investments in warrants are classified as long-term if the warrants are exercisable over one year after the date of receipt.

 

Investments in Marketable Securities

 

Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities as of September 30, 2023 were obtained through exercise of stock warrants of its consulting service customers and measured at fair value with changes in fair value recognized in other income (expenses).

 

Intangible Asset, Net

 

Intangible asset represents the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries. The acquired intangible asset is recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective assets. The estimated useful life of the customer relationship is 8 years.

 

Impairment of Long-Lived Assets Other Than Goodwill

 

Long-lived assets with finite lives, primarily property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets during the nine months ended September 30, 2023 and 2022.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with ASC Topic 350, “Intangibles – Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.

 

Foreign Currency Translation

 

The functional currency of HeartCore Japan and HeartCore Capital Advisors is the Japanese Yen (“JPY”). The functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”). The functional currency of Sigmaways B.V. is the Euro (“EUR”). The functional currency of Sigmaways Technologies is the Canada Dollar (“CAD”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited consolidated statements of operations.

 

F-7

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. 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 statements of changes in shareholders’ equity (deficit).

 

Revenue Recognition

 

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

 

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.

 

The Company currently generates its revenues from the following main sources:

 

Revenues from On-Premise Software

 

Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Licenses for on-premise software are typically sold to the customer with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support service. The SSP for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis. The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence.

 

Revenues from Maintenance and Support Services

 

Maintenance and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available during the subscription. Revenues from maintenance and support services are recognized over time as such services are performed. Revenues for consumption-based services are generally recognized as the services are performed and accepted by the customers.

 

Revenues from Software as a Service (“SaaS”)

 

The Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. The subscription contracts are generally one year or less in length.

 

F-8

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Revenues from Software Development and Other Miscellaneous Services

 

The Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application, and workflow development. The Company also provides other miscellaneous services, such as 3D Space photography. The Company generally recognizes revenue at a point in time when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers.

 

Revenues from Customized Software Development and Services

 

The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. 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 contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.

 

Revenues from Consulting Services

 

The Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service contracts are generally less than one year in length and normally include both cash and noncash consideration. Cash consideration is paid in installment payments and is recognized in revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is 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. The Company assesses the estimated amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been resolved.

 

The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.5 million and $1.2 million, respectively.

 

Disaggregation of Revenues

 

The Company disaggregates its revenues from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the three and nine months ended September 30, 2023 and 2022 is as following:

 

SCHEDULE OF DISAGGREGATION OF REVENUES

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Revenues from on-premise software		$	396,647			$	257,121			$	1,457,836			$	1,775,254
Revenues from maintenance and support services			650,603				678,521				2,226,802				2,251,137
Revenues from software as a service (“SaaS”)			148,857				122,347				497,430				352,251
Revenues from software development and other miscellaneous services			474,859				340,742				1,561,655				1,518,032
Revenues from customized software development and services			2,405,907				-				6,332,479				-
Revenues from consulting services			612,035				473,745				6,442,229				922,100
Total revenues		$	4,688,908			$	1,872,476			$	18,518,431			$	6,818,774

 

F-9

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company’s disaggregation of revenues by product/service is as following:

 

		2023				2022				2023				2022
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Revenues from customer experience management platform		$	1,403,932			$	1,171,150			$	4,696,241			$	4,757,369
Revenues from process mining			99,618				68,560				390,374				453,368
Revenues from robotic process automation			58,051				69,693				271,520				317,110
Revenues from task mining			74,958				66,799				277,725				252,234
Revenues from customized software development and services			2,405,907				-				6,332,479				-
Revenues from consulting services			612,035				473,745				6,442,229				922,100
Revenues from others			34,407				22,529				107,863				116,593
Total revenues		$	4,688,908			$	1,872,476			$	18,518,431			$	6,818,774

 

As of September 30, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and the majority of revenues generated were attributed to the Company’s operation in Japan.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

 

For the nine months ended September 30, 2023, customer B and C represent 14.2% and 13.6%, respectively, of the Company’s total revenues. For the nine months ended September 30, 2022, customer A represents 10.0% of the Company’s total revenues.

 

For the nine months ended September 30, 2023, vendor D, B, A and E represent 26.4%, 26.2%, 22.1% and 15.9%, respectively, of the Company’s total purchases. For the nine months ended September 30, 2022, vendor A, B, C and D represent 25.9%, 19.7%, 16.3% and 15.5%, respectively, of the Company’s total purchases.

 

Stock-based Compensation

 

The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.

 

F-10

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Business Combinations

 

The Company accounts its business combinations using the acquisition method of accounting in accordance with ASC Topic 805. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible asset acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred.

 

Consideration transferred in a business combination is measured at the fair value as of the date of acquisition. Where the consideration in an acquisition includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability. It is subsequently carried at fair value with changes in fair value reflected in earnings.

 

In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive loss.

 

Fair value is determined based upon the guidance of ASC Topic 820, “Fair Value Measurements and Disclosures,” and generally are determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgments and estimates. The Company utilizes the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition.

 

Fair Value Measurements

 

The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:

 

	●	Level 1: quoted prices in active markets for identical assets or liabilities;
	●	Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or
	●	Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

 

As of September 30, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

 

Investments in Warrants

 

The Company received warrants from its customers as noncash consideration from consulting services. The warrants are not registered for public sale and are measured at fair value at contract inception. The Company’s investments in warrants are measured on a recurring basis and carried on the balance sheet at an estimated fair value at the end of the period. The valuation of investments in warrants was determined using a Black-Scholes model of value based upon the stock price, exercise price, expected volatility, time to maturity, and a risk-free interest rate for the term of the warrants exercise. Such valuations are classified within Level 3 of the fair value hierarchy.

 

The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022:

 

SCHEDULE OF INVESTMENTS IN WARRANTS

		For the Nine Months Ended
		September 30,
		2023				2022
Fair value of investments in warrants at beginning of the period		$	-			$	-
Warrants received as noncash consideration			4,009,335				-
Changes in fair value of investments in warrants			(294,565	)			-
Investments in warrants converted to marketable securities			(1,257,868	)			-
Fair value of investments in warrants at end of the period		$	2,456,902			$	-

 

Investments in Marketable Securities

 

The Company’s investments in marketable securities registered for public sale with readily determinable fair value are measured at quoted prices on a recurring basis at the end of the period. Marketable securities are classified within Level 1 of the fair value hierarchy.

 

The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022:

 

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

		For the Nine Months Ended
		September 30,
		2023				2022
Fair value of investments in marketable securities at beginning of the period		$	-			$	-
Investments in warrants converted to marketable securities			1,257,868				-
Changes in fair value of investments in marketable securities			(500,762	)			-
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	757,106			$	-

 

F-11

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Recent Accounting Pronouncements

 

New Accounting Pronouncements Recently Adopted

 

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, “Financial Instruments – Credit Losses” is effective for public companies for annual reporting periods, and interim periods within those years beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements.

 

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements.

 

New Accounting Pronouncements Not Yet Effective

 

The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s unaudited consolidated financial statements.

 

NOTE 3 — ACCOUNTS RECEIVABLE

 

Accounts receivable consists of the following:

 

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		September 30,				December 31,
		2023				2022
Accounts receivable – non-factored		$	2,344,989			$	551,064
Accounts receivable – factored with recourse			217,250				-
Accounts receivable, gross			2,562,239				551,064
Less: allowance for credit losses			-				-
Accounts receivable		$	2,562,239			$	551,064

 

NOTE 4 — PREPAID EXPENSES

 

Prepaid expenses consist of the following:

 

SCHEDULE OF PREPAID EXPENSES

		September 30,				December 31,
		2023				2022
Prepayments to software vendors		$	185,540			$	162,046
Prepaid marketing and consulting fees			102,839				99,770
Prepaid subscription fees			83,207				113,685
Prepaid insurance premium			208,385				66,023
Others			103,356				96,706
Total		$	683,327			$	538,230

 

F-12

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5 — NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE

 

On May 2, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 8% per annum and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering (“IPO”) on the Nasdaq Capital Market or New York Stock Exchange, or 3) 180 days following the note issuance. The interest rate would be 12% per annum for any amount that is unpaid when due. On July 27, 2023, the Company entered into a note exchange agreement with the promissory note issuer pursuant to which all of the promissory note principal amount and accrued interest owed to the Company shall be converted into and exchanged for 600,000 shares of common shares of the promissory note issuer upon the effectiveness of its IPO. The promissory note issuer has not completed the IPO as of September 30, 2023.

 

On September 1, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 4% per annum and matures on September 2, 2026. On the first business day following each annual anniversary of September 1, 2023, the promissory note issuer shall pay to the Company the sum of one-third of the total promissory note amount due and outstanding, including all accrued and unpaid interest as of such time, unless such annual payment has been forgiven by the Company pursuant to certain conditions. The interest rate would be 10% per annum for any amount that is unpaid when due.

 

NOTE 6 — RELATED PARTY TRANSACTIONS

 

As of September 30, 2023 and December 31, 2022, the Company has a due to related party balance of $7,859 and $402, 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 nine months ended September 30, 2023, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $7,562. During the nine months ended September 30, 2022, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $3,098.

 

As of September 30, 2023 and December 31, 2022, the Company has a loan receivable balance of $226,515 and $294,919, respectively, from Heartcore Technology Inc., a company controlled by the CEO of the Company. The loan was made to the related party to support its operation. The balance is unsecured, bears an annual interest of 1.475%, and requires repayments in installments starting from February 2022. During the nine months ended September 30, 2023 and 2022, the Company received repayments of $34,823 and $33,042, respectively, from this related party.

 

During the period from January 1, 2022 through January 13, 2022, the Company completed a private placement, in which it issued 30,000 shares of common shares at a purchase price of $2.50 per share to the officers of the Company for an aggregate amount of $75,000.

 

NOTE 7 — PROPERTY AND EQUIPMENT, NET

 

Property and equipment, net consist of the following:

 

SCHEDULE OF PROPERTY AND EQUIPMENT NET

		September 30,				December 31,
		2023				2022
Leasehold improvements		$	471,069			$	298,637
Machinery and equipment			673,435				316,827
Vehicle			85,111				106,490
Software			142,829				163,049
Subtotal			1,372,444				885,003
Less: accumulated depreciation			(619,504	)			(681,376	)
Property and equipment, net		$	752,940			$	203,627

 

Depreciation expenses were $70,200 and $64,398 for the nine months ended September 30, 2023 and 2022, respectively.

 

NOTE 8 — INTANGIBLE ASSET, NET

 

Intangible asset, net is as follows:

 

SCHEDULE OF INTANGIBLE ASSETS

		September 30,				December 31,
		2023				2022
Customer relationship		$	5,100,000			$	-
Less: accumulated amortization			(425,000	)			-
Intangible asset, net		$	4,675,000			$	-

 

Amortization expenses were $425,000 and nil for the nine months ended September 30, 2023 and 2022, respectively.

 

As of September 30, 2023, the future estimated amortization cost for intangible asset is as follows:

 

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET

			Estimated
Year Ended December 31,			Amortization
Remaining of 2023			$	159,375
2024				637,500
2025				637,500
2026				637,500
2027				637,500
Thereafter				1,965,625
Total			$	4,675,000

 

F-13

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 9 — LEASES

 

The Company has entered into four leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases. Right-of-use assets of these finance leases in the amount of $85,591 and $18,335 are included in property and equipment, net as of September 30, 2023 and December 31, 2022, respectively.

 

Operating lease expenses for lease payments are recognized on a straight-line basis over the lease term. Finance lease costs include amortization, which are recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with initial term of twelve months or less are not recorded on the consolidated balance sheets.

 

The components of lease costs are as follows:

 

 SCHEDULE OF LEASE COSTS

		2023				2022
		For the Nine Months Ended
		September 30,
		2023				2022
Finance lease costs
Amortization of right-of-use assets		$	15,215			$	26,825
Interest on lease liabilities			98				370
Total finance lease costs			15,313				27,195
Operating lease costs			286,934				244,688
Total lease costs		$	302,247			$	271,883

 

F-14

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table presents supplemental information related to the Company’s leases:

 

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES

		2023				2022
		For the Nine Months Ended
		September 30,
		2023				2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	98			$	370
Operating cash flows from operating leases			257,277				243,108
Financing cash flows from finance leases			16,537				29,051
Finance lease right-of-use asset obtained in exchange for finance lease liability			93,117				-
Operating lease right-of-use asset obtained in exchange for operating lease liability			317,040				-
Remeasurement of operating lease liability and right-of-use asset due to lease modification			12,579				-
Weighted average remaining lease term (years)
Finance leases			5.0				1.1
Operating leases			7.7				9.4
Weighted average discount rate (per annum)
Finance leases			1.32	%			1.32	%
Operating leases			1.33	%			1.32	%

 

As of September 30, 2023, the future maturity of lease liabilities is as follows:

 

SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2023		$	4,649			$	101,255
2024			17,844				388,730
2025			17,593				383,300
2026			17,593				321,614
2027			17,593				277,553
Thereafter			13,195				1,142,795
Total lease payments			88,467				2,615,247
Less: imputed interest			(2,856	)			(136,089	)
Total lease liabilities			85,611				2,479,158
Less: current portion			(17,076	)			(365,241	)
Non-current lease liabilities		$	68,535			$	2,113,917

 

Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amounted to $338,220 and $244,395 as of September 30, 2023 and December 31, 2022, respectively.

 

F-15

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 10 — FACTORING LIABILITY

 

Sigmaways, the newly acquired subsidiary of the Company, entered into a Factoring and Security Agreement (the “Factoring Agreement”) with The Southern Bank Company, an unrelated factor (the “Factor”), in 2017, for the purpose of factoring certain accounts receivable. Under the terms of the Factoring Agreement, the Company may offer for sale, and the Factor may purchase in its sole discretion, certain accounts receivable of the Company (the “Purchased Receivable”). The Factoring Agreement provided for a maximum of $850,000 in Purchased Receivable.

 

Selected accounts receivable is submitted to the Factor, and the Company receives 90% of the face value of the accounts receivable by wire transfer. Upon payment by the customers, the remainder of the amount due is received from the Factor after deducting certain fees.

 

The Factoring Agreement specifies that eligible accounts receivable is factored with recourse. Under the terms of the recourse provision, the Company is required to reimburse the Factor, upon demand, for Purchased Receivable that is not paid on time by the customers. The performance of all obligations and payments to the Factor is personally guaranteed by Prakash Sadasivam, CEO of Sigmaways and Chief Strategy Officer (“CSO”) of the Company, and secured by all Sigmaways’ now owned and hereafter assets and any sums maintained by the Factor that are identified as payable to the Company.

 

The Factoring Agreement has an initial term of twelve months and automatically renews for successive twelve-month renewal periods unless terminated pursuant to the terms of the Factoring Agreement. The Company may terminate the Factoring Agreement with sixty days’ written notice to the Factor and is subject to certain early termination fee.

 

The Factoring Agreement contained covenants that are customary for accounts receivable-based factoring agreements and also contained provisions relating to events of default that are customary for agreements of this type.

 

As of September 30, 2023, there was $217,250 borrowed and outstanding under the Factoring Agreement. There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense. During the nine months ended September 30, 2023, the Company recorded $54,790 in interest expense related to the Factoring Agreement.

 

NOTE 11 — INSURANCE PREMIUM FINANCING

 

In January 2023, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $389,035 at an annual interest rate of 16.04% for ten months from February 1, 2023, payable in ten monthly installments of principal and interest.

 

In February 2022, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $388,538 at an annual interest rate of 12.80% for nine months from February 1, 2022, payable in nine monthly installments of principal and interest.

 

As of September 30, 2023 and December 31, 2022, the balance of the insurance premium financing was $122,279 and nil, respectively. During the nine months ended September 30, 2023 and 2022, the interest incurred was $25,988 and $19,859, respectively.

 

F-16

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 12 — LONG-TERM DEBTS

 

The Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions, which consist of the following:

 

SCHEDULE OF LONG-TERM DEBTS

Name of Financial Institutions		Original Amount Borrowed								Loan Duration		Annual Interest Rate				Balance as of September 30, 2023				Balance as of December 31, 2022
Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000				(a)(c)			1/10/2019 – 1/10/2024			0.430	%		$	66,854			$	228,956
Loans with banks and other financial institutions
Resona Bank, Limited			JPY50,000,000				(a)(b)			12/29/2017 – 12/29/2024			0.675	%			63,779				113,677
Resona Bank, Limited			JPY10,000,000				(a)(b)			9/30/2020 – 9/30/2027			0.000	%			39,009				52,705
Resona Bank, Limited			JPY40,000,000				(a)(b)			9/30/2020 – 9/30/2027			0.000	%			156,037				210,822
Resona Bank, Limited			JPY20,000,000				(a)(b)			11/13/2020 – 10/31/2027			1.600	%			79,610				107,227
Sumitomo Mitsui Banking Corporation			JPY100,000,000				(a)			12/28/2018 – 12/28/2023			1.475	%			44,444				165,237
Sumitomo Mitsui Banking Corporation			JPY10,000,000				(a)(b)			12/30/2019 – 12/30/2026			1.975	%			31,849				44,532
The Shoko Chukin Bank, Ltd.			JPY30,000,000							9/28/2018 – 8/31/2023			1.200	%			-				34,343
The Shoko Chukin Bank, Ltd.			JPY50,000,000							7/27/2020 – 6/30/2027			1.290	%			185,854				253,377
The Shoko Chukin Bank, Ltd.			JPY30,000,000							7/25/2023 – 6/30/2028			Tokyo Interbank Offered Rate + 1.950	%			193,742				-
Japan Finance Corporation			JPY80,000,000							11/17/2020 – 11/30/2027			0.210	%			329,456				442,036
Higashi-Nippon Bank			JPY30,000,000				(a)			3/31/2022 – 3/31/2025			1.400	%			105,094				177,669
First Home Bank			$350,000				(d)			4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%			237,336				-
U.S. Small Business Administration			$350,000				(d)			5/30/2020 – 5/30/2050			3.750	%			350,000				-
Aggregate outstanding principal balances																	1,883,064				1,830,581
Less: unamortized debt issuance costs																	(5,794	)			(8,969	)
Less: current portion																	(525,440	)			(697,877	)
Non-current portion																$	1,351,830			$	1,123,735

 

(a)	These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder.
(b)	These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.
(c)	The bond is guaranteed by Resona Bank, Limited.
(d)	These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.

 

Interest expense for long-term debts was $44,295 and $19,502 for the nine months ended September 30, 2023 and 2022, respectively.

 

As of September 30, 2023, future minimum loan payments are as follows:

 

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

			Loan
Year Ended December 31,			Payment
Remaining of 2023			$	146,763
2024				462,065
2025				305,291
2026				293,302
2027				262,017
Thereafter				413,626
Total			$	1,883,064

 

F-17

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 — INCOME TAXES

 

United States

 

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

 

Netherlands

 

Sigmaways B.V. is a company incorporated in Amsterdam in Netherlands in November 2019. The first EUR200,000 of taxable income will be taxed at 19% and the remaining taxable income will be taxed at statutory tax rate of 25.80%.

 

Canada

 

Sigmaways Technologies is a company incorporated in British Columbia in Canada in August 2020. It is subject to income tax on income arising in, or derived from, the tax jurisdiction in British Columbia it operates. The basic federal rate of Part I tax is 38% of taxable income, 28% after federal tax abatement. 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.

 

Japan

 

The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory tax rate of approximately 34.59% for the nine months ended September 30, 2023 and 2022.

 

For the nine months ended September 30, 2023 and 2022, the Company’s income tax expense (benefit) are as follows:

 

 SCHEDULE OF INCOME TAX EXPENSES

		2023				2022
		For the Nine Months Ended
		September 30,
		2023				2022
Current		$	168,549			$	(2,108	)
Deferred			(109,690	)			(8,798	)
Income tax expense (benefit)		$	58,859			$	(10,906	)

 

The effective tax rate was (3.47)% and 0.21% for the nine months ended September 30, 2023 and 2022, respectively.

 

F-18

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 14 – STOCK-BASED COMPENSATION

 

Options

 

In May 2016, the Company granted 507 units stock options to its employees each to acquire one share of common shares of HeartCore Japan (an equivalent of approximately 1,494 shares of common shares of HeartCore USA) at JPY10 (approximately $0.09) each. All options are exercisable upon issuance with a repurchase provision before the completion of the Company’s initial public offering, which serves as a vesting condition. All employees that were granted these stock options had early exercised their stock options in 2016 prior to the vesting of the related stock options. As of November 3, 2021, 324 units of the options were forfeited, and the CEO of the Company has repurchased and held the shares issued related to the early exercise of such stock options on behalf of the Company. On November 3, 2021, the Company redeemed 484,056 shares (equivalent to 324 shares of common shares of HeartCore Japan) from the CEO of the Company.

 

The consideration received for the remaining early exercised options was recorded by the Company as a share repurchase liability included in other current liabilities in the consolidated balance sheet with JPY1,830 (approximately $16) as of December 31, 2021. The shares issued related to the early exercise of the above-mentioned stock options were not considered outstanding as of December 31, 2021. On February 14, 2022, the 183 units of stock options were vested upon the completion of the Company’s initial public offering and the Company recognized stock-based compensation of $11,005 during the nine months ended September 30, 2022. In the same period, the share repurchase liability of $16 was settled by issuance of 273,489 shares of common shares (equivalent to 183 shares of common shares of HeartCore Japan) from exercise of stock options.

 

The following table summarizes the Company’s stock option activity for the stock options issued in 2016 for the nine months ended September 30, 2022:

 

SCHEDULE OF UNVESTED STOCK OPTION

		Number of Stock Options
Issued and unvested as of January 1, 2022			183
Vested and exercised			183
Issued and unvested as of September 30, 2022			-

 

On August 6, 2021, the Board of Directors and stockholders of the Company approved a 2021 Equity Incentive Plan (the “2021 Plan”), under which 2,400,000 shares of common shares are authorized for issuance. On December 25, 2021, the Company awarded options to purchase 1,534,500 shares of common shares pursuant to the 2021 Plan at an exercise price of $2.50 per share to various officers, directors, employees and consultants of the Company. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common shares, with the expiration date on December 25, 2031.

 

On August 2, 2022, the Company awarded options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $2.94 per share to an employee of the Company. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common shares, with the expiration date on August 2, 2032.

 

On August 9, 2022, the Company awarded options to purchase 14,500 shares of common shares at an exercise price of $2.48 per share to three prior employees of the Company. The options are fully vested and exercisable on the grant date, with the expiration date on August 9, 2026.

 

On February 3, 2023, the Company awarded options to purchase 100,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $1.17 per share to an employee of the Company. The options vest 50% on the grant date and February 1, 2024, respectively, with the expiration date on February 3, 2033.

 

On August 25, 2023, the Company awarded options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $1.10 per share to an employee of the Company. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common shares, with the expiration date on August 25, 2033.

 

On August 1, 2023, the Board of Directors and stockholders of the Company approved a 2023 Equity Incentive Plan (the “2023 Plan”), under which 2,000,000 shares of common shares are authorized for issuance. No shares were issued pursuant to the 2023 Plan as of September 30, 2023.

 

F-19

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table summarizes the stock options activity and related information for the nine months ended September 30, 2023 and 2022:

 

SCHEDULE OF STOCK OPTION ACTIVITY

			Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2022				1,534,500			$	2.50				9.99			$	-
Granted				16,500				2.54				4.59				-
Exercised				-				-				-				-
Forfeited				(39,500	)			2.50				-				-
As of September 30, 2022				1,511,500			$	2.50				9.19			$	-
As of January 1, 2023				1,466,500			$	2.50				8.94			$	-
Granted				102,000				1.17				9.36				-
Exercised				-				-				-				-
Forfeited				(9,500	)			2.50				-				-
As of September 30, 2023				1,559,000			$	2.41				8.27			$	-
Vested and exercisable as of September 30, 2023				425,125			$	2.34				8.19			$	-

 

 

The Company calculated the fair value of options granted in the nine months ended September 30, 2023 using the Black-Scholes model. Significant assumptions used in the valuation include expected volatility, risk-free interest rate, dividend yield and expected exercise term.

 

For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to options of $144,306 and $479,122, respectively. For the three and nine months ended September 30, 2022, the Company recognized stock-based compensation related to options of $280,883 and $858,633, respectively. The outstanding unamortized stock-based compensation related to options was $578,075 (which will be recognized through August 2027) as of September 30, 2023.

 

Restricted Stock Units (“RSUs”)

 

On February 9, 2022, the Company entered into executive employment agreements with five executives and granted 85,820 RSUs pursuant to the 2021 Plan. The RSUs vest on each annual anniversary of the date of the employment agreement, in an amount equal to 25% of the applicable shares of common shares. The fair value of the RSUs at grant date was $424,809.

 

On February 25, 2022, the Company entered into a service agreement with a marketing company to purchase 6-month marketing services and granted 83,333 RSUs. The RSUs were issued and vested on May 15, 2022. The fair value of the RSUs at grant date was $224,999.

 

On March 22, 2023, the Company entered into agreements with employees and service providers of Sigmaways and granted 671,350 RSUs pursuant to the 2021 Plan. The RSUs were fully vested upon issuance. The fair value of the RSUs at grant date was $691,491.

 

The following table summarizes the RSUs activity for the nine months ended September 30, 2023 and 2022:

 

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value per Share
Unvested as of January 1, 2022			-			$	-
Granted			169,153				3.84
Vested			(83,333	)			2.70
Forfeited			-				-
Unvested as of September 30, 2022			85,820			$	4.95
Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,805	)			1.15
Forfeited			-				-
Unvested as of September 30, 2023			64,365			$	4.95

 

For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to RSUs of $29,000 and $788,577, respectively. For the three and nine months ended September 30, 2022, the Company recognized stock-based compensation related to RSUs of $55,768 and $366,844, respectively. The outstanding unamortized stock-based compensation related to RSUs was $130,110 (which will be recognized through February 2026) as of September 30, 2023.

 

F-20

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 – SHAREHOLDERS’ EQUITY

 

The Company was authorized to issue 200,000,000 shares of common shares, par value of $0.0001 per share, and 20,000,000 shares of preferred shares, par value of $0.0001 per share.

 

During the period from January 1, 2022 through January 13, 2022, the Company issued 96,000 shares of common shares at a purchase price of $2.50 per share for aggregate net proceeds of $220,572 in a private placement, including 30,000 shares of common shares issued to the officers of the Company.

 

On February 14, 2022, the Company completed its initial public offering on the NASDAQ Capital Market under the symbol of “HTCR”. The Company offered 3,000,000 common shares at $5.00 per share. Net proceeds raised by the Company from the initial public offering amounted to $13,724,167 after deducting underwriting discounts and commissions and other offering expenses. The Company has deferred costs of $300,460 directly attributed to the offering, among which $178,847 offering costs were paid and deferred as of December 31, 2021. Those costs were charged against the proceeds from the offering.

 

On February 14, 2022, 273,489 shares of common shares were issued from exercise of stock options by settling share repurchase liability of $16 (also see NOTE 14).

 

On May 15, 2022, 83,333 shares of restricted shares were issued to a marketing company as compensation of services received (also see NOTE 14).

 

Share Repurchase Program

 

On June 1, 2022, the Board of Directors approved a share repurchase program (“2022 Share Repurchase Program”), pursuant to which the Company is authorized to repurchase up to $3.5 million of its outstanding common shares. The timing and amount of repurchases under the program are determined by the Company’s management based on its evaluation of market conditions and other factors. This program has no set termination date and may be suspended or discontinued by at any time.

 

During the period from June 1, 2022 through September 30, 2022, the Company repurchased 1,349,390 shares of common shares at an average price of $2.59 per share totaling approximately $3.5 million (including commissions) under the 2022 Share Repurchase Program. As of September 30, 2022, the Company has used up the entire balance authorized under the 2022 Share Repurchase Program.

 

On February 1, 2023, 2,500,000 shares of common shares were issued for the acquisition of 51% of the outstanding shares of Sigmaways and its subsidiaries with fair value of $3,150,000 (also see NOTE 17).

 

As of September 30, 2023 and December 31, 2022, there were 20,842,690 and 17,649,886 shares of common shares issued and outstanding, respectively.

 

No preferred shares were issued and outstanding as of September 30, 2023 and December 31, 2022.

 

NOTE 16 – NET LOSS PER SHARE

 

Basic net loss per share is calculated on the basis of weighted average outstanding common shares. Diluted net loss per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and other dilutive securities. Common shares equivalents are determined by applying the treasury stock method to the assumed conversion of share repurchase liability to common shares related to the early exercised stock options and unvested RSUs, and are not included in the calculation of diluted loss per share if their effect would be anti-dilutive.

 

The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022 is as follows:

 

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

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Net loss per share - basic and diluted:
Numerator:
Net loss attributable to HeartCore Enterprises, Inc. common shareholders		$	(2,307,220	)		$	(1,970,934	)		$	(1,336,731	)		$	(5,253,026	)
Denominator:
Weighted average number of common shares outstanding used in calculating net loss per share			20,842,690				17,835,027				20,257,020				18,014,483
Net loss per share - basic and diluted		$	(0.11	)		$	(0.11	)		$	(0.07	)		$	(0.29	)

 

For the three and nine months ended September 30, 2023 and 2022, the weighted average common shares outstanding are the same for basic and diluted net loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

 

F-21

 

 

HEARTCORE ENTERPRISES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 – BUSINESS COMBINATION

 

On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California, and its subsidiaries. The Sigmaways Agreement was further amended on December 23, 2022 and February 1, 2023, respectively, and the transaction was closed on February 1, 2023. Sigmaways and its subsidiaries are primarily engaged in the business of developing and sales of software in the United States. The Company aimed to expand the business of software development and sales in the United States through this acquisition. The purchase consideration was $4,150,000, consisted of $1,000,000 in cash and 2,500,000 shares of common shares of the Company with fair value of $3,150,000 at the closing date.

 

The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities and non-controlling interest based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Amounts recorded in the business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

 

The purchase price was allocated on the acquisition date as follows:

 

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION

		Amount
Current assets		$	2,066,683
Acquired intangible asset			5,100,000
Non-current assets			47,979
Current liabilities			(1,146,900	)
Deferred tax liabilities			(1,428,000	)
Non-current liabilities			(576,203	)
Goodwill			3,276,441
Non-controlling interest			(3,190,000	)
Total purchase consideration		$	4,150,000

 

The results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s unaudited consolidated financial statements since the date of acquisition. Sigmaways and its subsidiaries contributed revenues and net loss of $6,332,479 and $855,532, respectively, to the Company from February 1, 2023 to September 30, 2023.

 

Pro forma results of operations for the business combination have not been presented because they are not material to the unaudited consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022.

 

The Company’s policy is to perform its annual impairment testing on goodwill for its reporting unit on December 31 of each fiscal year or more frequently if events or changes in circumstances indicate that an impairment may exist. The Company did not recognize any impairment loss on goodwill during the nine months ended September 30, 2023.

 

NOTE 18 - SUBSEQUENT EVENTS

 

On October 4, 2023, the Company obtained a five-year term loan in the amount of JPY10,000,000 (approximately $73,000) from the Sumitomo Mitsui Banking Corporation, with an interest rate of 0.2% per annum starting in November 2026. The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.

 

On October 4, 2023, the Company obtained a five-year term loan in the amount of JPY10,000,000 (approximately $73,000) from the Sumitomo Mitsui Banking Corporation, with an interest rate of 0.6% per annum. The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.

 

On October 5, 2023, the Company obtained a five-year term loan in the amount of JPY30,000,000 (approximately $219,000) from the Higashi-Nippon Bank, with an interest rate of 1.45% per annum. The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe harbor for forward-looking statements made by or on behalf of HeartCore Enterprises, Inc. (the “Company”). The Company and its 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. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Such forward-looking statements include risks and uncertainties and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties can be found in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q.

 

Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could have a material effect on the future financial performance of the Company. The forward-looking statements in this report are made on the basis of management’s assumptions and analyses, as of the time the statements are made, in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances.

 

Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

 

Business Overview

 

We are a leading software development company based in Tokyo, Japan. We provide software through two business units. The first business unit includes a customer experience management business that has been in existence for 12 years. Our customer experience management platform (the “CXM Platform”) includes marketing, sales, service and content management systems, as well as other tools and integrations, that enable companies to attract and engage customers throughout the customer experience. We also provide education, services and support to help customers be successful with our CXM Platform.

 

The second business unit is a digital transformation business which provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. We also have an ongoing technology innovation team to develop software that supports the narrow needs of large enterprise customers.

 

On September 6, 2022, the Company entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California and engaged in the business of developing and sales of software in the United States. The acquisition closed on February 1, 2023.

 

During 2022, we started the GO IPO consulting business, which supports Japanese companies seeking to list on Nasdaq and NYSE in the United States. As of November 13, 2023, we have entered into consulting agreements with 11 companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting fee ranging from $350,000 to $900,000 and warrants or Japanese 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. The revenue from the GO IPO business helped to offset the decline in sales in the CX and DX divisions. In the first quarter of 2023, we formed HeartCore Financial, Inc. and HeartCore Capital Advisors, Inc. as a part of our Go IPO consulting business.

 

 

We have made significant investments in our sales and marketing efforts globally. As of September 30, 2023, our sales and marketing organization was comprised of 16 employees, including our field sales organization, which maintains a physical sales presence in the Japanese software market. Using our go-to-market strategy, we believe we have made significant contributions in Japan and have established a diversified revenue and customer base. As of September 30, 2023, our combined business units (customer experience management business unit and digital transformation business unit) had 937 total customers in Japan.

 

Recent Developments

 

GATES GROUP Inc. Service Agreement

 

On October 2, 2023 (the “GATES Effective Date”), the Company entered into a Service Agreement (the “GATES Agreement”) by and between the Company and GATES GROUP Inc., a Japanese corporation (“GATES”). Pursuant to the terms of the GATES Agreement, GATES engaged the Company, on an exclusive basis, to render the following services for GATES (collectively, the “GATES Services”):

 

(i) Phase 1:

 

●	Suggesting to hire human resources, if the Company deems necessary;
●	Suggesting to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles, if the Company deems necessary;
●	Suggesting to remove problematic accounting account, if the Company deems necessary;
●	Suggesting to translate accounting documents (i.e., financial statement, general ledger, journal entry), if the Company deems necessary;
●	Suggesting to develop growth strategy after public listing;
●	Suggesting to consider the listing structure, if the Company deems necessary.

 

(ii) Phase 2:

 

●	Suggesting for the selection and negotiation of terms for a law firm, underwriter and auditing firm for GATES, if the Company deems necessary;
●	Suggesting for the preparation of documentation for internal controls required for an initial public offering or de-SPAC transaction by GATES;
●	Suggesting for converting GATES’ financial statement based on United States generally accounting principles (US GAAP), if the Company deems necessary;
●	Translation of documents into English which the Company agrees to translate;
●	Attending and, if requested by GATES and the Company deems necessary, leading, GATES’ meetings regarding the initial public offering;
●	Suggesting GATES with support services related to GATES’ Nasdaq listing;
●	Suggesting the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings, if the Company deems necessary;
●	Support for investor relations activities, if the Company deems necessary;
●	Suggesting for preparing of investor presentation/deck and executive summary of GATES’ operation, if the Company deems necessary; and

 

(iii) Phase 3:

 

●	Support for investor relations activities, if the Company deems necessary.

 

In providing the GATES Services, the Company will not render legal advice or perform accounting services, and will not act as an investment advisor or broker/dealer. Pursuant to the terms of the GATES Agreement, the parties agreed that the Company will not provide the following services, among others: negotiation of the sale of GATES’ securities; participation in discussions between GATES and potential investors; assisting in structuring any transactions involving the sale of GATES’ securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in GATES.

 

 

In exchange for providing the GATES Services for Phase 1 and Phase 2, GATES will pay to the Company $600,000 (the “Services Fee”) as follows:

 

●	10% of the Services Fee on the GATES Effective Date;
●	50% of the Services Fee four months after the GATES Effective Date;
●	20% of the Services Fee six months after the GATES Effective Date; and
●	20% of the Services Fee eight months after the GATES Effective Date.

 

For Phase 3, in return for GATES’ Nasdaq listing, GATES will issue and the Company will be entitled to receive, a warrant to acquire a number of shares of capital stock of the entity designated by the Company from GATES and its affiliated company becoming a publicly traded company. The total amount of such shares will be an amount equal to 3% of the fully diluted share capital of GATES as of the GATES Effective Date (subject to adjustment as set forth in the GATES Agreement).

 

The term of the GATES Agreement will continue until the earlier of (i) three years from the GATES Effective Date; and (ii) two years later from the date on which the stock of GATES or any successor or resulting entity in the contemplated initial public offering of GATES’ stock in the U.S. or a merger or other similar transaction with a special purpose acquisition company, or other transaction pursuant to which GATES or its affiliated company becomes a public traded company in the U.S. The term of the GATES Agreement may be renewed upon the mutual written agreement of the parties to the GATES Agreement.

 

The GATES Agreement may be terminated by either party upon one month’s written notice to the other party, with the payment set forth in the GATES Agreement. However, if either party engages in anti-social force activities, the other party will terminate the GATES Agreement without written notice immediately, and the other party will pay the compensation as set forth in the GATES Agreement.

 

GATES Warrant

 

On October 2, 2023, GATES issued to the Company a common stock purchase warrant (the “GATES Warrant”) to purchase 16 shares of GATES capital stock, subject to adjustment as set forth in the GATES Warrant. Pursuant to the terms of the GATES Warrant, the Company may, at any time (i) on or after the earlier of the date that either (a) GATES completes its first listing on any tier of the Nasdaq Stock Market, the new York Stock Exchange or the NYSE American; (b) GATES consummates a merger or other transaction with a special purpose acquisition company (“SPAC”) wherein GATES becomes a subsidiary of the SPAC; or (c) GATES consummates any other GATES Fundamental Transaction (as defined in the GATES Warrant) (the “GATES Trigger Date”); and (ii) on or prior to the close of business on the tenth anniversary of the GATES Trigger Date, exercise the GATES Warrant to purchase 16 shares of GATES’ capital stock (subject to adjustment as provided in the GATES Warrant), which represents 3% of Gates’ issued and outstanding common stock as of the issuance date of the GATES Warrant, for an exercise price per share of $0.01, subject to adjustment as provided in the GATES Warrant. The number of shares for which the GATES Warrant will be exercisable will be automatically adjusted on the GATES Trigger Date to be 3% of the fully diluted number and class of shares of capital stock of GATES as of the GATES Trigger Date, following completion of the transactions which caused the GATES Trigger Date to be achieved. The GATES Warrant contains a 9.99% equity blocker.

 

Termination of May 2023 ATM Offering

 

On October 12, 2023, the Company delivered written notice to Sutter Securities, Inc. (“Sutter”) that the Company was terminating the Common Stock Sales Agreement, dated May 29, 2023, by and between the Company and Sutter (the “Sales Agreement”), in accordance with its terms, which termination will be effective on October 22, 2023.

 

Pursuant to the Sales Agreement, the Company filed a prospectus supplement on May 31, 2023 (the “May 2023 ATM Prospectus Supplement”) pursuant to which it may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $4,205,067 through Sutter as the sales agent (the “May 2023 ATM Offering”). The Company did not sell any shares of common stock under the May 2023 Prospectus Supplement. The Company terminated the May 2023 ATM Prospectus Supplement and the May 2023 ATM Offering immediately following October 22, 2023, the effective date of the termination of the Sales Agreement.

 

 

October 2023 ATM Offering

 

On October 23, 2023, the Company entered into the At The Market Offering Agreement (the “October 2023 ATM Agreement”) by and between the Company and H.C. Wainwright & Co., LLC (the “Manager”), as sales agent. Pursuant to the prospectus supplement and accompanying base prospectus relating to the offering of the Shares (as hereinafter defined), and under terms of the October 2023 ATM Agreement and the prospectus supplement and the accompanying base prospectus, filed on October 23, 2023, the Company may, from time to time, in transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act issue and sell through or to the Manager, up to a maximum aggregate amount of $1,988,229 of shares of the Company’s common stock (the “Shares”). The issuance and sale of the Shares to or through the Manager from time to time will be effectuated pursuant to the Company’s effective shelf registration statement on Form S-3, as amended (File No. 333-270503), which was declared effective by the SEC on April 12, 2023 (the “Registration Statement”), and the related prospectus supplement and accompanying base prospectus relating to the offering of the Shares.

 

Pursuant to the terms of the October 2023 ATM Agreement, the Company may issue and sell the Shares from time to time through the Manager, acting as sales agent or principal, and the Manager agrees to use its commercially reasonable efforts to sell, the Shares on the following terms: (i) the Shares will be sold on a daily basis or otherwise as agreed to by the Company and the Manager on any day that (a) is a day on which the Nasdaq Capital Market is open for trading, (b) the Company has instructed the Manager to make such sales, and (c) the Company has satisfied its obligations as set forth in the October 2023 ATM Agreement. The Company will designate the maximum amount of the Shares to be sold by the Manager daily, if any (subject to the limitations set forth in the October 2023 ATM Agreement) and the minimum price per Share at which such Shares, if any, may be sold. The Company has no obligation to sell, and the Manager is not obligated to buy or sell, any of the Shares under the October 2023 ATM Agreement and may at any time suspend offers under the October 2023 ATM Agreement or terminate the October 2023 ATM Agreement. The offering of the Shares pursuant to the prospectus supplement and the accompanying base prospectus will terminate upon the earlier of (i) the sale of the Shares pursuant to such prospectus supplement and accompanying base prospectus having an aggregate sales price of $1,988,229, and (ii) the termination by the Company or the Manager of the October 2023 ATM Agreement pursuant to its terms.

 

The Manager may sell Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. The Manager may also sell Shares in privately negotiated transactions, with the Company’s prior written approval, if so provided in the “Plan of Distribution” section of the prospectus supplement or a supplement thereto or in a new prospectus supplement disclosing the terms of such privately negotiated transaction.

 

Unless otherwise agreed between the Company and the Manager, settlement for sales of the Shares will occur on the second trading day (and on and after May 28, 2024, on the first trading day or any such shorter settlement cycle as may be in effect under Rule 15c6-1 promulgated under the Exchange Act, from time to time) following the date on which any sales are made. Sales of the Shares will be settled through the facilities of The Depository Trust Company or by such other means as the Company and the Manager may agree. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.

 

The Company will pay the Manager a cash commission of 4.0% of the gross sales price of the Shares sold by the Manager pursuant to the October 2023 ATM Agreement; provided, however, that such compensation will not apply when the Manager acts as principal, in which case the Company may sell Shares to the Manager as principal at a price agreed upon at the relevant applicable time and pursuant to a separate agreement the Company will enter into with the Manager setting forth the applicable terms. Pursuant to the terms of the October 2023 ATM Agreement, the Company also agreed to reimburse the Manager for reasonable fees and expenses of the Manager’s counsel, not to exceed $75,000, and additional amounts for due diligence update sessions conducted in connection with each such date the Company files its Quarterly Reports on Form 10-Q or its Annual Report on Form 10-K, as applicable.

 

 

The Company has the right, by giving written notice as specified in the October 2023 ATM Agreement, to terminate the October 2023 ATM Agreement in its sole discretion at any time upon 10 business days’ prior written notice. The Manager has the right, by giving written notice as specified in the October 2023 ATM Agreement, to terminate the provisions of the October 2023 ATM Agreement relating to the solicitation of offers to purchase the Shares in its sole discretion at any time.

 

The October 2023 ATM Agreement contains certain covenants, representations and warranties customary for an agreement of this type. The Company agreed to provide indemnification and contribution to the Manager against certain liabilities, including liabilities under the Securities Act.

 

Nasdaq Notice Regarding Minimum Bid Price Requirement

 

On October 26, 2023, the Company received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualification Department (the “Nasdaq Staff”) indicating that the Company is 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 the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR,” and the Company is currently monitoring the closing bid price of its common stock and evaluating its alternatives, if appropriate, to resolve the deficiency and regain compliance with this rule.

 

The Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price for the last 30 consecutive business days, the Company no longer meets this requirement. The Bid Price Notice indicated that the Company will be provided 180 calendar days, or until April 23, 2024, in which to regain compliance. If at any time during this period the closing bid price of the Company’s common stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff will provide the Company with written confirmation of compliance and the matter will be closed.

 

Alternatively, if the Company fails to regain compliance with Rule 5550(a)(2) prior to the expiration of the 180 calendar day period, but meets 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 provides written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary, then the Company may be granted an additional 180 calendar days to regain compliance with Rule 5550(a)(2).

 

There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement, even if it maintains compliance with the other listing requirements. The Company is considering actions that it may take in response to the Bid Price Notice in order to regain compliance with the continued listing requirements, but no decisions regarding a response have been made at this time.

 

Financial Overview

 

For the three months ended September 30, 2023 and 2022, we generated revenues of $4,688,908 and $1,872,476, respectively, and reported net loss of $2,541,133 and $1,970,934, respectively.

 

For the nine months ended September 30, 2023 and 2022, we generated revenues of $18,518,431 and $6,818,774, respectively, and reported net loss of $1,755,942 and $5,253,026, respectively, and cash flows used in operating activities of $2,457,661 and $4,206,370, respectively.

 

As of September 30, 2023, we had an accumulated deficit of $11,910,310.

 

 

Results of Operations

 

Comparison of Results of Operations for the Three Months Ended September 30, 2023 and 2022

 

The following table summarizes our operating results as reflected in our unaudited statements of operations for the three months ended September 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

 

		For the Three Months Ended September 30,
		2023								2022								Variance
						% of								% of								% of
		Amount				Revenues				Amount				Revenues				Amount				Revenues
Revenues		$	4,688,908				100.0	%		$	1,872,476				100.0	%		$	2,816,432				150.4	%
Cost of Revenues			3,860,241				82.3	%			1,543,256				82.4	%			2,316,985				150.1	%
Gross Profit			828,667				17.7	%			329,220				17.6	%			499,447				151.7	%
Operating expenses:
Selling expenses			274,043				5.9	%			771,496				41.2	%			(497,453	)			-64.5	%
General and administrative expenses			2,172,298				46.3	%			1,513,028				80.8	%			659,270				43.6	%
Research and development expenses			170,071				3.6	%			58,275				3.1	%			111,796				191.8	%
Total operating expenses			2,616,412				55.8	%			2,342,799				125.1	%			273,613				11.7	%
Loss from operations			(1,787,745	)			-38.1	%			(2,013,579	)			-107.5	%			225,834				-11.2	%
Other income (expenses)			(733,975	)			-15.7	%			23,576				1.2	%			(757,551	)			-3,213.2	%
Loss before income tax provision			(2,521,720	)			-53.8	%			(1,990,003	)			-106.3	%			(531,717	)			26.7	%
Income tax expense (benefit)			19,413				0.4	%			(19,069	)			-1.0	%			38,482				-201.8	%
Net loss			(2,541,133	)			-54.2	%			(1,970,934	)			-105.3	%			(570,199	)			28.9	%
Less: net loss attributable to non-controlling interest			(233,913	)			-5.0	%			-				-				(233,913	)			-100.0	%
Net loss attributable to HeartCore Enterprises, Inc.		$	(2,307,220	)			-49.2	%		$	(1,970,934	)			105.3	%		$	(336,286	)			17.1	%

 

Revenues

 

Our total revenues increased by $2,816,432, or 150.4%, to $4,688,908 for the three months ended September 30, 2023 from $1,872,476 for the three months ended September 30, 2022, mainly attributable to (i) increased revenue of $2,405,907 from customized software development and services as a result of the acquisition of Sigmaways and its subsidiaries on February 1, 2023; (ii) increased revenue of $138,290 from GO IPO consulting services, as the Company obtained more IPO consulting customers in 2023.

 

Cost of Revenues

 

Our total cost of revenues increased by $2,316,985, or 150.1%, to $3,860,241 for the three months ended September 30, 2023 from $1,543,256 for the three months ended September 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software development and services.

 

 

Gross Profit

 

Our total gross profit increased by $499,447, or 151.7%, to $828,667 for the three months ended September 30, 2023 from $329,220 for the three months ended September 30, 2022, mainly attributable to (i) the increased gross profit of $113,685 from maintenance and support services, as we terminated some subcontractors in supporting service, as part of our effect to reduce costs; (ii) the increased gross profit of $220,792 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; (iii) the increased gross profit of $135,404 from GO IPO consulting services in light of the increase in sale. Our overall gross profit margin increased slightly by 0.1% to 17.7% for the three months ended September 30, 2023, from 17.6% for the three months ended September 30, 2022.

 

Selling Expenses

 

Our selling expenses decreased by $497,453, or 64.5%, to $274,043 for the three months ended September 30, 2023 from $771,496 for the three months ended September 30, 2022, primarily attributable to a decrease of $561,559 in advertising expense, as the Company spent heavily on IR and PR in the U.S. immediately after listing in Nasdaq in early 2022; offset by an increase of $80,291 in stock-based compensation for sales staff.

 

As a percentage of revenues, our selling expenses accounted for 5.9% and 41.2% of our total revenues for the three months ended September 30, 2023 and 2022, respectively.

 

General and Administrative Expenses

 

Our general and administrative expenses increased by $659,720, or 43.6%, to $2,172,298 for the three months ended September 30, 2023 from $1,513,028 for the three months ended September 30, 2022, primarily attributable to (i) an increase of $663,156 in salaries and welfare due to a company-wide wage increase and additional staff employed by Sigmaways and its subsidiaries; (ii) an increase of $169,154 in depreciation and amortization expenses, and an increase of $70,952 in rent expenses, mostly due to the acquisition of Sigmaways and its subsidiaries as well as the overall business expansion; offset by (iii) a decrease of $257,475 in stock-based compensation as the Company awarded options and RSUs to employees and service providers in early 2022 when the Company finished going public.

 

As a percentage of revenues, general and administrative expenses were 46.3% and 80.8% of our revenues for the three months ended September 30, 2023 and 2022, respectively.

 

Research and Development Expenses

 

Our research and development expenses increased by $111,796, or 191.8%, to $170,071 for the three months ended September 30, 2023 from $58,275 for the three months ended September 30, 2022, primarily attributable to the increase in outsourcing expenses relating to the development of new CMS management screen features in the current period.

 

As a percentage of revenues, research and development expenses were 3.6% and 3.1% of our revenues for the three months ended September 30, 2023 and 2022, respectively.

 

Other Income (Expenses)

 

Our other income (expenses) primarily include changes in fair value of investments in marketable securities, changes in fair value of investments in warrants, interest income generated from bank deposits, interest expense for bank loans and bonds, other income, and other expenses. Our other income decreased by $757,551, or 3,213.2%, from other income of $23,576 in the three months ended September 30, 2022 to other expenses of $733,975 in the three months ended September 30, 2023, primarily attributable to a decrease of $271,740 in changes in fair value of investments in marketable securities and a decrease of $460,672 in changes in fair value of investments in warrants, offset by an increase of $37,445 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government.

 

Income Tax Expense (Benefit)

 

Our income tax expense was $19,413 in the three months ended September 30, 2023, as compared to the income tax benefit of $19,069 in the three months ended September 30, 2022, as one of the newly incorporated subsidiaries generated net income before income tax in the current period while no entity generated taxable income in the prior period.

 

 

Net Loss

 

As a result of the foregoing, we reported a net loss of $2,541,133 for the three months ended September 30, 2023, representing a $570,199, or 28.9%, increase from a net loss of $1,970,934 for the three months ended September 30, 2022.

 

Net Loss Attributable to Non-controlling Interest

 

We owned 51% equity ownership interest of Sigmaways and its subsidiaries as of September 30, 2023. Accordingly, we recorded net loss attributable to the non-controlling interest of $233,913 in the three months ended September 30, 2023.

 

Net Loss Attributable to HeartCore Enterprises, Inc.

 

As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $2,307,220 for the three months ended September 30, 2023, representing a $336,286, or 17.1%, increase from $1,970,934 for the three months ended September 30, 2022.

 

Comparison of Results of Operations for the Nine Months Ended September 30, 2023 and 2022

 

The following table summarizes our operating results as reflected in our unaudited statements of operations during the nine months ended September 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

 

		For the Nine Months Ended September 30,
		2023								2022								Variance
						% of								% of								% of
		Amount				Revenues				Amount				Revenues				Amount				Revenues
Revenues		$	18,518,431				100.0	%		$	6,818,774				100.0	%		$	11,699,657				171.6	%
Cost of Revenues			10,548,245				57.0	%			3,935,908				57.7	%			6,612,337				168.0	%
Gross Profit			7,970,186				43.0	%			2,882,866				42.3	%			5,087,320				176.5	%
Operating expenses:
Selling expenses			1,330,747				7.2	%			1,706,250				25.0	%			(375,503	)			-22.0	%
General and administrative expenses			7,305,392				39.4	%			5,832,276				85.5	%			1,473,116				25.3	%
Research and development expenses			289,303				1.6	%			583,762				8.6	%			(294,459	)			-50.4	%
Total operating expenses			8,925,442				48.2	%			8,122,288				119.1	%			803,154				9.9	%
Loss from operations			(955,256	)			-5.2	%			(5,239,422	)			-76.8	%			4,284,166				-81.8	%
Other expenses			(741,827	)			-4.0	%			(24,510	)			-0.4	%			(717,317	)			2,926.6	%
Loss before income tax provision			(1,697,083	)			-9.2	%			(5,263,932	)			-77.2	%			3,566,849				-67.8	%
Income tax expense (benefit)			58,859				0.3	%			(10,906	)			-0.2	%			69,765				-639.7	%
Net loss			(1,755,942	)			-9.5	%			(5,253,026	)			-77.0	%			3,497,084				-66.6	%
Less: net loss attributable to non-controlling interest			(419,211	)			-2.3	%			-				-				(419,211	)			-100.0	%
Net loss attributable to HeartCore Enterprises, Inc.		$	(1,336,731	)			-7.2	%		$	(5,253,026	)			-77.0	%		$	3,916,295				-74.6	%

 

 

Revenues

 

Our total revenues increased by $11,699,657, or 171.6%, to $18,518,431 for the nine months ended September 30, 2023 from $6,818,774 for the nine months ended September 30, 2022, mainly attributable to (i) the increased revenue of $5,520,129 from GO IPO consulting services as the Company obtained more IPO consulting customers in 2023 and received warrants from its customers as noncash consideration from consulting services; (ii) the increased revenue of $6,332,479 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; offset by (iii) the decreased revenue of $317,418 in revenue from sales of on-premise software, primarily due to the weak perform of a significant distributor in the current period.

 

Cost of Revenues

 

Our total cost of revenues increased by $6,612,337, or 168.0%, to $10,548,245 for the nine months ended September 30, 2023 from $3,935,908 for the nine months ended September 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software development and services.

 

Gross Profit

 

Our total gross profit increased by $5,087,320, or 176.5%, to $7,970,186 for the nine months ended September 30, 2023 from $2,882,866 for the nine months ended September 30, 2022, mainly attributable to (i) the increased gross profit of $4,418,239 from GO IPO consulting services as the Company obtained more IPO consulting customers in 2023 and received warrants from its customers as noncash consideration from consulting services; (ii) the increased gross profit of $930,399 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; offset by (iii) the decreased gross profit of $1,003,681 from sales of on-premise software due to the overall market competition. Our overall gross profit margin was 43.0% and 42.3% for the nine months ended September 30, 2023 and 2022, respectively.

 

Selling Expenses

 

Our selling expenses decreased by $375,503 or 22.0%, to $1,330,747 for the nine months ended September 30, 2023 from $1,706,250 for the nine months ended September 30, 2022, primarily attributable to a decrease of $902,271 in advertising expenses, as the Company spent heavily on IR and PR in the U.S. immediately after listing in Nasdaq in early 2022, offset by an increase of $483,669 in stock-based compensation for sales staff.

 

As a percentage of revenues, our selling expenses accounted for 7.2% and 25.0% of our total revenues for the nine months ended September 30, 2023 and 2022, respectively.

 

General and Administrative Expenses

 

Our general and administrative expenses increased by $1,473,116, or 25.3%, to $7,305,392 for the nine months ended September 30, 2023 from $5,832,276 for the nine months ended September 30, 2022, primarily attributable to (i) an increase of $1,240,015 in salaries and welfare, an increase of $297,951 in office, utility and other expenses, an increase of $419,800 in depreciation and amortization expenses, and an increase of $186,759 in rent expenses, mostly due to the acquisition of Sigmaways and its subsidiaries, as well as the overall business expansion; offset by (ii) a decrease of $242,877 in listing-related expenses as we finished the process of going public in early 2022; and (iii) a decrease of $538,997 in stock-based compensation as the Company awarded options and RSUs to employees and service providers in early 2022 when the Company finished going public.

 

As a percentage of revenues, general and administrative expenses were 39.4% and 85.5% of our revenues for the nine months ended September 30, 2023 and 2022, respectively.

 

 

Research and Development Expenses

 

Our research and development expenses decreased by $294,459, or 50.4%, to $289,303 for the nine months ended September 30, 2023 from $583,762 for the nine months ended September 30, 2022, primarily attributable to the decrease of $328,402 in outsourcing expenses relating to the development of a high quality 12K VR camera and related data compression system, which was completed in June 2022, offset by an increase of $59,104 in stock-based compensation for research and development staff.

 

As a percentage of revenues, research and development expenses were 1.6% and 8.6% of our revenues for the nine months ended September 30, 2023 and 2022, respectively.

 

Other Expenses

 

Our other expenses primarily include changes in fair value of investments in marketable securities and changes in fair value of investments in warrants, interest income generated from bank deposits, interest expense for bank loans and bonds, other income, and other expenses. Our other expenses increased by $717,317, or 2,926.6%, to $741,827 in the nine months ended September 30, 2023 from $24,510 in the nine months ended September 30, 2022, primarily attributable to (i) a decrease of $294,565 in changes in fair value of investments in warrants; (ii) a decrease of $500,762 in changes in fair value of investments in marketable securities; offset by (iii) an increase of $135,996 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government.

 

Income Tax Expense (Benefit)

 

Our income tax expense was $58,859 in the nine months ended September 30, 2023, as compared to tax benefit of $10,906 in the nine months ended September 30, 2022, mainly due to one of our newly incorporated subsidiaries generated net income before income tax during the nine months ended September 30, 2023 while all entities suffered from taxable loss in the prior period.

 

Net Loss

 

As a result of the foregoing, we reported a net loss of $1,755,942 for the nine months ended September 30, 2023, representing a $3,497,084, or 66.6%, decrease from a net loss of $5,253,026 for the nine months ended September 30, 2022.

 

Net Loss Attributable to Non-controlling Interest

 

We owned 51% equity ownership interest of Sigmaways and its subsidiaries as of September 30, 2023. Accordingly, we recorded a net loss attributable to the non-controlling interest of $419,211 in the nine months ended September 30, 2023.

 

Net Loss Attributable to HeartCore Enterprises, Inc.

 

As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $1,336,731 for the nine months ended September 30, 2023, representing a $3,916,295, or 74.6%, decrease from $5,253,026 for the nine months ended September 30, 2022.

 

Liquidity and Capital Resources

 

As of September 30, 2023, we had $2,199,565 in cash, as compared to $7,177,326 as of December 31, 2022. As of September 30, 2023, our working capital was $1,095,609, as compared to $4,887,444 as of December 31, 2022. We also had $2,562,239 in accounts receivable as of September 30, 2023. Our accounts receivable primarily includes balance due from customers for our on-premise software sold and services provided to and accepted by customers, as well as Sigmaways’s accounts receivable related to customized software development and services.

 

 

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

 

		For the Nine Months Ended September 30,
		2023				2022
Net cash flows used in operating activities		$	(2,457,661	)		$	(4,206,370	)
Net cash flows used in investing activities			(1,781,810	)			(8,630	)
Net cash flows provided by (used in) financing activities			(432,051	)			9,122,350
Effect of exchange rate changes			(306,239	)			(200,981	)
Net change in cash and cash equivalents			(4,977,761	)			4,706,369
Cash and cash equivalents, beginning of the period			7,177,326				3,136,839
Cash and cash equivalents, end of the period		$	2,199,565			$	7,843,208

 

Operating Activities

 

Net cash flows used in operating activities was $2,457,661 for the nine months ended September 30, 2023, as compared to $4,206,370 net cash flows used in operating activities for the nine months ended September 30, 2022, primarily consisting of the following:

 

	●	Net loss of $1,755,942 for the nine months ended September 30, 2023.
	●	Warrants received as non-cash consideration of $4,009,335 as two of our IPO consulting customers completed the IPO during the current period.
	●	An increase of $322,583 in accounts receivable in light of the increase in revenues.
	●	Offset by an increase of $200,256 in deferred revenue, due to the upfront payment received for long-term service contracts.
	●	Offset by stock-based compensation of $1,267,699 for the nine months ended September 30, 2023, as we granted equity rewards to our employees and service providers in the current period.
	●	Offset by depreciation and amortization expenses of $495,200, mainly because we acquired Sigmaways and its subsidiaries on February 1, 2023 and recognized amortization expense for the intangible asset identified through the acquisition.
	●	Offset by the loss from changes in fair value of investments in marketable securities of $500,762 due to the decrease in customers’ stock price from the warrant exercise date to the balance sheet date.
	●	Offset by the loss from changes in fair value of investments in warrants of $294,565 as we recognized investments in warrants and remeasured the fair value at the period end.
	●	Offset by an increase of $597,247 in accounts payable and accrued expenses as we incurred more operating expenses due to business.
	●	Offset by non-cash lease expense of $254,876 due to the amortization or operating lease right-of-use assets as time passed.

 

Investing Activities

 

Net cash flows used in investing activities amounted to $1,781,810 for the nine months ended September 30, 2023, as compared to net cash flows used in investing activities of $8,630 for the nine months ended September 30, 2022. Net cash flows used in investing activities for the nine months ended September 30, 2023 primarily consisted of (i) payment for acquisition of Sigmaways and its subsidiaries, net of cash acquired, of $724,910; (ii) advances on notes receivable of $600,000; and (iii) purchases of property and equipment of $516,658.

 

Financing Activities

 

Net cash flows used in financing activities amounted to $432,051 for the nine months ended September 30, 2023, as compared to net cash flows provided by financing activities of $9,122,350 for the nine months ended September 30, 2022. Net cash flows used in financing activities primarily consisted of repayment of $584,779 for long-term debts, and repayment of $266,756 for insurance premium financing, offset by the net proceeds of $217,250 from the factoring arrangement and proceeds of $219,427 from long-term debt.

 

 

Contractual Obligations

 

Lease commitment

 

The Company has entered into four leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases.

 

As of September 30, 2023, future minimum lease payments under the non-cancellable lease agreements are as follows:

 

Year Ended December 31,		Finance Leases				Operating Leases
Remaining of 2023		$	4,649			$	101,255
2024			17,844				388,730
2025			17,593				383,300
2026			17,593				321,614
2027			17,593				277,553
Thereafter			13,195				1,142,795
Total lease payments			88,467				2,615,247
Less: imputed interest			(2,856	)			(136,089	)
Total lease liabilities			85,611				2,479,158
Less: current portion			(17,076	)			(365,241	)
Non-current lease liabilities		$	68,535			$	2,113,917

 

Long-Term Debts

 

The Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions.

 

As of September 30, 2023, future minimum loan payments are as follows:

 

		Loan
Year Ended December 31,		Payment
Remaining of 2023		$	146,763
2024			462,065
2025			305,291
2026			293,302
2027			262,017
Thereafter			413,626
Total		$	1,883,064

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements as of September 30, 2023.

 

Critical Accounting Policies and Estimates

 

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements. These financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the 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. We believe critical accounting policies as disclosed herein reflect the more significant judgments and estimates used in preparation of our unaudited consolidated financial statements.

 

 

Business Combinations

 

We account for business combinations using the acquisition method, which requires management to estimate the fair value of the tangible assets, liabilities, identifiable intangible asset and non-controlling interest, and to properly allocate purchase price consideration to the individual assets acquired, liabilities assumed and non-controlling interest. Goodwill is measured as the excess amount of consideration transferred. The allocation of the purchase price utilizes significant estimates and assumptions in determining the fair values of identifiable assets acquired, liabilities assumed and non-controlling interest, especially with respect to intangible asset. These estimates are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset and are reviewed by consulting with third-party valuation appraisers. The purchase price allocation for business acquisitions contains uncertainties because it requires management’s judgment.

 

The fair value of the intangible asset is estimated using the income approach using the multi-period excess earnings method. Management applies significant judgement related to this fair value method, which included the selection of an expected EBITDA margin assumption for the forecast period, and discount rate assumptions. These significant assumptions are based on company specific information and projections, which are not observable in the market (except for the discount rate assumption) 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.

 

The accounting for business combinations is a critical accounting estimate because it requires estimates and judgement in assessing the future cash flows of the acquired business, the fair value of non-controlling interest, and the allocation of the future cash flows to identifiable intangible assets, in determining the fair value for assets and liabilities.

 

Revenue Recognition

 

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

 

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.

 

The Company currently generates its revenues from the following main sources:

 

Revenues from On-Premise Software

 

Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Licenses for on-premise software are typically sold to the customer with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support service. The SSP for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis. The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence.

 

Revenues from Maintenance and Support Services

 

Maintenance and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available during the subscription. Revenues from maintenance and support services are recognized over time as such services are performed. Revenues for consumption-based services are generally recognized as the services are performed and accepted by the customers.

 

 

Revenues from Software as a Service (“SaaS”)

 

The Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. The subscription contracts are generally one year or less in length.

 

Revenues from Software Development and Other Miscellaneous Services

 

The Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application, and workflow development. The Company also provides other miscellaneous services, such as 3D Space photography. The Company generally recognizes revenue at a point in time when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers.

 

Revenues from Customized Software Development and Services

 

The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. 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 contract that result in the transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.

 

Revenues from Consulting Services

 

The Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service contracts are generally less than one year in length and normally include both cash and noncash consideration. Cash consideration is paid in installment payments and is recognized in revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is 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. The Company assesses the estimated amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been resolved.

 

The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.5 million and $1.2 million, respectively.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2023. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, the Company’s disclosure controls and procedures were not effective, for the same reason as previously disclosed under Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on March 31, 2023, as the same may be amended from time to time.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as updated from time to time.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

There have been no defaults in any material payments during the covered period.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

(a) None.

 

(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.

 

 

ITEM 6. EXHIBITS

 

Exhibit Number		Description of Document
10.1		Service Agreement, dated as of October 2, 2023, by and between the registrant and GATES GROUP Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).
10.2		Common Stock Purchase Warrant, dated October 2, 2023, issued by GATES GROUP Inc. to the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2023).
10.3		At The Market Offering Agreement, dated October 23, 2023, by and between HeartCore Enterprises, Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 23, 2023).
31.1*		Rule 13a-14(a) Certification of Principal Executive Officer.
31.2*		Rule 13a-14(a) Certification of Principal Financial Officer.
32.1**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Principal Executive Officer and Principal Financial Officer.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*	Filed herewith.
**	Furnished herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

	HEARTCORE ENTERPRISES, INC.
Dated: November 13, 2023	By:	/s/ Sumitaka Yamamoto
		Sumitaka Yamamoto
		Chief Executive Officer and President (principal executive officer)
Dated: November 13, 2023	By:	/s/ Qizhi Gao
		Qizhi Gao
		Chief Financial Officer (principal financial officer and principal accounting officer)

 

 

 

Exhibit 31.1

 

CERTIFICATIONS

 

I, Sumitaka Yamamoto, certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of HeartCore Enterprises, Inc.; and
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2023	By:	/s/ Sumitaka Yamamoto
		Sumitaka Yamamoto
		Chief Executive Officer and President (principal executive officer)

 

 

 

 

Exhibit 31.2

 

CERTIFICATIONS

 

I, Qizhi Gao, certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of HeartCore Enterprises, Inc.; and
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2023	By:	/s/ Qizhi Gao
		Qizhi Gao
		Chief Financial Officer (principal financial officer)

 

 

 

 

Exhibit 32.1

 

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of HeartCore Enterprises, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sumitaka Yamamoto, Chief Executive Officer and President of the Company, and I, Qizhi Gao, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: November 13, 2023	/s/ Sumitaka Yamamoto
	Sumitaka Yamamoto
	Chief Executive Officer and President (principal executive officer)
Date: November 13, 2023	/s/ Qizhi Gao
	Qizhi Gao Chief Financial Officer (principal financial officer)

 

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

 

 

 

v3.23.3

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 13, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-41272
Entity Registrant Name	HeartCore Enterprises, Inc.
Entity Central Index Key	0001892322
Entity Tax Identification Number	87-0913420
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1-2-33
Entity Address, Address Line Two	Higashigotanda
Entity Address, Address Line Three	Shinagawa-ku
Entity Address, City or Town	Tokyo
Entity Address, Country	JP
City Area Code	(206)
Local Phone Number	385-0488
Title of 12(b) Security	Common Stock
Trading Symbol	HTCR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,842,690

v3.23.3

Consolidated Balance Sheets - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 2,199,565	$ 7,177,326
Accounts receivable	2,562,239	551,064
Investments in marketable securities	757,106
Prepaid expenses	683,327	538,230
Note receivable	300,000
Current portion of long-term note receivable	100,000
Other current assets	111,326	220,070
Total current assets	6,756,002	8,535,137
Non-current assets:
Property and equipment, net	752,940	203,627
Operating lease right-of-use assets	2,413,814	2,644,957
Intangible asset, net	4,675,000
Goodwill	3,276,441
Long-term investments in warrants	2,456,902
Long-term note receivable	200,000
Deferred tax assets	222,172	263,339
Security deposits	338,220	244,395
Other non-current assets	67	661
Total non-current assets	14,519,632	3,603,451
Total assets	21,275,634	12,138,588
Current liabilities:
Accounts payable and accrued expenses	1,779,953	497,742
Accrued payroll and other employee costs	558,394	360,222
Current portion of long-term debts	525,440	697,877
Insurance premium financing	122,279
Factoring liability	217,250
Operating lease liabilities, current	365,241	291,863
Finance lease liabilities, current	17,076	19,294
Income tax payables	103,935	2,747
Deferred revenue	1,740,877	1,724,519
Total current liabilities	5,660,393	3,647,693
Non-current liabilities:
Long-term debts	1,351,830	1,123,735
Operating lease liabilities, non-current	2,113,917	2,421,054
Finance lease liabilities, non-current	68,535	459
Deferred tax liabilities	1,309,000
Other non-current liabilities	197,817	138,018
Total non-current liabilities	5,041,099	3,683,266
Total liabilities	10,701,492	7,330,959
Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,842,690 and 17,649,886 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)	2,083	1,764
Additional paid-in capital	19,431,987	15,014,607
Accumulated deficit	(11,910,310)	(10,573,579)
Accumulated other comprehensive income	282,734	364,837
Total HeartCore Enterprises, Inc. shareholders’ equity	7,806,494	4,807,629
Non-controlling interest	2,767,648
Total shareholders’ equity	10,574,142	4,807,629
Total liabilities and shareholders’ equity	21,275,634	12,138,588
Related Party [Member]
Current assets:
Due from related party	42,439	48,447
Non-current assets:
Long-term loan receivable from related party	184,076	246,472
Current liabilities:
Other current liabilities	7,859	402
Nonrelated Party [Member]
Current liabilities:
Other current liabilities	$ 222,089	$ 53,027

v3.23.3

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	20,842,690	17,649,886
Common stock, shares outstanding	20,842,690	17,649,886

v3.23.3

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenues	$ 4,688,908	$ 1,872,476	$ 18,518,431	$ 6,818,774
Cost of revenues	3,860,241	1,543,256	10,548,245	3,935,908
Gross profit	828,667	329,220	7,970,186	2,882,866
Operating expenses:
Selling expenses	274,043	771,496	1,330,747	1,706,250
General and administrative expenses	2,172,298	1,513,028	7,305,392	5,832,276
Research and development expenses	170,071	58,275	289,303	583,762
Total operating expenses	2,616,412	2,342,799	8,925,442	8,122,288
Loss from operations	(1,787,745)	(2,013,579)	(955,256)	(5,239,422)
Other income (expenses):
Changes in fair value of investments in marketable securities	(271,740)		(500,762)
Changes in fair value of investments in warrants	(460,672)		(294,565)
Interest income	14,363	21,707	64,633	32,256
Interest expenses	(42,619)	(10,500)	(125,073)	(39,361)
Other income	52,640	15,195	176,641	40,645
Other expenses	(25,947)	(2,826)	(62,701)	(58,050)
Total other income (expenses)	(733,975)	23,576	(741,827)	(24,510)
Loss before income tax provision	(2,521,720)	(1,990,003)	(1,697,083)	(5,263,932)
Income tax expense (benefit)	19,413	(19,069)	58,859	(10,906)
Net loss	(2,541,133)	(1,970,934)	(1,755,942)	(5,253,026)
Less: net loss attributable to non-controlling interest	(233,913)		(419,211)
Net loss attributable to HeartCore Enterprises, Inc.	(2,307,220)	(1,970,934)	(1,336,731)	(5,253,026)
Other comprehensive income (loss):
Foreign currency translation adjustment	(90,743)	128,705	(85,244)	428,118
Total comprehensive loss	(2,631,876)	(1,842,229)	(1,841,186)	(4,824,908)
Less: comprehensive loss attributable to non-controlling interest	(235,094)		(422,352)
Comprehensive loss attributable to HeartCore Enterprises, Inc.	$ (2,396,782)	$ (1,842,229)	$ (1,418,834)	$ (4,824,908)
Net loss per common share attributable to HeartCore Enterprises, Inc.
Basic	$ (0.11)	$ (0.11)	$ (0.07)	$ (0.29)
Diluted	$ (0.11)	$ (0.11)	$ (0.07)	$ (0.29)
Weighted average common shares outstanding
Basic	20,842,690	17,835,027	20,257,020	18,014,483
Diluted	20,842,690	17,835,027	20,257,020	18,014,483

v3.23.3

Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock, Common [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2021	$ 1,554	$ 3,350,779		$ (3,896,113)	$ (15,172)			$ (558,952)
Balance, shares at Dec. 31, 2021	15,546,454
Net loss				(1,578,451)				(1,578,451)
Foreign currency translation adjustment					80,053			80,053
Issuance of common shares for cash	$ 310	13,643,969						13,644,279
Issuance of common shares for cash, shares	3,096,000
Issuance of common shares from exercise of share options	$ 27	(11)						16
Issuance of common shares from exercise of share options, shares	273,489
Stock-based compensation		422,164						422,164
Balance at Mar. 31, 2022	$ 1,891	17,416,901		(5,474,564)	64,881			12,009,109
Balance, shares at Mar. 31, 2022	18,915,943
Balance at Dec. 31, 2021	$ 1,554	3,350,779		(3,896,113)	(15,172)			(558,952)
Balance, shares at Dec. 31, 2021	15,546,454
Net loss								$ (5,253,026)
Issuance of common shares from exercise of share options, shares
Stock-based compensation, shares								16,500
Balance at Sep. 30, 2022	$ 1,899	18,220,206	$ (3,500,000)	(9,149,139)	412,946			$ 5,985,912
Balance, shares at Sep. 30, 2022	18,999,276		(1,349,390)
Balance at Mar. 31, 2022	$ 1,891	17,416,901		(5,474,564)	64,881			12,009,109
Balance, shares at Mar. 31, 2022	18,915,943
Net loss				(1,703,641)				(1,703,641)
Foreign currency translation adjustment					219,360			219,360
Stock-based compensation	$ 8	466,654						466,662
Stock-based compensation, shares	83,333
Repurchase of common shares			$ (1,336,762)					(1,336,762)
Repurchase of common shares, shares			(558,809)
Balance at Jun. 30, 2022	$ 1,899	17,883,555	$ (1,336,762)	(7,178,205)	284,241			9,654,728
Balance, shares at Jun. 30, 2022	18,999,276		(558,809)
Net loss				(1,970,934)				(1,970,934)
Foreign currency translation adjustment					128,705			128,705
Stock-based compensation		336,651						336,651
Repurchase of common shares			$ (2,163,238)					(2,163,238)
Repurchase of common shares, shares			(790,581)
Balance at Sep. 30, 2022	$ 1,899	18,220,206	$ (3,500,000)	(9,149,139)	412,946			5,985,912
Balance, shares at Sep. 30, 2022	18,999,276		(1,349,390)
Balance at Dec. 31, 2022	$ 1,764	15,014,607		(10,573,579)	364,837	4,807,629		4,807,629
Balance, shares at Dec. 31, 2022	17,649,886
Net loss				1,882,289		1,882,289	(74,252)	1,808,037
Foreign currency translation adjustment					(22,744)	(22,744)	(2,290)	(25,034)
Stock-based compensation	$ 69	915,159				915,228		915,228
Stock-based compensation, shares	692,804
Issuance of common shares for acquisition of subsidiary	$ 250	3,149,750				3,150,000		3,150,000
Issuance of common shares for acquisition of subsidiary, shares	2,500,000
Non-controlling interests arising from acquisition of subsidiary							3,190,000	3,190,000
Balance at Mar. 31, 2023	$ 2,083	19,079,516		(8,691,290)	342,093	10,732,402	3,113,458	13,845,860
Balance, shares at Mar. 31, 2023	20,842,690
Balance at Dec. 31, 2022	$ 1,764	15,014,607		(10,573,579)	364,837	4,807,629		4,807,629
Balance, shares at Dec. 31, 2022	17,649,886
Net loss								$ (1,755,942)
Issuance of common shares from exercise of share options, shares
Stock-based compensation, shares								102,000
Balance at Sep. 30, 2023	$ 2,083	19,431,987		(11,910,310)	282,734	7,806,494	2,767,648	$ 10,574,142
Balance, shares at Sep. 30, 2023	20,842,690
Balance at Mar. 31, 2023	$ 2,083	19,079,516		(8,691,290)	342,093	10,732,402	3,113,458	13,845,860
Balance, shares at Mar. 31, 2023	20,842,690
Net loss				(911,800)		(911,800)	(111,046)	(1,022,846)
Foreign currency translation adjustment					30,203	30,203	330	30,533
Stock-based compensation		179,165				179,165		179,165
Balance at Jun. 30, 2023	$ 2,083	19,258,681		(9,603,090)	372,296	10,029,970	3,002,742	13,032,712
Balance, shares at Jun. 30, 2023	20,842,690
Net loss				(2,307,220)		(2,307,220)	(233,913)	(2,541,133)
Foreign currency translation adjustment					(89,562)	(89,562)	(1,181)	(90,743)
Stock-based compensation		173,306				173,306		173,306
Balance at Sep. 30, 2023	$ 2,083	$ 19,431,987		$ (11,910,310)	$ 282,734	$ 7,806,494	$ 2,767,648	$ 10,574,142
Balance, shares at Sep. 30, 2023	20,842,690

v3.23.3

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (1,755,942)	$ (5,253,026)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expenses	495,200	64,398
Gain on disposal of property and equipment	(4,737)
Amortization of debt issuance costs	2,257	3,051
Non-cash lease expense	254,876	207,549
Loss on termination of lease	76
Deferred income taxes	(109,690)	(5,843)
Stock-based compensation	1,267,699	1,225,477
Warrants received as noncash consideration	(4,009,335)
Changes in fair value of investments in marketable securities	500,762
Changes in fair value of investments in warrants	294,565
Changes in assets and liabilities:
Accounts receivable	(322,583)	168,021
Prepaid expenses	187,269	(56,553)
Other assets	(23,982)	(142,967)
Accounts payable and accrued expenses	597,247	(96,238)
Accrued payroll and other employee costs	7,471	59,059
Due to related party	7,562	3,098
Operating lease liabilities	(231,499)	(213,691)
Finance lease liabilities		(370)
Income tax payables	101,058	(7,704)
Deferred revenue	200,256	45,938
Other liabilities	83,809	(206,569)
Net cash flows used in operating activities	(2,457,661)	(4,206,370)
Cash flows from investing activities:
Purchases of property and equipment	(516,658)	(41,672)
Proceeds from disposal of property and equipment	24,935
Advances on note receivable	(600,000)
Repayment of loan provided to related party	34,823	33,042
Payment for acquisition of subsidiary, net of cash acquired	(724,910)
Net cash flows used in investing activities	(1,781,810)	(8,630)
Cash flows from financing activities:
Proceeds from initial public offering, net of issuance cost		13,602,554
Proceeds from issuance of common shares prior to initial public offering		220,572
Repurchase of common shares		(3,500,000)
Payments for finance leases	(16,537)	(29,051)
Proceeds from long-term debt	219,427	258,087
Repayment of long-term debts	(584,779)	(699,407)
Repayment of insurance premium financing	(266,756)	(298,886)
Net proceeds from factoring arrangement	217,250
Payments for debt issuance costs	(656)	(1,030)
Payment for mandatorily redeemable financial interest		(430,489)
Net cash flows provided by (used in) financing activities	(432,051)	9,122,350
Effect of exchange rate changes	(306,239)	(200,981)
Net change in cash and cash equivalents	(4,977,761)	4,706,369
Cash and cash equivalents - beginning of the period	7,177,326	3,136,839
Cash and cash equivalents - end of the period	2,199,565	7,843,208
Supplemental cash flow disclosure:
Interest paid	59,290	38,387
Income taxes paid	91,657	3,013
Non-cash investing and financing transactions:
Payroll withheld as repayment of loan receivable from employees		12,034
Liabilities assumed in connection with purchase of property and equipment	9,602	17,731
Share repurchase liability settled by issuance of common shares		16
Deferred offering costs recognized against the proceeds from the offering		178,847
Insurance premium financing	389,035	388,538
Common shares issued for acquisition of subsidiary	3,150,000
Investments in warrants converted to marketable securities	1,257,868
Finance lease right-of-use asset obtained in exchange for finance lease liability	93,117
Operating lease right-of-use asset obtained in exchange for operating lease liability	317,040
Remeasurement of operating lease liability and right-of-use asset due to lease modification	$ 12,579

v3.23.3

ORGANIZATION AND DESCRIPTION OF BUSINESS	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND DESCRIPTION OF BUSINESS	NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS   HeartCore Enterprises, Inc. (“HeartCore USA” or the “Company”), a holding company, was incorporated under the laws of the State of Delaware on May 18, 2021.   On July 16, 2021, the Company executed a Share Exchange Agreement with certain shareholders of HeartCore Co., Ltd. (“HeartCore Japan”), a company that was incorporated in Japan on June 12, 2009. Pursuant to the terms of the Share Exchange Agreement, the Company issued 15,999,994 shares of its common shares to the shareholders of HeartCore Japan in exchange for 10,706 shares out of 10,984 shares of common shares issued by HeartCore Japan, representing approximately 97.5% of HeartCore Japan’s outstanding common shares. On February 24, 2022, the Company purchased the remaining 278 shares of common shares of HeartCore Japan. As a result, HeartCore Japan became a wholly-owned operating subsidiary of the Company.   The share exchange on July 16, 2021 has been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled these two entities before and after the transaction. The consolidation of the Company and its subsidiary has been accounted for at historical cost and prepared on the basis as if the transaction had become effective as of the beginning of the earliest period presented in the accompanying unaudited consolidated financial statements.   The Company, via its wholly-owned operating subsidiary, HeartCore Japan, is mainly engaged in the business of developing and sales of comprehensive software. Beginning from early 2022, HeartCore USA is engaged in business of providing consulting services to Japanese companies with intention to go public in the United States capital market.   On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V. and Sigmaways Technologies Ltd. (“Sigmaways Technologies”). Sigmaways B.V. was incorporated in Netherlands in November 2019. Sigmaways Technologies was incorporated in Canada in August 2020. Sigmaways and its wholly-owned subsidiaries are primarily engaged in the business of developing and sales of software in the United States. The acquisition was closed on February 1, 2023.   In January 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Financial, Inc. (“HeartCore Financial”), under the laws of the State of Delaware. HeartCore Financial is engaged in the business of providing financial consulting services.   In February 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Capital Advisors, Inc. (“HeartCore Capital Advisors”), in Japan. HeartCore Capital Advisors is engaged in the business of providing financial consulting services to Japanese companies.   HeartCore USA, HeartCore Japan, Sigmaways, Sigmaways B.V., Sigmaways Technologies, HeartCore Financial and HeartCore Capital Advisors are hereafter referred to as the Company.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Basis of Presentation and Principles of Consolidation   The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.   These unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022.   Use of Estimates   In preparing the unaudited consolidated financial statements in conformity U.S. GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses, useful lives of property and equipment, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and financing leases, valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates.   COVID-19   While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the unaudited consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s unaudited consolidated financial statements.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   Asset Retirement Obligations   Pursuant to the lease agreements for the office space, the Company is responsible to restore these spaces back to its original statute at the time of leaving. The Company recognizes an obligation related to these restorations as asset retirement obligation included in other non-current liabilities in the consolidated balance sheets, in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset Retirement Obligation Accounting”. The Company capitalizes the associated asset retirement cost by increasing the carrying amount of the related property and equipment. The following table presents changes in asset retirement obligations:   SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS     September 30,     December 31,       2023     2022   Beginning balance   $ 138,018     $ 155,666   Liabilities incurred     83,821       -   Accretion expense     328       459   Foreign currency translation adjustment     (24,350 )     (18,107 ) Ending balance   $ 197,817     $ 138,018     Software Development Costs   Software development costs are expensed as incurred until the point the Company establishes technological feasibility. Technological feasibility is established upon completion of a detailed program design or the completion of a working model. Costs incurred by the Company between establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products. The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred.   In the nine months ended September 30, 2023 and 2022, software development costs expensed as incurred amounted to $289,303 and $583,762, respectively. These software development costs were included in the research and development expenses.   Investments in Warrants   Investments in warrants represent stock warrants of its consulting service customers and are not registered for public sale. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investments in warrants are classified as long-term if the warrants are exercisable over one year after the date of receipt.   Investments in Marketable Securities   Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities as of September 30, 2023 were obtained through exercise of stock warrants of its consulting service customers and measured at fair value with changes in fair value recognized in other income (expenses).   Intangible Asset, Net   Intangible asset represents the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries. The acquired intangible asset is recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective assets. The estimated useful life of the customer relationship is 8 years.   Impairment of Long-Lived Assets Other Than Goodwill   Long-lived assets with finite lives, primarily property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets during the nine months ended September 30, 2023 and 2022.   Goodwill   Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with ASC Topic 350, “Intangibles – Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.   Foreign Currency Translation   The functional currency of HeartCore Japan and HeartCore Capital Advisors is the Japanese Yen (“JPY”). The functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”). The functional currency of Sigmaways B.V. is the Euro (“EUR”). The functional currency of Sigmaways Technologies is the Canada Dollar (“CAD”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited consolidated statements of operations.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. 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 statements of changes in shareholders’ equity (deficit).   Revenue Recognition   The Company recognizes revenues under ASC Topic 606, “Revenue from Contracts with customers”.   To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.   The Company currently generates its revenues from the following main sources:   Revenues from On-Premise Software   Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Licenses for on-premise software are typically sold to the customer with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support service. The SSP for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis. The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence.   Revenues from Maintenance and Support Services   Maintenance and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available during the subscription. Revenues from maintenance and support services are recognized over time as such services are performed. Revenues for consumption-based services are generally recognized as the services are performed and accepted by the customers.   Revenues from Software as a Service (“SaaS”)   The Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. The subscription contracts are generally one year or less in length.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   Revenues from Software Development and Other Miscellaneous Services   The Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application, and workflow development. The Company also provides other miscellaneous services, such as 3D Space photography. The Company generally recognizes revenue at a point in time when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers.   Revenues from Customized Software Development and Services   The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. 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 contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.   Revenues from Consulting Services   The Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service contracts are generally less than one year in length and normally include both cash and noncash consideration. Cash consideration is paid in installment payments and is recognized in revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is 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. The Company assesses the estimated amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been resolved.   The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.5 million and $1.2 million, respectively.   Disaggregation of Revenues   The Company disaggregates its revenues from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the three and nine months ended September 30, 2023 and 2022 is as following:   SCHEDULE OF DISAGGREGATION OF REVENUES                                       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Revenues from on-premise software   $ 396,647     $ 257,121     $ 1,457,836     $ 1,775,254   Revenues from maintenance and support services     650,603       678,521       2,226,802       2,251,137   Revenues from software as a service (“SaaS”)     148,857       122,347       497,430       352,251   Revenues from software development and other miscellaneous services     474,859       340,742       1,561,655       1,518,032   Revenues from customized software development and services     2,405,907       -       6,332,479       -   Revenues from consulting services     612,035       473,745       6,442,229       922,100   Total revenues   $ 4,688,908     $ 1,872,476     $ 18,518,431     $ 6,818,774       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The Company’s disaggregation of revenues by product/service is as following:       2023     2022     2023     2022       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Revenues from customer experience management platform   $ 1,403,932     $ 1,171,150     $ 4,696,241     $ 4,757,369   Revenues from process mining     99,618       68,560       390,374       453,368   Revenues from robotic process automation     58,051       69,693       271,520       317,110   Revenues from task mining     74,958       66,799       277,725       252,234   Revenues from customized software development and services     2,405,907       -       6,332,479       -   Revenues from consulting services     612,035       473,745       6,442,229       922,100   Revenues from others     34,407       22,529       107,863       116,593   Total revenues   $ 4,688,908     $ 1,872,476     $ 18,518,431     $ 6,818,774     As of September 30, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and the majority of revenues generated were attributed to the Company’s operation in Japan.   Concentration of Credit Risk   Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.   For the nine months ended September 30, 2023, customer B and C represent 14.2% and 13.6%, respectively, of the Company’s total revenues. For the nine months ended September 30, 2022, customer A represents 10.0% of the Company’s total revenues.   For the nine months ended September 30, 2023, vendor D, B, A and E represent 26.4%, 26.2%, 22.1% and 15.9%, respectively, of the Company’s total purchases. For the nine months ended September 30, 2022, vendor A, B, C and D represent 25.9%, 19.7%, 16.3% and 15.5%, respectively, of the Company’s total purchases.   Stock-based Compensation   The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   Business Combinations   The Company accounts its business combinations using the acquisition method of accounting in accordance with ASC Topic 805. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible asset acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred.   Consideration transferred in a business combination is measured at the fair value as of the date of acquisition. Where the consideration in an acquisition includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability. It is subsequently carried at fair value with changes in fair value reflected in earnings.   In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive loss.   Fair value is determined based upon the guidance of ASC Topic 820, “Fair Value Measurements and Disclosures,” and generally are determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgments and estimates. The Company utilizes the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition.   Fair Value Measurements   The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:     ● Level 1: quoted prices in active markets for identical assets or liabilities;   ● Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or   ● Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.   As of September 30, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.   Investments in Warrants   The Company received warrants from its customers as noncash consideration from consulting services. The warrants are not registered for public sale and are measured at fair value at contract inception. The Company’s investments in warrants are measured on a recurring basis and carried on the balance sheet at an estimated fair value at the end of the period. The valuation of investments in warrants was determined using a Black-Scholes model of value based upon the stock price, exercise price, expected volatility, time to maturity, and a risk-free interest rate for the term of the warrants exercise. Such valuations are classified within Level 3 of the fair value hierarchy.   The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF INVESTMENTS IN WARRANTS                     For the Nine Months Ended       September 30,       2023     2022   Fair value of investments in warrants at beginning of the period   $ -     $       -   Warrants received as noncash consideration     4,009,335       -   Changes in fair value of investments in warrants     (294,565 )     -   Investments in warrants converted to marketable securities     (1,257,868 )     -   Fair value of investments in warrants at end of the period   $ 2,456,902     $ -     Investments in Marketable Securities   The Company’s investments in marketable securities registered for public sale with readily determinable fair value are measured at quoted prices on a recurring basis at the end of the period. Marketable securities are classified within Level 1 of the fair value hierarchy.   The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES                       For the Nine Months Ended       September 30,       2023     2022   Fair value of investments in marketable securities at beginning of the period   $ -     $       -   Investments in warrants converted to marketable securities     1,257,868       -   Changes in fair value of investments in marketable securities     (500,762 )     -   Marketable securities sold     -       -   Fair value of investments in marketable securities at end of the period   $ 757,106     $ -       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   Recent Accounting Pronouncements   New Accounting Pronouncements Recently Adopted   In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, “Financial Instruments – Credit Losses” is effective for public companies for annual reporting periods, and interim periods within those years beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements.   In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements.   New Accounting Pronouncements Not Yet Effective   The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s unaudited consolidated financial statements.

v3.23.3

ACCOUNTS RECEIVABLE	9 Months Ended
	Sep. 30, 2023
Credit Loss [Abstract]
ACCOUNTS RECEIVABLE	NOTE 3 — ACCOUNTS RECEIVABLE   Accounts receivable consists of the following:   SCHEDULE OF ACCOUNTS RECEIVABLE NET     September 30,     December 31,       2023     2022   Accounts receivable – non-factored   $ 2,344,989     $ 551,064   Accounts receivable – factored with recourse     217,250       -   Accounts receivable, gross     2,562,239       551,064   Less: allowance for credit losses     -       -   Accounts receivable   $ 2,562,239     $ 551,064

v3.23.3

PREPAID EXPENSES	9 Months Ended
	Sep. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
PREPAID EXPENSES	NOTE 4 — PREPAID EXPENSES   Prepaid expenses consist of the following:   SCHEDULE OF PREPAID EXPENSES     September 30,     December 31,       2023     2022   Prepayments to software vendors   $ 185,540     $ 162,046   Prepaid marketing and consulting fees     102,839       99,770   Prepaid subscription fees     83,207       113,685   Prepaid insurance premium     208,385       66,023   Others     103,356       96,706   Total   $ 683,327     $ 538,230       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE	NOTE 5 — NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE   On May 2, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 8% per annum and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering (“IPO”) on the Nasdaq Capital Market or New York Stock Exchange, or 3) 180 days following the note issuance. The interest rate would be 12% per annum for any amount that is unpaid when due. On July 27, 2023, the Company entered into a note exchange agreement with the promissory note issuer pursuant to which all of the promissory note principal amount and accrued interest owed to the Company shall be converted into and exchanged for 600,000 shares of common shares of the promissory note issuer upon the effectiveness of its IPO. The promissory note issuer has not completed the IPO as of September 30, 2023.   On September 1, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 4% per annum and matures on September 2, 2026. On the first business day following each annual anniversary of September 1, 2023, the promissory note issuer shall pay to the Company the sum of one-third of the total promissory note amount due and outstanding, including all accrued and unpaid interest as of such time, unless such annual payment has been forgiven by the Company pursuant to certain conditions. The interest rate would be 10% per annum for any amount that is unpaid when due.

v3.23.3

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2023
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 6 — RELATED PARTY TRANSACTIONS   As of September 30, 2023 and December 31, 2022, the Company has a due to related party balance of $7,859 and $402, 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 nine months ended September 30, 2023, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $7,562. During the nine months ended September 30, 2022, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $3,098.   As of September 30, 2023 and December 31, 2022, the Company has a loan receivable balance of $226,515 and $294,919, respectively, from Heartcore Technology Inc., a company controlled by the CEO of the Company. The loan was made to the related party to support its operation. The balance is unsecured, bears an annual interest of 1.475%, and requires repayments in installments starting from February 2022. During the nine months ended September 30, 2023 and 2022, the Company received repayments of $34,823 and $33,042, respectively, from this related party.   During the period from January 1, 2022 through January 13, 2022, the Company completed a private placement, in which it issued 30,000 shares of common shares at a purchase price of $2.50 per share to the officers of the Company for an aggregate amount of $75,000.

v3.23.3

PROPERTY AND EQUIPMENT, NET	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT, NET	NOTE 7 — PROPERTY AND EQUIPMENT, NET   Property and equipment, net consist of the following:   SCHEDULE OF PROPERTY AND EQUIPMENT NET     September 30,     December 31,       2023     2022   Leasehold improvements   $ 471,069     $ 298,637   Machinery and equipment     673,435       316,827   Vehicle     85,111       106,490   Software     142,829       163,049   Subtotal     1,372,444       885,003   Less: accumulated depreciation     (619,504 )     (681,376 ) Property and equipment, net   $ 752,940     $ 203,627     Depreciation expenses were $70,200 and $64,398 for the nine months ended September 30, 2023 and 2022, respectively.

v3.23.3

INTANGIBLE ASSET, NET	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSET, NET	NOTE 8 — INTANGIBLE ASSET, NET   Intangible asset, net is as follows:   SCHEDULE OF INTANGIBLE ASSETS     September 30,     December 31,       2023     2022   Customer relationship   $ 5,100,000     $                -   Less: accumulated amortization     (425,000 )     -   Intangible asset, net   $ 4,675,000     $ -     Amortization expenses were $425,000 and nil for the nine months ended September 30, 2023 and 2022, respectively.   As of September 30, 2023, the future estimated amortization cost for intangible asset is as follows:   SCHEDULE OF AMORTIZATION INTANGIBLE ASSET       Estimated   Year Ended December 31,     Amortization   Remaining of 2023     $ 159,375   2024       637,500   2025       637,500   2026       637,500   2027       637,500   Thereafter       1,965,625   Total     $ 4,675,000       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

LEASES	9 Months Ended
	Sep. 30, 2023
Leases
LEASES	NOTE 9 — LEASES   The Company has entered into four leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases. Right-of-use assets of these finance leases in the amount of $85,591 and $18,335 are included in property and equipment, net as of September 30, 2023 and December 31, 2022, respectively.   Operating lease expenses for lease payments are recognized on a straight-line basis over the lease term. Finance lease costs include amortization, which are recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with initial term of twelve months or less are not recorded on the consolidated balance sheets.   The components of lease costs are as follows:    SCHEDULE OF LEASE COSTS     2023     2022       For the Nine Months Ended       September 30,       2023     2022   Finance lease costs                 Amortization of right-of-use assets   $ 15,215     $ 26,825   Interest on lease liabilities     98       370   Total finance lease costs     15,313       27,195   Operating lease costs     286,934       244,688   Total lease costs   $ 302,247     $ 271,883       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The following table presents supplemental information related to the Company’s leases:   SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES     2023     2022       For the Nine Months Ended       September 30,       2023     2022   Cash paid for amounts included in the measurement of lease liabilities:                 Operating cash flows from finance leases   $ 98     $ 370   Operating cash flows from operating leases     257,277       243,108   Financing cash flows from finance leases     16,537       29,051   Finance lease right-of-use asset obtained in exchange for finance lease liability     93,117       -   Operating lease right-of-use asset obtained in exchange for operating lease liability     317,040       -   Remeasurement of operating lease liability and right-of-use asset due to lease modification     12,579       -                     Weighted average remaining lease term (years)                 Finance leases     5.0       1.1   Operating leases     7.7       9.4                     Weighted average discount rate (per annum)                 Finance leases     1.32 %     1.32 % Operating leases     1.33 %     1.32 %   As of September 30, 2023, the future maturity of lease liabilities is as follows:   SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES Year Ended December 31,   Finance Lease     Operating Lease   Remaining of 2023   $ 4,649     $ 101,255   2024     17,844       388,730   2025     17,593       383,300   2026     17,593       321,614   2027     17,593       277,553   Thereafter     13,195       1,142,795   Total lease payments     88,467       2,615,247   Less: imputed interest     (2,856 )     (136,089 ) Total lease liabilities     85,611       2,479,158   Less: current portion     (17,076 )     (365,241 ) Non-current lease liabilities   $ 68,535     $ 2,113,917     Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amounted to $338,220 and $244,395 as of September 30, 2023 and December 31, 2022, respectively.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

FACTORING LIABILITY	9 Months Ended
	Sep. 30, 2023
Factoring Liability
FACTORING LIABILITY	NOTE 10 — FACTORING LIABILITY   Sigmaways, the newly acquired subsidiary of the Company, entered into a Factoring and Security Agreement (the “Factoring Agreement”) with The Southern Bank Company, an unrelated factor (the “Factor”), in 2017, for the purpose of factoring certain accounts receivable. Under the terms of the Factoring Agreement, the Company may offer for sale, and the Factor may purchase in its sole discretion, certain accounts receivable of the Company (the “Purchased Receivable”). The Factoring Agreement provided for a maximum of $850,000 in Purchased Receivable.   Selected accounts receivable is submitted to the Factor, and the Company receives 90% of the face value of the accounts receivable by wire transfer. Upon payment by the customers, the remainder of the amount due is received from the Factor after deducting certain fees.   The Factoring Agreement specifies that eligible accounts receivable is factored with recourse. Under the terms of the recourse provision, the Company is required to reimburse the Factor, upon demand, for Purchased Receivable that is not paid on time by the customers. The performance of all obligations and payments to the Factor is personally guaranteed by Prakash Sadasivam, CEO of Sigmaways and Chief Strategy Officer (“CSO”) of the Company, and secured by all Sigmaways’ now owned and hereafter assets and any sums maintained by the Factor that are identified as payable to the Company.   The Factoring Agreement has an initial term of twelve months and automatically renews for successive twelve-month renewal periods unless terminated pursuant to the terms of the Factoring Agreement. The Company may terminate the Factoring Agreement with sixty days’ written notice to the Factor and is subject to certain early termination fee.   The Factoring Agreement contained covenants that are customary for accounts receivable-based factoring agreements and also contained provisions relating to events of default that are customary for agreements of this type.   As of September 30, 2023, there was $217,250 borrowed and outstanding under the Factoring Agreement. There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense. During the nine months ended September 30, 2023, the Company recorded $54,790 in interest expense related to the Factoring Agreement.

v3.23.3

INSURANCE PREMIUM FINANCING	9 Months Ended
	Sep. 30, 2023
Insurance [Abstract]
INSURANCE PREMIUM FINANCING	NOTE 11 — INSURANCE PREMIUM FINANCING   In January 2023, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $389,035 at an annual interest rate of 16.04% for ten months from February 1, 2023, payable in ten monthly installments of principal and interest.   In February 2022, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $388,538 at an annual interest rate of 12.80% for nine months from February 1, 2022, payable in nine monthly installments of principal and interest.   As of September 30, 2023 and December 31, 2022, the balance of the insurance premium financing was $122,279 and nil, respectively. During the nine months ended September 30, 2023 and 2022, the interest incurred was $25,988 and $19,859, respectively.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

LONG-TERM DEBTS	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
LONG-TERM DEBTS	NOTE 12 — LONG-TERM DEBTS   The Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions, which consist of the following:   SCHEDULE OF LONG-TERM DEBTS Name of Financial Institutions   Original Amount Borrowed           Loan Duration   Annual Interest Rate     Balance as of September 30, 2023     Balance as of December 31, 2022                                       Bond payable                                             Corporate bond issued through Resona Bank, Limited     JPY100,000,000       (a)(c)     1/10/2019 – 1/10/2024     0.430 %   $ 66,854     $ 228,956   Loans with banks and other financial institutions                                             Resona Bank, Limited     JPY50,000,000       (a)(b)     12/29/2017 – 12/29/2024     0.675 %     63,779       113,677   Resona Bank, Limited     JPY10,000,000       (a)(b)     9/30/2020 – 9/30/2027     0.000 %     39,009       52,705   Resona Bank, Limited     JPY40,000,000       (a)(b)     9/30/2020 – 9/30/2027     0.000 %     156,037       210,822   Resona Bank, Limited     JPY20,000,000       (a)(b)     11/13/2020 – 10/31/2027     1.600 %     79,610       107,227   Sumitomo Mitsui Banking Corporation     JPY100,000,000       (a)     12/28/2018 – 12/28/2023     1.475 %     44,444       165,237   Sumitomo Mitsui Banking Corporation     JPY10,000,000       (a)(b)     12/30/2019 – 12/30/2026     1.975 %     31,849       44,532   The Shoko Chukin Bank, Ltd.     JPY30,000,000             9/28/2018 – 8/31/2023     1.200 %     -       34,343   The Shoko Chukin Bank, Ltd.     JPY50,000,000             7/27/2020 – 6/30/2027     1.290 %     185,854       253,377   The Shoko Chukin Bank, Ltd.     JPY30,000,000             7/25/2023 – 6/30/2028     Tokyo Interbank Offered Rate + 1.950 %     193,742       -   Japan Finance Corporation     JPY80,000,000             11/17/2020 – 11/30/2027     0.210 %     329,456       442,036   Higashi-Nippon Bank     JPY30,000,000       (a)     3/31/2022 – 3/31/2025     1.400 %     105,094       177,669   First Home Bank     $350,000       (d)     4/18/2019 – 4/18/2029     Wall Street Journal U.S. Prime Rate + 2.750 %     237,336       -   U.S. Small Business Administration     $350,000       (d)     5/30/2020 – 5/30/2050     3.750 %     350,000       -   Aggregate outstanding principal balances                                 1,883,064       1,830,581   Less: unamortized debt issuance costs                                 (5,794 )     (8,969 ) Less: current portion                                 (525,440 )     (697,877 ) Non-current portion                               $ 1,351,830     $ 1,123,735     (a) These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder. (b) These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts. (c) The bond is guaranteed by Resona Bank, Limited. (d) These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.   Interest expense for long-term debts was $44,295 and $19,502 for the nine months ended September 30, 2023 and 2022, respectively.   As of September 30, 2023, future minimum loan payments are as follows:   SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS       Loan   Year Ended December 31,     Payment   Remaining of 2023     $ 146,763   2024       462,065   2025       305,291   2026       293,302   2027       262,017   Thereafter       413,626   Total     $ 1,883,064       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

INCOME TAXES	9 Months Ended
	Sep. 30, 2023
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 13 — INCOME TAXES   United States   HeartCore USA, Sigmaways and HeartCore Financial, incorporated in the United States, are subject to federal income tax at 21% statutory tax rate with respect to the profit generated from the United States.   Netherlands   Sigmaways B.V. is a company incorporated in Amsterdam in Netherlands in November 2019. The first EUR200,000 of taxable income will be taxed at 19% and the remaining taxable income will be taxed at statutory tax rate of 25.80%.   Canada   Sigmaways Technologies is a company incorporated in British Columbia in Canada in August 2020. It is subject to income tax on income arising in, or derived from, the tax jurisdiction in British Columbia it operates. The basic federal rate of Part I tax is 38% of taxable income, 28% after federal tax abatement. 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.   Japan   The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory tax rate of approximately 34.59% for the nine months ended September 30, 2023 and 2022.   For the nine months ended September 30, 2023 and 2022, the Company’s income tax expense (benefit) are as follows:    SCHEDULE OF INCOME TAX EXPENSES     2023     2022       For the Nine Months Ended       September 30,       2023     2022   Current   $ 168,549     $ (2,108 ) Deferred     (109,690 )     (8,798 ) Income tax expense (benefit)   $ 58,859     $ (10,906 )   The effective tax rate was (3.47)% and 0.21% for the nine months ended September 30, 2023 and 2022, respectively.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]
STOCK-BASED COMPENSATION	NOTE 14 – STOCK-BASED COMPENSATION   Options   In May 2016, the Company granted 507 units stock options to its employees each to acquire one share of common shares of HeartCore Japan (an equivalent of approximately 1,494 shares of common shares of HeartCore USA) at JPY10 (approximately $0.09) each. All options are exercisable upon issuance with a repurchase provision before the completion of the Company’s initial public offering, which serves as a vesting condition. All employees that were granted these stock options had early exercised their stock options in 2016 prior to the vesting of the related stock options. As of November 3, 2021, 324 units of the options were forfeited, and the CEO of the Company has repurchased and held the shares issued related to the early exercise of such stock options on behalf of the Company. On November 3, 2021, the Company redeemed 484,056 shares (equivalent to 324 shares of common shares of HeartCore Japan) from the CEO of the Company.   The consideration received for the remaining early exercised options was recorded by the Company as a share repurchase liability included in other current liabilities in the consolidated balance sheet with JPY1,830 (approximately $16) as of December 31, 2021. The shares issued related to the early exercise of the above-mentioned stock options were not considered outstanding as of December 31, 2021. On February 14, 2022, the 183 units of stock options were vested upon the completion of the Company’s initial public offering and the Company recognized stock-based compensation of $11,005 during the nine months ended September 30, 2022. In the same period, the share repurchase liability of $16 was settled by issuance of 273,489 shares of common shares (equivalent to 183 shares of common shares of HeartCore Japan) from exercise of stock options.   The following table summarizes the Company’s stock option activity for the stock options issued in 2016 for the nine months ended September 30, 2022:   SCHEDULE OF UNVESTED STOCK OPTION     Number of Stock Options   Issued and unvested as of January 1, 2022     183   Vested and exercised     183   Issued and unvested as of September 30, 2022     -     On August 6, 2021, the Board of Directors and stockholders of the Company approved a 2021 Equity Incentive Plan (the “2021 Plan”), under which 2,400,000 shares of common shares are authorized for issuance. On December 25, 2021, the Company awarded options to purchase 1,534,500 shares of common shares pursuant to the 2021 Plan at an exercise price of $2.50 per share to various officers, directors, employees and consultants of the Company. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common shares, with the expiration date on December 25, 2031.   On August 2, 2022, the Company awarded options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $2.94 per share to an employee of the Company. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common shares, with the expiration date on August 2, 2032.   On August 9, 2022, the Company awarded options to purchase 14,500 shares of common shares at an exercise price of $2.48 per share to three prior employees of the Company. The options are fully vested and exercisable on the grant date, with the expiration date on August 9, 2026.   On February 3, 2023, the Company awarded options to purchase 100,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $1.17 per share to an employee of the Company. The options vest 50% on the grant date and February 1, 2024, respectively, with the expiration date on February 3, 2033.   On August 25, 2023, the Company awarded options to purchase 2,000 shares of common shares pursuant to the 2021 Plan at an exercise price of $1.10 per share to an employee of the Company. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common shares, with the expiration date on August 25, 2033.   On August 1, 2023, the Board of Directors and stockholders of the Company approved a 2023 Equity Incentive Plan (the “2023 Plan”), under which 2,000,000 shares of common shares are authorized for issuance. No shares were issued pursuant to the 2023 Plan as of September 30, 2023.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The following table summarizes the stock options activity and related information for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF STOCK OPTION ACTIVITY       Number of Options     Weighted Average Exercise Price     Weighted Average Remaining Term (Years)     Intrinsic Value   As of January 1, 2022       1,534,500     $ 2.50       9.99     $          -   Granted       16,500       2.54       4.59       -   Exercised       -              -       -       -   Forfeited       (39,500 )     2.50       -       -   As of September 30, 2022       1,511,500     $ 2.50       9.19     $ -                                       As of January 1, 2023       1,466,500     $ 2.50       8.94     $ -   Granted       102,000       1.17       9.36       -   Exercised       -       -        -       -   Forfeited       (9,500 )     2.50       -       -   As of September 30, 2023       1,559,000     $ 2.41       8.27     $ -   Vested and exercisable as of September 30, 2023       425,125     $ 2.34       8.19     $ -       The Company calculated the fair value of options granted in the nine months ended September 30, 2023 using the Black-Scholes model. Significant assumptions used in the valuation include expected volatility, risk-free interest rate, dividend yield and expected exercise term.   For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to options of $144,306 and $479,122, respectively. For the three and nine months ended September 30, 2022, the Company recognized stock-based compensation related to options of $280,883 and $858,633, respectively. The outstanding unamortized stock-based compensation related to options was $578,075 (which will be recognized through August 2027) as of September 30, 2023.   Restricted Stock Units (“RSUs”)   On February 9, 2022, the Company entered into executive employment agreements with five executives and granted 85,820 RSUs pursuant to the 2021 Plan. The RSUs vest on each annual anniversary of the date of the employment agreement, in an amount equal to 25% of the applicable shares of common shares. The fair value of the RSUs at grant date was $424,809.   On February 25, 2022, the Company entered into a service agreement with a marketing company to purchase 6-month marketing services and granted 83,333 RSUs. The RSUs were issued and vested on May 15, 2022. The fair value of the RSUs at grant date was $224,999.   On March 22, 2023, the Company entered into agreements with employees and service providers of Sigmaways and granted 671,350 RSUs pursuant to the 2021 Plan. The RSUs were fully vested upon issuance. The fair value of the RSUs at grant date was $691,491.   The following table summarizes the RSUs activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF RESTRICTED STOCK UNITS     Number of RSUs     Weighted Average Grant Date Fair Value per Share   Unvested as of January 1, 2022     -     $ -   Granted     169,153                   3.84   Vested     (83,333 )     2.70   Forfeited     -       -   Unvested as of September 30, 2022     85,820     $ 4.95                     Unvested as of January 1, 2023     85,820     $ 4.95   Granted     671,350       1.03   Vested     (692,805 )     1.15   Forfeited     -       -   Unvested as of September 30, 2023     64,365     $ 4.95     For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to RSUs of $29,000 and $788,577, respectively. For the three and nine months ended September 30, 2022, the Company recognized stock-based compensation related to RSUs of $55,768 and $366,844, respectively. The outstanding unamortized stock-based compensation related to RSUs was $130,110 (which will be recognized through February 2026) as of September 30, 2023.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

SHAREHOLDERS’ EQUITY	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
SHAREHOLDERS’ EQUITY	NOTE 15 – SHAREHOLDERS’ EQUITY   The Company was authorized to issue 200,000,000 shares of common shares, par value of $0.0001 per share, and 20,000,000 shares of preferred shares, par value of $0.0001 per share.   During the period from January 1, 2022 through January 13, 2022, the Company issued 96,000 shares of common shares at a purchase price of $2.50 per share for aggregate net proceeds of $220,572 in a private placement, including 30,000 shares of common shares issued to the officers of the Company.   On February 14, 2022, the Company completed its initial public offering on the NASDAQ Capital Market under the symbol of “HTCR”. The Company offered 3,000,000 common shares at $5.00 per share. Net proceeds raised by the Company from the initial public offering amounted to $13,724,167 after deducting underwriting discounts and commissions and other offering expenses. The Company has deferred costs of $300,460 directly attributed to the offering, among which $178,847 offering costs were paid and deferred as of December 31, 2021. Those costs were charged against the proceeds from the offering.   On February 14, 2022, 273,489 shares of common shares were issued from exercise of stock options by settling share repurchase liability of $16 (also see NOTE 14).   On May 15, 2022, 83,333 shares of restricted shares were issued to a marketing company as compensation of services received (also see NOTE 14).   Share Repurchase Program   On June 1, 2022, the Board of Directors approved a share repurchase program (“2022 Share Repurchase Program”), pursuant to which the Company is authorized to repurchase up to $3.5 million of its outstanding common shares. The timing and amount of repurchases under the program are determined by the Company’s management based on its evaluation of market conditions and other factors. This program has no set termination date and may be suspended or discontinued by at any time.   During the period from June 1, 2022 through September 30, 2022, the Company repurchased 1,349,390 shares of common shares at an average price of $2.59 per share totaling approximately $3.5 million (including commissions) under the 2022 Share Repurchase Program. As of September 30, 2022, the Company has used up the entire balance authorized under the 2022 Share Repurchase Program.   On February 1, 2023, 2,500,000 shares of common shares were issued for the acquisition of 51% of the outstanding shares of Sigmaways and its subsidiaries with fair value of $3,150,000 (also see NOTE 17).   As of September 30, 2023 and December 31, 2022, there were 20,842,690 and 17,649,886 shares of common shares issued and outstanding, respectively.   No preferred shares were issued and outstanding as of September 30, 2023 and December 31, 2022.

v3.23.3

NET LOSS PER SHARE	9 Months Ended
	Sep. 30, 2023
Net loss per common share attributable to HeartCore Enterprises, Inc.
NET LOSS PER SHARE	NOTE 16 – NET LOSS PER SHARE   Basic net loss per share is calculated on the basis of weighted average outstanding common shares. Diluted net loss per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and other dilutive securities. Common shares equivalents are determined by applying the treasury stock method to the assumed conversion of share repurchase liability to common shares related to the early exercised stock options and unvested RSUs, and are not included in the calculation of diluted loss per share if their effect would be anti-dilutive.   The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022 is as follows:   SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                                       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Net loss per share - basic and diluted:                                 Numerator:                                 Net loss attributable to HeartCore Enterprises, Inc. common shareholders   $ (2,307,220 )   $ (1,970,934 )   $ (1,336,731 )   $ (5,253,026 ) Denominator:                                 Weighted average number of common shares outstanding used in calculating net loss per share     20,842,690       17,835,027       20,257,020       18,014,483   Net loss per share - basic and diluted   $ (0.11 )   $ (0.11 )   $ (0.07 )   $ (0.29 )   For the three and nine months ended September 30, 2023 and 2022, the weighted average common shares outstanding are the same for basic and diluted net loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

v3.23.3

BUSINESS COMBINATION	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
BUSINESS COMBINATION	NOTE 17 – BUSINESS COMBINATION   On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California, and its subsidiaries. The Sigmaways Agreement was further amended on December 23, 2022 and February 1, 2023, respectively, and the transaction was closed on February 1, 2023. Sigmaways and its subsidiaries are primarily engaged in the business of developing and sales of software in the United States. The Company aimed to expand the business of software development and sales in the United States through this acquisition. The purchase consideration was $4,150,000, consisted of $1,000,000 in cash and 2,500,000 shares of common shares of the Company with fair value of $3,150,000 at the closing date.   The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities and non-controlling interest based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Amounts recorded in the business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.   The purchase price was allocated on the acquisition date as follows:   SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION     Amount   Current assets   $ 2,066,683   Acquired intangible asset     5,100,000   Non-current assets     47,979   Current liabilities     (1,146,900 ) Deferred tax liabilities     (1,428,000 ) Non-current liabilities     (576,203 ) Goodwill     3,276,441   Non-controlling interest     (3,190,000 ) Total purchase consideration   $ 4,150,000     The results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s unaudited consolidated financial statements since the date of acquisition. Sigmaways and its subsidiaries contributed revenues and net loss of $6,332,479 and $855,532, respectively, to the Company from February 1, 2023 to September 30, 2023.   Pro forma results of operations for the business combination have not been presented because they are not material to the unaudited consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022.   The Company’s policy is to perform its annual impairment testing on goodwill for its reporting unit on December 31 of each fiscal year or more frequently if events or changes in circumstances indicate that an impairment may exist. The Company did not recognize any impairment loss on goodwill during the nine months ended September 30, 2023.

v3.23.3

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 18 - SUBSEQUENT EVENTS   On October 4, 2023, the Company obtained a five-year term loan in the amount of JPY10,000,000 (approximately $73,000) from the Sumitomo Mitsui Banking Corporation, with an interest rate of 0.2% per annum starting in November 2026. The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.   On October 4, 2023, the Company obtained a five-year term loan in the amount of JPY10,000,000 (approximately $73,000) from the Sumitomo Mitsui Banking Corporation, with an interest rate of 0.6% per annum. The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.   On October 5, 2023, the Company obtained a five-year term loan in the amount of JPY30,000,000 (approximately $219,000) from the Higashi-Nippon Bank, with an interest rate of 1.45% per annum. The loan is co-guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder, and Tokyo Credit Guarantee Association.

v3.23.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation   The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.   These unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022.
Use of Estimates	Use of Estimates   In preparing the unaudited consolidated financial statements in conformity U.S. GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses, useful lives of property and equipment, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and financing leases, valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates.
COVID-19	COVID-19   While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the unaudited consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s unaudited consolidated financial statements.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Asset Retirement Obligations	Asset Retirement Obligations   Pursuant to the lease agreements for the office space, the Company is responsible to restore these spaces back to its original statute at the time of leaving. The Company recognizes an obligation related to these restorations as asset retirement obligation included in other non-current liabilities in the consolidated balance sheets, in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset Retirement Obligation Accounting”. The Company capitalizes the associated asset retirement cost by increasing the carrying amount of the related property and equipment. The following table presents changes in asset retirement obligations:   SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS     September 30,     December 31,       2023     2022   Beginning balance   $ 138,018     $ 155,666   Liabilities incurred     83,821       -   Accretion expense     328       459   Foreign currency translation adjustment     (24,350 )     (18,107 ) Ending balance   $ 197,817     $ 138,018
Software Development Costs	Software Development Costs   Software development costs are expensed as incurred until the point the Company establishes technological feasibility. Technological feasibility is established upon completion of a detailed program design or the completion of a working model. Costs incurred by the Company between establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products. The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred.   In the nine months ended September 30, 2023 and 2022, software development costs expensed as incurred amounted to $289,303 and $583,762, respectively. These software development costs were included in the research and development expenses.
Investments in Warrants	Investments in Warrants   Investments in warrants represent stock warrants of its consulting service customers and are not registered for public sale. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investments in warrants are classified as long-term if the warrants are exercisable over one year after the date of receipt.
Investments in Marketable Securities	Investments in Marketable Securities   Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities as of September 30, 2023 were obtained through exercise of stock warrants of its consulting service customers and measured at fair value with changes in fair value recognized in other income (expenses).
Intangible Asset, Net	Intangible Asset, Net   Intangible asset represents the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries. The acquired intangible asset is recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective assets. The estimated useful life of the customer relationship is 8 years.
Impairment of Long-Lived Assets Other Than Goodwill	Impairment of Long-Lived Assets Other Than Goodwill   Long-lived assets with finite lives, primarily property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets during the nine months ended September 30, 2023 and 2022.
Goodwill	Goodwill   Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with ASC Topic 350, “Intangibles – Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.
Foreign Currency Translation	Foreign Currency Translation   The functional currency of HeartCore Japan and HeartCore Capital Advisors is the Japanese Yen (“JPY”). The functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”). The functional currency of Sigmaways B.V. is the Euro (“EUR”). The functional currency of Sigmaways Technologies is the Canada Dollar (“CAD”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited consolidated statements of operations.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. 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 statements of changes in shareholders’ equity (deficit).
Revenue Recognition	Revenue Recognition   The Company recognizes revenues under ASC Topic 606, “Revenue from Contracts with customers”.   To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.   The Company currently generates its revenues from the following main sources:   Revenues from On-Premise Software   Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Licenses for on-premise software are typically sold to the customer with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support service. The SSP for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis. The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence.   Revenues from Maintenance and Support Services   Maintenance and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available during the subscription. Revenues from maintenance and support services are recognized over time as such services are performed. Revenues for consumption-based services are generally recognized as the services are performed and accepted by the customers.   Revenues from Software as a Service (“SaaS”)   The Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. The subscription contracts are generally one year or less in length.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   Revenues from Software Development and Other Miscellaneous Services   The Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application, and workflow development. The Company also provides other miscellaneous services, such as 3D Space photography. The Company generally recognizes revenue at a point in time when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers.   Revenues from Customized Software Development and Services   The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. 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 contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.   Revenues from Consulting Services   The Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service contracts are generally less than one year in length and normally include both cash and noncash consideration. Cash consideration is paid in installment payments and is recognized in revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is 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. The Company assesses the estimated amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been resolved.   The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.5 million and $1.2 million, respectively.   Disaggregation of Revenues   The Company disaggregates its revenues from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the three and nine months ended September 30, 2023 and 2022 is as following:   SCHEDULE OF DISAGGREGATION OF REVENUES                                       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Revenues from on-premise software   $ 396,647     $ 257,121     $ 1,457,836     $ 1,775,254   Revenues from maintenance and support services     650,603       678,521       2,226,802       2,251,137   Revenues from software as a service (“SaaS”)     148,857       122,347       497,430       352,251   Revenues from software development and other miscellaneous services     474,859       340,742       1,561,655       1,518,032   Revenues from customized software development and services     2,405,907       -       6,332,479       -   Revenues from consulting services     612,035       473,745       6,442,229       922,100   Total revenues   $ 4,688,908     $ 1,872,476     $ 18,518,431     $ 6,818,774       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The Company’s disaggregation of revenues by product/service is as following:       2023     2022     2023     2022       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Revenues from customer experience management platform   $ 1,403,932     $ 1,171,150     $ 4,696,241     $ 4,757,369   Revenues from process mining     99,618       68,560       390,374       453,368   Revenues from robotic process automation     58,051       69,693       271,520       317,110   Revenues from task mining     74,958       66,799       277,725       252,234   Revenues from customized software development and services     2,405,907       -       6,332,479       -   Revenues from consulting services     612,035       473,745       6,442,229       922,100   Revenues from others     34,407       22,529       107,863       116,593   Total revenues   $ 4,688,908     $ 1,872,476     $ 18,518,431     $ 6,818,774     As of September 30, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and the majority of revenues generated were attributed to the Company’s operation in Japan.
Concentration of Credit Risk	Concentration of Credit Risk   Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.   For the nine months ended September 30, 2023, customer B and C represent 14.2% and 13.6%, respectively, of the Company’s total revenues. For the nine months ended September 30, 2022, customer A represents 10.0% of the Company’s total revenues.   For the nine months ended September 30, 2023, vendor D, B, A and E represent 26.4%, 26.2%, 22.1% and 15.9%, respectively, of the Company’s total purchases. For the nine months ended September 30, 2022, vendor A, B, C and D represent 25.9%, 19.7%, 16.3% and 15.5%, respectively, of the Company’s total purchases.
Stock-based Compensation	Stock-based Compensation   The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.     HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Business Combinations	Business Combinations   The Company accounts its business combinations using the acquisition method of accounting in accordance with ASC Topic 805. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible asset acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred.   Consideration transferred in a business combination is measured at the fair value as of the date of acquisition. Where the consideration in an acquisition includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability. It is subsequently carried at fair value with changes in fair value reflected in earnings.   In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive loss.   Fair value is determined based upon the guidance of ASC Topic 820, “Fair Value Measurements and Disclosures,” and generally are determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgments and estimates. The Company utilizes the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition.
Fair Value Measurements	Fair Value Measurements   The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:     ● Level 1: quoted prices in active markets for identical assets or liabilities;   ● Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or   ● Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.   As of September 30, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.   Investments in Warrants   The Company received warrants from its customers as noncash consideration from consulting services. The warrants are not registered for public sale and are measured at fair value at contract inception. The Company’s investments in warrants are measured on a recurring basis and carried on the balance sheet at an estimated fair value at the end of the period. The valuation of investments in warrants was determined using a Black-Scholes model of value based upon the stock price, exercise price, expected volatility, time to maturity, and a risk-free interest rate for the term of the warrants exercise. Such valuations are classified within Level 3 of the fair value hierarchy.   The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF INVESTMENTS IN WARRANTS                     For the Nine Months Ended       September 30,       2023     2022   Fair value of investments in warrants at beginning of the period   $ -     $       -   Warrants received as noncash consideration     4,009,335       -   Changes in fair value of investments in warrants     (294,565 )     -   Investments in warrants converted to marketable securities     (1,257,868 )     -   Fair value of investments in warrants at end of the period   $ 2,456,902     $ -     Investments in Marketable Securities   The Company’s investments in marketable securities registered for public sale with readily determinable fair value are measured at quoted prices on a recurring basis at the end of the period. Marketable securities are classified within Level 1 of the fair value hierarchy.   The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES                       For the Nine Months Ended       September 30,       2023     2022   Fair value of investments in marketable securities at beginning of the period   $ -     $       -   Investments in warrants converted to marketable securities     1,257,868       -   Changes in fair value of investments in marketable securities     (500,762 )     -   Marketable securities sold     -       -   Fair value of investments in marketable securities at end of the period   $ 757,106     $ -       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Recent Accounting Pronouncements	Recent Accounting Pronouncements   New Accounting Pronouncements Recently Adopted   In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, “Financial Instruments – Credit Losses” is effective for public companies for annual reporting periods, and interim periods within those years beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements.   In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements.   New Accounting Pronouncements Not Yet Effective   The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s unaudited consolidated financial statements.

v3.23.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS	SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS     September 30,     December 31,       2023     2022   Beginning balance   $ 138,018     $ 155,666   Liabilities incurred     83,821       -   Accretion expense     328       459   Foreign currency translation adjustment     (24,350 )     (18,107 ) Ending balance   $ 197,817     $ 138,018
SCHEDULE OF DISAGGREGATION OF REVENUES	SCHEDULE OF DISAGGREGATION OF REVENUES                                       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Revenues from on-premise software   $ 396,647     $ 257,121     $ 1,457,836     $ 1,775,254   Revenues from maintenance and support services     650,603       678,521       2,226,802       2,251,137   Revenues from software as a service (“SaaS”)     148,857       122,347       497,430       352,251   Revenues from software development and other miscellaneous services     474,859       340,742       1,561,655       1,518,032   Revenues from customized software development and services     2,405,907       -       6,332,479       -   Revenues from consulting services     612,035       473,745       6,442,229       922,100   Total revenues   $ 4,688,908     $ 1,872,476     $ 18,518,431     $ 6,818,774       HEARTCORE ENTERPRISES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS   The Company’s disaggregation of revenues by product/service is as following:       2023     2022     2023     2022       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Revenues from customer experience management platform   $ 1,403,932     $ 1,171,150     $ 4,696,241     $ 4,757,369   Revenues from process mining     99,618       68,560       390,374       453,368   Revenues from robotic process automation     58,051       69,693       271,520       317,110   Revenues from task mining     74,958       66,799       277,725       252,234   Revenues from customized software development and services     2,405,907       -       6,332,479       -   Revenues from consulting services     612,035       473,745       6,442,229       922,100   Revenues from others     34,407       22,529       107,863       116,593   Total revenues   $ 4,688,908     $ 1,872,476     $ 18,518,431     $ 6,818,774
SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES	The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF INVESTMENTS IN WARRANTS                     For the Nine Months Ended       September 30,       2023     2022   Fair value of investments in warrants at beginning of the period   $ -     $       -   Warrants received as noncash consideration     4,009,335       -   Changes in fair value of investments in warrants     (294,565 )     -   Investments in warrants converted to marketable securities     (1,257,868 )     -   Fair value of investments in warrants at end of the period   $ 2,456,902     $ -
Marketable Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES	The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES                       For the Nine Months Ended       September 30,       2023     2022   Fair value of investments in marketable securities at beginning of the period   $ -     $       -   Investments in warrants converted to marketable securities     1,257,868       -   Changes in fair value of investments in marketable securities     (500,762 )     -   Marketable securities sold     -       -   Fair value of investments in marketable securities at end of the period   $ 757,106     $ -

v3.23.3

ACCOUNTS RECEIVABLE (Tables)	9 Months Ended
	Sep. 30, 2023
Credit Loss [Abstract]
SCHEDULE OF ACCOUNTS RECEIVABLE NET	Accounts receivable consists of the following:   SCHEDULE OF ACCOUNTS RECEIVABLE NET     September 30,     December 31,       2023     2022   Accounts receivable – non-factored   $ 2,344,989     $ 551,064   Accounts receivable – factored with recourse     217,250       -   Accounts receivable, gross     2,562,239       551,064   Less: allowance for credit losses     -       -   Accounts receivable   $ 2,562,239     $ 551,064

v3.23.3

PREPAID EXPENSES (Tables)	9 Months Ended
	Sep. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
SCHEDULE OF PREPAID EXPENSES	Prepaid expenses consist of the following:   SCHEDULE OF PREPAID EXPENSES     September 30,     December 31,       2023     2022   Prepayments to software vendors   $ 185,540     $ 162,046   Prepaid marketing and consulting fees     102,839       99,770   Prepaid subscription fees     83,207       113,685   Prepaid insurance premium     208,385       66,023   Others     103,356       96,706   Total   $ 683,327     $ 538,230

v3.23.3

PROPERTY AND EQUIPMENT, NET (Tables)	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
SCHEDULE OF PROPERTY AND EQUIPMENT NET	Property and equipment, net consist of the following:   SCHEDULE OF PROPERTY AND EQUIPMENT NET     September 30,     December 31,       2023     2022   Leasehold improvements   $ 471,069     $ 298,637   Machinery and equipment     673,435       316,827   Vehicle     85,111       106,490   Software     142,829       163,049   Subtotal     1,372,444       885,003   Less: accumulated depreciation     (619,504 )     (681,376 ) Property and equipment, net   $ 752,940     $ 203,627

v3.23.3

INTANGIBLE ASSET, NET (Tables)	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
SCHEDULE OF INTANGIBLE ASSETS	Intangible asset, net is as follows:   SCHEDULE OF INTANGIBLE ASSETS     September 30,     December 31,       2023     2022   Customer relationship   $ 5,100,000     $                -   Less: accumulated amortization     (425,000 )     -   Intangible asset, net   $ 4,675,000     $ -
SCHEDULE OF AMORTIZATION INTANGIBLE ASSET	As of September 30, 2023, the future estimated amortization cost for intangible asset is as follows:   SCHEDULE OF AMORTIZATION INTANGIBLE ASSET       Estimated   Year Ended December 31,     Amortization   Remaining of 2023     $ 159,375   2024       637,500   2025       637,500   2026       637,500   2027       637,500   Thereafter       1,965,625   Total     $ 4,675,000

v3.23.3

LEASES (Tables)	9 Months Ended
	Sep. 30, 2023
Leases
SCHEDULE OF LEASE COSTS	The components of lease costs are as follows:    SCHEDULE OF LEASE COSTS     2023     2022       For the Nine Months Ended       September 30,       2023     2022   Finance lease costs                 Amortization of right-of-use assets   $ 15,215     $ 26,825   Interest on lease liabilities     98       370   Total finance lease costs     15,313       27,195   Operating lease costs     286,934       244,688   Total lease costs   $ 302,247     $ 271,883
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES	The following table presents supplemental information related to the Company’s leases:   SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES     2023     2022       For the Nine Months Ended       September 30,       2023     2022   Cash paid for amounts included in the measurement of lease liabilities:                 Operating cash flows from finance leases   $ 98     $ 370   Operating cash flows from operating leases     257,277       243,108   Financing cash flows from finance leases     16,537       29,051   Finance lease right-of-use asset obtained in exchange for finance lease liability     93,117       -   Operating lease right-of-use asset obtained in exchange for operating lease liability     317,040       -   Remeasurement of operating lease liability and right-of-use asset due to lease modification     12,579       -                     Weighted average remaining lease term (years)                 Finance leases     5.0       1.1   Operating leases     7.7       9.4                     Weighted average discount rate (per annum)                 Finance leases     1.32 %     1.32 % Operating leases     1.33 %     1.32 %
SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES	As of September 30, 2023, the future maturity of lease liabilities is as follows:   SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES Year Ended December 31,   Finance Lease     Operating Lease   Remaining of 2023   $ 4,649     $ 101,255   2024     17,844       388,730   2025     17,593       383,300   2026     17,593       321,614   2027     17,593       277,553   Thereafter     13,195       1,142,795   Total lease payments     88,467       2,615,247   Less: imputed interest     (2,856 )     (136,089 ) Total lease liabilities     85,611       2,479,158   Less: current portion     (17,076 )     (365,241 ) Non-current lease liabilities   $ 68,535     $ 2,113,917

v3.23.3

LONG-TERM DEBTS (Tables)	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
SCHEDULE OF LONG-TERM DEBTS	The Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions, which consist of the following:   SCHEDULE OF LONG-TERM DEBTS Name of Financial Institutions   Original Amount Borrowed           Loan Duration   Annual Interest Rate     Balance as of September 30, 2023     Balance as of December 31, 2022                                       Bond payable                                             Corporate bond issued through Resona Bank, Limited     JPY100,000,000       (a)(c)     1/10/2019 – 1/10/2024     0.430 %   $ 66,854     $ 228,956   Loans with banks and other financial institutions                                             Resona Bank, Limited     JPY50,000,000       (a)(b)     12/29/2017 – 12/29/2024     0.675 %     63,779       113,677   Resona Bank, Limited     JPY10,000,000       (a)(b)     9/30/2020 – 9/30/2027     0.000 %     39,009       52,705   Resona Bank, Limited     JPY40,000,000       (a)(b)     9/30/2020 – 9/30/2027     0.000 %     156,037       210,822   Resona Bank, Limited     JPY20,000,000       (a)(b)     11/13/2020 – 10/31/2027     1.600 %     79,610       107,227   Sumitomo Mitsui Banking Corporation     JPY100,000,000       (a)     12/28/2018 – 12/28/2023     1.475 %     44,444       165,237   Sumitomo Mitsui Banking Corporation     JPY10,000,000       (a)(b)     12/30/2019 – 12/30/2026     1.975 %     31,849       44,532   The Shoko Chukin Bank, Ltd.     JPY30,000,000             9/28/2018 – 8/31/2023     1.200 %     -       34,343   The Shoko Chukin Bank, Ltd.     JPY50,000,000             7/27/2020 – 6/30/2027     1.290 %     185,854       253,377   The Shoko Chukin Bank, Ltd.     JPY30,000,000             7/25/2023 – 6/30/2028     Tokyo Interbank Offered Rate + 1.950 %     193,742       -   Japan Finance Corporation     JPY80,000,000             11/17/2020 – 11/30/2027     0.210 %     329,456       442,036   Higashi-Nippon Bank     JPY30,000,000       (a)     3/31/2022 – 3/31/2025     1.400 %     105,094       177,669   First Home Bank     $350,000       (d)     4/18/2019 – 4/18/2029     Wall Street Journal U.S. Prime Rate + 2.750 %     237,336       -   U.S. Small Business Administration     $350,000       (d)     5/30/2020 – 5/30/2050     3.750 %     350,000       -   Aggregate outstanding principal balances                                 1,883,064       1,830,581   Less: unamortized debt issuance costs                                 (5,794 )     (8,969 ) Less: current portion                                 (525,440 )     (697,877 ) Non-current portion                               $ 1,351,830     $ 1,123,735     (a) These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder. (b) These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts. (c) The bond is guaranteed by Resona Bank, Limited. (d) These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.
SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS	As of September 30, 2023, future minimum loan payments are as follows:   SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS       Loan   Year Ended December 31,     Payment   Remaining of 2023     $ 146,763   2024       462,065   2025       305,291   2026       293,302   2027       262,017   Thereafter       413,626   Total     $ 1,883,064

v3.23.3

INCOME TAXES (Tables)	9 Months Ended
	Sep. 30, 2023
Income Tax Disclosure [Abstract]
SCHEDULE OF INCOME TAX EXPENSES	For the nine months ended September 30, 2023 and 2022, the Company’s income tax expense (benefit) are as follows:    SCHEDULE OF INCOME TAX EXPENSES     2023     2022       For the Nine Months Ended       September 30,       2023     2022   Current   $ 168,549     $ (2,108 ) Deferred     (109,690 )     (8,798 ) Income tax expense (benefit)   $ 58,859     $ (10,906 )

v3.23.3

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]
SCHEDULE OF UNVESTED STOCK OPTION	The following table summarizes the Company’s stock option activity for the stock options issued in 2016 for the nine months ended September 30, 2022:   SCHEDULE OF UNVESTED STOCK OPTION     Number of Stock Options   Issued and unvested as of January 1, 2022     183   Vested and exercised     183   Issued and unvested as of September 30, 2022     -
SCHEDULE OF STOCK OPTION ACTIVITY	The following table summarizes the stock options activity and related information for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF STOCK OPTION ACTIVITY       Number of Options     Weighted Average Exercise Price     Weighted Average Remaining Term (Years)     Intrinsic Value   As of January 1, 2022       1,534,500     $ 2.50       9.99     $          -   Granted       16,500       2.54       4.59       -   Exercised       -              -       -       -   Forfeited       (39,500 )     2.50       -       -   As of September 30, 2022       1,511,500     $ 2.50       9.19     $ -                                       As of January 1, 2023       1,466,500     $ 2.50       8.94     $ -   Granted       102,000       1.17       9.36       -   Exercised       -       -        -       -   Forfeited       (9,500 )     2.50       -       -   As of September 30, 2023       1,559,000     $ 2.41       8.27     $ -   Vested and exercisable as of September 30, 2023       425,125     $ 2.34       8.19     $ -
SCHEDULE OF RESTRICTED STOCK UNITS	The following table summarizes the RSUs activity for the nine months ended September 30, 2023 and 2022:   SCHEDULE OF RESTRICTED STOCK UNITS     Number of RSUs     Weighted Average Grant Date Fair Value per Share   Unvested as of January 1, 2022     -     $ -   Granted     169,153                   3.84   Vested     (83,333 )     2.70   Forfeited     -       -   Unvested as of September 30, 2022     85,820     $ 4.95                     Unvested as of January 1, 2023     85,820     $ 4.95   Granted     671,350       1.03   Vested     (692,805 )     1.15   Forfeited     -       -   Unvested as of September 30, 2023     64,365     $ 4.95

v3.23.3

NET LOSS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2023
Net loss per common share attributable to HeartCore Enterprises, Inc.
SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE	The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022 is as follows:   SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                                       For the Three Months Ended September 30,     For the Nine Months Ended September 30,       2023     2022     2023     2022   Net loss per share - basic and diluted:                                 Numerator:                                 Net loss attributable to HeartCore Enterprises, Inc. common shareholders   $ (2,307,220 )   $ (1,970,934 )   $ (1,336,731 )   $ (5,253,026 ) Denominator:                                 Weighted average number of common shares outstanding used in calculating net loss per share     20,842,690       17,835,027       20,257,020       18,014,483   Net loss per share - basic and diluted   $ (0.11 )   $ (0.11 )   $ (0.07 )   $ (0.29 )

v3.23.3

BUSINESS COMBINATION (Tables)	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION	The purchase price was allocated on the acquisition date as follows:   SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION     Amount   Current assets   $ 2,066,683   Acquired intangible asset     5,100,000   Non-current assets     47,979   Current liabilities     (1,146,900 ) Deferred tax liabilities     (1,428,000 ) Non-current liabilities     (576,203 ) Goodwill     3,276,441   Non-controlling interest     (3,190,000 ) Total purchase consideration   $ 4,150,000

v3.23.3

ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - shares					3 Months Ended
	Feb. 24, 2022	Jan. 13, 2022	Jul. 16, 2021	Jul. 15, 2021	Mar. 31, 2022	Sep. 06, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares		96,000
Common Stock [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares					3,096,000
Share Exchange Agreement [Member] | Stockholder [Member] | Common Stock [Member] | HeartCore Japan [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares			15,999,994
Stock issued during period, exchange shares	278		10,706	10,984
Ownership percentage			97.50%
Share Exchange and Purchase Agreement [Member] | Sigmaways Inc [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business acquisition percentage of voting interest acquired						51.00%

v3.23.3

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Beginning balance	$ 138,018	$ 155,666
Liabilities incurred	83,821
Accretion expense	328	459
Foreign currency translation adjustment	(24,350)	(18,107)
Ending balance	$ 197,817	$ 138,018

v3.23.3

SCHEDULE OF DISAGGREGATION OF REVENUES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Product Information [Line Items]
Total revenues	$ 4,688,908	$ 1,872,476	$ 18,518,431	$ 6,818,774
On Premise Software [Member]
Product Information [Line Items]
Total revenues	396,647	257,121	1,457,836	1,775,254
Maintenance And Support Services [Member]
Product Information [Line Items]
Total revenues	650,603	678,521	2,226,802	2,251,137
Software As A Service Saa S [Member]
Product Information [Line Items]
Total revenues	148,857	122,347	497,430	352,251
Software Development And Other Miscellaneous Services [Member]
Product Information [Line Items]
Total revenues	474,859	340,742	1,561,655	1,518,032
Customised Software Development And Services [Member]
Product Information [Line Items]
Total revenues	2,405,907		6,332,479
Consulting Services [Member]
Product Information [Line Items]
Total revenues	612,035	473,745	6,442,229	922,100
Customer Experience Management Platform [Member]
Product Information [Line Items]
Total revenues	1,403,932	1,171,150	4,696,241	4,757,369
Process Mining [Member]
Product Information [Line Items]
Total revenues	99,618	68,560	390,374	453,368
Robotic Process Automation [Member]
Product Information [Line Items]
Total revenues	58,051	69,693	271,520	317,110
Task Mining [Member]
Product Information [Line Items]
Total revenues	74,958	66,799	277,725	252,234
Others [Member]
Product Information [Line Items]
Total revenues	$ 34,407	$ 22,529	$ 107,863	$ 116,593

v3.23.3

SCHEDULE OF INVESTMENTS IN WARRANTS (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Accounting Policies [Abstract]
Fair value of investments in warrants at beginning of the period
Warrants received as noncash consideration	4,009,335
Changes in fair value of investments in warrants	(294,565)
Investments in warrants converted to marketable securities	(1,257,868)
Fair value of investments in warrants at end of the period	$ 2,456,902

v3.23.3

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Fair value of investments in warrants at beginning of the period
Investments in warrants converted to marketable securities	(1,257,868)
Changes in fair value of investments in marketable securities	(294,565)
Fair value of investments in warrants at end of the period	2,456,902
Marketable Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Fair value of investments in warrants at beginning of the period
Investments in warrants converted to marketable securities	1,257,868
Changes in fair value of investments in marketable securities	(500,762)
Marketable securities sold
Fair value of investments in warrants at end of the period	$ 757,106

v3.23.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Product Information [Line Items]
Software development costs	$ 170,071	$ 58,275	$ 289,303	$ 583,762
Impairments assets			0	0
Revenues recognized included deferred revenues			$ 1,500,000	$ 1,200,000
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Product Information [Line Items]
Concentration risk percentage			14.20%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Product Information [Line Items]
Concentration risk percentage			13.60%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Product Information [Line Items]
Concentration risk percentage			10.00%
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor D [Member]
Product Information [Line Items]
Concentration risk percentage			26.40%	15.50%
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor B [Member]
Product Information [Line Items]
Concentration risk percentage			26.20%	19.70%
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor A [Member]
Product Information [Line Items]
Concentration risk percentage			22.10%	25.90%
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor E [Member]
Product Information [Line Items]
Concentration risk percentage			15.90%
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor C [Member]
Product Information [Line Items]
Concentration risk percentage				16.30%
Customer Relationships [Member]
Product Information [Line Items]
Estimated useful life	8 years		8 years

v3.23.3

SCHEDULE OF ACCOUNTS RECEIVABLE NET (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	$ 2,562,239	$ 551,064
Less: allowance for credit losses
Accounts receivable	2,562,239	551,064
Nonfactored [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	2,344,989	551,064
Factored With Recourse [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	$ 217,250

v3.23.3

SCHEDULE OF PREPAID EXPENSES (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepayments to software vendors	$ 185,540	$ 162,046
Prepaid marketing and consulting fees	102,839	99,770
Prepaid subscription fees	83,207	113,685
Prepaid insurance premium	208,385	66,023
Others	103,356	96,706
Total	$ 683,327	$ 538,230

v3.23.3

NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE (Details Narrative) - USD ($)				9 Months Ended
	Sep. 01, 2023	Jul. 27, 2023	May 02, 2023	Sep. 30, 2023
Note Exchange Agreement [Member]
Short-Term Debt [Line Items]
Debt conversion shares issued		600,000
Promissory Note [Member]
Short-Term Debt [Line Items]
Receivables	$ 300,000		$ 300,000
Receivables interest rate	4.00%		8.00%
Debt instrument maturity description				the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering (“IPO”) on the Nasdaq Capital Market or New York Stock Exchange
Interest rate	10.00%		12.00%

v3.23.3

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		9 Months Ended
	Jan. 13, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Loan receivable balance		$ 300,000
Number of common stock issued	96,000
Share price	$ 2.50
Proceeds private placement	$ 220,572
Heartcore Technology Inc., [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Loan receivable balance		$ 226,515		294,919
Related party annual interest rate		1.475%
Repayment of debt related party		$ 34,823	$ 33,042
Sumitaka Yamamoto [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Other receivables		7,859		$ 402
Operating costs and expenses		$ 7,562	$ 3,098
Officers [Member] | Private Placement [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of common stock issued	30,000
Share price	$ 2.50
Proceeds private placement	$ 75,000

v3.23.3

SCHEDULE OF PROPERTY AND EQUIPMENT NET (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Subtotal	$ 1,372,444	$ 885,003
Less: accumulated depreciation	(619,504)	(681,376)
Property and equipment, net	752,940	203,627
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Subtotal	471,069	298,637
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Subtotal	673,435	316,827
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Subtotal	85,111	106,490
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Subtotal	$ 142,829	$ 163,049

v3.23.3

PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expenses	$ 70,200	$ 64,398

v3.23.3

SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Customer relationship	$ 5,100,000
Less: accumulated amortization	(425,000)
Intangible asset, net	$ 4,675,000

v3.23.3

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remaining of 2023	$ 159,375
2024	637,500
2025	637,500
2026	637,500
2027	637,500
Thereafter	1,965,625
Intangible asset, net	$ 4,675,000

v3.23.3

INTANGIBLE ASSET, NET (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 425,000

v3.23.3

SCHEDULE OF LEASE COSTS (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Leases
Amortization of right-of-use assets	$ 15,215	$ 26,825
Interest on lease liabilities	98	370
Total finance lease costs	15,313	27,195
Operating lease costs	286,934	244,688
Total lease costs	$ 302,247	$ 271,883

v3.23.3

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Leases
Operating cash flows from finance leases	$ 98	$ 370
Operating cash flows from operating leases	257,277	243,108
Financing cash flows from finance leases	16,537	29,051
Finance lease right-of-use asset obtained in exchange for finance lease liability	93,117
Operating lease right-of-use asset obtained in exchange for operating lease liability	317,040
Remeasurement of operating lease liability and right-of-use asset due to lease modification	$ 12,579
Weighted average remaining lease term (years) Finance leases	5 years	1 year 1 month 6 days
Weighted average remaining lease term (years) Operating leases	7 years 8 months 12 days	9 years 4 months 24 days
Weighted-average discount rate: (per annum) Finance leases	1.32%	1.32%
Weighted-average discount rate: (per annum) Operating leases	1.33%	1.32%

v3.23.3

SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Finance Lease, Liability [Abstract]
Remaining of 2023	$ 4,649
2024	17,844
2025	17,593
2026	17,593
2027	17,593
Thereafter	13,195
Total lease payment	88,467
Less: imputed interest	(2,856)
Total lease liabilities	85,611
Less: current portion	(17,076)	$ (19,294)
Non-current lease liabilities	68,535	459
Operating Lease, Liability [Abstract]
Remaining of 2023	101,255
2024	388,730
2025	383,300
2026	321,614
2027	277,553
Thereafter	1,142,795
Total lease payment	2,615,247
Less: imputed interest	(136,089)
Total lease liabilities	2,479,158
Less: current portion	(365,241)	(291,863)
Non-current lease liabilities	$ 2,113,917	$ 2,421,054

v3.23.3

LEASES (Details Narrative) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Impairment Effects on Earnings Per Share [Line Items]
Security deposits	$ 338,220	$ 244,395
Property, Plant and Equipment [Member]
Impairment Effects on Earnings Per Share [Line Items]
Finance lease right of use asset	$ 85,591	$ 18,335

v3.23.3

FACTORING LIABILITY (Details Narrative) - Factoring Agreement [Member]	9 Months Ended
	Sep. 30, 2023 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accounts receivable purchase	$ 850,000
Percentage of face value of accounts receivable received by wire transfer	90.00%
Total amount outstanding as per agreementr	$ 217,250
Interest expense	$ 54,790

v3.23.3

INSURANCE PREMIUM FINANCING (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Feb. 28, 2023	Dec. 31, 2022	Feb. 28, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Insurance premium financing	$ 122,279
Insurance interest incurred	$ 25,988	$ 19,859
Insurance Premium Financing Agreement [Member] | Bank Direct Capital Finance [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Insurance premium financing			$ 389,035		$ 388,538
Interest rate percentage			16.04%		12.80%

v3.23.3

SCHEDULE OF LONG-TERM DEBTS (Details)		9 Months Ended
		Sep. 30, 2023 JPY (¥)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Schedule of Investments [Line Items]
Long-Term Debt			$ 1,883,064	$ 1,830,581
Unamortized Debt Issuance Expense			(5,794)	(8,969)
Long-Term Debt, Current Maturities			(525,440)	(697,877)
Long-Term Debt, Excluding Current Maturities			1,351,830	1,123,735
Resona Bank, Limited [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		12/29/2017 – 12/29/2024
Debt Instrument, Interest Rate, Stated Percentage		0.675%
Original Amount Borrowed | ¥	[1],[2]	¥ 50,000,000
Long-Term Debt			63,779	113,677
Resona Bank, Limited One [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		9/30/2020 – 9/30/2027
Debt Instrument, Interest Rate, Stated Percentage		0.00%
Original Amount Borrowed | ¥	[1],[2]	¥ 10,000,000
Long-Term Debt			39,009	52,705
Resona Bank, Limited Two [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		9/30/2020 – 9/30/2027
Debt Instrument, Interest Rate, Stated Percentage		0.00%
Original Amount Borrowed | ¥	[1],[2]	¥ 40,000,000
Long-Term Debt			156,037	210,822
Resona Bank, Limited Three [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		11/13/2020 – 10/31/2027
Debt Instrument, Interest Rate, Stated Percentage		1.60%
Original Amount Borrowed | ¥	[1],[2]	¥ 20,000,000
Long-Term Debt			79,610	107,227
Sumitomo Mitsui Banking Corporation [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		12/28/2018 – 12/28/2023
Debt Instrument, Interest Rate, Stated Percentage		1.475%
Original Amount Borrowed | ¥	[1]	¥ 100,000,000
Long-Term Debt			44,444	165,237
Sumitomo Mitsui Banking Corporation One [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		12/30/2019 – 12/30/2026
Debt Instrument, Interest Rate, Stated Percentage		1.975%
Original Amount Borrowed | ¥	[1],[2]	¥ 10,000,000
Long-Term Debt			31,849	44,532
The Shoko Chukin Bank, Ltd. [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		9/28/2018 – 8/31/2023
Debt Instrument, Interest Rate, Stated Percentage		1.20%
Original Amount Borrowed | ¥		¥ 30,000,000
Long-Term Debt				34,343
The Shoko Chukin Bank, Ltd One [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		7/27/2020 – 6/30/2027
Debt Instrument, Interest Rate, Stated Percentage		1.29%
Original Amount Borrowed | ¥		¥ 50,000,000
Long-Term Debt			185,854	253,377
The Shoko Chukin Bank Ltd Two [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		7/25/2023 – 6/30/2028
Debt Instrument, Interest Rate, Stated Percentage		1.95%
Original Amount Borrowed | ¥		¥ 30,000,000
Long-Term Debt			193,742
Japan Finance Corporation One [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		11/17/2020 – 11/30/2027
Debt Instrument, Interest Rate, Stated Percentage		0.21%
Original Amount Borrowed | ¥		¥ 80,000,000
Long-Term Debt			329,456	442,036
Higashi Nippon Bank [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		3/31/2022 – 3/31/2025
Debt Instrument, Interest Rate, Stated Percentage		1.40%
Original Amount Borrowed | ¥	[1]	¥ 30,000,000
Long-Term Debt			105,094	177,669
First Home Bank [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		4/18/2019 – 4/18/2029
Debt Instrument, Interest Rate, Stated Percentage		2.75%
Original Amount Borrowed | ¥	[3]	¥ 350,000
Long-Term Debt			237,336
U S Small Business Administration [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		5/30/2020 – 5/30/2050
Debt Instrument, Interest Rate, Stated Percentage		3.75%
Original Amount Borrowed | ¥	[3]	¥ 350,000
Long-Term Debt			350,000
Corporate Bond Securities [Member] | Resona Bank, Limited [Member]
Schedule of Investments [Line Items]
Debt Instrument, Maturity Date, Description		1/10/2019 – 1/10/2024
Debt Instrument, Interest Rate, Stated Percentage		0.43%
Original Amount Borrowed | ¥	[1],[4]	¥ 100,000,000
Long-Term Debt			$ 66,854	$ 228,956
[1] These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder. [2] These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts. [3] These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways. [4] The bond is guaranteed by Resona Bank, Limited.

v3.23.3

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Remaining of 2023	$ 146,763
2024	462,065
2025	305,291
2026	293,302
2027	262,017
Thereafter	413,626
Total	$ 1,883,064	$ 1,830,581

v3.23.3

LONG-TERM DEBTS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Debt Disclosure [Abstract]
Interest expense for long-term debts	$ 44,295	$ 19,502

v3.23.3

SCHEDULE OF INCOME TAX EXPENSES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Current			$ 168,549	$ (2,108)
Deferred			(109,690)	(8,798)
Income tax expense (benefit)	$ 19,413	$ (19,069)	$ 58,859	$ (10,906)

v3.23.3

INCOME TAXES (Details Narrative)		9 Months Ended
	Jan. 01, 2010	Sep. 30, 2023	Sep. 30, 2022
Operating Loss Carryforwards [Line Items]
Income tax examination, description		Sigmaways B.V. is a company incorporated in Amsterdam in Netherlands in November 2019. The first EUR200,000 of taxable income will be taxed at 19% and the remaining taxable income will be taxed at statutory tax rate of 25.80%
Effective tax rate		(3.47%)	0.21%
Domestic Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate		21.00%
Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate	15.00%	34.59%	34.59%
Taxable income, rate		38.00%
Federal tax abatement, after		28.00%
Foreign Tax Authority [Member] | Minimum [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate		2.00%
Foreign Tax Authority [Member] | Maximum [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate		12.00%

v3.23.3

SCHEDULE OF UNVESTED STOCK OPTION (Details) - Equity Option [Member]	9 Months Ended
	Sep. 30, 2022 shares
Offsetting Assets [Line Items]
Issued and unvested as of January 1, 2022	183
Vested and exercised	183
Issued and unvested as of September 30, 2022

v3.23.3

SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($)		9 Months Ended
	Feb. 14, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]
Number of Options balance		1,466,500	1,534,500
Weighted Average Exercise Price, balance		$ 2.50	$ 2.50
Weighted Average Remaining Term (Years)		8 years 11 months 8 days	9 years 11 months 26 days
Intrinsic Value
Number of Options, Granted		102,000	16,500
Weighted Average Exercise Price, Granted		$ 1.17	$ 2.54
Weighted Average Remaining Term (Years), Granted		9 years 4 months 9 days	4 years 7 months 2 days
Number of Options, Exercised	273,489
Weighted Average Exercise Price, Exercised		$ (0)
Number of Options, Forfeited		(9,500)	(39,500)
Weighted Average Exercise Price, Forfeited
Number of Options, balance		1,559,000	1,511,500
Weighted Average Exercise Price, balance		$ 2.41	$ 2.50
Weighted Average Remaining Term (Years)		8 years 3 months 7 days	9 years 2 months 8 days
Intrinsic Value
Number of Options, Vested and exercisable, balance		425,125
Weighted Average Exercise Price, Vested and exercisable, balance		$ 2.34
Weighted Average Remaining Term (Years), Vested and exercisable, balance		8 years 2 months 8 days
Intrinsic Value

v3.23.3

SCHEDULE OF RESTRICTED STOCK UNITS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Restricted Stock Units, Unvested balance	85,820
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95
Number of Restricted Stock Units, Granted	671,350	169,153
Weighted Average Grant Date Fair Value per Share, Granted	$ 1.03	$ 3.84
Number of Restricted Stock Units, Vested	(692,805)	(83,333)
Weighted Average Grant Date Fair Value per Share, Vested	$ 1.15	$ 2.70
Number of Restricted Stock Units, Forfeited
Weighted Average Grant Date Fair Value per Share, Forfeited
Number of Restricted Stock Units, Unvested balance	64,365	85,820
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95	$ 4.95

v3.23.3

STOCK-BASED COMPENSATION (Details Narrative)												1 Months Ended	3 Months Ended				9 Months Ended
	Aug. 25, 2023 $ / shares shares	Mar. 22, 2023 USD ($) shares	Feb. 03, 2023 $ / shares shares	Aug. 09, 2022 $ / shares shares	Aug. 02, 2022 $ / shares shares	May 15, 2022 shares	Feb. 25, 2022 USD ($) shares	Feb. 14, 2022 shares	Feb. 09, 2022 USD ($) shares	Dec. 25, 2021 $ / shares shares	Nov. 03, 2021 shares	May 31, 2016 $ / shares shares	Sep. 30, 2023 USD ($)	Mar. 31, 2023 shares	Sep. 30, 2022 USD ($)	Jun. 30, 2022 shares	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares	Aug. 01, 2023 shares	Jan. 13, 2022 $ / shares	Dec. 31, 2021 USD ($)	Dec. 31, 2021 JPY (¥)	Aug. 06, 2021 shares	May 31, 2016 ¥ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted																	102,000	16,500
Shares issued price per share | $ / shares																				$ 2.50
Number of option forfeited																	9,500	39,500
Option exercise price per share | $ / shares																	$ (0)
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share base compensation | $													$ 29,000		$ 55,768		$ 788,577	$ 366,844
Unamortized share based compensation | $													130,110				130,110
Service Agreement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of restricted stock issued		671,350				83,333	83,333
RSUs grant date fair value | $		$ 691,491					$ 224,999
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options vested																		183
Allocated share base compensation | $													144,306		$ 280,883		479,122	$ 858,633
Unamortized share based compensation | $													$ 578,075				$ 578,075
2021 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation authorized																							2,400,000
2023 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation authorized																			2,000,000
Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted														692,804		83,333
Number of shares issued in acquisition														2,500,000
HeartCore Japan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted											484,056
Other current liabilities																					$ 16	¥ 1,830
Number of options vested																		183
HeartCore Japan [Member] | Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Repurchase liability, shares | $																		$ 16
Repurchase liability, value																		273,489
HeartCore Japan [Member] | IPO [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options vested								183
Allocated share base compensation | $																		$ 11,005
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted					2,000
Shares issued price per share | $ / shares					$ 2.94
Percentage of shares expected to be vested	25.00%		50.00%		25.00%
Expiration date	Aug. 25, 2033		Feb. 03, 2033		Aug. 02, 2032
Employees [Member] | HeartCore Japan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted												507
Number of shares issued in acquisition												1,494
Shares issued price per share | (per share)												$ 0.09												¥ 10
Options granted											324
Chief Executive Officer [Member] | HeartCore Japan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of option forfeited											324
Officers, Directors, Employees and Consultants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Option to purchase common stock										1,534,500
Option exercise price per share | $ / shares										$ 2.50
Percentage of shares expected to be vested										25.00%
Expiration date										Dec. 25, 2031
Three Prior Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted	2,000		100,000	14,500
Shares issued price per share | $ / shares	$ 1.10		$ 1.17	$ 2.48
Expiration date				Aug. 09, 2026
Five Executives [Member] | 2021 Equity Incentive Plan [Member] | Executive Employment Agreements [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Percentage of shares expected to be vested									25.00%
Number of restricted stock issued									85,820
RSUs grant date fair value | $									$ 424,809

v3.23.3

SHAREHOLDERS’ EQUITY (Details Narrative) - USD ($)							3 Months Ended			4 Months Ended	9 Months Ended
	Mar. 22, 2023	Feb. 01, 2023	May 15, 2022	Feb. 25, 2022	Feb. 14, 2022	Jan. 13, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Jun. 01, 2022	Dec. 31, 2021
Subsidiary, Sale of Stock [Line Items]
Common stock, shares authorized											200,000,000		200,000,000
Common stock, par value											$ 0.0001		$ 0.0001
Preferred stock, shares authorized											20,000,000		20,000,000
Preferred stock, par value											$ 0.0001		$ 0.0001
Issuance of common shares for cash, shares						96,000
Shares Issued, Price Per Share						$ 2.50
Proceeds from Issuance of Private Placement						$ 220,572
Proceeds from issuance initial public offering												$ 13,602,554
Debt Issuance Costs, Net															$ 300,460
Deferred cost recognized															$ 178,847
Common stock issued from exercise of stock option					273,489
Common stock issued from exercise of stock option, shares					$ 16				$ 16
Stock Repurchased During Period, Value							$ 2,163,238	$ 1,336,762
Common stock, shares issued											20,842,690		17,649,886
Common stock, shares outstanding											20,842,690		17,649,886
Preferred stock, shares issued											0		0
Preferred stock, shares outstanding											0		0
Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Issuance of common shares for cash, shares									3,096,000
Common stock issued from exercise of stock option									273,489
Common stock issued from exercise of stock option, shares									$ 27
Stock Repurchased During Period, Value
2022 Share Repurchase Program [Member]
Subsidiary, Sale of Stock [Line Items]
Repurchase														$ 3,500,000
2022 Share Repurchase Program [Member] | Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Shares Issued, Price Per Share							$ 2.59			$ 2.59		$ 2.59
Stock Repurchased During Period, Shares										1,349,390
Stock Repurchased During Period, Value										$ 3,500,000
2022 Share Repurchase Program [Member] | Common Stock [Member] | Sigmaways [Member]
Subsidiary, Sale of Stock [Line Items]
Ownership percent		51.00%
2022 Share Repurchase Program [Member] | Common Stock [Member] | Sigmaways [Member]
Subsidiary, Sale of Stock [Line Items]
Share issued		2,500,000
Share issued, value		$ 3,150,000
Service Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Number of restricted stock issued	671,350		83,333	83,333
IPO [Member]
Subsidiary, Sale of Stock [Line Items]
Issuance of common shares for cash, shares					3,000,000
Share Price					$ 5.00
Proceeds from issuance initial public offering					$ 13,724,167
Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Issuance of common shares for cash, shares						30,000

v3.23.3

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net loss per common share attributable to HeartCore Enterprises, Inc.
Net loss attributable to HeartCore Enterprises, Inc. common shareholders	$ (2,307,220)	$ (1,970,934)	$ (1,336,731)	$ (5,253,026)
Weighted average common shares outstanding - basic	20,842,690	17,835,027	20,257,020	18,014,483
Weighted average common shares outstanding - diluted	20,842,690	17,835,027	20,257,020	18,014,483
Net income (loss) per share - basic	$ (0.11)	$ (0.11)	$ (0.07)	$ (0.29)
Net income (loss) per share - diluted	$ (0.11)	$ (0.11)	$ (0.07)	$ (0.29)

v3.23.3

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022	Sep. 06, 2022
Business Combination and Asset Acquisition [Abstract]
Current assets			$ 2,066,683
Acquired intangible asset			5,100,000
Non-current assets			47,979
Current liabilities			(1,146,900)
Deferred tax liabilities			(1,428,000)
Non-current liabilities			(576,203)
Goodwill	$ 3,276,441		3,276,441
Non-controlling interest			(3,190,000)
Total purchase consideration			$ 4,150,000

v3.23.3

BUSINESS COMBINATION (Details Narrative) - USD ($)		8 Months Ended
	Sep. 06, 2022	Sep. 30, 2023
Business Acquisition [Line Items]
Revenue		$ 6,332,479
Net loss		$ 855,532
Purchase Agreement [Member] | Sigmaways [Member]
Business Acquisition [Line Items]
Purchase combination consideration	$ 41,500
Purchase consideration, cost	$ 10,000
Acquisition, shares	25,000
Debt instrument, fair value	$ 31,500
Purchase Agreement [Member] | Sigamaways Inc [Member]
Business Acquisition [Line Items]
Business acquisition percentage of voting interests acquired	51.00%

v3.23.3

SUBSEQUENT EVENTS (Details Narrative)	Oct. 05, 2023 USD ($)	Oct. 05, 2023 JPY (¥)	Oct. 04, 2023 USD ($)	Oct. 04, 2023 JPY (¥)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Subsequent Event [Line Items]
Debt conversion original debt amount					$ 1,883,064	$ 1,830,581
The Shoko Chukin Bank, Ltd. [Member]
Subsequent Event [Line Items]
Debt conversion original debt amount						34,343
Debt conversion interest rate					1.20%
The Shoko Chukin Bank, Ltd. [Member] | Subsequent Event [Member] | Five Year Term Loan One [Member]
Subsequent Event [Line Items]
Debt conversion original debt amount			$ 73,000	¥ 10,000,000
Debt conversion interest rate			20.00%	20.00%
The Shoko Chukin Bank, Ltd. [Member] | Subsequent Event [Member] | Five Year Term Loan Two [Member]
Subsequent Event [Line Items]
Debt conversion original debt amount			$ 73,000	¥ 10,000,000
Debt conversion interest rate			60.00%	60.00%
Higashi Nippon Bank [Member]
Subsequent Event [Line Items]
Debt conversion original debt amount					$ 105,094	$ 177,669
Debt conversion interest rate					1.40%
Higashi Nippon Bank [Member] | Subsequent Event [Member] | Five Year Term Loan Three [Member]
Subsequent Event [Line Items]
Debt conversion original debt amount	$ 219,000	¥ 30,000,000
Debt conversion interest rate	145.00%	145.00%

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