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HTCR HeartCore Enterprises Inc

0.6799

0.0459 (7.24%)

Aug 14 2024 - Closed

Delayed by 15 minutes

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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 June 30, 2024

☐	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 August 14, 2024, there were 20,864,144 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	14

Item 4.	Controls and Procedures	14

PART II – OTHER INFORMATION		15

Item 1.	Legal Proceedings	15

Item 1A.	Risk Factors	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3.	Defaults Upon Senior Securities	15

Item 4.	Mine Safety Disclosures	15

Item 5.	Other Information	15

Item 6.	Exhibits	15

Signatures		16

2

Item 1. Financial Statements.

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

		June 30,				December 31,
		2024				2023
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	3,806,349			$	1,012,479
Accounts receivable			2,440,872				2,623,682
Investments in marketable securities			435,498				642,348
Investment in equity securities			-				300,000
Prepaid expenses			3,877,454				536,865
Current portion of long-term note receivable			100,000				100,000
Due from related party			40,495				44,758
Other current assets			199,221				234,761
Total current assets			10,899,889				5,494,893

Non-current assets:
Accounts receivable, non-current			640,197				-
Property and equipment, net			640,787				763,730
Operating lease right-of-use assets			2,106,466				2,467,889
Intangible asset, net			4,196,875				4,515,625
Goodwill			3,276,441				3,276,441
Long-term investment in SAFE			350,000				-
Long-term investment in equity securities			300,000				-
Long-term investment in warrants			543,120				2,004,308
Long-term note receivable			200,000				200,000
Deferred tax assets			395,743				369,436
Security deposits			310,833				348,428
Long-term loan receivable from related party			145,274				182,946
Long-term loan receivable			145,274				182,946
Other non-current assets			70,309				71
Total non-current assets			13,176,045				14,128,874

Total assets		$	24,075,934			$	19,623,767

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses		$	1,757,545			$	1,757,038
Accounts payable and accrued expenses – related party			21,579				-
Accrued payroll and other employee costs			628,136				723,305
Due to related party			140				1,476
Short-term debt			-				135,937
Current portion of long-term debts			508,729				371,783
Insurance premium financing			112,488				-
Factoring liability			320,759				562,767
Operating lease liabilities, current			358,377				396,535
Finance lease liabilities, current			15,992				17,445
Income tax payables			1,142				162,689
Deferred revenue			2,207,420				2,166,175
Other current liabilities			9,261,012				216,405
Total current liabilities			15,193,319				6,511,555

Non-current liabilities:
Long-term debts			1,403,569				1,770,352
Operating lease liabilities, non-current			1,804,967				2,135,160
Finance lease liabilities, non-current			52,055				66,779
Deferred tax liabilities			1,175,125				1,264,375
Other non-current liabilities			685,364				208,732
Total non-current liabilities			5,121,080				5,445,398

Total liabilities			20,314,399				11,956,953

Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023)			-				-
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,864,144 and 20,842,690 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)			2,085				2,083
Additional paid-in capital			19,325,270				19,594,801
Accumulated deficit			(18,047,919	)			(14,763,469	)
Accumulated other comprehensive income			325,857				331,881
Total HeartCore Enterprises, Inc. shareholders’ equity			1,605,293				5,165,296
Non-controlling interests			2,156,242				2,501,518
Total shareholders’ equity			3,761,535				7,666,814

Total liabilities and shareholders’ equity		$	24,075,934			$	19,623,767

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

F-1

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

		2024				2023				2024				2023
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523
Cost of revenues			3,260,507				3,586,938				6,275,050				6,688,004
Gross profit			805,881				1,508,435				2,838,070				7,141,519

Operating expenses:
Selling expenses			179,408				488,062				399,115				1,056,704
General and administrative expenses			2,022,409				2,447,887				4,428,712				5,133,094
Research and development expenses			111,268				39,608				200,402				119,232
Total operating expenses			2,313,085				2,975,557				5,028,229				6,309,030

Income (loss) from operations			(1,507,204	)			(1,467,122	)			(2,190,159	)			832,489

Other income (expenses):
Changes in fair value of investments in marketable securities			(196,249	)			(229,022	)			(430,331	)			(229,022	)
Changes in fair value of investment in warrants			(558,820	)			(27,258	)			(1,237,707	)			166,107
Interest income			2,030				18,665				4,624				50,270
Interest expenses			(37,040	)			(42,614	)			(73,701	)			(82,454	)
Other income			37,858				109,800				134,874				124,001
Other expenses			(23,856	)			(7,297	)			(49,050	)			(36,754	)
Total other expenses			(776,077	)			(177,726	)			(1,651,291	)			(7,852	)
Income (loss) before income tax provision			(2,283,281	)			(1,644,848	)			(3,841,450	)			824,637
Income tax expense (benefit)			(72,163	)			(622,002	)			(152,330	)			39,446
Net income (loss)			(2,211,118	)			(1,022,846	)			(3,689,120	)			785,191
Less: net loss attributable to non-controlling interests			(260,018	)			(111,046	)			(404,670	)			(185,298	)
Net income (loss) attributable to HeartCore Enterprises, Inc.		$	(1,951,100	)		$	(911,800	)		$	(3,284,450	)		$	970,489

Other comprehensive income (loss):
Foreign currency translation adjustment			(24,120	)			30,533				(13,825	)			5,499
Total comprehensive income (loss)			(2,235,238	)			(992,313	)			(3,702,945	)			790,690
Less: comprehensive loss attributable to non-controlling interests			(262,908	)			(110,716	)			(412,471	)			(187,258	)
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.		$	(1,972,330	)		$	(881,597	)		$	(3,290,474	)		$	977,948

Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Basic		$	(0.09	)		$	(0.04	)		$	(0.16	)		$	0.05
Diluted		$	(0.09	)		$	(0.04	)		$	(0.16	)		$	0.05
Weighted average common shares outstanding
Basic			20,864,144				20,842,690				20,859,429				19,959,333
Diluted			20,864,144				20,842,690				20,859,429				19,959,333

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

F-2

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Comprehensive Income				Shareholders’ Equity				Non-controlling Interests				Shareholders’ Equity
		Common Shares								Additional								Accumulated Other				Total HeartCore Enterprises, Inc.								Total
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Comprehensive Income				Shareholders’ Equity				Non-controlling Interests				Shareholders’ Equity
Balance, December 31, 2023			20,842,690			$	2,083			$	19,594,801			$	(14,763,469	)		$	331,881			$	5,165,296			$	2,501,518			$	7,666,814
Net loss			-				-				-				(1,333,350	)			-				(1,333,350	)			(144,652	)			(1,478,002	)
Foreign currency translation adjustment			-				-				-				-				15,206				15,206				(4,911	)			10,295
Capital contribution from non-controlling shareholder			-				-				-				-				-				-				67,195				67,195
Stock-based compensation			21,454				2				91,710				-				-				91,712				-				91,712
Balance, March 31, 2024			20,864,144				2,085				19,686,511				(16,096,819	)			347,087				3,938,864				2,419,150				6,358,014

Net loss			-				-				-				(1,951,100	)			-				(1,951,100	)			(260,018	)			(2,211,118	)
Distribution of dividends			-				-				(417,283	)			-				-				(417,283	)			-				(417,283	)
Foreign currency translation adjustment			-				-				-				-				(21,230	)			(21,230	)			(2,890	)			(24,120	)
Stock-based compensation			-				-				56,042				-				-				56,042				-				56,042
Balance, June 30, 2024			20,864,144			$	2,085			$	19,325,270			$	(18,047,919	)		$	325,857			$	1,605,293			$	2,156,242			$	3,761,535

		Common Shares								Additional								Accumulated Other				Total HeartCore Enterprises, Inc.								Total
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Comprehensive Income				Shareholders’ Equity				Non-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 interest 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
Balance			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	)
Net income (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

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

F-3

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

		2024				2023
		For the Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net income (loss)		$	(3,689,120	)		$	785,191
Adjustments to reconcile net income (loss) to net cash flows used in operating activities:
Depreciation and amortization expenses			374,946				306,097
Amortization of debt issuance costs			2,296				1,316
Non-cash lease expense			182,546				155,301
Gain on termination of lease			(469	)			-
Deferred income taxes			(153,531	)			(75,240	)
Stock-based compensation			147,754				1,094,393
Warrants received as noncash consideration			-				(4,009,335	)
Changes in fair value of investments in marketable securities			430,331				229,022
Changes in fair value of investment in warrants			1,237,707				(166,107	)
Loss on disposal of property and equipment			1,894				-
Changes in assets and liabilities:
Accounts receivable			(548,402	)			(596,312	)
Prepaid expenses			158,110				1,245
Other assets			(7,526	)			23,277
Accounts payable and accrued expenses			272,375				(8,359	)
Accounts payable and accrued expenses – related party			21,956				-
Accrued payroll and other employee costs			(278,361	)			124
Due to related party			(1,246	)			4,214
Operating lease liabilities			(183,047	)			(147,035	)
Income tax payables			(152,697	)			106,625
Deferred revenue			165,073				810,639
Other liabilities			558,667				116,382
Net cash flows used in operating activities			(1,460,744	)			(1,368,562	)

Cash flows from investing activities:
Purchases of property and equipment			(4,134	)			(180,451	)
Prepayment for property and equipment			(35,209	)			-
Advance on note receivable			-				(300,000	)
Purchase of long-term investment in SAFE			(350,000	)			-
Net proceeds from sale of warrants			5,640,000				-
Repayment of loan provided to related party			21,166				23,715
Payment for acquisition of subsidiary, net of cash acquired			-				(724,910	)
Net cash flows provided by (used in) investing activities			5,271,823				(1,181,646	)

Cash flows from financing activities:
Payments for finance leases			(8,526	)			(11,243	)
Proceeds from short-term debt			68,138				-
Repayment of short-term and long-term debts			(281,451	)			(411,923	)
Repayment of insurance premium financing			(60,201	)			(149,250	)
Net proceeds from factoring arrangement			-				328,967
Net repayment of factoring arrangement			(242,008	)			-
Payments for debt issuance costs			-				(448	)
Distribution of dividends			(417,283	)			-
Capital contribution from non-controlling shareholder			67,195				-
Net cash flows used in financing activities			(874,136	)			(243,897	)

Effect of exchange rate changes			(143,073	)			(144,480	)

Net change in cash and cash equivalents			2,793,870				(2,938,585	)
Cash and cash equivalents - beginning of the period			1,012,479				7,177,326
Cash and cash equivalents - end of the period		$	3,806,349			$	4,238,741

Supplemental cash flow disclosures:
Interest paid		$	74,063			$	40,083
Income taxes paid		$	117,524			$	-

Non-cash investing and financing transactions:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities		$	125,735			$	-
Insurance premium financing		$	172,689			$	389,035
Liabilities assumed in connection with purchase of property and equipment		$	-			$	2,199
Common shares issued for acquisition of subsidiary		$	-			$	3,150,000
Warrants converted to marketable securities		$	223,481			$	1,257,868

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

F-4

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 the business of providing consulting services to Japanese companies with intention to go public in the United States capital market.

On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V. 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.

In November 2023, HeartCore Japan established a 51% owned subsidiary in Vietnam, HeartCore Luvina Vietnam Company Limited (“HeartCore Luvina”), which is engaged in the business of providing software development and other services. HeartCore Luvina started its operations from February 2024.

On November 17, 2023, HeartCore Japan and HeartCore Capital Advisors entered into a merger agreement to merge the two entities into one with HeartCore Japan being the surviving entity. On January 1, 2024, the merger was completed and HeartCore Capital Advisors transferred all of its assets and liabilities to HeartCore Japan. The merger has been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled the two entities before and after the transaction.

In April 2024, HeartCore Financial incorporated a branch office, HeartCore Financial, Inc. – Japan Branch Office (“HeartCore Financial – Japan”), in Japan. HeartCore Financial – Japan is engaged in the business of providing financial consulting services.

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

F-5

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, 2023.

Correction of Error in Previously Issued Financial Statements

During the review of the Company’s consolidated financial statements for the six months ended June 30, 2024, the Company identified an error in the consolidated statement of cash flows in the consolidated financial statements for the three months ended March 31, 2024 due to a misclassification between operating and investing activities for the net proceeds received from sale of warrants, and corrected such error through a cumulative out-of-period adjustment in the consolidated statement of cash flows for the six months ended June 30, 3024. The change in prepaid expenses and change in other liabilities in the operating cash flows for the three months ended March 31, 2024 should have been $102,028 and $60,658, respectively, but was stated as $(3,257,972) and $5,060,658, respectively, resulting in net cash flows provided by operating activities overstated by $1,640,000. Concurrently, the Company failed to include net proceeds from sale of warrants included in the investing activities of $1,640,000, resulting in net cash flows provided by investing activities understated by $1,640,000 in the consolidated statement of cash flows for the three months ended March 31, 2024. The error had no impact on the consolidated balance sheet, statement of operations and comprehensive income (loss) and statement of changes in shareholders’ equity.

In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated this error and, based on analysis of quantitative and qualitative factors, determined that the error is not material to the previously issued financial statements and the cumulative out-of-period adjustment for the correction of this error is not material to the financial statements for the six months ended June 30, 2024. Therefore, as permitted by SAB108, the Company corrected such error in the current filing through a cumulative out-of-period adjustment in the consolidated statement of cash flows for the six months ended June 30, 3024.

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 unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the 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 and intangible asset, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and finance leases, valuation of asset retirement obligations, valuation of investment in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates.

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:

		June 30,				December 31,
		2024				2023
Beginning balance		$	208,732			$	138,018
Liabilities incurred			-				83,821
Accretion expense			176				428
Liabilities settled			(3,779	)			-
Foreign currency translation adjustment			(19,765	)			(13,535	)
Ending balance		$	185,364			$	208,732

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 six months ended June 30, 2024 and 2023, software development costs expensed as incurred amounted to $200,402 and $119,232, respectively. These software development costs were included in the research and development expenses.

F-6

Investment in Warrants

Investment in warrants represents stock warrants of its consulting service customers. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investment in warrants is classified as long-term if the warrants are exercisable over one year after the date of receipt.

Investments in Marketable Securities

Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities 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).

Investment in Equity Securities

Investment in equity securities represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value. Investment in equity securities is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investment in equity securities is classified as long-term if the Company anticipates to dispose of the investment over one year after the date of receipt based on information available as of the date the unaudited consolidated financial statements are issued. The Company did not recognize any impairment loss on investment in equity securities for the six months ended June 30, 2024.

Investment in SAFE

Investment in SAFE represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value through a simple agreement for future equity (“SAFE”). Investment in SAFE is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investment in SAFE is classified as long-term if the Company anticipates the equity financing or dissolution or liquidity event prescribed in the SAFE to take place over one year after the date of receipt based on information available as of the date the unaudited consolidated financial statements are issued. The Company did not recognize any impairment loss on investment in SAFE for the six months ended June 30, 2024.

Intangible Asset, Net

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

Impairment of Long-Lived Assets Other Than 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 six months ended June 30, 2024 and 2023.

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.

F-7

Foreign Currency Translation

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

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 within the unaudited consolidated statements of changes in shareholders’ equity.

Revenue Recognition

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

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenues amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross sales in the United States.

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

Revenues from On-Premise Software

Licenses for on-premise software provide the customers with a right to use the software as it exists when made available to the customers. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customers. Licenses for on-premise software are typically sold to the customers with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support 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 customers. The subscription contracts are generally one year or less in length.

F-8

Revenues from Software Development and Other Miscellaneous Services

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

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 contracts that result in the transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create an asset with an alternative use to the Company. The Company recognizes revenues on rate per hour contracts based on the amount billable to the customers, as the Company has the right to invoice the customers in an amount that directly corresponds with the value to the customers of the Company’s performance to date.

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 normally include both cash and noncash considerations. Cash consideration is paid in installment payments and is recognized in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is in the form of 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 Company records reduction to revenues for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which it makes such a determination. Reserves for customer refunds are included within other current liabilities or other non-current liabilities on the consolidated balance sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

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, current or non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.5 million and $1.3 million, respectively.

F-9

Disaggregation of Revenues

The Company disaggregates its revenues from contracts by product/service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues by revenue stream for the three and six months ended June 30, 2024 and 2023 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from on-premise software		$	575,424			$	704,268			$	1,654,160			$	1,061,189
Revenues from maintenance and support services			549,284				874,725				1,177,048				1,576,199
Revenues from software as a service (“SaaS”)			152,248				177,529				291,948				348,573
Revenues from software development and other miscellaneous services			516,561				406,455				964,019				1,086,796
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

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


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from customer experience management platform		$	1,420,584			$	1,725,872			$	3,480,173			$	3,292,309
Revenues from process mining			101,307				188,555				174,462				290,756
Revenues from robotic process automation			102,373				127,283				158,564				213,469
Revenues from task mining			107,362				95,679				153,220				202,767
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Revenues from others			61,891				25,588				120,756				73,456
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

As of June 30, 2024 and 2023, and for the periods then ended, the majority of the long-lived assets (excluding intangible asset) and 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 receivable, note receivable and other receivable. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

For the six months ended June 30, 2024, customer A represents 13.7% of the Company’s total revenues. For the six months ended June 30, 2023, customer B, C and D represent 18.2%, 12.8% and 11.8%, respectively, of the Company’s total revenues.

For the six months ended June 30, 2024, no vendor accounts for more than 10% of the Company’s total purchases. For the six months ended June 30, 2023, vendor A and B represent 60.9% and 22.7%, 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 and comprehensive income (loss) based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.

F-10

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 interests, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded 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 income (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 June 30, 2024 and December 31, 2023, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

F-11

Assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 are summarized below (also see NOTE 6):


Fair Value Measurements as of June 30, 2024
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at June 30, 2024
Investments in marketable securities			435,498				-				-				435,498
Long-term investment in warrants			-				-				543,120				543,120


Fair Value Measurements as of December 31, 2023
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at December 31, 2023
Investments in marketable securities			642,348				-				-				642,348
Long-term investment in warrants			-				-				2,004,308				2,004,308

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2023, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis. For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		June 30,				December 31,
		2024				2023
Accounts receivable – non-factored		$	2,760,310			$	2,060,915
Accounts receivable – factored with recourse			320,759				562,767
Total accounts receivable, gross			3,081,069				2,623,682
Less: allowance for credit losses			-				-
Total accounts receivable			3,081,069				2,623,682
Less: current portion			(2,440,872	)			(2,623,682	)
Accounts receivable, non-current		$	640,197			$	-

NOTE 4 – PREPAID EXPENSES

Prepaid expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

		June 30,				December 31,
		2024				2023
Prepayments to software and consulting services vendors		$	189,168			$	199,376
Prepaid marketing and consulting fees			34,269				92,546
Prepaid subscription fees			49,080				95,971
Prepaid insurance premium			152,678				72,668
Referral fee paid in advance			3,360,000				-
Others			92,259				76,304
Total		$	3,877,454			$	536,865

F-12

NOTE 5 – RELATED PARTY TRANSACTIONS

As of June 30, 2024 and December 31, 2023, the Company has a due to related party balance of $140 and $1,476, respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”) and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the six months ended June 30, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company in a net amount of $1,246. During the six months ended June 30, 2023, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $4,214.

As of June 30, 2024 and December 31, 2023, the Company has a loan receivable balance of $185,769 and $227,704, 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 six months ended June 30, 2024 and 2023, the Company received repayments of $21,166 and $23,715, respectively, from this related party.

During the six months ended June 30, 2024, the Company engaged Luvina Software Joint Stock Company, the non-controlling interest shareholder of HeartCore Luvina, for software development and other support services in the amount of $31,590. As of June 30, 2024 and December 31, 2023, the Company has an accounts payable and accrued expenses balance of $21,579 and nil, respectively, to this related party.

NOTE 6 – INVESTMENTS

Investment in SAFE

On April 17, 2024, the Company entered into a simple agreement for future equity (“SAFE”) for $350,000 with Heart-Tech Health, Inc. (“Heart-Tech”), a non-related company, in exchange for the right to be issued certain shares of Heart-Tech’s preferred stock in connection with Heart-Tech’s future equity financing, at a 15% discount to the price per share of the preferred stock sold in the equity financing, subject to a pre-determined valuation cap. Alternatively, upon a dissolution or liquidity event such as a change in control or an initial public offering, the Company is entitled to receive a portion of $350,000. As of June 30, 2024, the Company recorded the investment of $350,000 as an investment in SAFE on the consolidated balance sheet.

Investment in Equity Securities

On May 2, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 8% per annum and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering on the Nasdaq Capital Market or New York Stock Exchange, or 3) 180 days following the note issuance. The interest rate would be 12% per annum for any amount that is unpaid when due. On July 27, 2023, the Company entered into a note exchange agreement with the promissory note issuer to convert all of the promissory note principal amount and accrued interest into 600,000 shares of common shares of the promissory note issuer.

Investment in Warrants

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

The following table summarizes the Company’s investment in warrants activities for the six months ended June 30, 2024 and 2023:


		For the Six Months Ended
		June 30,
		2024				2023
Fair value of investment in warrants at beginning of the period		$	2,004,308			$	-
Warrants received as noncash consideration			-				4,009,335
Changes in fair value of investment in warrants			(1,237,707	)			166,107
Warrants converted to marketable securities			(223,481	)			(1,257,868	)
Fair value of investment in warrants at end of the period		$	543,120			$	2,917,574

Investments in Marketable Securities

The Company’s investments in marketable securities represent stocks received upon the exercise of warrants described above. They are registered for public sale with readily determinable fair values, and are measured at quoted prices on a recurring basis at the end of the period. The following table summarizes the Company’s investments in marketable securities activities for the six months ended June 30, 2024 and 2023:


		For the Six Months Ended
		June 30,
		2024				2023
Fair value of investments in marketable securities at beginning of the period		$	642,348			$	-
Warrants converted to marketable securities			223,481				1,257,868
Changes in fair value of investments in marketable securities			(430,331	)			(229,022	)
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	435,498			$	1,028,846

F-13

NOTE 7 – LONG-TERM NOTE RECEIVABLE

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

NOTE 8 – PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

		June 30,				December 31,
		2024				2023
Leasehold improvements		$	444,237			$	496,810
Machinery and equipment			648,113				706,145
Vehicle			81,301				89,859
Software			136,287				150,633
Subtotal			1,309,938				1,443,447
Less: accumulated depreciation			(669,151	)			(679,717	)
Property and equipment, net		$	640,787			$	763,730

Depreciation expenses are $56,196 and $40,472 for the six months ended June 30, 2024 and 2023, respectively.

NOTE 9 – INTANGIBLE ASSET, NET

Intangible asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

		June 30,				December 31,
		2024				2023
Customer relationship		$	5,100,000			$	5,100,000
Less: accumulated amortization			(903,125	)			(584,375	)
Intangible asset, net		$	4,196,875			$	4,515,625

Amortization expenses are $318,750 and $265,625 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the future estimated amortization cost for intangible asset is as follows:

		Estimated
Year Ended December 31,		Amortization
Remaining of 2024		$	318,750
2025			637,500
2026			637,500
2027			637,500
2028			637,500
Thereafter			1,328,125
Total		$	4,196,875

F-14

NOTE 10 – LEASES

The Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases were classified as operating leases. It has also entered into a lease for office equipment, 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 $69,106 and $85,613 are included in property and equipment, net as of June 30, 2024 and December 31, 2023, 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 in the consolidated balance sheets.

The components of lease costs are as follows:

SCHEDULE OF LEASE COSTS


		For the Six Months Ended
		June 30,
		2024				2023
Finance lease costs
Amortization of right-of-use assets		$	8,733			$	10,902
Interest on lease liabilities			499				86
Total finance lease costs			9,232				10,988
Operating lease costs			198,701				176,809
Total lease costs		$	207,933			$	187,797

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


		For the Six Months Ended
		June 30,
		2024				2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	499			$	86
Operating cash flows from operating leases			206,648				164,317
Financing cash flows from finance leases			8,526				11,243
Operating lease right-of-use assets obtained in exchange for operating lease liabilities			125,735				-

Weighted average remaining lease term (years)
Finance leases			4.3				0.3
Operating leases			7.2				8.7

Weighted average discount rate (per annum)
Finance leases			1.32	%			1.32	%
Operating leases			1.37	%			1.32	%

As of June 30, 2024, the future maturity of lease liabilities is as follows:

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2024		$	8,394			$	198,991
2025			16,787				373,470
2026			16,787				303,852
2027			16,787				261,809
2028			11,192				261,809
Thereafter			-				870,248
Total lease payments			69,947				2,270,179
Less: imputed interest			(1,900	)			(106,835	)
Total lease liabilities			68,047				2,163,344
Less: current portion			(15,992	)			(358,377	)
Non-current lease liabilities		$	52,055			$	1,804,967

Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amount to $310,833 and $348,428 as of June 30, 2024 and December 31, 2023, respectively.

F-15

NOTE 11 – OTHER LIABILITIES

Other current liabilities consist of the following:

SCHEDULE OF OTHER CURRENT LIABILITIES

		June 30,				December 31,
		2024				2023
Accrued consumption taxes		$	203,070			$	143,702
Advance received for warrants sale*			9,000,000				-
Others			57,942				72,703
Total other current liabilities		$	9,261,012			$	216,405

*

On February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

Other non-current liabilities consist of the following:

		June 30,				December 31,
		2024				2023
Asset retirement obligations		$	185,364			$	208,732
Customer refund liability**			500,000				-
Total other non-current liabilities		$	685,364			$	208,732

**	On June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement with the customer was terminated and the Company will refund $500,000 to the customer in August 2025.

NOTE 12 – FACTORING LIABILITY

Sigmaways, the subsidiary acquired by the Company in February 2023, entered into a Factoring and Security Agreement (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 June 30, 2024 and December 31, 2023, there was $320,759 and $562,767 borrowed and outstanding under the Factoring Agreement, respectively. There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense. During the six months ended June 30, 2024 and 2023, the Company recorded $30,786 and $41,611 in interest expenses related to the Factoring Agreement, respectively.

F-16

NOTE 13 – INSURANCE PREMIUM FINANCING

In January 2024, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $172,689 at an annual interest rate of 13.9% for eleven months from February 1, 2024, payable in eleven monthly installments of principal and interest.

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

As of June 30, 2024 and December 31, 2023, the balances of the insurance premium financing were $112,488 and nil, respectively. During the six months ended June 30, 2024 and 2023, the Company recorded $7,044 and $18,033, respectively, in interest expenses related to the insurance premium financing.

NOTE 14 – DEBTS

Short-term Debt

The Company’s short-term debt represents a loan borrowed from a financial institution as follows:

SCHEDULE OF SHORT-TERM DEBTS

Name of Financial
Institution

Original
Amount
Borrowed

Loan
Duration

Annual
Interest Rate

Balance as of
June 30,
2024

Balance as of
December 31,
2023

Biz Forward Co., Ltd.

JPY19,280,001

(a)

12/26/2023 – 1/31/2024

36.840

%

$

-

$

135,937

(a)	The loan is secured by accounts receivable of HeartCore Japan in the amount of JPY23,882,562.

Long-term Debts

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

SCHEDULE OF LONG-TERM DEBTS

Name of Banks/Financial Institutions		Original Amount Borrowed				Loan Duration		Annual Interest Rate				Balance as of June 30, 2024				Balance as of December 31, 2023
Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000	(b)(d)		1/10/2019 – 1/10/2024			0.430	%		$	-			$	70,507
Loans with banks and financial institutions
Resona Bank, Limited			JPY50,000,000	(b)(c)		12/29/2017 – 12/29/2024			0.675	%			49,470				54,678
Resona Bank, Limited			JPY10,000,000	(b)(c)		9/30/2020 – 9/30/2027			1.000	%			34,945				38,624
Resona Bank, Limited			JPY40,000,000	(b)(c)		9/30/2020 – 9/30/2027			1.000	%			139,781				154,495
Resona Bank, Limited			JPY20,000,000	(b)(c)		11/13/2020 – 10/31/2027			1.600	%			71,408				78,925
Sumitomo Mitsui Banking Corporation			JPY100,000,000	(b)		12/28/2018 – 7/1/2024			1.475	%			10,507				11,612
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		12/30/2019 – 12/30/2026			1.975	%			28,113				31,072
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		10/4/2023 – 9/30/2028			0.600	%			61,661				68,152
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		10/4/2023 – 9/30/2028			0.000	%			61,661				68,152
The Shoko Chukin Bank, Ltd.			JPY50,000,000			7/27/2020 – 6/30/2027			1.290	%			165,859				183,319
The Shoko Chukin Bank, Ltd.			JPY30,000,000			7/25/2023 – 6/30/2028			Tokyo Interbank Offered Rate + 1.950	%			175,108				197,137
Japan Finance Corporation			JPY80,000,000			11/17/2020 – 11/30/2027			0.210	%			295,994				327,152
Higashi-Nippon Bank			JPY30,000,000	(b)		3/31/2022 – 3/31/2025			1.400	%			84,205				93,070
Higashi-Nippon Bank			JPY30,000,000	(b)(c)		10/11/2023 – 9/30/2028			1.450	%			184,996				204,471
First Home Bank		$	350,000	(e)		4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%			212,893				229,007
U.S. Small Business Administration		$	350,000	(e)		5/30/2020 – 5/30/2050			3.750	%			350,000				350,000
Aggregate outstanding principal balances													1,926,601				2,160,373
Less: unamortized debt issuance costs													(14,303	)			(18,238	)
Less: current portion													(508,729	)			(371,783	)
Non-current portion												$	1,403,569			$	1,770,352

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

F-17

Interest expense for short-term debt and long-term debts was $2,929 and $32,942, respectively, for the six months ended June 30, 2024. Interest expense for short-term debt and long-term debts was nil and $22,810, respectively, for the six months ended June 30, 2023.

As of June 30, 2024, future minimum principal payments for long-term debts are as follows:

		Principal
Year Ended December 31,		Payment
Remaining of 2024		$	260,702
2025			404,497
2026			360,339
2027			386,977
2028			177,502
Thereafter			336,584
Total		$	1,926,601

NOTE 15 – INCOME TAXES

United States

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

Netherlands

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

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.

Vietnam

HeartCore Luvina is a company incorporated in Vietnam in November 2023. It is subject to standard income tax rate at 20% with respect to the taxable income.

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 result in an effective statutory tax rate of approximately 34.59% for the six months ended June 30, 2024 and 2023.

For the six months ended June 30, 2024 and 2023, the Company’s income tax expense (benefit) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

		2024				2023
		For the Six Months Ended
		June 30,
		2024				2023
Current		$	1,201			$	114,686
Deferred			(153,531	)			(75,240	)
Income tax expense (benefit)		$	(152,330	)		$	39,446

The effective tax rate was 3.97% and 4.78% for the six months ended June 30, 2024 and 2023, respectively.

F-18

NOTE 16 – STOCK-BASED COMPENSATION

Options

On August 6, 2021, the Board of Directors and shareholders 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 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 1, 2023, the Board of Directors 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 June 30, 2024.

The following table summarizes the stock options activity and related information for the six months ended June 30, 2024 and 2023:

SCHEDULE OF STOCK OPTION ACTIVITY

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2023			1,466,500			$	2.50				8.94			$	-
Granted			100,000				1.17				9.61				-
Exercised			-				-				-				-
Forfeited			(2,000	)			2.50				-				-
As of June 30, 2023			1,564,500			$	2.42				8.52			$	26,000

As of January 1, 2024			1,547,000			$	2.41				8.01			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			(35,000	)			2.42				-				-
As of June 30, 2024			1,512,000			$	2.41				7.51			$	-
Vested and exercisable as of June 30, 2024			813,250			$	2.34				7.53			$	-

The Company calculated the fair value of options granted in the six months ended June 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 six months ended June 30, 2024, the Company recognized stock-based compensation related to options of $40,597 and $111,044, respectively. For the three and six months ended June 30, 2023, the Company recognized stock-based compensation related to options of $150,481 and $334,816, respectively. The outstanding unamortized stock-based compensation related to options was $266,230 (which will be recognized through December 2025) as of June 30, 2024.

Restricted Stock Units (“RSUs”)

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.

F-19

The following table summarizes the RSUs activity for the six months ended June 30, 2024 and 2023:

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value Per Share

Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,804	)			1.15
Forfeited			-				-
Unvested as of June 30, 2023			64,366			$	4.95

Unvested as of January 1, 2024			64,366			$	4.95
Granted			-				-
Vested			(21,454	)			4.95
Forfeited			-				-
Unvested as of June 30, 2024			42,912			$	4.95

For the three and six months ended June 30, 2024, the Company recognized stock-based compensation related to RSUs of $15,445 and $36,710, respectively. For the three and six months ended June 30, 2023, the Company recognized stock-based compensation related to RSUs of $28,684 and $759,577, respectively. The outstanding unamortized stock-based compensation related to RSUs was $64,400 (which will be recognized through February 2026) as of June 30, 2024.

NOTE 17 – SHAREHOLDERS’ EQUITY

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 19).

In November 2023, the Company established a 51% owned subsidiary in Vietnam. On February 16, 2024, the Company received capital contribution of VND1,646.4 million in cash, equivalent to $67,195, from the non-controlling shareholder of the subsidiary.

On March 29, 2024, the Board of Directors approved a dividend declaration of $0.02 per share of common share for the shareholders of record at the close of business on April 26, 2024. The dividends in the amount of $417,283 were paid on May 3, 2024.

As of June 30, 2024 and December 31, 2023, there were 20,864,144 and 20,842,690 shares of common shares issued and outstanding, respectively.

No preferred shares were issued and outstanding as of June 30, 2024 and December 31, 2023.

NOTE 18 – NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated on the basis of weighted average outstanding common shares. Diluted net income (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 income (loss) per share if their effect would be anti-dilutive.

F-20

The computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2024 and 2023 is as follows:

		2024				2023				2024				2023
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Net income (loss) per share - basic and diluted
Numerator
Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders		$	(1,951,100	)		$	(911,800	)		$	(3,284,450	)		$	970,489
Denominator
Weighted average number of common shares outstanding used in calculating net income (loss) per share			20,864,144				20,842,690				20,859,429				19,959,333
Net income (loss) per share - basic and diluted		$	(0.09	)		$	(0.04	)		$	(0.16	)		$	0.05

For the three and six months ended June 30, 2024 and 2023, the weighted average common shares outstanding are the same for basic and diluted net income (loss) per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

NOTE 19 – BUSINESS COMBINATION

On September 6, 2022, HeartCore USA entered into the Sigmaways Agreement to acquire 51% of the outstanding shares of Sigmaways, a company incorporated under the laws of the State of California, and its subsidiaries. The Sigmaways Agreement was further amended on December 23, 2022 and February 1, 2023, respectively, and the transaction was closed on February 1, 2023. The purchase consideration is $4,150,000, consisted of $1,000,000 in cash and 2,500,000 shares of common shares of the Company with fair value of $3,150,000 at the closing date.

The total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed and non-controlling interest based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill.

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

		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.

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 income (loss).

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 for the six months ended June 30, 2024 and 2023.

NOTE 20 – SUBSEQUENT EVENT

On July 22, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common shares to be paid on August 26, 2024 to shareholders of record as of August 19, 2024.

F-21

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 us or on our behalf. We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission (“SEC”) and in our reports and presentations to stockholders or potential stockholders. 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, 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, our CX division, includes a customer experience management business (the “CXM Platform”) that has been in existence for 14 years. Our CXM Platform includes marketing, sales, service and content management systems, as well as other tools and integrations, that enable companies to attract and engage customers throughout the customer experience. We also provide education, services and support to help customers be successful with our CXM Platform.

The second business unit, our DX division, 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.

During 2022, we started the GO IPO business, which supports Japanese companies listing on Nasdaq and NYSE in the United States. As of August 14, 2024, we have entered into consulting agreements with 14 companies to assist them in their IPO process, pursuant to which we are entitled to receive from each company a consulting fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share .

On February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

3

In July 2024, BloomZ Inc. (“BloomZ”), one of our Go IPO clients, successfully began trading on The Nasdaq Capital Market. We hope that this marks the beginning of a second wave of initial public offerings for our Go IPO clients, as we are optimistic regarding the backlog of Go IPO deals.

We were incorporated in the State of Delaware on May 18, 2021. We conduct business activities principally through our wholly owned subsidiary, HeartCore Co., Ltd. (“HeartCore Japan”), a Japanese corporation, which was established in Japan by Mr. Sumitaka Yamamoto, our CEO, in 2009.

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, a company incorporated under the laws of the State of California, and its wholly owned subsidiaries. Sigmaways and its wholly owned subsidiaries are engaged in the business of developing and sales of software in the United States. The acquisition closed on February 1, 2023.

In the first quarter of 2023, we formed HeartCore Financial, Inc. (“HeartCore Financial”) in the U.S. and HeartCore Capital Advisors, Inc. (“HeartCore Capital Advisors”) in Japan, as a part of our Go IPO consulting business. In the fourth quarter of 2023, we formed HeartCore Luvina Vietnam Company Limited in Vietnam (“HeartCore Luvina”), which is engaged in the business of software development.

On November 17, 2023, HeartCore Japan and HeartCore Capital Advisors entered into a merger agreement to merge the two entities into one with HeartCore Japan being the surviving entity. On January 1, 2024, the merger was completed and HeartCore Capital Advisors transferred all of its assets and liabilities to HeartCore Japan. The merger has been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled the two entities before and after the transaction.

In April 2024, HeartCore Financial incorporated a branch office, HeartCore Financial, Inc. – Japan Branch Office, in Japan.

Recent Developments

Sale of Warrants

On February 29, 2024, the Company entered into a warrants transfer agreement with an unrelated third party to sell a warrant it received from a Go IPO client as non-cash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants were exercisable upon the Go IPO’s client’s consummation of a merger with a special purpose acquisition company or the occurrence of other fundamental events, as described in the warrant agreement between the Company and the Go IPO client.

Cash Dividends

On March 29, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common shares. The dividend was paid on May 3, 2024 to shareholders of record as of April 26, 2024, resulting in an aggregate of $417,283 in total dividends paid by the Company.

On July 22, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common shares. The dividend will be paid on August 26, 2024 to shareholders of record as of August 19, 2024, resulting in an aggregate of $417,283 in total dividends to be paid by the Company.

The Company may continue to issue quarterly dividends going forward, contingent upon Board of Directors approval, following review of the Company’s then-current financial results. Future dividends, if any, may be less than, equal to or greater than recent dividends.

4

Noncompliance with Nasdaq’s 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 was 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 had no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR.”

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 then-last 30 consecutive business days, the Company did not meet this requirement. The Bid Price Notice indicated that the Company would 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 was at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff would provide the Company with written confirmation of compliance and the matter will be closed.

Alternatively, if the Company failed to regain compliance with Rule 5550(a)(2) prior to the expiration of the 180 calendar day period, but met 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 provided 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).

On April 24, 2024, the Company received written notice from the Nasdaq Staff indicating that although the Company was not in compliance with the Minimum Bid Price Requirement, the Nasdaq Staff determined that the Company is eligible for an additional 180 calendar day period, or until October 21, 2024, to regain compliance. The Nasdaq Staff indicated that its determination was based on the Company meeting the continued listing requirement for market value of publicly held shares and all of the other applicable requirements for initial listing on the Nasdaq Capital Market, with the exception of the Minimum Bid Requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. Accordingly, there is no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR.”

If at any time during this additional time 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.

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 currently monitoring the closing bid price of its common stock and evaluating its alternatives, if appropriate, to resolve the deficiency and regain compliance with Minimum Bid Price Requirement.

Financial Overview

For the three months ended June 30, 2024 and 2023, we generated revenues of $4,066,388 and $5,095,373, respectively, reported a net loss of $2,211,118 and $1,022,846, respectively.

For the six months ended June 30, 2024 and 2023, we generated revenues of $9,113,120 and $13,829,523, respectively, reported a net loss of $3,689,120 and net income of $785,191, respectively, and had cash flows used in operating activities of $1,460,744 and 1,368,562, respectively. As noted in our unaudited consolidated financial statements, as of June 30, 2024, we had an accumulated deficit of $18,047,919.

5

Results of Operations

Comparison of Results of Operations for the Three Months Ended June 30, 2024 and 2023

The following table summarizes our operating results as reflected in our unaudited statements of operations during the three months ended June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

		For the Three Months Ended June 30,
		2024								2023								Variance
						% of								% of
		Amount				Revenues				Amount				Revenues				Amount				%

Revenues		$	4,066,388				100.0	%		$	5,095,373				100.0	%		$	(1,028,985	)			-20.2	%
Cost of revenues			3,260,507				80.2	%			3,586,938				70.4	%			(326,431	)			-9.1	%
Gross profit			805,881				19.8	%			1,508,435				29.6	%			(702,554	)			-46.6	%

Operating expenses:
Selling expenses			179,408				4.4	%			488,062				9.6	%			(308,654	)			-63.2	%
General and administrative expenses			2,022,409				49.7	%			2,447,887				48.0	%			(425,478	)			-17.4	%
Research and development expenses			111,268				2.7	%			39,608				0.8	%			71,660				180.9	%
Total operating expenses			2,313,085				56.8	%			2,975,557				58.4	%			(662,472	)			-22.3	%

Loss from operations			(1,507,204	)			-37.0	%			(1,467,122	)			-28.8	%			(40,082	)			2.7	%

Other expenses			(776,077	)			-19.1	%			(177,726	)			-3.5	%			(598,351	)			336.7	%

Loss before income tax provision			(2,283,281	)			-56.1	%			(1,644,848	)			-32.3	%			(638,433	)			38.8	%

Income tax benefit			(72,163	)			-1.8	%			(622,002	)			-12.2	%			549,839				-88.4	%

Net loss			(2,211,118	)			-54.3	%			(1,022,846	)			-20.1	%			(1,188,272	)			116.2	%

Less: net loss attributable to non-controlling interests			(260,018	)			-6.4	%			(111,046	)			-2.2	%			(148,972	)			134.2	%

Net loss attributable to HeartCore Enterprises, Inc.		$	(1,951,100	)			-47.9	%		$	(911,800	)			-17.9	%		$	(1,039,300	)			114.0	%

Revenues

Our total revenues decreased by $1,028,985, or 20.2%, to $4,066,388 for the three months ended June 30, 2024 from $5,095,373 for the three months ended June 30, 2023, mainly attributable to (i) the decreased revenues of $486,631 from GO IPO consulting services as in the three months ended June 30, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement with the customer was terminated and the Company will refund $500,000 to the customer; (ii) the decreased revenues of $325,441 in maintenance and supporting services, as we entered into a significant maintenance service contract with a customer in the three months ended June 30, 2023 while there was no such contract in the current period ; and (iii) the decreased revenues of $172,894 in customized software development and services due to intense competition in software industry.

Cost of Revenues

Our total costs of revenues decreased by $326,431, or 9.1%, to $3,260,507 for the three months ended June 30, 2024 from $3,586,938 for the three months ended June 30, 2023, in light of the decrease in sales in GO IPO consulting services and on-premise software, offset by the increase in the costs related to customized software development and services and software as a service.

6

Gross Profit

Our total gross profit decreased by $702,554, or 46.6%, to $805,881 for the three months ended June 30, 2024 from $1,508,435 for the three months ended June 30, 2023, mainly attributable to (i) a decrease in gross profit of $118,376 from GO IPO consulting services due to the consulting service agreement termination with a customer that resulted in reduction of consulting service revenues in the three months ended June 30, 2024; (ii) a decrease in gross profit of $346,136 in maintenance and support services in light of the decrease in sales; and (iii) a decrease in gross profit of $289,934 in customized software development and services in light of the increase in costs due to intense market competition.

For the reasons discussed above, our overall gross profit margin decreased by 9.8% to 19.8% for the three months ended June 30, 2024 from 29.6% in the three months ended June 30, 2023.

Selling Expenses

Our selling expenses decreased by $308,654, or 63.2%, to $179,408 for the three months ended June 30, 2024 from $488,062 in the three months ended June 30, 2023, primarily attributable to (i) a decrease of $222,924 in advertising expenses due to less advertising activities in the current period; and (ii) a decrease of $77,580 in sales commission in light of the decrease in revenues.

As a percentage of revenues, our selling expenses accounted for 4.4% and 9.6% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

General and Administrative Expenses

Our general and administrative expenses decreased by $425,478, or 17.4%, to $2,022,409 for the three months ended June 30, 2024 from $2,447,887 in the three months ended June 30, 2023, primarily attributable to (i) a decrease of $230,118 in salaries and welfare due to the retirement of certain senior employees; and (ii) a decrease of $243,627 in office, utility, and other expenses due to our effort to reduce operating costs.

As a percentage of revenues, our general and administrative expenses were 49.7% and 48.0% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

Research and Development Expenses

Our research and development expenses slightly increased by $71,660, or 180.9%, to $111,268 in the three months ended June 30, 2024 from $39,608 in the three months ended June 30, 2023, primarily attributable to an increase of $72,559 in outsourcing expenses relating to the development of new CMS management screen features in the current period.

As a percentage of revenues, our research and development expenses were 2.7% and 0.8% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

Other Income (Expenses), Net

Our other income (expenses) primarily includes changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other income, and other expenses. Other expenses, net, of $177,726 for the three months ended June 30, 2023 increased by $598,351, or 336.7%, to other expenses, net, of $776,077 for the three months ended June 30, 2024, primarily attributable to an increase of $531,562 in loss on fair value changes in investment in warrants.

7

Income Tax Benefit

Income tax benefit was $72,163 in the three months ended June 30, 2024, a decrease of $549,839, or 88.4%, from income tax benefit of $622,002 in the three months ended June 30, 2023, primarily due to a net loss before income tax provision in the current period, while we recorded a net income before income tax provision in the three months ended March 31, 2023 and the Company started to consider net operating losses carried forward from previous years in income tax calculation and recognized an income tax benefit in the three months ended June 30, 2023 to offset the income tax expense recognized in the prior quarter.

Net Loss

As a result of the foregoing, we reported a net loss of $2,211,118 for the three months ended June 30, 2024, representing a $1,188,272, or 116.2%, increase from a net loss of $1,022,846 for the three months ended June 30, 2023.

Net Loss Attributable to Non-controlling Interests

We owned 51% equity interest in Sigmaways and its subsidiaries and 51% equity interest in HeartCore Luvina. Accordingly, we recorded net loss attributable to non-controlling interests of $260,018 and $111,046 for the three months ended June 30, 2024 and 2023, respectively.

Net Loss Attributable to HeartCore Enterprises, Inc.

As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $1,951,100 for the three months ended June 30, 2024, representing a $1,039,300, or 114.0%, increase from a net loss attributable to HeartCore Enterprises, Inc. of $911,800 for the three months ended June 30, 2023.

Comparison of Results of Operations for the Six Months Ended June 30, 2024 and 2023

The following table summarizes our operating results as reflected in our unaudited statements of operations during the six months ended June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

		For the Six Months Ended June 30,
		2024								2023								Variance
						% of								% of
		Amount				Revenues				Amount				Revenues				Amount				%

Revenues		$	9,113,120				100.0	%		$	13,829,523				100.0	%		$	(4,716,403	)			-34.1	%
Cost of revenues			6,275,050				68.9	%			6,688,004				48.4	%			(412,954	)			-6.2	%
Gross profit			2,838,070				31.1	%			7,141,519				51.6	%			(4,303,449	)			-60.3	%

Operating expenses:
Selling expenses			399,115				4.4	%			1,056,704				7.6	%			(657,589	)			-62.2	%
General and administrative expenses			4,428,712				48.6	%			5,133,094				37.1	%			(704,382	)			-13.7	%
Research and development expenses			200,402				2.2	%			119,232				0.9	%			81,170				68.1	%
Total operating expenses			5,028,229				55.2	%			6,309,030				45.6	%			(1,280,801	)			-20.3	%

Income (loss) from operations			(2,190,159	)			-24.1	%			832,489				6.0	%			(3,022,648	)			-363.1	%

Other expenses			(1,651,291	)			-18.1	%			(7,852	)			-0.1	%			(1,643,439	)			20,930.2	%

Income (loss) before income tax provision			(3,841,450	)			-42.2	%			824,637				5.9	%			(4,666,087	)			-565.8	%

Income tax expense (benefit)			(152,330	)			-1.7	%			39,446				0.3	%			(191,776	)			-486.2	%

Net income (loss)			(3,689,120	)			-40.5	%			785,191				5.6	%			(4,474,311	)			-569.8	%

Less: net loss attributable to non-controlling interests			(404,670	)			-4.4	%			(185,298	)			-1.4	%			(219,372	)			118.4	%

Net income (loss) attributable to HeartCore Enterprises, Inc.		$	(3,284,450	)			-36.1	%		$	970,489				7.0	%		$	(4,254,939	)			-438.4	%

8

Revenues

Our total revenues decreased by $4,716,403, or 34.1%, to $9,113,120 for the six months ended June 30, 2024 from $13,829,523 for the six months ended June 30, 2023, mainly attributable to (i) the decreased revenues of $5,103,901 from GO IPO consulting services as the Company’s two IPO consulting customers successfully listed on the Nasdaq in the six months ended June 30, 2023 and the Company received warrants from its customers as non-cash consideration from consulting services, while there was no such activity in the six months ended June 30, 2024; (ii) the decreased revenues of $399,151 from maintenance and support services, as we entered into a significant maintenance service contract with a customer in the six months ended June 30, 2023 while there was no such contract in the current period; offset by (iii) an increase of $592,971 in revenues from sale of on-premise software, primarily due to the Company newly obtained two large orders from two customers during the six months ended June 30, 2024.

Cost of Revenues

Our total costs of revenues slightly decreased by $412,954, or 6.2%, to $6,275,050 for the six months ended June 30, 2024 from $6,688,004 for the six months ended June 30, 2023, mainly in light of the decrease in sales in GO IPO consulting services.

Gross Profit

Our total gross profit decreased by $4,303,449, or 60.3%, to $2,838,070 for the six months ended June 30, 2024 from $7,141,519 for the six months ended June 30, 2023, mainly attributable to (i) a decrease in gross profit of $4,367,148 from GO IPO consulting services, as we recognized revenues from the warrants of the customers upon customers’ IPO effectiveness in the six months ended June 30, 2023, while there was no such activity in the current period; (ii) a decrease in gross profit of $483,044 in maintenance and support services in light of the decrease in sales; offset by (iii) an increase in gross profit of $759,015 in sales of on-premise software, as the sales of CMS license increased significantly, while there was not much change in the corresponding costs as the product was developed by ourself, instead of purchasing from outsiders.

For the reasons discussed above, our overall gross profit margin decreased by 20.5% to 31.1% for the six months ended June 30, 2024 from 51.6% in the six months ended June 30, 2023.

Selling Expenses

Our selling expenses decreased by $657,589, or 62.2%, to $399,115 for the six months ended June 30, 2024 from $1,056,704 in the six months ended June 30, 2023, primarily attributable to a decrease of $338,863 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period; and (ii) a decrease of $322,142 in advertising expense due to less advertising activities in the current period.

As a percentage of revenues, our selling expenses accounted for 4.4% and 7.6% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

General and Administrative Expenses

Our general and administrative expenses decreased by $704,382, or 13.7%, to $4,428,712 for the six months ended June 30, 2024 from $5,133,094 in the six months ended June 30, 2023, primarily attributable to (i) a decrease of $532,207 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period; and (ii) a decrease of $113,950 in office, utility, and other expenses due to our effort to reduce operating costs.

As a percentage of revenues, our general and administrative expenses were 48.6% and 37.1% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

9

Research and Development Expenses

Our research and development expenses slightly increased by $81,170, or 68.1%, to $200,402 in the six months ended June 30, 2024 from $119,232 in the six months ended June 30, 2023, primarily attributable to an increase of $137,967 in outsourcing expenses relating to the development of new CMS management screen features in the current period; offset by (ii) a decrease of $56,797 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period.

As a percentage of revenues, our research and development expenses were 2.2% and 0.9% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

Other Income (Expenses), Net

Our other income (expenses) primarily includes changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other income, and other expenses. Other expenses, net, of $7,852 for the six months ended June 30, 2023 increased by $1,643,439, or 20,930.2%, to other expenses, net, of $1,651,291 for the six months ended June 30, 2024, primarily attributable to an increase of $201,309 in loss on fair value changes in investments in marketable securities and an increase of $1,403,814 in loss on fair value changes in investment in warrants.

Income Tax Expense (Benefit)

Income tax benefit was $152,330 for the six months ended June 30, 2024, a decrease of $191,776, or 486.2%, from income tax expense of $39,446 in the six months ended June 30, 2023, primarily due to a net loss before income tax provision in the current period, while we recorded a net income before income tax provision in the six months ended June 30, 2023.

Net Income (Loss)

As a result of the foregoing, we reported a net loss of $3,689,120 for the six months ended June 30, 2024, representing a $4,474,311, or 569.8%, decrease from a net income of $785,191 for the six months ended June 30, 2023.

Net Loss Attributable to Non-controlling Interests

We owned 51% equity interest in Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina. Accordingly, we recorded net loss attributable to non-controlling interests of $404,670 and $185,298 for the six months ended June 30, 2024 and 2023, respectively.

Net Income (Loss) Attributable to HeartCore Enterprises, Inc.

As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $3,284,450 for the six months ended June 30, 2024, representing a $4,254,939, or 438.4%, decrease from a net income attributable to HeartCore Enterprises, Inc. of $970,489 for the six months ended June 30, 2023.

Liquidity and Capital Resources

As of June 30, 2024, we had $3,806,349 in cash and cash equivalents, as compared to $1,012,479 as of December 31, 2023. We also had $2,440,872 in accounts receivable, current as of June 30, 2024. Our accounts receivable primarily include balance due from customers for our on-premise software sold and services provided and accepted by customers, as well as amounts billable to the customers for customized software development and services.

10

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

		For the Six Months Ended June 30,
		2024				2023
Net cash flows used in operating activities		$	(1,460,744	)		$	(1,368,562	)
Net cash flows provided by (used in) investing activities			5,271,823				(1,181,646	)
Net cash flows used in financing activities			(874,136	)			(243,897	)
Effect of exchange rate changes			(143,073	)			(144,480	)
Net change in cash and cash equivalents			2,793,870				(2,938,585	)
Cash and cash equivalents, beginning of the period			1,012,479				7,177,326
Cash and cash equivalents, end of the period		$	3,806,349			$	4,238,741

Operating Activities

Net cash flows used in operating activities was $1,460,744 for the six months ended June 30, 2024, primarily consisting of the following:

	●	Net loss of $3,689,120 for the six months ended June 30, 2024.
	●	Depreciation and amortization expenses of $374,946.
	●	Non-cash lease expense of $182,546.
	●	A loss of $430,331 on fair value changes in investments in marketable shares.
	●	A loss of $1,237,707 on fair value changes in investment in warrants.
	●	An increase of $548,402 in accounts receivable due to increased sale of on-premise software in the current period.
	●	Offset by an increase of $558,667 in other liabilities, mainly because we terminated the consulting service agreement with a customer and will refund $500,000 to the customer.

Investing Activities

Net cash flows provided by investing activities amounted to $5,271,823 for the six months ended June 30, 2024, primarily attributable to net proceeds from sale of unearned warrants of $5,640,000, offset by payment of $350,000 to purchase long-term investment in SAFE and prepayment of $35,209 for property and equipment.

Financing Activities

Net cash flows used in financing activities amounted to $874,136 for the six months ended June 30, 2024, primarily consisting of repayment of $281,451 for short-term and long-term debts, and net repayment of $242,008 for factoring arrangement, and dividend distribution of $417,283.

Contractual Obligations

Lease Commitment

The Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases were classified as operating leases. It has also entered into a lease for office equipment, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases.

As of June 30, 2024, future minimum lease payments under the non-cancelable lease agreements are as follows:

Year Ending December 31,		Finance Leases				Operating Leases
Remaining of 2024		$	8,394			$	198,991
2025			16,787				373,470
2026			16,787				303,852
2027			16,787				261,809
2028			11,192				261,809
Thereafter			-				870,248
Total lease payments			69,947				2,270,179
Less: imputed interest			(1,900	)			(106,835	)
Total lease liabilities			68,047				2,163,344
Less: current portion			(15,992	)			(358,377	)
Non-current lease liabilities		$	52,055			$	1,804,967

11

Debts

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

As of June 30, 2024, future minimum principal payments for long-term debts are as follows:

		Principal
Year Ending December 31,		Payment
Remaining of 2024		$	260,702
2025			404,497
2026			360,339
2027			386,977
2028			177,502
Thereafter			336,584
Total		$	1,926,601

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2024.

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 unaudited consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. We continue to evaluate the estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed herein reflect the more significant judgments and estimates used in preparation of our unaudited consolidated financial statements.

Revenue Recognition

The Company recognizes revenues under the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”.

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenues amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross sales in the United States.

12

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

Revenues from On-Premise Software

Licenses for on-premise software provide the customers with a right to use the software as it exists when made available to the customers. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customers. Licenses for on-premise software are typically sold to the customers with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support 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 customers. The subscription contracts are generally one year or less in length.

Revenues from Software Development and Other Miscellaneous Services

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

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 contracts that result in the transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create an asset with an alternative use to the Company. The Company recognizes revenues on rate per hour contracts based on the amount billable to the customers, as the Company has the right to invoice the customers in an amount that directly corresponds with the value to the customers of the Company’s performance to date.

13

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 normally include both cash and noncash considerations. Cash consideration is paid in installment payments and is recognized in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is in the form of 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 Company records reduction to revenues for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which it makes such a determination. Reserves for customer refunds are included within other current liabilities or other non-current liabilities on the consolidated balance sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

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, current and non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.5 million and $1.3 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 June 30, 2024. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2024, 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, 2023, as filed with the Securities and Exchange Commission on April 9, 2024.

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 June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

14

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, 2023, 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.

(c) During the quarter ended June 30, 2024, no director or officer of the Company adopted or terminated a contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or a non-Rule 10b5-1 trading arrangement.

ITEM 6. EXHIBITS

Exhibit Number		Description of Document

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.

15

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: August 14, 2024	By:	/s/ Sumitaka Yamamoto
		Sumitaka Yamamoto
		Chief Executive Officer and President (principal executive officer)

Dated: August 14, 2024	By:	/s/ Qizhi Gao
		Qizhi Gao
		Chief Financial Officer (principal financial officer and principal accounting officer)

16

Exhibit 31.1

CERTIFICATIONS

I, Sumitaka Yamamoto, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2024 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: August 14, 2024	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 June 30, 2024 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: August 14, 2024	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 June 30, 2024 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: August 14, 2024	/s/ Sumitaka Yamamoto
	Sumitaka Yamamoto
	Chief Executive Officer and President (principal executive officer)

Date: August 14, 2024	/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.

Cover - $ / shares	6 Months Ended
Cover - $ / shares	Jun. 30, 2024	Aug. 14, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
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		20,864,144
Entity Listing, Par Value Per Share	$ 0.0001

Consolidated Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 3,806,349	$ 1,012,479
Accounts receivable	2,440,872	2,623,682
Investments in marketable securities	435,498	642,348
Investment in equity securities		300,000
Prepaid expenses	3,877,454	536,865
Current portion of long-term note receivable	100,000	100,000
Other current assets	199,221	234,761
Total current assets	10,899,889	5,494,893
Non-current assets:
Accounts receivable, non-current	640,197
Property and equipment, net	640,787	763,730
Operating lease right-of-use assets	2,106,466	2,467,889
Intangible asset, net	4,196,875	4,515,625
Goodwill	3,276,441	3,276,441
Long-term investment in SAFE	350,000
Long-term investment in equity securities	300,000
Long-term investment in warrants	543,120	2,004,308
Deferred tax assets	395,743	369,436
Security deposits	310,833	348,428
Other non-current assets	70,309	71
Total non-current assets	13,176,045	14,128,874
Total assets	24,075,934	19,623,767
Current liabilities:
Accrued payroll and other employee costs	628,136	723,305
Short-term debt		135,937
Current portion of long-term debts	508,729	371,783
Insurance premium financing	112,488
Factoring liability	320,759	562,767
Operating lease liabilities, current	358,377	396,535
Finance lease liabilities, current	15,992	17,445
Income tax payables	1,142	162,689
Deferred revenue	2,207,420	2,166,175
Total current liabilities	15,193,319	6,511,555
Long-term debts	1,403,569	1,770,352
Operating lease liabilities, non-current	1,804,967	2,135,160
Finance lease liabilities, non-current	52,055	66,779
Deferred tax liabilities	1,175,125	1,264,375
Other non-current liabilities	685,364	208,732
Total non-current liabilities	5,121,080	5,445,398
Total liabilities	20,314,399	11,956,953
Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023)
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,864,144 and 20,842,690 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)	2,085	2,083
Additional paid-in capital	19,325,270	19,594,801
Accumulated deficit	(18,047,919)	(14,763,469)
Accumulated other comprehensive income	325,857	331,881
Total HeartCore Enterprises, Inc. shareholders’ equity	1,605,293	5,165,296
Non-controlling interests	2,156,242	2,501,518
Total shareholders’ equity	3,761,535	7,666,814
Total liabilities and shareholders’ equity	24,075,934	19,623,767
Related Party [Member]
Current assets:
Due from related party	40,495	44,758
Non-current assets:
Long-term loan receivable	145,274	182,946
Current liabilities:
Accounts payable and accrued expenses – related party	21,579
Other current liabilities	140	1,476
Nonrelated Party [Member]
Non-current assets:
Long-term loan receivable	200,000	200,000
Current liabilities:
Accounts payable and accrued expenses – related party	1,757,545	1,757,038
Other current liabilities	$ 9,261,012	$ 216,405

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
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	20,864,144	20,842,690
Common stock, shares outstanding	20,864,144	20,842,690

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Revenues	$ 4,066,388	$ 5,095,373	$ 9,113,120	$ 13,829,523
Cost of revenues	3,260,507	3,586,938	6,275,050	6,688,004
Gross profit	805,881	1,508,435	2,838,070	7,141,519
Operating expenses:
Selling expenses	179,408	488,062	399,115	1,056,704
General and administrative expenses	2,022,409	2,447,887	4,428,712	5,133,094
Research and development expenses	111,268	39,608	200,402	119,232
Total operating expenses	2,313,085	2,975,557	5,028,229	6,309,030
Income (loss) from operations	(1,507,204)	(1,467,122)	(2,190,159)	832,489
Other income (expenses):
Changes in fair value of investments in marketable securities	(196,249)	(229,022)	(430,331)	(229,022)
Changes in fair value of investment in warrants	(558,820)	(27,258)	(1,237,707)	166,107
Interest income	2,030	18,665	4,624	50,270
Interest expenses	(37,040)	(42,614)	(73,701)	(82,454)
Other income	37,858	109,800	134,874	124,001
Other expenses	(23,856)	(7,297)	(49,050)	(36,754)
Total other expenses	(776,077)	(177,726)	(1,651,291)	(7,852)
Income (loss) before income tax provision	(2,283,281)	(1,644,848)	(3,841,450)	824,637
Income tax expense (benefit)	(72,163)	(622,002)	(152,330)	39,446
Net income (loss)	(2,211,118)	(1,022,846)	(3,689,120)	785,191
Less: net loss attributable to non-controlling interests	(260,018)	(111,046)	(404,670)	(185,298)
Net income (loss) attributable to HeartCore Enterprises, Inc.	(1,951,100)	(911,800)	(3,284,450)	970,489
Other comprehensive income (loss):
Foreign currency translation adjustment	(24,120)	30,533	(13,825)	5,499
Total comprehensive income (loss)	(2,235,238)	(992,313)	(3,702,945)	790,690
Less: comprehensive loss attributable to non-controlling interests	(262,908)	(110,716)	(412,471)	(187,258)
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.	$ (1,972,330)	$ (881,597)	$ (3,290,474)	$ 977,948
Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Basic	$ (0.09)	$ (0.04)	$ (0.16)	$ 0.05
Diluted	$ (0.09)	$ (0.04)	$ (0.16)	$ 0.05
Weighted average common shares outstanding
Basic	20,864,144	20,842,690	20,859,429	19,959,333
Diluted	20,864,144	20,842,690	20,859,429	19,959,333

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
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 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)
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 interest 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 income (loss)							785,191
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
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 income (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
Balance at Dec. 31, 2023	$ 2,083	19,594,801	(14,763,469)	331,881	5,165,296	2,501,518	7,666,814
Balance, shares at Dec. 31, 2023	20,842,690
Net income (loss)			(1,333,350)		(1,333,350)	(144,652)	(1,478,002)
Foreign currency translation adjustment				15,206	15,206	(4,911)	10,295
Capital contribution from non-controlling shareholder						67,195	67,195
Stock-based compensation	$ 2	91,710			91,712		91,712
Stock-based compensation, shares	21,454
Balance at Mar. 31, 2024	$ 2,085	19,686,511	(16,096,819)	347,087	3,938,864	2,419,150	6,358,014
Balance, shares at Mar. 31, 2024	20,864,144
Balance at Dec. 31, 2023	$ 2,083	19,594,801	(14,763,469)	331,881	5,165,296	2,501,518	7,666,814
Balance, shares at Dec. 31, 2023	20,842,690
Net income (loss)							(3,689,120)
Balance at Jun. 30, 2024	$ 2,085	19,325,270	(18,047,919)	325,857	1,605,293	2,156,242	3,761,535
Balance, shares at Jun. 30, 2024	20,864,144
Balance at Mar. 31, 2024	$ 2,085	19,686,511	(16,096,819)	347,087	3,938,864	2,419,150	6,358,014
Balance, shares at Mar. 31, 2024	20,864,144
Net income (loss)			(1,951,100)		(1,951,100)	(260,018)	(2,211,118)
Foreign currency translation adjustment				(21,230)	(21,230)	(2,890)	(24,120)
Stock-based compensation		56,042			56,042		56,042
Distribution of dividends		(417,283)			(417,283)		(417,283)
Balance at Jun. 30, 2024	$ 2,085	$ 19,325,270	$ (18,047,919)	$ 325,857	$ 1,605,293	$ 2,156,242	$ 3,761,535
Balance, shares at Jun. 30, 2024	20,864,144

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities:
Net income (loss)	$ (3,689,120)	$ 785,191
Adjustments to reconcile net income (loss) to net cash flows used in operating activities:
Depreciation and amortization expenses	374,946	306,097
Amortization of debt issuance costs	2,296	1,316
Non-cash lease expense	182,546	155,301
Gain on termination of lease	(469)
Deferred income taxes	(153,531)	(75,240)
Stock-based compensation	147,754	1,094,393
Warrants received as noncash consideration		(4,009,335)
Changes in fair value of investments in marketable securities	430,331	229,022
Changes in fair value of investment in warrants	1,237,707	(166,107)
Loss on disposal of property and equipment	1,894
Changes in assets and liabilities:
Accounts receivable	(548,402)	(596,312)
Prepaid expenses	158,110	1,245
Other assets	(7,526)	23,277
Accrued payroll and other employee costs	(278,361)	124
Due to related party	(1,246)	4,214
Operating lease liabilities	(183,047)	(147,035)
Income tax payables	(152,697)	106,625
Deferred revenue	165,073	810,639
Other liabilities	558,667	116,382
Net cash flows used in operating activities	(1,460,744)	(1,368,562)
Cash flows from investing activities:
Purchases of property and equipment	(4,134)	(180,451)
Prepayment for property and equipment	(35,209)
Advance on note receivable		(300,000)
Purchase of long-term investment in SAFE	(350,000)
Net proceeds from sale of warrants	5,640,000
Repayment of loan provided to related party	21,166	23,715
Payment for acquisition of subsidiary, net of cash acquired		(724,910)
Net cash flows provided by (used in) investing activities	5,271,823	(1,181,646)
Cash flows from financing activities:
Payments for finance leases	(8,526)	(11,243)
Proceeds from short-term debt	68,138
Repayment of short-term and long-term debts	(281,451)	(411,923)
Repayment of insurance premium financing	(60,201)	(149,250)
Net proceeds from factoring arrangement		328,967
Net repayment of factoring arrangement	(242,008)
Payments for debt issuance costs		(448)
Distribution of dividends	(417,283)
Capital contribution from non-controlling shareholder	67,195
Net cash flows used in financing activities	(874,136)	(243,897)
Effect of exchange rate changes	(143,073)	(144,480)
Net change in cash and cash equivalents	2,793,870	(2,938,585)
Cash and cash equivalents - beginning of the period	1,012,479	7,177,326
Cash and cash equivalents - end of the period	3,806,349	4,238,741
Supplemental cash flow disclosures:
Interest paid	74,063	40,083
Income taxes paid	117,524
Non-cash investing and financing transactions:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	125,735
Insurance premium financing	172,689	389,035
Liabilities assumed in connection with purchase of property and equipment		2,199
Common shares issued for acquisition of subsidiary		3,150,000
Warrants converted to marketable securities	223,481	1,257,868
Nonrelated Party [Member]
Changes in assets and liabilities:
Accounts payable and accrued expenses – related party	272,375	(8,359)
Related Party [Member]
Changes in assets and liabilities:
Accounts payable and accrued expenses – related party	$ 21,956

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (1,951,100)	$ (911,800)	$ (3,284,450)	$ 970,489

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2024

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 the business of providing consulting services to Japanese companies with intention to go public in the United States capital market.

On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California in April 2006, and its wholly-owned subsidiaries, Sigmaways B.V. 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.

In November 2023, HeartCore Japan established a 51% owned subsidiary in Vietnam, HeartCore Luvina Vietnam Company Limited (“HeartCore Luvina”), which is engaged in the business of providing software development and other services. HeartCore Luvina started its operations from February 2024.

On November 17, 2023, HeartCore Japan and HeartCore Capital Advisors entered into a merger agreement to merge the two entities into one with HeartCore Japan being the surviving entity. On January 1, 2024, the merger was completed and HeartCore Capital Advisors transferred all of its assets and liabilities to HeartCore Japan. The merger has been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled the two entities before and after the transaction.

In April 2024, HeartCore Financial incorporated a branch office, HeartCore Financial, Inc. – Japan Branch Office (“HeartCore Financial – Japan”), in Japan. HeartCore Financial – Japan is engaged in the business of providing financial consulting services.

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

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, 2023.

Correction of Error in Previously Issued Financial Statements

During the review of the Company’s consolidated financial statements for the six months ended June 30, 2024, the Company identified an error in the consolidated statement of cash flows in the consolidated financial statements for the three months ended March 31, 2024 due to a misclassification between operating and investing activities for the net proceeds received from sale of warrants, and corrected such error through a cumulative out-of-period adjustment in the consolidated statement of cash flows for the six months ended June 30, 3024. The change in prepaid expenses and change in other liabilities in the operating cash flows for the three months ended March 31, 2024 should have been $102,028 and $60,658, respectively, but was stated as $(3,257,972) and $5,060,658, respectively, resulting in net cash flows provided by operating activities overstated by $1,640,000. Concurrently, the Company failed to include net proceeds from sale of warrants included in the investing activities of $1,640,000, resulting in net cash flows provided by investing activities understated by $1,640,000 in the consolidated statement of cash flows for the three months ended March 31, 2024. The error had no impact on the consolidated balance sheet, statement of operations and comprehensive income (loss) and statement of changes in shareholders’ equity.

In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated this error and, based on analysis of quantitative and qualitative factors, determined that the error is not material to the previously issued financial statements and the cumulative out-of-period adjustment for the correction of this error is not material to the financial statements for the six months ended June 30, 2024. Therefore, as permitted by SAB108, the Company corrected such error in the current filing through a cumulative out-of-period adjustment in the consolidated statement of cash flows for the six months ended June 30, 3024.

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 unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the 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 and intangible asset, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and finance leases, valuation of asset retirement obligations, valuation of investment in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates.

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:

		June 30,				December 31,
		2024				2023
Beginning balance		$	208,732			$	138,018
Liabilities incurred			-				83,821
Accretion expense			176				428
Liabilities settled			(3,779	)			-
Foreign currency translation adjustment			(19,765	)			(13,535	)
Ending balance		$	185,364			$	208,732

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 six months ended June 30, 2024 and 2023, software development costs expensed as incurred amounted to $200,402 and $119,232, respectively. These software development costs were included in the research and development expenses.

Investment in Warrants

Investment in warrants represents stock warrants of its consulting service customers. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investment in warrants is classified as long-term if the warrants are exercisable over one year after the date of receipt.

Investments in Marketable Securities

Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities 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).

Investment in Equity Securities

Investment in equity securities represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value. Investment in equity securities is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investment in equity securities is classified as long-term if the Company anticipates to dispose of the investment over one year after the date of receipt based on information available as of the date the unaudited consolidated financial statements are issued. The Company did not recognize any impairment loss on investment in equity securities for the six months ended June 30, 2024.

Investment in SAFE

Investment in SAFE represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value through a simple agreement for future equity (“SAFE”). Investment in SAFE is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investment in SAFE is classified as long-term if the Company anticipates the equity financing or dissolution or liquidity event prescribed in the SAFE to take place over one year after the date of receipt based on information available as of the date the unaudited consolidated financial statements are issued. The Company did not recognize any impairment loss on investment in SAFE for the six months ended June 30, 2024.

Intangible Asset, Net

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

Impairment of Long-Lived Assets Other Than 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 six months ended June 30, 2024 and 2023.

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

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 within the unaudited consolidated statements of changes in shareholders’ equity.

Revenue Recognition

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

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenues amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross sales in the United States.

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

Revenues from On-Premise Software

Licenses for on-premise software provide the customers with a right to use the software as it exists when made available to the customers. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customers. Licenses for on-premise software are typically sold to the customers with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support 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 customers. The subscription contracts are generally one year or less in length.

Revenues from Software Development and Other Miscellaneous Services

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

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 contracts that result in the transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create an asset with an alternative use to the Company. The Company recognizes revenues on rate per hour contracts based on the amount billable to the customers, as the Company has the right to invoice the customers in an amount that directly corresponds with the value to the customers of the Company’s performance to date.

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 normally include both cash and noncash considerations. Cash consideration is paid in installment payments and is recognized in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is in the form of 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 Company records reduction to revenues for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which it makes such a determination. Reserves for customer refunds are included within other current liabilities or other non-current liabilities on the consolidated balance sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

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, current or non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.5 million and $1.3 million, respectively.

Disaggregation of Revenues

The Company disaggregates its revenues from contracts by product/service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues by revenue stream for the three and six months ended June 30, 2024 and 2023 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from on-premise software		$	575,424			$	704,268			$	1,654,160			$	1,061,189
Revenues from maintenance and support services			549,284				874,725				1,177,048				1,576,199
Revenues from software as a service (“SaaS”)			152,248				177,529				291,948				348,573
Revenues from software development and other miscellaneous services			516,561				406,455				964,019				1,086,796
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

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


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from customer experience management platform		$	1,420,584			$	1,725,872			$	3,480,173			$	3,292,309
Revenues from process mining			101,307				188,555				174,462				290,756
Revenues from robotic process automation			102,373				127,283				158,564				213,469
Revenues from task mining			107,362				95,679				153,220				202,767
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Revenues from others			61,891				25,588				120,756				73,456
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

As of June 30, 2024 and 2023, and for the periods then ended, the majority of the long-lived assets (excluding intangible asset) and 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 receivable, note receivable and other receivable. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

For the six months ended June 30, 2024, customer A represents 13.7% of the Company’s total revenues. For the six months ended June 30, 2023, customer B, C and D represent 18.2%, 12.8% and 11.8%, respectively, of the Company’s total revenues.

For the six months ended June 30, 2024, no vendor accounts for more than 10% of the Company’s total purchases. For the six months ended June 30, 2023, vendor A and B represent 60.9% and 22.7%, 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 and comprehensive income (loss) based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.

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 interests, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded 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 income (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 June 30, 2024 and December 31, 2023, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 are summarized below (also see NOTE 6):


Fair Value Measurements as of June 30, 2024
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at June 30, 2024
Investments in marketable securities			435,498				-				-				435,498
Long-term investment in warrants			-				-				543,120				543,120


Fair Value Measurements as of December 31, 2023
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at December 31, 2023
Investments in marketable securities			642,348				-				-				642,348
Long-term investment in warrants			-				-				2,004,308				2,004,308

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2023, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis. For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2024

Credit Loss [Abstract]

ACCOUNTS RECEIVABLE

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		June 30,				December 31,
		2024				2023
Accounts receivable – non-factored		$	2,760,310			$	2,060,915
Accounts receivable – factored with recourse			320,759				562,767
Total accounts receivable, gross			3,081,069				2,623,682
Less: allowance for credit losses			-				-
Total accounts receivable			3,081,069				2,623,682
Less: current portion			(2,440,872	)			(2,623,682	)
Accounts receivable, non-current		$	640,197			$	-

PREPAID EXPENSES

6 Months Ended

Jun. 30, 2024

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

		June 30,				December 31,
		2024				2023
Prepayments to software and consulting services vendors		$	189,168			$	199,376
Prepaid marketing and consulting fees			34,269				92,546
Prepaid subscription fees			49,080				95,971
Prepaid insurance premium			152,678				72,668
Referral fee paid in advance			3,360,000				-
Others			92,259				76,304
Total		$	3,877,454			$	536,865

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2024

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 5 – RELATED PARTY TRANSACTIONS

As of June 30, 2024 and December 31, 2023, the Company has a due to related party balance of $140 and $1,476, respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”) and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the six months ended June 30, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company in a net amount of $1,246. During the six months ended June 30, 2023, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $4,214.

As of June 30, 2024 and December 31, 2023, the Company has a loan receivable balance of $185,769 and $227,704, 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 six months ended June 30, 2024 and 2023, the Company received repayments of $21,166 and $23,715, respectively, from this related party.

During the six months ended June 30, 2024, the Company engaged Luvina Software Joint Stock Company, the non-controlling interest shareholder of HeartCore Luvina, for software development and other support services in the amount of $31,590. As of June 30, 2024 and December 31, 2023, the Company has an accounts payable and accrued expenses balance of $21,579 and nil, respectively, to this related party.

INVESTMENTS

6 Months Ended

Jun. 30, 2024

Investments, All Other Investments [Abstract]

NOTE 6 – INVESTMENTS

Investment in SAFE

On April 17, 2024, the Company entered into a simple agreement for future equity (“SAFE”) for $350,000 with Heart-Tech Health, Inc. (“Heart-Tech”), a non-related company, in exchange for the right to be issued certain shares of Heart-Tech’s preferred stock in connection with Heart-Tech’s future equity financing, at a 15% discount to the price per share of the preferred stock sold in the equity financing, subject to a pre-determined valuation cap. Alternatively, upon a dissolution or liquidity event such as a change in control or an initial public offering, the Company is entitled to receive a portion of $350,000. As of June 30, 2024, the Company recorded the investment of $350,000 as an investment in SAFE on the consolidated balance sheet.

Investment in Equity Securities

On May 2, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 8% per annum and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering on the Nasdaq Capital Market or New York Stock Exchange, or 3) 180 days following the note issuance. The interest rate would be 12% per annum for any amount that is unpaid when due. On July 27, 2023, the Company entered into a note exchange agreement with the promissory note issuer to convert all of the promissory note principal amount and accrued interest into 600,000 shares of common shares of the promissory note issuer.

Investment in Warrants

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

The following table summarizes the Company’s investment in warrants activities for the six months ended June 30, 2024 and 2023:


		For the Six Months Ended
		June 30,
		2024				2023
Fair value of investment in warrants at beginning of the period		$	2,004,308			$	-
Warrants received as noncash consideration			-				4,009,335
Changes in fair value of investment in warrants			(1,237,707	)			166,107
Warrants converted to marketable securities			(223,481	)			(1,257,868	)
Fair value of investment in warrants at end of the period		$	543,120			$	2,917,574

Investments in Marketable Securities

The Company’s investments in marketable securities represent stocks received upon the exercise of warrants described above. They are registered for public sale with readily determinable fair values, and are measured at quoted prices on a recurring basis at the end of the period. The following table summarizes the Company’s investments in marketable securities activities for the six months ended June 30, 2024 and 2023:


		For the Six Months Ended
		June 30,
		2024				2023
Fair value of investments in marketable securities at beginning of the period		$	642,348			$	-
Warrants converted to marketable securities			223,481				1,257,868
Changes in fair value of investments in marketable securities			(430,331	)			(229,022	)
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	435,498			$	1,028,846

LONG-TERM NOTE RECEIVABLE

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

LONG-TERM NOTE RECEIVABLE

NOTE 7 – LONG-TERM NOTE RECEIVABLE

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

PROPERTY AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

NOTE 8 – PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

		June 30,				December 31,
		2024				2023
Leasehold improvements		$	444,237			$	496,810
Machinery and equipment			648,113				706,145
Vehicle			81,301				89,859
Software			136,287				150,633
Subtotal			1,309,938				1,443,447
Less: accumulated depreciation			(669,151	)			(679,717	)
Property and equipment, net		$	640,787			$	763,730

Depreciation expenses are $56,196 and $40,472 for the six months ended June 30, 2024 and 2023, respectively.

INTANGIBLE ASSET, NET

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSET, NET

NOTE 9 – INTANGIBLE ASSET, NET

Intangible asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

		June 30,				December 31,
		2024				2023
Customer relationship		$	5,100,000			$	5,100,000
Less: accumulated amortization			(903,125	)			(584,375	)
Intangible asset, net		$	4,196,875			$	4,515,625

Amortization expenses are $318,750 and $265,625 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the future estimated amortization cost for intangible asset is as follows:

		Estimated
Year Ended December 31,		Amortization
Remaining of 2024		$	318,750
2025			637,500
2026			637,500
2027			637,500
2028			637,500
Thereafter			1,328,125
Total		$	4,196,875

LEASES

6 Months Ended

Jun. 30, 2024

NOTE 10 – LEASES

The Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases were classified as operating leases. It has also entered into a lease for office equipment, 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 $69,106 and $85,613 are included in property and equipment, net as of June 30, 2024 and December 31, 2023, 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 in the consolidated balance sheets.

The components of lease costs are as follows:

SCHEDULE OF LEASE COSTS


		For the Six Months Ended
		June 30,
		2024				2023
Finance lease costs
Amortization of right-of-use assets		$	8,733			$	10,902
Interest on lease liabilities			499				86
Total finance lease costs			9,232				10,988
Operating lease costs			198,701				176,809
Total lease costs		$	207,933			$	187,797

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


		For the Six Months Ended
		June 30,
		2024				2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	499			$	86
Operating cash flows from operating leases			206,648				164,317
Financing cash flows from finance leases			8,526				11,243
Operating lease right-of-use assets obtained in exchange for operating lease liabilities			125,735				-

Weighted average remaining lease term (years)
Finance leases			4.3				0.3
Operating leases			7.2				8.7

Weighted average discount rate (per annum)
Finance leases			1.32	%			1.32	%
Operating leases			1.37	%			1.32	%

As of June 30, 2024, the future maturity of lease liabilities is as follows:

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2024		$	8,394			$	198,991
2025			16,787				373,470
2026			16,787				303,852
2027			16,787				261,809
2028			11,192				261,809
Thereafter			-				870,248
Total lease payments			69,947				2,270,179
Less: imputed interest			(1,900	)			(106,835	)
Total lease liabilities			68,047				2,163,344
Less: current portion			(15,992	)			(358,377	)
Non-current lease liabilities		$	52,055			$	1,804,967

Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amount to $310,833 and $348,428 as of June 30, 2024 and December 31, 2023, respectively.

OTHER LIABILITIES

6 Months Ended

Jun. 30, 2024

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES

NOTE 11 – OTHER LIABILITIES

Other current liabilities consist of the following:

SCHEDULE OF OTHER CURRENT LIABILITIES

		June 30,				December 31,
		2024				2023
Accrued consumption taxes		$	203,070			$	143,702
Advance received for warrants sale*			9,000,000				-
Others			57,942				72,703
Total other current liabilities		$	9,261,012			$	216,405

*

On February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

Other non-current liabilities consist of the following:

		June 30,				December 31,
		2024				2023
Asset retirement obligations		$	185,364			$	208,732
Customer refund liability**			500,000				-
Total other non-current liabilities		$	685,364			$	208,732

**	On June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement with the customer was terminated and the Company will refund $500,000 to the customer in August 2025.

FACTORING LIABILITY

6 Months Ended

Jun. 30, 2024

Factoring Liability

FACTORING LIABILITY

NOTE 12 – FACTORING LIABILITY

Sigmaways, the subsidiary acquired by the Company in February 2023, 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 June 30, 2024 and December 31, 2023, there was $320,759 and $562,767 borrowed and outstanding under the Factoring Agreement, respectively. There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense. During the six months ended June 30, 2024 and 2023, the Company recorded $30,786 and $41,611 in interest expenses related to the Factoring Agreement, respectively.

INSURANCE PREMIUM FINANCING

6 Months Ended

Jun. 30, 2024

Insurance [Abstract]

INSURANCE PREMIUM FINANCING

NOTE 13 – INSURANCE PREMIUM FINANCING

In January 2024, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $172,689 at an annual interest rate of 13.9% for eleven months from February 1, 2024, payable in eleven monthly installments of principal and interest.

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

As of June 30, 2024 and December 31, 2023, the balances of the insurance premium financing were $112,488 and nil, respectively. During the six months ended June 30, 2024 and 2023, the Company recorded $7,044 and $18,033, respectively, in interest expenses related to the insurance premium financing.

DEBTS

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

NOTE 14 – DEBTS

Short-term Debt

The Company’s short-term debt represents a loan borrowed from a financial institution as follows:

SCHEDULE OF SHORT-TERM DEBTS

Name of Financial
Institution

Original
Amount
Borrowed

Loan
Duration

Annual
Interest Rate

Balance as of
June 30,
2024

Balance as of
December 31,
2023

Biz Forward Co., Ltd.

JPY19,280,001

(a)

12/26/2023 – 1/31/2024

36.840

%

$

-

$

135,937

(a)	The loan is secured by accounts receivable of HeartCore Japan in the amount of JPY23,882,562.

Long-term Debts

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

SCHEDULE OF LONG-TERM DEBTS

Name of Banks/Financial Institutions		Original Amount Borrowed				Loan Duration		Annual Interest Rate				Balance as of June 30, 2024				Balance as of December 31, 2023
Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000	(b)(d)		1/10/2019 – 1/10/2024			0.430	%		$	-			$	70,507
Loans with banks and financial institutions
Resona Bank, Limited			JPY50,000,000	(b)(c)		12/29/2017 – 12/29/2024			0.675	%			49,470				54,678
Resona Bank, Limited			JPY10,000,000	(b)(c)		9/30/2020 – 9/30/2027			1.000	%			34,945				38,624
Resona Bank, Limited			JPY40,000,000	(b)(c)		9/30/2020 – 9/30/2027			1.000	%			139,781				154,495
Resona Bank, Limited			JPY20,000,000	(b)(c)		11/13/2020 – 10/31/2027			1.600	%			71,408				78,925
Sumitomo Mitsui Banking Corporation			JPY100,000,000	(b)		12/28/2018 – 7/1/2024			1.475	%			10,507				11,612
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		12/30/2019 – 12/30/2026			1.975	%			28,113				31,072
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		10/4/2023 – 9/30/2028			0.600	%			61,661				68,152
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		10/4/2023 – 9/30/2028			0.000	%			61,661				68,152
The Shoko Chukin Bank, Ltd.			JPY50,000,000			7/27/2020 – 6/30/2027			1.290	%			165,859				183,319
The Shoko Chukin Bank, Ltd.			JPY30,000,000			7/25/2023 – 6/30/2028			Tokyo Interbank Offered Rate + 1.950	%			175,108				197,137
Japan Finance Corporation			JPY80,000,000			11/17/2020 – 11/30/2027			0.210	%			295,994				327,152
Higashi-Nippon Bank			JPY30,000,000	(b)		3/31/2022 – 3/31/2025			1.400	%			84,205				93,070
Higashi-Nippon Bank			JPY30,000,000	(b)(c)		10/11/2023 – 9/30/2028			1.450	%			184,996				204,471
First Home Bank		$	350,000	(e)		4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%			212,893				229,007
U.S. Small Business Administration		$	350,000	(e)		5/30/2020 – 5/30/2050			3.750	%			350,000				350,000
Aggregate outstanding principal balances													1,926,601				2,160,373
Less: unamortized debt issuance costs													(14,303	)			(18,238	)
Less: current portion													(508,729	)			(371,783	)
Non-current portion												$	1,403,569			$	1,770,352

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

Interest expense for short-term debt and long-term debts was $2,929 and $32,942, respectively, for the six months ended June 30, 2024. Interest expense for short-term debt and long-term debts was nil and $22,810, respectively, for the six months ended June 30, 2023.

As of June 30, 2024, future minimum principal payments for long-term debts are as follows:

		Principal
Year Ended December 31,		Payment
Remaining of 2024		$	260,702
2025			404,497
2026			360,339
2027			386,977
2028			177,502
Thereafter			336,584
Total		$	1,926,601

INCOME TAXES

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

NOTE 15 – INCOME TAXES

United States

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

Netherlands

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

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.

Vietnam

HeartCore Luvina is a company incorporated in Vietnam in November 2023. It is subject to standard income tax rate at 20% with respect to the taxable income.

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 result in an effective statutory tax rate of approximately 34.59% for the six months ended June 30, 2024 and 2023.

For the six months ended June 30, 2024 and 2023, the Company’s income tax expense (benefit) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

		2024				2023
		For the Six Months Ended
		June 30,
		2024				2023
Current		$	1,201			$	114,686
Deferred			(153,531	)			(75,240	)
Income tax expense (benefit)		$	(152,330	)		$	39,446

The effective tax rate was 3.97% and 4.78% for the six months ended June 30, 2024 and 2023, respectively.

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 16 – STOCK-BASED COMPENSATION

Options

On August 6, 2021, the Board of Directors and shareholders 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 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 1, 2023, the Board of Directors 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 June 30, 2024.

The following table summarizes the stock options activity and related information for the six months ended June 30, 2024 and 2023:

SCHEDULE OF STOCK OPTION ACTIVITY

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2023			1,466,500			$	2.50				8.94			$	-
Granted			100,000				1.17				9.61				-
Exercised			-				-				-				-
Forfeited			(2,000	)			2.50				-				-
As of June 30, 2023			1,564,500			$	2.42				8.52			$	26,000

As of January 1, 2024			1,547,000			$	2.41				8.01			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			(35,000	)			2.42				-				-
As of June 30, 2024			1,512,000			$	2.41				7.51			$	-
Vested and exercisable as of June 30, 2024			813,250			$	2.34				7.53			$	-

The Company calculated the fair value of options granted in the six months ended June 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 six months ended June 30, 2024, the Company recognized stock-based compensation related to options of $40,597 and $111,044, respectively. For the three and six months ended June 30, 2023, the Company recognized stock-based compensation related to options of $150,481 and $334,816, respectively. The outstanding unamortized stock-based compensation related to options was $266,230 (which will be recognized through December 2025) as of June 30, 2024.

Restricted Stock Units (“RSUs”)

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 six months ended June 30, 2024 and 2023:

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value Per Share

Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,804	)			1.15
Forfeited			-				-
Unvested as of June 30, 2023			64,366			$	4.95

Unvested as of January 1, 2024			64,366			$	4.95
Granted			-				-
Vested			(21,454	)			4.95
Forfeited			-				-
Unvested as of June 30, 2024			42,912			$	4.95

For the three and six months ended June 30, 2024, the Company recognized stock-based compensation related to RSUs of $15,445 and $36,710, respectively. For the three and six months ended June 30, 2023, the Company recognized stock-based compensation related to RSUs of $28,684 and $759,577, respectively. The outstanding unamortized stock-based compensation related to RSUs was $64,400 (which will be recognized through February 2026) as of June 30, 2024.

SHAREHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

SHAREHOLDERS’ EQUITY

NOTE 17 – SHAREHOLDERS’ EQUITY

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 19).

In November 2023, the Company established a 51% owned subsidiary in Vietnam. On February 16, 2024, the Company received capital contribution of VND1,646.4 million in cash, equivalent to $67,195, from the non-controlling shareholder of the subsidiary.

On March 29, 2024, the Board of Directors approved a dividend declaration of $0.02 per share of common share for the shareholders of record at the close of business on April 26, 2024. The dividends in the amount of $417,283 were paid on May 3, 2024.

As of June 30, 2024 and December 31, 2023, there were 20,864,144 and 20,842,690 shares of common shares issued and outstanding, respectively.

No preferred shares were issued and outstanding as of June 30, 2024 and December 31, 2023.

NET INCOME (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2024

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

NET INCOME (LOSS) PER SHARE

NOTE 18 – NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated on the basis of weighted average outstanding common shares. Diluted net income (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 income (loss) per share if their effect would be anti-dilutive.

The computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2024 and 2023 is as follows:

		2024				2023				2024				2023
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Net income (loss) per share - basic and diluted
Numerator
Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders		$	(1,951,100	)		$	(911,800	)		$	(3,284,450	)		$	970,489
Denominator
Weighted average number of common shares outstanding used in calculating net income (loss) per share			20,864,144				20,842,690				20,859,429				19,959,333
Net income (loss) per share - basic and diluted		$	(0.09	)		$	(0.04	)		$	(0.16	)		$	0.05

For the three and six months ended June 30, 2024 and 2023, the weighted average common shares outstanding are the same for basic and diluted net income (loss) per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

BUSINESS COMBINATION

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS COMBINATION

NOTE 19 – BUSINESS COMBINATION

On September 6, 2022, HeartCore USA entered into the Sigmaways Agreement to acquire 51% of the outstanding shares of Sigmaways, a company incorporated under the laws of the State of California, and its subsidiaries. The Sigmaways Agreement was further amended on December 23, 2022 and February 1, 2023, respectively, and the transaction was closed on February 1, 2023. The purchase consideration is $4,150,000, consisted of $1,000,000 in cash and 2,500,000 shares of common shares of the Company with fair value of $3,150,000 at the closing date.

The total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed and non-controlling interest based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill.

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

		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.

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 income (loss).

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 for the six months ended June 30, 2024 and 2023.

SUBSEQUENT EVENT

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENT

NOTE 20 – SUBSEQUENT EVENT

On July 22, 2024, the Board of Directors of the Company declared a cash dividend of $0.02 per share of the Company’s common shares to be paid on August 26, 2024 to shareholders of record as of August 19, 2024.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2024

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, 2023.

Correction of Error in Previously Issued Financial Statements

Correction of Error in Previously Issued Financial Statements

During the review of the Company’s consolidated financial statements for the six months ended June 30, 2024, the Company identified an error in the consolidated statement of cash flows in the consolidated financial statements for the three months ended March 31, 2024 due to a misclassification between operating and investing activities for the net proceeds received from sale of warrants, and corrected such error through a cumulative out-of-period adjustment in the consolidated statement of cash flows for the six months ended June 30, 3024. The change in prepaid expenses and change in other liabilities in the operating cash flows for the three months ended March 31, 2024 should have been $102,028 and $60,658, respectively, but was stated as $(3,257,972) and $5,060,658, respectively, resulting in net cash flows provided by operating activities overstated by $1,640,000. Concurrently, the Company failed to include net proceeds from sale of warrants included in the investing activities of $1,640,000, resulting in net cash flows provided by investing activities understated by $1,640,000 in the consolidated statement of cash flows for the three months ended March 31, 2024. The error had no impact on the consolidated balance sheet, statement of operations and comprehensive income (loss) and statement of changes in shareholders’ equity.

In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated this error and, based on analysis of quantitative and qualitative factors, determined that the error is not material to the previously issued financial statements and the cumulative out-of-period adjustment for the correction of this error is not material to the financial statements for the six months ended June 30, 2024. Therefore, as permitted by SAB108, the Company corrected such error in the current filing through a cumulative out-of-period adjustment in the consolidated statement of cash flows for the six months ended June 30, 3024.

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 unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the 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 and intangible asset, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and finance leases, valuation of asset retirement obligations, valuation of investment in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates.

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:

		June 30,				December 31,
		2024				2023
Beginning balance		$	208,732			$	138,018
Liabilities incurred			-				83,821
Accretion expense			176				428
Liabilities settled			(3,779	)			-
Foreign currency translation adjustment			(19,765	)			(13,535	)
Ending balance		$	185,364			$	208,732

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 six months ended June 30, 2024 and 2023, software development costs expensed as incurred amounted to $200,402 and $119,232, respectively. These software development costs were included in the research and development expenses.

Investment in Warrants

Investment in Warrants

Investment in warrants represents stock warrants of its consulting service customers. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investment in warrants is classified as long-term if the warrants are exercisable over one year after the date of receipt.

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 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).

Investment in Equity Securities

Investment in Equity Securities

Investment in equity securities represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value. Investment in equity securities is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investment in equity securities is classified as long-term if the Company anticipates to dispose of the investment over one year after the date of receipt based on information available as of the date the unaudited consolidated financial statements are issued. The Company did not recognize any impairment loss on investment in equity securities for the six months ended June 30, 2024.

Investment in SAFE

Investment in SAFE

Investment in SAFE represents investment in a privately held entity that does not have a readily determinable fair value or report net asset value through a simple agreement for future equity (“SAFE”). Investment in SAFE is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investment in SAFE is classified as long-term if the Company anticipates the equity financing or dissolution or liquidity event prescribed in the SAFE to take place over one year after the date of receipt based on information available as of the date the unaudited consolidated financial statements are issued. The Company did not recognize any impairment loss on investment in SAFE for the six months ended June 30, 2024.

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 asset. 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 six months ended June 30, 2024 and 2023.

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

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 within the unaudited consolidated statements of changes in shareholders’ equity.

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. Revenues amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross sales in the United States.

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

Revenues from On-Premise Software

Licenses for on-premise software provide the customers with a right to use the software as it exists when made available to the customers. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customers. Licenses for on-premise software are typically sold to the customers with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support 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 customers. The subscription contracts are generally one year or less in length.

Revenues from Software Development and Other Miscellaneous Services

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

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 contracts that result in the transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customers and does not create an asset with an alternative use to the Company. The Company recognizes revenues on rate per hour contracts based on the amount billable to the customers, as the Company has the right to invoice the customers in an amount that directly corresponds with the value to the customers of the Company’s performance to date.

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 normally include both cash and noncash considerations. Cash consideration is paid in installment payments and is recognized in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is in the form of 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 Company records reduction to revenues for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which it makes such a determination. Reserves for customer refunds are included within other current liabilities or other non-current liabilities on the consolidated balance sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

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, current or non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.5 million and $1.3 million, respectively.

Disaggregation of Revenues

The Company disaggregates its revenues from contracts by product/service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues by revenue stream for the three and six months ended June 30, 2024 and 2023 is as following:

SCHEDULE OF DISAGGREGATION OF REVENUES


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from on-premise software		$	575,424			$	704,268			$	1,654,160			$	1,061,189
Revenues from maintenance and support services			549,284				874,725				1,177,048				1,576,199
Revenues from software as a service (“SaaS”)			152,248				177,529				291,948				348,573
Revenues from software development and other miscellaneous services			516,561				406,455				964,019				1,086,796
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

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


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from customer experience management platform		$	1,420,584			$	1,725,872			$	3,480,173			$	3,292,309
Revenues from process mining			101,307				188,555				174,462				290,756
Revenues from robotic process automation			102,373				127,283				158,564				213,469
Revenues from task mining			107,362				95,679				153,220				202,767
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Revenues from others			61,891				25,588				120,756				73,456
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

As of June 30, 2024 and 2023, and for the periods then ended, the majority of the long-lived assets (excluding intangible asset) and 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 receivable, note receivable and other receivable. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

For the six months ended June 30, 2024, customer A represents 13.7% of the Company’s total revenues. For the six months ended June 30, 2023, customer B, C and D represent 18.2%, 12.8% and 11.8%, respectively, of the Company’s total revenues.

For the six months ended June 30, 2024, no vendor accounts for more than 10% of the Company’s total purchases. For the six months ended June 30, 2023, vendor A and B represent 60.9% and 22.7%, 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 and comprehensive income (loss) based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.

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 interests, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded 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 income (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 June 30, 2024 and December 31, 2023, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 are summarized below (also see NOTE 6):


Fair Value Measurements as of June 30, 2024
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at June 30, 2024
Investments in marketable securities			435,498				-				-				435,498
Long-term investment in warrants			-				-				543,120				543,120


Fair Value Measurements as of December 31, 2023
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at December 31, 2023
Investments in marketable securities			642,348				-				-				642,348
Long-term investment in warrants			-				-				2,004,308				2,004,308

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2023, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis. For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements and related disclosures.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

		June 30,				December 31,
		2024				2023
Beginning balance		$	208,732			$	138,018
Liabilities incurred			-				83,821
Accretion expense			176				428
Liabilities settled			(3,779	)			-
Foreign currency translation adjustment			(19,765	)			(13,535	)
Ending balance		$	185,364			$	208,732

SCHEDULE OF DISAGGREGATION OF REVENUES

SCHEDULE OF DISAGGREGATION OF REVENUES


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from on-premise software		$	575,424			$	704,268			$	1,654,160			$	1,061,189
Revenues from maintenance and support services			549,284				874,725				1,177,048				1,576,199
Revenues from software as a service (“SaaS”)			152,248				177,529				291,948				348,573
Revenues from software development and other miscellaneous services			516,561				406,455				964,019				1,086,796
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

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


		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues from customer experience management platform		$	1,420,584			$	1,725,872			$	3,480,173			$	3,292,309
Revenues from process mining			101,307				188,555				174,462				290,756
Revenues from robotic process automation			102,373				127,283				158,564				213,469
Revenues from task mining			107,362				95,679				153,220				202,767
Revenues from customized software development and services			2,122,059				2,294,953				4,299,652				3,926,572
Revenues from consulting services			150,812				637,443				726,293				5,830,194
Revenues from others			61,891				25,588				120,756				73,456
Total revenues		$	4,066,388			$	5,095,373			$	9,113,120			$	13,829,523

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 are summarized below (also see NOTE 6):


Fair Value Measurements as of June 30, 2024
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at June 30, 2024
Investments in marketable securities			435,498				-				-				435,498
Long-term investment in warrants			-				-				543,120				543,120


Fair Value Measurements as of December 31, 2023
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at December 31, 2023
Investments in marketable securities			642,348				-				-				642,348
Long-term investment in warrants			-				-				2,004,308				2,004,308

ACCOUNTS RECEIVABLE (Tables)

6 Months Ended

Jun. 30, 2024

Credit Loss [Abstract]

SCHEDULE OF ACCOUNTS RECEIVABLE NET

Accounts receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		June 30,				December 31,
		2024				2023
Accounts receivable – non-factored		$	2,760,310			$	2,060,915
Accounts receivable – factored with recourse			320,759				562,767
Total accounts receivable, gross			3,081,069				2,623,682
Less: allowance for credit losses			-				-
Total accounts receivable			3,081,069				2,623,682
Less: current portion			(2,440,872	)			(2,623,682	)
Accounts receivable, non-current		$	640,197			$	-

PREPAID EXPENSES (Tables)

6 Months Ended

Jun. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

SCHEDULE OF PREPAID EXPENSES

Prepaid expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

		June 30,				December 31,
		2024				2023
Prepayments to software and consulting services vendors		$	189,168			$	199,376
Prepaid marketing and consulting fees			34,269				92,546
Prepaid subscription fees			49,080				95,971
Prepaid insurance premium			152,678				72,668
Referral fee paid in advance			3,360,000				-
Others			92,259				76,304
Total		$	3,877,454			$	536,865

INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Marketable Securities [Member]

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES


		For the Six Months Ended
		June 30,
		2024				2023
Fair value of investments in marketable securities at beginning of the period		$	642,348			$	-
Warrants converted to marketable securities			223,481				1,257,868
Changes in fair value of investments in marketable securities			(430,331	)			(229,022	)
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	435,498			$	1,028,846

Warrant [Member]

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

The following table summarizes the Company’s investment in warrants activities for the six months ended June 30, 2024 and 2023:


		For the Six Months Ended
		June 30,
		2024				2023
Fair value of investment in warrants at beginning of the period		$	2,004,308			$	-
Warrants received as noncash consideration			-				4,009,335
Changes in fair value of investment in warrants			(1,237,707	)			166,107
Warrants converted to marketable securities			(223,481	)			(1,257,868	)
Fair value of investment in warrants at end of the period		$	543,120			$	2,917,574

PROPERTY AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2024

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

		June 30,				December 31,
		2024				2023
Leasehold improvements		$	444,237			$	496,810
Machinery and equipment			648,113				706,145
Vehicle			81,301				89,859
Software			136,287				150,633
Subtotal			1,309,938				1,443,447
Less: accumulated depreciation			(669,151	)			(679,717	)
Property and equipment, net		$	640,787			$	763,730

INTANGIBLE ASSET, NET (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS

Intangible asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

		June 30,				December 31,
		2024				2023
Customer relationship		$	5,100,000			$	5,100,000
Less: accumulated amortization			(903,125	)			(584,375	)
Intangible asset, net		$	4,196,875			$	4,515,625

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET

As of June 30, 2024, the future estimated amortization cost for intangible asset is as follows:

		Estimated
Year Ended December 31,		Amortization
Remaining of 2024		$	318,750
2025			637,500
2026			637,500
2027			637,500
2028			637,500
Thereafter			1,328,125
Total		$	4,196,875

LEASES (Tables)

6 Months Ended

Jun. 30, 2024

SCHEDULE OF LEASE COSTS

The components of lease costs are as follows:

SCHEDULE OF LEASE COSTS


		For the Six Months Ended
		June 30,
		2024				2023
Finance lease costs
Amortization of right-of-use assets		$	8,733			$	10,902
Interest on lease liabilities			499				86
Total finance lease costs			9,232				10,988
Operating lease costs			198,701				176,809
Total lease costs		$	207,933			$	187,797

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY’S LEASES

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


		For the Six Months Ended
		June 30,
		2024				2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	499			$	86
Operating cash flows from operating leases			206,648				164,317
Financing cash flows from finance leases			8,526				11,243
Operating lease right-of-use assets obtained in exchange for operating lease liabilities			125,735				-

Weighted average remaining lease term (years)
Finance leases			4.3				0.3
Operating leases			7.2				8.7

Weighted average discount rate (per annum)
Finance leases			1.32	%			1.32	%
Operating leases			1.37	%			1.32	%

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

As of June 30, 2024, the future maturity of lease liabilities is as follows:

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2024		$	8,394			$	198,991
2025			16,787				373,470
2026			16,787				303,852
2027			16,787				261,809
2028			11,192				261,809
Thereafter			-				870,248
Total lease payments			69,947				2,270,179
Less: imputed interest			(1,900	)			(106,835	)
Total lease liabilities			68,047				2,163,344
Less: current portion			(15,992	)			(358,377	)
Non-current lease liabilities		$	52,055			$	1,804,967

OTHER LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2024

Other Liabilities Disclosure [Abstract]

SCHEDULE OF OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

SCHEDULE OF OTHER CURRENT LIABILITIES

		June 30,				December 31,
		2024				2023
Accrued consumption taxes		$	203,070			$	143,702
Advance received for warrants sale*			9,000,000				-
Others			57,942				72,703
Total other current liabilities		$	9,261,012			$	216,405

*

On February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

SCHEDULE OF OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consist of the following:

		June 30,				December 31,
		2024				2023
Asset retirement obligations		$	185,364			$	208,732
Customer refund liability**			500,000				-
Total other non-current liabilities		$	685,364			$	208,732

**	On June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement with the customer was terminated and the Company will refund $500,000 to the customer in August 2025.

DEBTS (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

SCHEDULE OF SHORT-TERM DEBTS

The Company’s short-term debt represents a loan borrowed from a financial institution as follows:

SCHEDULE OF SHORT-TERM DEBTS

Name of Financial
Institution

Original
Amount
Borrowed

Loan
Duration

Annual
Interest Rate

Balance as of
June 30,
2024

Balance as of
December 31,
2023

Biz Forward Co., Ltd.

JPY19,280,001

(a)

12/26/2023 – 1/31/2024

36.840

%

$

-

$

135,937

(a)	The loan is secured by accounts receivable of HeartCore Japan in the amount of JPY23,882,562.

SCHEDULE OF LONG-TERM DEBTS

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

SCHEDULE OF LONG-TERM DEBTS

Name of Banks/Financial Institutions		Original Amount Borrowed				Loan Duration		Annual Interest Rate				Balance as of June 30, 2024				Balance as of December 31, 2023
Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000	(b)(d)		1/10/2019 – 1/10/2024			0.430	%		$	-			$	70,507
Loans with banks and financial institutions
Resona Bank, Limited			JPY50,000,000	(b)(c)		12/29/2017 – 12/29/2024			0.675	%			49,470				54,678
Resona Bank, Limited			JPY10,000,000	(b)(c)		9/30/2020 – 9/30/2027			1.000	%			34,945				38,624
Resona Bank, Limited			JPY40,000,000	(b)(c)		9/30/2020 – 9/30/2027			1.000	%			139,781				154,495
Resona Bank, Limited			JPY20,000,000	(b)(c)		11/13/2020 – 10/31/2027			1.600	%			71,408				78,925
Sumitomo Mitsui Banking Corporation			JPY100,000,000	(b)		12/28/2018 – 7/1/2024			1.475	%			10,507				11,612
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		12/30/2019 – 12/30/2026			1.975	%			28,113				31,072
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		10/4/2023 – 9/30/2028			0.600	%			61,661				68,152
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(b)(c)		10/4/2023 – 9/30/2028			0.000	%			61,661				68,152
The Shoko Chukin Bank, Ltd.			JPY50,000,000			7/27/2020 – 6/30/2027			1.290	%			165,859				183,319
The Shoko Chukin Bank, Ltd.			JPY30,000,000			7/25/2023 – 6/30/2028			Tokyo Interbank Offered Rate + 1.950	%			175,108				197,137
Japan Finance Corporation			JPY80,000,000			11/17/2020 – 11/30/2027			0.210	%			295,994				327,152
Higashi-Nippon Bank			JPY30,000,000	(b)		3/31/2022 – 3/31/2025			1.400	%			84,205				93,070
Higashi-Nippon Bank			JPY30,000,000	(b)(c)		10/11/2023 – 9/30/2028			1.450	%			184,996				204,471
First Home Bank		$	350,000	(e)		4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%			212,893				229,007
U.S. Small Business Administration		$	350,000	(e)		5/30/2020 – 5/30/2050			3.750	%			350,000				350,000
Aggregate outstanding principal balances													1,926,601				2,160,373
Less: unamortized debt issuance costs													(14,303	)			(18,238	)
Less: current portion													(508,729	)			(371,783	)
Non-current portion												$	1,403,569			$	1,770,352

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

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

As of June 30, 2024, future minimum principal payments for long-term debts are as follows:

		Principal
Year Ended December 31,		Payment
Remaining of 2024		$	260,702
2025			404,497
2026			360,339
2027			386,977
2028			177,502
Thereafter			336,584
Total		$	1,926,601

INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

SCHEDULE OF INCOME TAX EXPENSES

For the six months ended June 30, 2024 and 2023, the Company’s income tax expense (benefit) are as follows:

SCHEDULE OF INCOME TAX EXPENSES

		2024				2023
		For the Six Months Ended
		June 30,
		2024				2023
Current		$	1,201			$	114,686
Deferred			(153,531	)			(75,240	)
Income tax expense (benefit)		$	(152,330	)		$	39,446

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

SCHEDULE OF STOCK OPTION ACTIVITY

The following table summarizes the stock options activity and related information for the six months ended June 30, 2024 and 2023:

SCHEDULE OF STOCK OPTION ACTIVITY

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2023			1,466,500			$	2.50				8.94			$	-
Granted			100,000				1.17				9.61				-
Exercised			-				-				-				-
Forfeited			(2,000	)			2.50				-				-
As of June 30, 2023			1,564,500			$	2.42				8.52			$	26,000

As of January 1, 2024			1,547,000			$	2.41				8.01			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			(35,000	)			2.42				-				-
As of June 30, 2024			1,512,000			$	2.41				7.51			$	-
Vested and exercisable as of June 30, 2024			813,250			$	2.34				7.53			$	-

SCHEDULE OF RESTRICTED STOCK UNITS

The following table summarizes the RSUs activity for the six months ended June 30, 2024 and 2023:

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value Per Share

Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,804	)			1.15
Forfeited			-				-
Unvested as of June 30, 2023			64,366			$	4.95

Unvested as of January 1, 2024			64,366			$	4.95
Granted			-				-
Vested			(21,454	)			4.95
Forfeited			-				-
Unvested as of June 30, 2024			42,912			$	4.95

NET INCOME (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2024

Net income (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 income (loss) per share for the three and six months ended June 30, 2024 and 2023 is as follows:

		2024				2023				2024				2023
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Net income (loss) per share - basic and diluted
Numerator
Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders		$	(1,951,100	)		$	(911,800	)		$	(3,284,450	)		$	970,489
Denominator
Weighted average number of common shares outstanding used in calculating net income (loss) per share			20,864,144				20,842,690				20,859,429				19,959,333
Net income (loss) per share - basic and diluted		$	(0.09	)		$	(0.04	)		$	(0.16	)		$	0.05

BUSINESS COMBINATION (Tables)

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION

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

		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

ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - shares	Jul. 16, 2021	Jun. 30, 2024	Dec. 31, 2023	Nov. 30, 2023	Sep. 06, 2022	Feb. 24, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, shares issued		20,864,144	20,842,690
Remaining shares		20,864,144	20,842,690
Heart Core Luvina [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Equity interest owned				51.00%
Share Exchange Agreement [Member] \| HeartCore Japan [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares	15,999,994
Conversion of stock, shares converted	10,706
Common stock, shares issued	10,984
Equity interest owned	97.50%
Remaining shares						278
Sigmaways Agreement [Member] \| Sigmaways Inc [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Equity interest owned					51.00%

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Beginning balance	$ 208,732	$ 138,018
Liabilities incurred		83,821
Accretion expense	176	428
Liabilities settled	(3,779)
Foreign currency translation adjustment	(19,765)	(13,535)
Ending balance	$ 185,364	$ 208,732

SCHEDULE OF DISAGGREGATION OF REVENUES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Product Information [Line Items]
Total revenues	$ 4,066,388	$ 5,095,373	$ 9,113,120	$ 13,829,523
On-Premise Software [Member]
Product Information [Line Items]
Total revenues	575,424	704,268	1,654,160	1,061,189
Maintenance and Support Services [Member]
Product Information [Line Items]
Total revenues	549,284	874,725	1,177,048	1,576,199
Software as a Service (SaaS) [Member]
Product Information [Line Items]
Total revenues	152,248	177,529	291,948	348,573
Software Development and Other Miscellaneous Services [Member]
Product Information [Line Items]
Total revenues	516,561	406,455	964,019	1,086,796
Customised Software Development and Services [Member]
Product Information [Line Items]
Total revenues	2,122,059	2,294,953	4,299,652	3,926,572
Consulting Services [Member]
Product Information [Line Items]
Total revenues	150,812	637,443	726,293	5,830,194
Customer Experience Management Platform [Member]
Product Information [Line Items]
Total revenues	1,420,584	1,725,872	3,480,173	3,292,309
Process Mining [Member]
Product Information [Line Items]
Total revenues	101,307	188,555	174,462	290,756
Robotic Process Automation [Member]
Product Information [Line Items]
Total revenues	102,373	127,283	158,564	213,469
Task Mining [Member]
Product Information [Line Items]
Total revenues	107,362	95,679	153,220	202,767
Others [Member]
Product Information [Line Items]
Total revenues	$ 61,891	$ 25,588	$ 120,756	$ 73,456

SCHEDULE OF ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Platform Operator, Crypto Asset [Line Items]
Investments in marketable securities	$ 435,498	$ 642,348	$ 1,028,846
Long-term investment in warrants	543,120	2,004,308
Fair Value, Inputs, Level 1 [Member]
Platform Operator, Crypto Asset [Line Items]
Investments in marketable securities	435,498	642,348
Long-term investment in warrants
Fair Value, Inputs, Level 2 [Member]
Platform Operator, Crypto Asset [Line Items]
Investments in marketable securities
Long-term investment in warrants
Fair Value, Inputs, Level 3 [Member]
Platform Operator, Crypto Asset [Line Items]
Investments in marketable securities
Long-term investment in warrants	$ 543,120	$ 2,004,308

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2024	Jun. 30, 2024	Jun. 30, 2023
Product Information [Line Items]
Increase decrease in prepaid expense	$ 102,028	$ (158,110)	$ (1,245)
Increase decrease in other operating liabilities	60,658	558,667	116,382
Operating activities overstated	1,640,000	(1,460,744)	(1,368,562)
[custom:NetProceedsFromSaleOfWarrants]	1,640,000	(5,640,000)
Investing activities understated	1,640,000	5,271,823	(1,181,646)
Software development costs		$ 200,402	119,232
Finite lived intangible assets useful life		8 years
Description of revenue recognition		Revenues amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption Tax on sales are calculated at 10% of gross sales in Japan and Vietnam, 5% of gross sales in Canada, 21% of gross sales in Netherlands and nil of gross sales in the United States.
Deferred revenue for service		$ 1,500,000	$ 1,300,000
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer A [Member]
Product Information [Line Items]
Concentration risk percentage		13.70%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer B [Member]
Product Information [Line Items]
Concentration risk percentage			18.20%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer C [Member]
Product Information [Line Items]
Concentration risk percentage			12.80%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer D [Member]
Product Information [Line Items]
Concentration risk percentage			11.80%
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Vendor A [Member]
Product Information [Line Items]
Concentration risk percentage			60.90%
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Vendor B [Member]
Product Information [Line Items]
Concentration risk percentage			22.70%
Previously Reported [Member]
Product Information [Line Items]
Increase decrease in prepaid expense	(3,257,972)
Increase decrease in other operating liabilities	$ 5,060,658

SCHEDULE OF ACCOUNTS RECEIVABLE NET (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable, gross	$ 3,081,069	$ 2,623,682
Less: allowance for credit losses
Total accounts receivable	3,081,069	2,623,682
Less: current portion	(2,440,872)	(2,623,682)
Accounts receivable, non-current	640,197
Non-Factored [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable, gross	2,760,310	2,060,915
Factored With Recourse [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total accounts receivable, gross	$ 320,759	$ 562,767

SCHEDULE OF PREPAID EXPENSES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepayments to software and consulting services vendors	$ 189,168	$ 199,376
Prepaid marketing and consulting fees	34,269	92,546
Prepaid subscription fees	49,080	95,971
Prepaid insurance premium	152,678	72,668
Referral fee paid in advance	3,360,000
Others	92,259	76,304
Total	$ 3,877,454	$ 536,865

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Loan receivable balance	$ 100,000		$ 100,000
Sumitaka Yamamoto [Member]
Related Party Transaction [Line Items]
Other receivables	140		1,476
Operating costs and expenses	1,246	$ 4,214
Heartcore Technology Inc [Member]
Related Party Transaction [Line Items]
Loan receivable balance	$ 185,769		227,704
Related party annual interest rate	1.475%
Proceeds from repayment of debt related party	$ 21,166	$ 23,715
Luvina Software Joint Stock Company Limited [Member]
Related Party Transaction [Line Items]
Payments to Develop Software	31,590
Related Party [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued expenses - related party	$ 21,579

SCHEDULE OF INVESTMENT IN WARRANTS ACTIVITY (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Fair value of investment in warrants at beginning of the period			$ 2,004,308
Warrants received as noncash consideration				$ (4,009,335)
Changes in fair value of investment in warrants	$ 558,820	$ 27,258	1,237,707	(166,107)
Warrants converted to marketable securities			223,481	1,257,868
Fair value of investment in warrants at end of the period	543,120		543,120
Warrant [Member]
Fair value of investment in warrants at beginning of the period			2,004,308
Warrants received as noncash consideration				4,009,335
Changes in fair value of investment in warrants			(1,237,707)	166,107
Warrants converted to marketable securities			223,481	(1,257,868)
Fair value of investment in warrants at end of the period	$ 543,120	$ 2,917,574	$ 543,120	$ 2,917,574

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Investments, All Other Investments [Abstract]
Fair value of investments in marketable securities at beginning of the period			$ 642,348
Warrants converted to marketable securities			223,481	1,257,868
Changes in fair value of investments in marketable securities	$ (196,249)	$ (229,022)	(430,331)	(229,022)
Marketable securities sold
Fair value of investments in marketable securities at end of the period	$ 435,498	$ 1,028,846	$ 435,498	$ 1,028,846

INVESTMENTS (Details Narrative) - USD ($)	Apr. 17, 2024	Jul. 27, 2023	May 02, 2023	Jun. 30, 2024	Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Long-term investment in SAFE				$ 350,000
Promissory Note [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payable			$ 300,000
Interest rate			8.00%
Debt instrument maturity description			1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering on the Nasdaq Capital Market or New York Stock Exchange, or 3) 180 days following the note issuance. The interest rate would be 12% per annum for any amount that is unpaid when due.
Variable interest rate			12.00%
SAFE Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Long-term investment in SAFE	$ 350,000			$ 350,000
Discount rate for price per share issued	15.00%
Proceeds from investment in SAFE	$ 350,000
Note Exchange Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt conversion shares issued		600,000

LONG-TERM NOTE RECEIVABLE (Details Narrative) - Promissory Note [Member]	Sep. 01, 2023 USD ($)
Short-Term Debt [Line Items]
Receivables	$ 300,000
Receivables interest rate	4.00%
Maturity date	Sep. 02, 2026
Interest rate	10.00%

SCHEDULE OF PROPERTY AND EQUIPMENT NET (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Subtotal	$ 1,309,938	$ 1,443,447
Less: accumulated depreciation	(669,151)	(679,717)
Property and equipment, net	640,787	763,730
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Subtotal	444,237	496,810
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Subtotal	648,113	706,145
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Subtotal	81,301	89,859
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Subtotal	$ 136,287	$ 150,633

PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation expenses	$ 56,196	$ 40,472

SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Customer relationship	$ 5,100,000	$ 5,100,000
Less: accumulated amortization	(903,125)	(584,375)
Intangible asset, net	$ 4,196,875	$ 4,515,625

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Remaining of 2024	$ 318,750
2025	637,500
2026	637,500
2027	637,500
2028	637,500
Thereafter	1,328,125
Intangible asset, net	$ 4,196,875	$ 4,515,625

INTANGIBLE ASSET, NET (Details Narrative) - USD ($)	6 Months Ended
INTANGIBLE ASSET, NET (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 318,750	$ 265,625

SCHEDULE OF LEASE COSTS (Details) - USD ($)	6 Months Ended
SCHEDULE OF LEASE COSTS (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023
Leases
Amortization of right-of-use assets	$ 8,733	$ 10,902
Interest on lease liabilities	499	86
Total finance lease costs	9,232	10,988
Operating lease costs	198,701	176,809
Total lease costs	$ 207,933	$ 187,797

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO COMPANY’S LEASES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Leases
Operating cash flows from finance leases	$ 499	$ 86
Operating cash flows from operating leases	206,648	164,317
Financing cash flows from finance leases	8,526	11,243
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$ 125,735
Weighted average remaining lease term (years) Finance leases	4 years 3 months 18 days	3 months 18 days
Weighted average remaining lease term (years) Operating leases	7 years 2 months 12 days	8 years 8 months 12 days
Weighted-average discount rate: (per annum) Finance leases	1.32%	1.32%
Weighted-average discount rate: (per annum) Operating leases	1.37%	1.32%

SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Finance Lease, Liability [Abstract]
Remaining of 2024	$ 8,394
2025	16,787
2026	16,787
2027	16,787
2028	11,192
Thereafter
Total lease payments	69,947
Less: imputed interest	(1,900)
Total lease liabilities	68,047
Less: current portion	(15,992)	$ (17,445)
Non-current lease liabilities	52,055	66,779
Operating Lease, Liability [Abstract]
Remaining of 2024	198,991
2025	373,470
2026	303,852
2027	261,809
2028	261,809
Thereafter	870,248
Total lease payments	2,270,179
Less: imputed interest	(106,835)
Total lease liabilities	2,163,344
Less: current portion	(358,377)	(396,535)
Non-current lease liabilities	$ 1,804,967	$ 2,135,160

LEASES (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Impairment Effects on Earnings Per Share [Line Items]
Security deposits	$ 310,833	$ 348,428
Property, Plant and Equipment [Member]
Impairment Effects on Earnings Per Share [Line Items]
Finance lease right of use asset	$ 69,106	$ 85,613

SCHEDULE OF OTHER CURRENT LIABILITIES (Details) - USD ($)

Jun. 30, 2024

Dec. 31, 2023

Defined Benefit Plan Disclosure [Line Items]

Accrued consumption taxes

$ 203,070

$ 143,702

Advance received for warrants sale

^[1]

9,000,000

57,942

72,703

Nonrelated Party [Member]

Defined Benefit Plan Disclosure [Line Items]

Total other current liabilities

$ 9,261,012

$ 216,405

[1]

On February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

SCHEDULE OF OTHER CURRENT LIABILITIES (Details) (Parenthetical) - USD ($)		6 Months Ended
	Feb. 29, 2024	Jun. 30, 2024
Other Liabilities Disclosure [Abstract]
Non cash consideration from consulting services	$ 9,000,000
Proceeds from warrants exercise		$ 9,000,000

SCHEDULE OF OTHER NON-CURRENT LIABILITIES (Details) - USD ($)

Jun. 30, 2024

Dec. 31, 2023

Other Liabilities Disclosure [Abstract]

Asset retirement obligations

$ 185,364

$ 208,732

Customer refund liability

^[1]

500,000

Total other non-current liabilities

$ 685,364

$ 208,732

[1]	On June 28, 2024, the Company entered into a settlement agreement with a customer, pursuant to which the consulting service agreement with the customer was terminated and the Company will refund $500,000 to the customer in August 2025.

SCHEDULE OF OTHER NON-CURRENT LIABILITIES (Details) (Parenthetical)	Jun. 28, 2024 USD ($)
Other Liabilities Disclosure [Abstract]
Refund amount	$ 500,000

FACTORING LIABILITY (Details Narrative) - Factoring Agreement [Member] - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
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%
Borrowed and outstanding	$ 320,759		$ 562,767
Interest expense	$ 30,786	$ 41,611

INSURANCE PREMIUM FINANCING (Details Narrative) - USD ($)	1 Months Ended		6 Months Ended
	Jan. 31, 2024	Jan. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Statutory Accounting Practices [Line Items]
Insurance premium financing			$ 112,488
Interest expenses related to insurance premium financing			$ 7,044	$ 18,033
Insurance Premium Financing Agreement [Member] \| Bank Direct Capital Finance [Member]
Statutory Accounting Practices [Line Items]
Insurance premium financing	$ 172,689	$ 389,035
Interest rate percentage	13.90%	16.04%
Payment terms	eleven months from February 1, 2024, payable in eleven monthly installments of principal and interest.	ten months from February 1, 2023, payable in ten monthly installments of principal and interest.

SCHEDULE OF SHORT-TERM DEBTS (Details)

6 Months Ended

Jun. 30, 2024

JPY (¥)

Jun. 30, 2024

USD ($)

Dec. 31, 2023

USD ($)

Short-term debt

$ 135,937

Biz Forward Co Ltd [Member]

Original amount borrowed | ¥

^[1]

¥ 19,280,001

12/26/2023 – 1/31/2024

Annual interest rate

36.84%

Short-term debt

$ 135,937

[1]	The loan is secured by accounts receivable of HeartCore Japan in the amount of JPY23,882,562.

SCHEDULE OF SHORT-TERM DEBTS (Details) (Parenthetical)	Jun. 30, 2024 USD ($)	Jun. 30, 2024 JPY (¥)	Dec. 31, 2023 USD ($)
Original amount borrowed \| $	$ 2,440,872		$ 2,623,682
HeartCore Japan [Member]
Original amount borrowed \| ¥		¥ 23,882,562

SCHEDULE OF LONG-TERM DEBTS (Details)

6 Months Ended

Jun. 30, 2024

JPY (¥)

Jun. 30, 2024

USD ($)

Dec. 31, 2023

USD ($)

Schedule of Investments [Line Items]

$ 1,926,601

$ 2,160,373

Unamortized Debt Issuance Expense

(14,303)

(18,238)

Long-Term Debt, Current Maturities

(508,729)

(371,783)

Long-Term Debt, Excluding Current Maturities

1,403,569

1,770,352

Resona Bank Limited [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

12/29/2017 – 12/29/2024

Debt Instrument, Interest Rate During Period

0.675%

Original Amount Borrowed | ¥

^[1],[2]

¥ 50,000,000

49,470

54,678

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 During Period

1.00%

Original Amount Borrowed | ¥

^[1],[2]

¥ 10,000,000

34,945

38,624

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 During Period

1.00%

Original Amount Borrowed | ¥

^[1],[2]

¥ 40,000,000

139,781

154,495

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 During Period

1.60%

Original Amount Borrowed | ¥

^[1],[2]

¥ 20,000,000

71,408

78,925

Sumitomo Mitsui Banking Corporation [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

12/28/2018 – 7/1/2024

Debt Instrument, Interest Rate During Period

1.475%

Original Amount Borrowed | ¥

^[1]

¥ 100,000,000

10,507

11,612

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 During Period

1.975%

Original Amount Borrowed | ¥

^[1],[2]

¥ 10,000,000

28,113

31,072

Sumitomo Mitsui Banking Corporation Two [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

10/4/2023 – 9/30/2028

Debt Instrument, Interest Rate During Period

0.60%

Original Amount Borrowed | ¥

^[1],[2]

¥ 10,000,000

61,661

68,152

Sumitomo Mitsui Banking Corporation Three [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

10/4/2023 – 9/30/2028

Debt Instrument, Interest Rate During Period

0.00%

Original Amount Borrowed | ¥

^[1],[2]

¥ 10,000,000

61,661

68,152

The Shoko Chukin Bank, Ltd [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

7/27/2020 – 6/30/2027

Debt Instrument, Interest Rate During Period

1.29%

Original Amount Borrowed | ¥

^[1],[2]

¥ 50,000,000

165,859

183,319

The Shoko Chukin Bank, Ltd One [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

7/25/2023 – 6/30/2028

Debt Instrument, Interest Rate During Period

1.95%

Original Amount Borrowed | ¥

^[1],[2]

¥ 30,000,000

175,108

197,137

Japan Finance Corporation [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

11/17/2020 – 11/30/2027

Debt Instrument, Interest Rate During Period

0.21%

Original Amount Borrowed | ¥

^[1],[2]

¥ 80,000,000

295,994

327,152

Higashi Nippon Bank [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

3/31/2022 – 3/31/2025

Debt Instrument, Interest Rate During Period

1.40%

Original Amount Borrowed | ¥

^[1]

¥ 30,000,000

84,205

93,070

Higashi Nippon Bank One [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

10/11/2023 – 9/30/2028

Debt Instrument, Interest Rate During Period

1.45%

Original Amount Borrowed | ¥

^[1],[2]

¥ 30,000,000

184,996

204,471

First Home Bank [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

4/18/2019 – 4/18/2029

Debt Instrument, Interest Rate During Period

2.75%

Original Amount Borrowed | ¥

^[3]

¥ 350,000

212,893

229,007

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 During Period

3.75%

Original Amount Borrowed | ¥

^[3]

¥ 350,000

350,000

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 During Period

0.43%

Original Amount Borrowed | ¥

^[1],[4]

¥ 100,000,000

$ 70,507

[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.

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Remaining of 2024	$ 260,702
2025	404,497
2026	360,339
2027	386,977
2028	177,502
Thereafter	336,584
Total	$ 1,926,601	$ 2,160,373

DEBTS (Details Narrative) - USD ($)	6 Months Ended
DEBTS (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023
Debt Disclosure [Abstract]
Interest expense, short term	$ 2,929
Interest expense, long term	$ 32,942	$ 22,810

SCHEDULE OF INCOME TAX EXPENSES (Details) - USD ($)	3 Months Ended		6 Months Ended
SCHEDULE OF INCOME TAX EXPENSES (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Current			$ 1,201	$ 114,686
Deferred			(153,531)	(75,240)
Income tax expense (benefit)	$ (72,163)	$ (622,002)	$ (152,330)	$ 39,446

INCOME TAXES (Details Narrative)	6 Months Ended
INCOME TAXES (Details Narrative)	Jun. 30, 2024	Jun. 30, 2023
Effective Income Tax Rate Reconciliation [Line Items]
Effective tax rate	3.97%	4.78%
NETHERLANDS
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	25.80%
NETHERLANDS \| First EUR 200,000 [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	19.00%
CANADA
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	15.00%
CANADA \| Minimum [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	2.00%
CANADA \| Maximum [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	12.00%
CANADA \| Part I Tax [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	38.00%
CANADA \| Tax Abatement [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	28.00%
VIET NAM
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	20.00%
JAPAN
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	34.59%	34.59%
Domestic Tax Jurisdiction [Member]
Effective Income Tax Rate Reconciliation [Line Items]
Effective statutory rate	21.00%

SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($)	6 Months Ended		12 Months Ended
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Number of Options balance	1,547,000	1,466,500	1,466,500
Weighted Average Exercise Price, balance	$ 2.41	$ 2.50	$ 2.50
Weighted Average Remaining Term (Years)	7 years 6 months 3 days	8 years 6 months 7 days	8 years 3 days	8 years 11 months 8 days
Intrinsic Value
Number of Options, Granted		100,000
Weighted Average Exercise Price, Granted		$ 1.17
Weighted Average Remaining Term (Years), Granted		9 years 7 months 9 days
Number of Options, Exercised
Weighted Average Exercise Price, Exercised
Intrinsic Value, Exercised
Number of Options, Forfeited	(35,000)	(2,000)
Weighted Average Exercise Price, Forfeited	$ 2.42	$ 2.50
Number of Options balance	1,512,000	1,564,500	1,547,000	1,466,500
Weighted Average Exercise Price, balance	$ 2.41	$ 2.42	$ 2.41	$ 2.50
Intrinsic Value		$ 26,000
Number of Options, Vested and exercisable, balance	813,250
Weighted Average Exercise Price, Vested and exercisable, balance	$ 2.34
Weighted Average Remaining Term (Years), Vested and exercisable, balance	7 years 6 months 10 days
Intrinsic Value, Vested and exercisable

SCHEDULE OF RESTRICTED STOCK UNITS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of RSUs, Unvested balance	64,366	85,820
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95	$ 4.95
Number of RSUs, Unvested balance		671,350
Weighted Average Grant Date Fair Value per Share, balance		$ 1.03
Number of RSUs, Unvested balance	(21,454)	(692,804)
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95	$ 1.15
Number of RSUs, Unvested balance
Weighted Average Grant Date Fair Value per Share, balance
Number of RSUs, Unvested balance	42,912	64,366
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95	$ 4.95

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)			3 Months Ended		6 Months Ended
STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	Mar. 22, 2023	Feb. 03, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Aug. 01, 2023	Aug. 06, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of option purchased						100,000
Service Agreement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of restricted stock issued	671,350
RSUs grant date fair value	$ 691,491
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share base compensation			$ 40,597	$ 150,481	$ 111,044	$ 334,816
Unamortized share based compensation			266,230		266,230
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share base compensation			15,445	$ 28,684	36,710	$ 759,577
Unamortized share based compensation			$ 64,400		$ 64,400
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of option purchased		100,000
Shares Issued, Price Per Share		$ 1.17
Share-based payment award, award vesting rights, percentage		50.00%
Share-based payment award, expiration date		Feb. 03, 2033
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
Share issued			0		0

SHAREHOLDERS’ EQUITY (Details Narrative) $ / shares in Units, ₫ in Millions						1 Months Ended	3 Months Ended
	May 03, 2024 USD ($)	Feb. 16, 2024 USD ($)	Feb. 16, 2024 VND (₫)	Feb. 01, 2023 USD ($) shares	Sep. 06, 2022 USD ($) shares	Nov. 30, 2023	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2024 shares	Mar. 29, 2024 $ / shares	Dec. 31, 2023 shares
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares, fair value \| $								$ 3,150,000
Capital contribution from non-controlling shareholder \| $							$ 67,195
Dividends \| $	$ 417,283
Common stock, shares issued									20,864,144		20,842,690
Common stock, shares outstanding									20,864,144		20,842,690
Preferred stock, shares issued									0		0
Preferred stock, shares outstanding									0		0
O2024Q2 Dividends [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, dividends declared per share \| $ / shares										$ 0.02
VIET NAM
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Subsidiary owned, percentage						51.00%
Capital contribution from non-controlling shareholder		$ 67,195	₫ 1,646.4
Sigmaways Agreement [Member] \| Sigamaways Inc [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Acquisition, shares				2,500,000	2,500,000
Business acquisition percentage of voting interests acquired				51.00%	51.00%
Shares, fair value \| $				$ 3,150,000	$ 3,150,000

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders	$ (1,951,100)	$ (911,800)	$ (3,284,450)	$ 970,489
Denominator used for net income (loss) per share - Basic	20,864,144	20,842,690	20,859,429	19,959,333
Denominator used for net income (loss) per share - Diluted	20,864,144	20,842,690	20,859,429	19,959,333
Net income (loss) per share - basic	$ (0.09)	$ (0.04)	$ (0.16)	$ 0.05
Net income (loss) per share - diluted	$ (0.09)	$ (0.04)	$ (0.16)	$ 0.05

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023	Sep. 06, 2022
Business Combination, Asset Acquisition, and Joint Venture Formation [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	3,276,441
Non-controlling interest			(3,190,000)
Total purchase consideration			$ 4,150,000

BUSINESS COMBINATION (Details Narrative) - USD ($)			3 Months Ended
BUSINESS COMBINATION (Details Narrative) - USD ($)	Feb. 01, 2023	Sep. 06, 2022	Mar. 31, 2023
Business Acquisition [Line Items]
Shares, fair value			$ 3,150,000
Sigmaways Agreement [Member] \| Sigamaways Inc [Member]
Business Acquisition [Line Items]
Business acquisition percentage of voting interests acquired	51.00%	51.00%
Purchase combination consideration		$ 4,150,000
Purchase consideration, cash		$ 1,000,000
Acquisition, shares	2,500,000	2,500,000
Shares, fair value	$ 3,150,000	$ 3,150,000

SUBSEQUENT EVENT (Details Narrative)	Jul. 22, 2024 $ / shares
Board Of Directors [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Dividend decleard per share	$ 0.02

HeartCore Enterprises (NASDAQ:HTCR)
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HeartCore Enterprises (NASDAQ:HTCR)
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