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HTCR HeartCore Enterprises Inc

0,7773

-0,0476 (-5,77%)

18 Mai 2024 - Geschlossen

Verzögert um 15 Minuten

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, 2023

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

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

Commission File Number 001-41272

HeartCore Enterprises, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

87-0913420

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

1-2-33, Higashigotanda, Shinagawa-ku

Tokyo, Japan

(Address of Principal Executive Offices) (Zip Code)

(206) 385-0488, ext. 100

(Registrant’s Telephone Number, Including Area Code)

N/A

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

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

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

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

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

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

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

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

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

As of August 14, 2023, there were 20,842,690 shares of outstanding common stock, par value $0.0001 per share, of the registrant.

HeartCore Enterprises, Inc.

Contents

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	F-1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14

Item 4.	Controls and Procedures	14

PART II – OTHER INFORMATION

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	16

Signatures		17

2

Item 1. Financial Statements.

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

		June 30,				December 31,
		2023				2022
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	4,238,741			$	7,177,326
Accounts receivable			2,812,337				551,064
Investments in marketable securities			1,028,846				-
Prepaid expenses			878,539				538,230
Note receivable			300,000				-
Due from related party			43,782				48,447
Other current assets			79,339				220,070
Total current assets			9,381,584				8,535,137

Non-current assets:
Property and equipment, net			331,389				203,627
Operating lease right-of-use assets			2,275,506				2,644,957
Intangible asset, net			4,834,375				-
Goodwill			3,276,441				-
Long-term investments in warrants			2,917,574				-
Deferred tax assets			238,783				263,339
Security deposits			339,052				244,395
Long-term loan receivable from related party			200,849				246,472
Other non-current assets			69				661
Total non-current assets			14,414,038				3,603,451

Total assets		$	23,795,622			$	12,138,588

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses		$	1,194,222			$	497,742
Accrued payroll and other employee costs			561,698				360,222
Due to related party			4,250				402
Current portion of long-term debts			548,297				697,877
Insurance premium financing			239,785				-
Factoring liability			328,967				-
Operating lease liabilities, current			262,063				291,863
Finance lease liabilities, current			7,386				19,294
Income tax payables			109,625				2,747
Deferred revenue			2,375,063				1,724,519
Other current liabilities			262,267				53,027
Total current liabilities			5,893,623				3,647,693

Non-current liabilities:
Long-term debts			1,324,383				1,123,735
Operating lease liabilities, non-current			2,066,343				2,421,054
Finance lease liabilities, non-current			-				459
Deferred tax liabilities			1,353,625				-
Other non-current liabilities			124,936				138,018
Total non-current liabilities			4,869,287				3,683,266

Total liabilities			10,762,910				7,330,959

Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)			-				-
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,842,690 and 17,649,886 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)			2,083				1,764
Additional paid-in capital			19,258,681				15,014,607
Accumulated deficit			(9,603,090	)			(10,573,579	)
Accumulated other comprehensive income			372,296				364,837
Total HeartCore Enterprises, Inc. shareholders’ equity			10,029,970				4,807,629
Non-controlling interest			3,002,742				-
Total shareholders’ equity			13,032,712				4,807,629

Total liabilities and shareholders’ equity		$	23,795,622			$	12,138,588

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)

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

Cost of revenues			3,586,938				1,337,296				6,688,004				2,392,652

Gross profit			1,508,435				1,333,001				7,141,519				2,553,646

Operating expenses:
Selling expenses			488,062				728,836				1,056,704				934,754
General and administrative expenses			2,447,887				1,850,315				5,133,094				4,319,248
Research and development expenses			39,608				417,228				119,232				525,487

Total operating expenses			2,975,557				2,996,379				6,309,030				5,779,489

Income (loss) from operations			(1,467,122	)			(1,663,378	)			832,489				(3,225,843	)

Other income (expenses):
Changes in fair value of investments in marketable securities			(229,022	)			-				(229,022	)			-
Changes in fair value of investments in warrants			(27,258	)			-				166,107				-
Interest income			18,665				9,091				50,270				10,549
Interest expenses			(42,614	)			(17,590	)			(82,454	)			(28,861	)
Other income			109,800				8,777				124,001				25,450
Other expenses			(7,297	)			(31,562	)			(36,754	)			(55,224	)
Total other expenses			(177,726	)			(31,284	)			(7,852	)			(48,086	)

Income (loss) before income tax provision			(1,644,848	)			(1,694,662	)			824,637				(3,273,929	)

Income tax expense (benefit)			(622,002	)			8,979				39,446				8,163

Net income (loss)			(1,022,846	)			(1,703,641	)			785,191				(3,282,092	)

Less: net loss attributable to non-controlling interest			(111,046	)			-				(185,298	)			-

Net income (loss) attributable to HeartCore Enterprises, Inc.		$	(911,800	)		$	(1,703,641	)		$	970,489			$	(3,282,092	)

Other comprehensive income:
Foreign currency translation adjustment			30,533				219,360				5,499				299,413

Total comprehensive income (loss)			(992,313	)			(1,484,281	)			790,690				(2,982,679	)
Less: comprehensive loss attributable to non-controlling interest			(110,716	)			-				(187,258	)			-
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.		$	(881,597	)		$	(1,484,281	)		$	977,948			$	(2,982,679	)

Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Basic		$	(0.04	)		$	(0.09	)		$	0.05			$	(0.18	)
Diluted		$	(0.04	)		$	(0.09	)		$	0.05			$	(0.18	)
Weighted average common shares outstanding
Basic			20,842,690				18,936,829				19,959,333				18,105,698
Diluted			20,842,690				18,936,829				19,959,333				18,105,698

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 (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

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

		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Comprehensive Income				Shareholders’ Equity				Non-controlling Interest				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 Interest				Shareholders’ Equity
Balance, December 31, 2022			17,649,886			$	1,764			$	15,014,607			$	(10,573,579	)		$	364,837			$	4,807,629			$	-			$	4,807,629
Net income (loss)			-				-				-				1,882,289				-				1,882,289				(74,252	)			1,808,037
Foreign currency translation adjustment			-				-				-				-				(22,744	)			(22,744	)			(2,290	)			(25,034	)
Issuance of common shares for acquisition of subsidiary			2,500,000				250				3,149,750				-				-				3,150,000				-				3,150,000
Non-controlling interests arising from acquisition of subsidiary			-				-				-				-				-				-				3,190,000				3,190,000
Stock-based compensation			692,804				69				915,159				-				-				915,228				-				915,228
Balance, March 31, 2023			20,842,690				2,083				19,079,516				(8,691,290	)			342,093				10,732,402				3,113,458				13,845,860
Beginning balance, value			20,842,690				2,083				19,079,516				(8,691,290	)			342,093				10,732,402				3,113,458				13,845,860
Net loss			-				-				-				(911,800	)			-				(911,800	)			(111,046	)			(1,022,846	)
Foreign currency translation adjustment			-				-				-				-				30,203				30,203				330				30,533
Stock-based compensation			-				-				179,165				-				-				179,165				-				179,165
Balance, June 30, 2023			20,842,690			$	2,083			$	19,258,681			$	(9,603,090	)		$	372,296			$	10,029,970			$	3,002,742			$	13,032,712
Ending balance, value			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

		2023				2022
		For the Six Months Ended June 30,
		2023				2022
Cash flows from operating activities:
Net income (loss)		$	785,191			$	(3,282,092	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expenses			306,097				46,688
Amortization of debt issuance costs			1,316				2,768
Non-cash lease expense			155,301				143,845
Deferred income taxes			(75,240	)			14,167
Stock-based compensation			1,094,393				888,826
Warrants received as noncash consideration			(4,009,335	)			-
Changes in fair value of investments in marketable securities			229,022				-
Changes in fair value of investments in warrants			(166,107	)			-

Changes in assets and liabilities:
Accounts receivable			(596,312	)			(344,779	)
Prepaid expenses			1,245				(266,030	)
Other assets			23,277				(5,516	)
Accounts payable and accrued expenses			(8,359	)			281,567
Accrued payroll and other employee costs			124				175,246
Due to related party			4,214				5,448
Operating lease liabilities			(147,035	)			(148,125	)
Finance lease liabilities			-				(288	)
Income tax payables			106,625				(8,756	)
Deferred revenue			810,639				596,762
Other liabilities			116,382				(193,598	)

Net cash flows used in operating activities			(1,368,562	)			(2,093,867	)

Cash flows from investing activities:
Purchases of property and equipment			(180,451	)			(30,963	)
Advance on note receivable			(300,000	)			-
Repayment of loan provided to related party			23,715				21,508
Payment for acquisition of subsidiary, net of cash acquired			(724,910	)			-

Net cash flows used in investing activities			(1,181,646	)			(9,455	)

Cash flows from financing activities:
Proceeds from initial public offering, net of issuance cost			-				13,602,554
Proceeds from issuance of common shares prior to initial public offering			-				220,572
Repurchase of common shares			-				(1,336,762	)
Payments for finance leases			(11,243	)			(24,189	)
Proceeds from long-term debt			-				258,087
Repayment of long-term debts			(411,923	)			(469,166	)
Repayment of insurance premium financing			(149,250	)			(167,955	)
Net proceeds from factoring arrangement			328,967				-
Payments for debt issuance costs			(448	)			(1,030	)
Payment for mandatorily redeemable financial interest			-				(430,489	)

Net cash flows provided by (used in) financing activities			(243,897	)			11,651,622

Effect of exchange rate changes			(144,480	)			(221,960	)

Net change in cash and cash equivalents			(2,938,585	)			9,326,340

Cash and cash equivalents - beginning of the period			7,177,326				3,136,839

Cash and cash equivalents - end of the period		$	4,238,741			$	12,463,179

Supplemental cash flow disclosure:
Interest paid		$	40,083			$	28,025
Income taxes paid		$	-			$	3,013

Non-cash investing and financing transactions:
Payroll withheld as repayment of loan receivable from employees		$	-			$	12,034
Liabilities assumed in connection with purchase of property and equipment		$	2,199			$	9,676
Share repurchase liability settled by issuance of common shares		$	-			$	16
Deferred offering costs recognized against the proceeds from the offering		$	-			$	178,847
Insurance premium financing		$	389,035			$	388,538
Common shares issued for acquisition of subsidiary		$	3,150,000			$	-
Investments in warrants converted to marketable securities		$	1,257,868			$	-

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

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

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

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

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

F-5

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

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

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

Use of Estimates

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

COVID-19

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

F-6

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,
		2023				2022
Beginning balance		$	138,018			$	155,666
Accretion expense			223				459
Foreign currency translation adjustment			(13,305	)			(18,107	)
Ending balance		$	124,936			$	138,018

Software Development Costs

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

In the six months ended June 30, 2023 and 2022, software development costs expensed as incurred amounted to $119,232 and $525,487, respectively. These software development costs were included in the research and development expenses.

Investments in Warrants

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

Investments in Marketable Securities

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

Intangible Asset, Net

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

Impairment of Long-Lived Assets Other Than Goodwill

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

Goodwill

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

Foreign Currency Translation

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

F-7

The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the 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. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.

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

Revenues from On-Premise Software

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

Revenues from Maintenance and Support Services

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

Revenues from Software as a Service (“SaaS”)

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

F-8

Revenues from Software Development and Other Miscellaneous Services

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

Revenues from Customized Software Development and Services

The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. The contract pricing is at stated billing rates per hour. These contracts are generally short-term in nature and not longer than one year in duration. For services provided under the contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.

Revenues from Consulting Services

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

The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.3 million and $1.1 million, respectively.

Disaggregation of Revenues

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

SCHEDULE OF DISAGGREGATION OF REVENUES

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from on-premise software		$	704,268			$	716,532			$	1,061,189			$	1,518,133
Revenues from maintenance and support services			874,725				727,277				1,576,199				1,572,616
Revenues from software as a service (“SaaS”)			177,529				103,250				348,573				229,904
Revenues from software development and other miscellaneous services			406,455				674,883				1,086,796				1,177,290
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

F-9

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

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from customer experience management platform		$	1,725,872			$	1,831,166			$	3,292,309			$	3,586,219
Revenues from process mining			188,555				118,320				290,756				384,808
Revenues from robotic process automation			127,283				149,031				213,469				247,417
Revenues from task mining			95,679				98,558				202,767				185,435
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Revenues from others			25,588				24,867				73,456				94,064
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

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

Concentration of Credit Risk

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

For the six months ended June 30, 2023, customer C, D and E represent 18.2%, 12.8% and 11.8%, respectively, of the Company’s total revenues. For the six months ended June 30, 2022, customer A and B represent 12.9% and 10.4%, respectively, of the Company’s total revenues.

For the six months ended June 30, 2023, vendor A and B represent 22.7% and 60.9%, respectively, of the Company’s total purchases. For the six months ended June 30, 2022, vendor A and B represent 44.5% and 29.8%, respectively, of the Company’s total purchases.

Stock-based Compensation

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

F-10

Business Combinations

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

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

In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive 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, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Investments in Warrants

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

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

SCHEDULE OF INVESTMENTS IN WARRANTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in warrants at beginning of the period		$	-			$	-
Warrants received as noncash consideration			4,009,335				-
Changes in fair value of investments in warrants			166,107				-
Investments in warrants converted to marketable securities			(1,257,868	)			-
Fair value of investments in warrants at end of the period		$	2,917,574			$	-

Investments in Marketable Securities

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

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in marketable securities at beginning of the period		$	-			$	-
Investments in warrants converted to marketable securities			1,257,868				-
Changes in fair value of investments in marketable securities			(229,022	)			-
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	1,028,846			$	-

F-11

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

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

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

New Accounting Pronouncements Not Yet Effective

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

NOTE 3 — ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		June 30,				December 31,
		2023				2022
Accounts receivable – non-factored		$	2,483,370			$	551,064
Accounts receivable – factored with recourse			328,967				-
Accounts receivable, gross			2,812,337				551,064
Less: allowance for credit losses			-				-
Accounts receivable		$	2,812,337			$	551,064

NOTE 4 — PREPAID EXPENSES

Prepaid expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

		June 30,				December 31,
		2023				2022
Prepayments to software vendors		$	157,782			$	162,046
Prepaid marketing and consulting fees			161,338				99,770
Prepaid subscription fees			113,173				113,685
Prepaid insurance premium			319,133				66,023
Others			127,113				96,706
Total		$	878,539			$	538,230

F-12

NOTE 5 — NOTE RECEIVABLE

On May 2, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 8% per annum and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering 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.

NOTE 6 — RELATED PARTY TRANSACTIONS

As of June 30, 2023 and December 31, 2022, the Company has a due to related party balance of $4,250 and $402, respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”) and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the 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. During the six months ended June 30, 2022, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $5,448.

As of June 30, 2023 and December 31, 2022, the Company has a loan receivable balance of $244,631 and $294,919, respectively, from Heartcore Technology Inc., a company controlled by the CEO of the Company. The loan was made to the related party to support its operation. The balance is unsecured, bears an annual interest of 1.475%, and requires repayments in installments starting from February 2022. During the six months ended June 30, 2023 and 2022, the Company received repayments of $23,715 and $21,508, respectively, from this related party.

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

NOTE 7 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

		June 30,				December 31,
		2023				2022
Leasehold improvements		$	272,711			$	298,637
Machinery and equipment			518,022				316,827
Vehicle			96,237				106,490
Software			147,350				163,049
Subtotal			1,034,320				885,003
Less: accumulated depreciation			(702,931	)			(681,376	)
Property and equipment, net		$	331,389			$	203,627

Depreciation expenses were $40,472 and $46,688 for the six months ended June 30, 2023 and 2022, respectively.

NOTE 8 — INTANGIBLE ASSET, NET

Intangible asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

		June 30,				December 31,
		2023				2022
Customer relationship		$	5,100,000			$	-
Less: accumulated amortization			(265,625	)			-
Intangible asset, net		$	4,834,375			$	-

Amortization expenses were $265,625 and nil for the six months ended June 30, 2023 and 2022, respectively.

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

		Estimated
Year Ended December 31,		Amortization
Remaining of 2023		$	318,750
2024			637,500
2025			637,500
2026			637,500
2027			637,500
Thereafter			1,965,625
Total		$	4,834,375

F-13

NOTE 9 — LEASES

The Company has entered into three leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and a lease for a vehicle, and these leases were classified as finance leases. Right-of-use assets of these finance leases in the amount of $6,506 and $18,335 are included in property and equipment, net as of June 30, 2023 and December 31, 2022, respectively.

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

The components of lease costs are as follows:

SCHEDULE OF LEASE COSTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Finance lease costs
Amortization of right-of-use assets		$	10,902			$	21,972
Interest on lease liabilities			86				288
Total finance lease costs			10,988				22,260
Operating lease costs			176,809				164,513
Total lease costs		$	187,797			$	186,773

F-14

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	86			$	288
Operating cash flows from operating leases			164,317				168,793
Financing cash flows from finance leases			11,243				24,189

Weighted average remaining lease term (years)
Finance leases			0.3				1.3
Operating leases			8.7				9.6

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

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

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2023		$	7,144			$	148,105
2024			259				286,340
2025			-				286,340
2026			-				286,340
2027			-				286,340
Thereafter			-				1,178,973
Total lease payments			7,403				2,472,438
Less: imputed interest			(17	)			(144,032	)
Total lease liabilities			7,386				2,328,406
Less: current portion			(7,386	)			(262,063	)
Non-current lease liabilities		$	-			$	2,066,343

Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amounted to $339,052 and $244,395 as of June 30, 2023 and December 31, 2022, respectively.

F-15

NOTE 10 — FACTORING LIABILITY

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

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

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

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

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

As of June 30, 2023, there was $328,967 borrowed and outstanding under the Factoring Agreement. There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense. During the six months ended June 30, 2023, the Company recorded $41,611 in interest expense related to the Factoring Agreement.

NOTE 11 — INSURANCE PREMIUM FINANCING

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

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

As of June 30, 2023 and December 31, 2022, the balance of the insurance premium financing was $239,785 and nil, respectively. During the six months ended June 30, 2023 and 2022, the interest incurred was $18,033 and $14,185, respectively.

F-16

NOTE 12 — LONG-TERM DEBTS

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

SCHEDULE OF LONG-TERM DEBTS

Name of Financial Institutions		Original Amount Borrowed					Loan Duration		Annual Interest Rate					Balance as of June 30, 2023				Balance as of December 31, 2022

Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000	(a)(c)			1/10/2019 – 1/10/2024			0.430	%			$	137,941			$	228,956
Loans with banks and other financial institutions
Resona Bank, Limited			JPY50,000,000	(a)(b)			12/29/2017 – 12/29/2024			0.675	%				74,005				113,677
Resona Bank, Limited			JPY10,000,000	(a)(b)			9/30/2020 – 9/30/2027			0.000	%				41,886				52,705
Resona Bank, Limited			JPY40,000,000	(a)(b)			9/30/2020 – 9/30/2027			0.000	%				167,543				210,822
Resona Bank, Limited			JPY20,000,000	(a)(b)			11/13/2020 – 10/31/2027			1.600	%				85,413				107,227
Sumitomo Mitsui Banking Corporation			JPY100,000,000	(a)			12/28/2018 – 12/28/2023			1.475	%				68,846				165,237
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(a)(b)			12/30/2019 – 12/30/2026			1.975	%				34,498				44,532
The Shoko Chukin Bank, Ltd.			JPY30,000,000				9/28/2018 – 8/31/2023			1.200	%				6,414				34,343
The Shoko Chukin Bank, Ltd.			JPY50,000,000				7/27/2020 – 6/30/2027			1.290	%				200,014				253,377
Japan Finance Corporation			JPY80,000,000				11/17/2020 – 11/30/2027			0.210	%				353,128				442,036
Higashi-Nippon Bank			JPY30,000,000	(a)			3/31/2022 – 3/31/2025			1.400	%				120,008				177,669
First Home Bank			$350,000	(d)			4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%				239,875				-
U.S. Small Business Administration			$350,000	(d)			5/30/2020 – 5/30/2050			3.750	%				350,000				-
Aggregate outstanding principal balances															1,879,571				1,830,581
Less: unamortized debt issuance costs															(6,891	)			(8,969	)
Less: current portion															(548,297	)			(697,877	)
Non-current portion														$	1,324,383			$	1,123,735

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

Interest expense for long-term debts was $22,810 and $14,676 for the six months ended June 30, 2023 and 2022, respectively.

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

Year Ended December 31,		Loan
		Payment
Remaining of 2023		$	295,810
2024			433,421
2025			271,417
2026			258,793
2027			226,359
Thereafter			393,771
Total		$	1,879,571

F-17

NOTE 13 — INCOME TAXES

United States

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

Netherlands

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

Canada

Sigmaways Technologies is a company incorporated in British Columbia in Canada in August 2020. It is subject to income tax on income arising in, or derived from, the tax jurisdiction in British Columbia it operates. The basic federal rate of Part I tax is 38% of taxable income, 28% after federal tax abatement. After the general tax reduction, the net federal tax rate is 15%. The provincial and territorial lower and higher tax rates in British Columbia are 2% and 12%, respectively.

Japan

The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory tax rate of approximately 34.59% and 30.62% for the six months ended June 30, 2023 and 2022, respectively.

For the six months ended June 30, 2023 and 2022, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Current		$	114,686			$	(1,464	)
Deferred			(75,240	)			9,627
Income tax expense		$	39,446			$	8,163

The effective tax rate was 4.78% and (0.25)% for the six months ended June 30, 2023 and 2022, respectively.

F-18

NOTE 14 – STOCK-BASED COMPENSATION

Options

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

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

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

SCHEDULE OF UNVESTED STOCK OPTION

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

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

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

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

On February 3, 2023, the Company awarded options to purchase 100,000 shares of common shares 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.

F-19

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

SCHEDULE OF STOCK OPTION ACTIVITY

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2022			1,534,500			$	2.50				9.99			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			-				-				-				-
As of June 30, 2022			1,534,500			$	2.50				9.49			$	-

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
Vested and exercisable as of June 30, 2023			426,500			$	2.34				8.44			$	13,000

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, 2023, the Company recognized stock-based compensation related to options of $150,481 and $334,816, respectively. For the three and six months ended June 30, 2022, the Company recognized stock-based compensation related to options of $284,938 and $577,750, respectively. The outstanding unamortized stock-based compensation related to options was $730,897 (which will be recognized through August 2026) as of June 30, 2023.

Restricted Stock Units (“RSUs”)

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

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

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

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

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value per Share
Unvested as of January 1, 2022			-			$	-
Granted			169,153				3.84
Vested			(83,333	)			2.70
Forfeited			-				-
Unvested as of June 30, 2022			85,820			$	4.95

Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,805	)			1.15
Forfeited			-				-
Unvested as of June 30, 2023			64,365			$	4.95

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. For the three and six months ended June 30, 2022, the Company recognized stock-based compensation related to RSUs of $181,724 and $311,076, respectively. The outstanding unamortized stock-based compensation related to RSUs was $159,110 (which will be recognized through February 2026) as of June 30, 2023.

F-20

NOTE 15 – SHAREHOLDERS’ EQUITY

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

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

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

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

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

Share Repurchase Program

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

During the period from June 1, 2022 through June 30, 2022, the Company repurchased 558,809 shares of common shares at an average price of $2.39 per share totaling approximately $1.3 million (including commissions) under the 2022 Share Repurchase Program.

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

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

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

NOTE 16 – 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, 2023 and 2022 is as follows:

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Net income (loss) per share - basic and diluted:
Numerator:
Allocation of net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders used in calculating net income (loss) per common share		$	(911,800	)		$	(1,703,641	)		$	970,489			$	(3,282,092	)
Net income (loss) attributable to common shareholders			(911,800	)			(1,703,641	)			970,489				(3,282,092	)
Denominator:
Weighted average number of common shares outstanding used in calculating net income (loss) per share			20,842,690				18,936,829				19,959,333				18,105,698
Denominator used for net income (loss) per share			20,842,690				18,936,829				19,959,333				18,105,698
Net income (loss) per share - basic and diluted		$	(0.04	)		$	(0.09	)		$	0.05			$	(0.18	)

For the three and six months ended June 30, 2023 and 2022, 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.

F-21

NOTE 17 – BUSINESS COMBINATION

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

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

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

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

The results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s unaudited consolidated financial statements since the date of acquisition. Sigmaways and its subsidiaries contributed revenues and net loss of $3,926,572 and $378,159, respectively, to the Company from February 1, 2023 to June 30, 2023.

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

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

NOTE 18 - SUBSEQUENT EVENTS

On July 25, 2023, the Company obtained a five-year term loan in the amount of JPY30,000,000 (approximately $207,000) from the Shoko Chukin Bank, Ltd., with a floating interest rate of Tokyo Interbank Offered Rate plus 1.950% per annum.

F-22

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

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

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

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

Business Overview

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

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

On September 6, 2022, HeartCore Enterprises, Inc. (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 is engaged in the business of developing and sales of software in the United States. The acquisition closed on February 1, 2023.

During 2022, we started the GO IPO consulting business, which supports Japanese companies seeking to list on Nasdaq and NYSE in the United States. As of August 14, 2023, we have entered into consulting agreements with 10 companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting fee ranging from $350,000 to $900,000 and warrants or Japanese acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share. The revenue from the GO IPO business helped to offset the decline in sales in the CX and DX divisions. In the first quarter of 2023, we formed HeartCore Financial, Inc. and HeartCore Capital Advisors, Inc. as a part of our Go IPO consulting business.

3

We have made significant investments in our sales and marketing efforts globally. As of June 30, 2023, our sales and marketing organization was comprised of 16 employees, including our field sales organization, which maintains a physical sales presence in the Japanese software market. Using our go-to-market strategy, we believe we have made significant contributions in Japan and have established a diversified revenue and customer base. As of June 30, 2023, our combined business units (customer experience management business unit and digital transformation business unit) had 923 total customers in Japan.

Recent Developments

rYojbaba Inc. Consulting Agreement

On April 4, 2023 (the “rYojbaba Effective Date”), the Company entered into a Consulting and Services Agreement (the “rYojbaba Consulting Agreement”) by and between the Company and rYojbaba Inc., a Japanese corporation (“rYojbaba”). Pursuant to the terms of the rYojbaba Consulting Agreement, the Company agreed to provide rYojbaba certain services, including the following (collectively, the “rYojbaba Services”):

	(i)	Assistance with the selection and negotiation of terms for a law firm, underwriter and auditing firm for rYojbaba;
	(ii)	Assisting in the preparation of documentation for internal controls required for an initial public offering of de-SPAC or other rYojbaba Fundamental Transaction (as defined in the rYojbaba Consulting Agreement) by rYojbaba;
	(iii)	Providing support services to remove problematic accounting accounts upon listing;
	(iv)	Translation of requested documents into English;
	(v)	Attend and, if requested by rYojbaba, lead meetings with rYojbaba’s management and employees;
	(vi)	Provide rYojbaba with support services related to rYojbaba’s NASDAQ listing;
	(vii)	Conversion of accounting data from Japanese standards to U.S. GAAP;
	(viii)	Support for rYojbaba’s negotiations with the audit firm;
	(ix)	Assist in the preparation of S-1 or F-1 filings;
	(x)	Creation of English web page; and
	(xi)	Preparing an investor presentation/deck and executive summary of rYojbaba’s operations.

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

Pursuant to the terms of the rYojbaba Consulting Agreement, rYojbaba agreed to compensate the Company as follows in return for the provision of the rYojbaba Services during the eight-month term:

(a) $500,000, to be paid as follows: (i) $200,000 on the rYojbaba Effective Date; (ii) $150,000 on the three-month anniversary of the rYojbaba Effective Date; and (iii) $150,000 on the date that rYojbaba first files a Form S-1, Form F-1, Form S-4, Form F-4 or any similar or replacement form with the SEC with respect to any transaction which is reasonably expected to result in the rYojbaba Trigger Date (as defined in the rYojbaba Warrant); and

(b) Issuance by rYojbaba to the Company of a warrant (the “rYojbaba Warrant”), deemed fully earned and vested as of the rYojbaba Effective Date, to acquire a number of shares of capital stock of rYojbaba, to initially be equal to 3% of the fully diluted share capital of rYojbaba as of the rYojbaba Effective Date, subject to adjustment as set forth in the rYojbaba Consulting Agreement and the rYojbaba Warrant.

4

For any services performed by the Company beyond the rYojbaba Term (as hereinafter defined), rYojbaba will compensate the Company for rYojbaba Services at the rate of $150 per hour, based on the hours spent by personnel of the Company.

The term of the rYojbaba Consulting Agreement will continue until eight months after the rYojbaba Effective Date, unless sooner terminated in accordance with the terms of the rYojbaba Consulting Agreement (the “rYojbaba Term”). The rYojbaba Consulting Agreement may be terminated at any time by either party upon notice to the other party.

rYojbaba Warrant

As provided in the rYojbaba Consulting Agreement, on the rYojbaba Effective Date, rYojbaba issued the rYojbaba Warrant to the Company. Pursuant to the terms of the rYojbaba Warrant, the Company may, at any time (i) on or after the earlier of the date that either (a) rYojbaba completes its first initial public offering of stock in the U.S. resulting in any class of rYojbaba’s stock being listed for trading on any tier of Nasdaq, the NYSE or the NYSE American; (b) rYojbaba consummates a merger or other transaction with a SPAC wherein rYojbaba becomes a subsidiary of the SPAC; or (c) rYojbaba undertakes any other rYojbaba Fundamental Transaction (the “rYojbaba Trigger Date”); and (ii) on or prior to the close of business on the tenth anniversary of the rYojbaba Trigger Date, exercise the rYojbaba Warrant to purchase 3,000 shares of rYojbaba’s common stock, which represents 3% of rYojbaba’s issued and outstanding common stock as of the rYojbaba Trigger Date, for an exercise price per share of $0.01, subject to adjustment as provided in the rYojbaba Warrant. The number of shares for which the rYojbaba Warrant will be exercisable will be automatically adjusted on the rYojbaba Trigger Date to be 3% of the fully diluted number and class of shares of capital stock of rYojbaba as of the rYojbaba Trigger Date, following completion of the transactions which caused the rYojbaba Trigger Date to be achieved. The rYojbaba Warrant contains a 9.99% equity blocker.

ZEROSPO Note Purchase Agreement

On May 2, 2023, the Company entered into a Note Purchase Agreement by and between the Company and ZEROSPO. Pursuant to the terms of the Note Purchase Agreement, ZEROSPO agreed to issue and sell to the Company, and the Company agreed to purchase, a promissory note in the principal amount of $300,000 (the “ZEROSPO Note”).

Pursuant to the terms of the ZEROSPO Note, ZEROSPO agreed to pay to the Company $300,000 and to pay interest on the outstanding principal amount at the rate of 8% per annum. To the extent not earlier paid, the principal amount and all accrued interest will be due and payable on the ZEROSPO Maturity Date (as hereinafter defined) or earlier in the event of an event of default as provided in the ZEROSPO Note. The “ZEROSPO Maturity Date” means the earlier of:

(i) The date of the closing of capital-raising transactions consummated by ZEROSPO via the issuance of any debt securities or equity securities of ZEROSPO or any of its affiliates which results in gross proceeds to ZEROSPO or any of its affiliates of $300,000 or more;

(ii) The date on which ZEROSPO completes a transaction pursuant to which its ordinary shares are listed for trading on The Nasdaq Capital Market, or any related exchange, including the NASDAQ Global Market, or on the New York Stock Exchange or any related securities exchange, including the NYSE American; and

(iii) The date which is 180 days following May 2, 2023.

ZEROSPO may, at its sole option, prepay the ZEROSPO Note and any accrued interest thereunder in whole or in part at any time. In the event that any amount due under the ZEROSPO Note is not paid as and when due, such amounts will accrue interest at the rate of 12% per year, simple interest, non-compounding, until paid.

Private Placement

On May 29, 2023, the Company entered into a Common Stock Sales Agreement (the “Sutter Agreement”) by and between the Company and Sutter Securities, Inc. (the “Sales Agent”). Pursuant to the terms of the Sutter Agreement, the parties agreed that, from time to time during the term of the Sutter Agreement, the Company would issue and sell through the Sales Agent common stock of the Company having an aggregate offering price of up to $5,000,000 (the “Placement Shares”). The issuance and sale of the Placement Shares to or through the Sales Agent will be effected pursuant to the Company’s effective shelf registration statement (File No. 333-270503), which was declared effective on April 12, 2023 (the “Registration Statement”). The Company filed a prospectus supplement to the Registration Statement relating to the offering of the Placement Shares pursuant to the Agreement.

5

Upon notification by the Company that it wishes to issue and sell the Placement Shares through the Sales Agent, as provided in the Sutter Agreement, the Sales Agent will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable laws, rules and regulations, including rules of The Nasdaq Stock Market (“Nasdaq”), for the period specified in the notice, to sell such shares up to the amount specified by the Company and otherwise in accordance with the terms of the notice. Subject to the terms of the notice, the Sales Agent may sell such shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended.

The Sales Agent has the right by giving notice as specified in the Sutter Agreement at any time to terminate the Sutter Agreement if (i) any Material Adverse Change (as defined in the Sutter Agreement), or any development that could reasonably be expected to result in a Material Adverse Change has occurred that, in the reasonable judgment of the Sales Agent, may materially impair the ability of the Sales Agent to sell the shares under the Sutter Agreement, (ii) the Company shall have failed, refused or been unable to perform any agreement on its part to be performed hereunder; provided, however, in the case of any failure of the Company to deliver (or cause another person to deliver) certain certifications, opinions, or letters, the Sales Agent’s right to terminate shall not arise unless such failure to deliver (or cause to be delivered) continues for more than 30 days from the date such delivery was required, (iii) any other condition of the Sales Agent’s obligations under the Sutter Agreement is not fulfilled, or (iv) any suspension or limitation of trading in the shares under the Sutter Agreement or in securities generally on Nasdaq shall have occurred (including automatic halt in trading pursuant to market-decline triggers, other than those in which solely program trading is temporarily halted), or a major disruption of securities settlements or clearing services in the United States shall have occurred, or minimum prices for trading have been fixed on Nasdaq.

In addition, each of the Company and the Sales Agent has the right, by giving 10 days’ notice as specified in the Sutter Agreement, to terminate the Sutter Agreement in its sole discretion at any time after the date of the Sutter Agreement.

Unless earlier terminated, the Sutter Agreement will automatically terminate upon the earlier to occur of (i) issuance and sale of all of the Placement Shares to or through the Sales Agent on the terms and subject to the conditions set forth in the Sutter Agreement, and (ii) the expiration of the Registration Statement on the third anniversary of the initial effective date of the Registration Statement pursuant to Rule 415(a)(5) under the Securities Act.

The Sutter Agreement contains certain covenants, representations and warranties customary for an agreement of this type. The Company has not received any fund from Sutter Agreement as of the date of this filing.

Appointment of Heather Neville as a Director

On May 30, 2023, the Board of Directors (the “Board”) of HeartCore Enterprises, Inc. (the “Company”) expanded the size of the Board from eight persons to nine persons, and named Heather Marie Neville to serve as a member of the Board, to fill the vacancy created by the increase in the size of the Board.

Neville Director Agreement

On June 1, 2023, the Company and Ms. Neville entered into a Director Agreement. The Director Agreement provides that Ms. Neville will be compensated as follows:

●

Ms. Neville will be paid the sum of $60,000 annually for her service as a director of the Company, to be paid $15,000 each calendar quarter, payable within five business days of the end of each calendar quarter, and with such amount for any partial calendar quarter being appropriately prorated.

During the term of the Director Agreement, the Company will reimburse Ms. Neville for all reasonable out-of-pocket expenses incurred by her in attending any in-person meetings, provided that Ms. Neville complies with the generally applicable policies, practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses. Any reimbursements for allocated expenses (as compared to out-of-pocket expenses in excess of $500) must be approved in advance by the Company.

The Director Agreement contains customary confidentiality provisions, and customary provisions related to Company ownership of intellectual property conceived or made by Ms. Neville in connection with the performance of her duties under the Director Agreement (i.e., a “work-made-for-hire” provision).

6

The Director Agreement provides that, during the term (which continues as long as Ms. Neville is serving as a director of the Company), Ms. Neville is entitled to indemnification and insurance coverage for officers’ liability, fiduciary liability and other liabilities arising out of her position with the Company in any capacity, in an amount not less than the highest amount available to any other director, and such coverage and protections, with respect to the various liabilities as to which Ms. Neville has been customarily indemnified prior to termination of employment, shall continue for at least six years following the end of the term. Any indemnification agreement entered into between the Company and Ms. Neville will continue in full force and effect in accordance with its terms following the termination of the applicable agreement.

The Director Agreement contains customary representations and warranties by Ms. Neville, relating to the Director Agreement, and contains other customary miscellaneous provisions relating to waivers, assignments, third party rights, survival of provisions following termination, severability, notices, waiver of jury trials and other provisions.

Financial Overview

For the three months ended June 30, 2023 and 2022, we generated revenues of $5,095,373 and $2,670,297, respectively, and reported net loss of $1,022,846 and $1,703,641, respectively.

For the six months ended June 30, 2023 and 2022, we generated revenues of $13,829,523 and $4,946,298, respectively, and reported net income of $785,191 and net loss of $3,282,092, respectively, and cash flows used in operating activities of $1,368,562 and $2,093,867, respectively.

As noted in our unaudited consolidated financial statements, as of June 30, 2023, we had an accumulated deficit of $9,603,090.

Results of Operations

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

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

		For the Three Months Ended June 30,
		2023								2022								Variance
						% of								% of								% of
		Amount				Revenues				Amount				Revenues				Amount				Revenues

Revenues		$	5,095,373				100.0	%		$	2,670,297				100.0	%		$	2,425,076				90.8	%
Cost of Revenues			3,586,938				70.4	%			1,337,296				50.1	%			2,249,642				168.2	%
Gross Profit			1,508,435				29.6	%			1,333,001				49.9	%			175,434				13.2	%

Operating expenses:
Selling expenses			488,062				9.6	%			728,836				27.3	%			(240,774	)			-33.0	%
General and administrative expenses			2,447,887				48.0	%			1,850,315				69.3	%			597,572				32.3	%
Research and development expenses			39,608				0.8	%			417,228				15.6	%			(377,620	)			-90.5	%
Total operating expenses			2,975,557				58.4	%			2,996,379				112.2	%			(20,822	)			-0.7	%

Loss from operations			(1,467,122	)			-28.8	%			(1,663,378	)			-62.3	%			196,256				-11.8	%

Other expenses			(177,726	)			-3.5	%			(31,284	)			-1.2	%			(146,442	)			468.1	%

Loss before income tax provision			(1,644,848	)			-32.3	%			(1,694,662	)			-63.5	%			49,814				-2.9	%

Income tax expense (benefit)			(622,002	)			-12.2	%			8,979				0.3	%			(630,981	)			-7027.3	%

Net loss			(1,022,846	)			-20.1	%			(1,703,641	)			-63.8	%			680,795				-40.0	%

Less: net loss attributable to non-controlling interest			(111,046	)			-2.2	%			-				-				(111,046	)			-100.0	%

Net loss attributable to HeartCore Enterprises, Inc.		$	(911,800	)			-17.9	%		$	(1,703,641	)			-63.8	%		$	791,841				-46.5	%

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Revenues

Our total revenues increased by $2,425,076, or 90.8%, to $5,095,373 for the three months ended June 30, 2023 from $2,670,297 for the three months ended June 30, 2022, mainly attributable to (i) an increased revenue of $2,294,953 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; (ii) an increased revenue of $189,088 from GO IPO consulting services as the Company obtained more IPO consulting customers in 2023.

Cost of Revenues

Our total costs of revenues increased by $2,249,642, or 168.2%, to $3,586,938 for the three months ended June 30, 2023 from $1,337,296 for the three months ended June 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software development and services.

Gross Profit

Our total gross profit increased by $175,434, or 13.2%, to $1,508,435 for the three months ended June 30, 2023 from $1,333,001 for the three months ended June 30, 2022, mainly attributable to (i) the increased gross profit of $336,870 from maintenance and support services, as we terminated some subcontractors in supporting service, as part of our effect to reduce costs; (ii) the increased gross profit of $485,731 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; offset by (iii) the decreased gross profit of $387,651 from sales of on-premise software, as we incurred costs of approximately $184,000 to purchase third-party software to be included in the CMS sale, per certain customers’ request in the current period; and (iv) the decreased gross profit of $236,103 from GO IPO consulting services. Our overall gross profit margin decreased by 20.3% to 29.6% for the three months ended June 30, 2023, from 49.9% for the three months ended June 30, 2022.

Selling Expenses

Our selling expenses decreased by $240,774, or 33.0%, to $488,062 for the three months ended June 30, 2023 from $728,836 for the three months ended June 30, 2022, primarily attributable to a decrease of $371,413 in advertising expense, as the company spent heavily on IR and PR in the U.S. immediately after listing in Nasdaq in early 2022; offset by an increase of $82,002 in stock-based compensation for sales staff.

As a percentage of revenues, our selling expenses accounted for 9.6% and 27.3% of our total revenues for the three months ended June 30, 2023 and 2022, respectively.

General and Administrative Expenses

Our general and administrative expenses increased by $597,572, or 32.3%, to $2,447,887 for the three months ended June 30, 2023 from $1,850,315 for the three months ended June 30, 2022, primarily attributable to (i) an increase of $546,302 in salaries and welfare due to a company-wide wage increase and additional staffs employed by Sigmaways and its subsidiaries; (ii) an increase of $114,129 in office, utility and other expenses, an increase of $154,542 in depreciation and amortization expenses, and an increase of $65,125 in rent expenses, mostly due to the acquisition of Sigmaways and its subsidiaries as well as the overall business expansion; offset by (iii) a decrease of $383,879 in stock-based compensation as the Company awarded options and RSUs to employees and service providers in early 2022 when the Company finished going public.

As a percentage of revenues, general and administrative expenses were 48.0% and 69.3% of our revenues for the three months ended June 30, 2023 and 2022, respectively.

Research and Development Expenses

Our research and development expenses decreased by $377,620, or 90.5%, to $39,608 for the three months ended June 30, 2023 from $417,228 for the three months ended June 30, 2022, primarily attributable to the decrease in outsourcing expenses relating to the development of a high quality 12K VR camera and related data compression system, which was completed in June 2022.

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As a percentage of revenues, research and development expenses were 0.8% and 15.6% of our revenues for the three months ended June 30, 2023 and 2022, respectively.

Other Expenses

Our other expenses primarily include changes in fair value of investments in marketable securities, changes in fair value of investments in warrants, interest income generated from bank deposits, interest expense for bank loans and bonds, other income, and other expenses. Our other expenses increased by $146,442, or 468.1%, to $177,726 in the three months ended June 30, 2023 from $31,284 in the three months ended June 30, 2022, primarily attributable to a decrease of $229,022 in changes in fair value of investments in marketable securities and a decrease of $27,258 in changes in fair value of investments in warrants, offset by an increase of $101,023 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government.

Income Tax Expense (Benefit)

Our income tax benefit was $622,002 in the three months ended June 30, 2023, as compared to the income tax expense of $8,979 in the three months ended June 30, 2022, as the Company started to consider net operating losses carried forward from previous years in the current period income tax calculation and recognized an income tax benefit in the current period 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 $1,022,846 for the three months ended June 30, 2023, representing a $680,795, or 40.0%, decreased from a net loss of $1,703,641 for the three months ended June 30, 2022.

Net Loss Attributable to Non-controlling Interest

We owned 51% equity ownership interest of Sigmaways and its subsidiaries as of June 30, 2023. Accordingly, we recorded net loss attributable to the non-controlling interest of $111,046 in the three months ended June 30, 2023.

Net Loss Attributable to HeartCore Enterprises, Inc.

As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $911,800 for the three months ended June 30, 2023, representing a $791,841 or 46.5%, decreased from a net loss attributable to HeartCore Enterprises, Inc. of $1,703,641 for the three months ended June 30, 2022.

Comparison of Results of Operations for the Six Months Ended June 30, 2023 and 2022

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

		For the Six Months Ended June 30,
		2023								2022								Variance
						% of								% of								% of
		Amount				Revenues				Amount				Revenues				Amount				Revenues

Revenues		$	13,829,523				100.0	%		$	4,946,298				100.0	%		$	8,883,225				179.6	%
Cost of Revenues			6,688,004				48.4	%			2,392,652				48.4	%			4,295,352				179.5	%
Gross Profit			7,141,519				51.6	%			2,553,646				51.6	%			4,587,873				179.7	%

Operating expenses:
Selling expenses			1,056,704				7.6	%			934,754				18.9	%			121,950				13.0	%
General and administrative expenses			5,133,094				37.1	%			4,319,248				87.3	%			813,846				18.8	%
Research and development expenses			119,232				0.9	%			525,487				10.6	%			(406,255	)			-77.3	%
Total operating expenses			6,309,030				45.6	%			5,779,489				116.8	%			529,541				9.2	%

Income (loss) from operations			832,489				6.0	%			(3,225,843	)			-65.2	%			4,058,332				-125.8	%

Other expenses			(7,852	)			-0.1	%			(48,086	)			-1.0	%			40,234				-83.7	%

Income (loss) before income tax provision			824,637				5.9	%			(3,273,929	)			-66.2	%			4,098,566				-125.2	%

Income tax expense			39,446				0.3	%			8,163				0.2	%			31,283				383.2	%

Net income (loss)			785,191				5.6	%			(3,282,092	)			-66.4	%			4,067,283				-123.9	%

Less: net loss attributable to non-controlling interest			(185,298	)			-1.4	%			-				-				(185,298	)			-100.0	%

Net income (loss) attributable to HeartCore Enterprises, Inc.		$	970,489				7.0	%		$	(3,282,092	)			-66.4	%		$	4,252,581				-129.6	%

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Revenues

Our total revenues increased by $8,883,225, or 179.6%, to $13,829,523 for the six months ended June 30, 2023 from $4,946,298 for the six months ended June 30, 2022, mainly attributable to (i) the increased revenue of $5,381,839 from GO IPO consulting services as the Company obtained more IPO consulting customers in 2023 and received warrants from its customers as noncash consideration from consulting services; (ii) the increased revenue of $3,926,572 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; offset by (iii) the decreased revenue of $456,944 in revenue from sales of on-premise software, primarily due to the weak perform of a significant distributor in the current period.

Cost of Revenues

Our total costs of revenues increased by $4,295,352, or 179.5%, to $6,688,004 for the six months ended June 30, 2023 from $2,392,652 for the six months ended June 30, 2022, in light of the increase in sales in GO IPO consulting services and customized software development and services.

Gross Profit

Our total gross profit increased by $4,587,873, or 179.7%, to $7,141,519 for the six months ended June 30, 2023 from $2,553,646 for the six months ended June 30, 2022, mainly attributable to (i) the increased gross profit of $4,282,835 from GO IPO consulting services as the Company obtained more IPO consulting customers in 2023 and received warrants from its customers as noncash consideration from consulting services; (ii) the increased gross profit of $709,607 from customized software development and services as a result of acquisition of Sigmaways and its subsidiaries on February 1, 2023; offset by (iii) the decreased gross profit of $914,590 from sales of on-premise software due to the overall market competition. Our overall gross profit margin remained 51.6% for the six months ended June 30, 2023 and 2022.

Selling Expenses

Our selling expenses increased by $121,950 or 13.0%, to $1,056,704 for the six months ended June 30, 2023 from $934,754 for the six months ended June 30, 2022, primarily attributable to an increase of $403,378 in stock-based compensation for sales staff, offset by the decrease of $340,712 in advertising expenses, as the company spent heavily on IR and PR in the U.S. immediately after listing in Nasdaq in early 2022.

As a percentage of revenues, our selling expenses accounted for 7.6% and 18.9% of our total revenues for the six months ended June 30, 2023 and 2022, respectively.

General and Administrative Expenses

Our general and administrative expenses increased by $813,846, or 18.8%, to $5,133,094 for the six months ended June 30, 2023 from $4,319,248 for the six months ended June 30, 2022, primarily attributable to (i) an increase of $576,859 in salaries and welfare, an increase of $310,796 in office, utility and other expenses, an increase of $250,646 in depreciation and amortization expenses, and an increase of $115,807 in rent expenses, mostly due to the acquisition of Sigmaways and its subsidiaries as well as the overall business expansion; offset by (ii) a decrease of $271,771 in listing-related expenses as we finished the process of going public in early 2022; and (iii) a decrease of $281,522 in stock-based compensation as the Company awarded options and RSUs to employees and service providers in early 2022 when the Company finished going public.

As a percentage of revenues, general and administrative expenses were 37.1% and 87.3% of our revenues for the six months ended June 30, 2023 and 2022, respectively.

Research and Development Expenses

Our research and development expenses decreased by $406,255, or 77.3%, to $119,232 for the six months ended June 30, 2023 from $525,487 for the six months ended June 30, 2022, primarily attributable to the decrease in outsourcing expenses relating to the development of a high quality 12K VR camera and related data compression system, which was completed in June 2022, offset by an increase of $57,839 in stock-based compensation for research and development staff.

As a percentage of revenues, research and development expenses were 0.9% and 10.6% of our revenues for the six months ended June 30, 2023 and 2022, respectively.

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Other Expenses

Our other expenses primarily include changes in fair value of investments in marketable securities and changes in fair value of investments in warrants, interest income generated from bank deposits, interest expense for bank loans and bonds, other income, and other expenses. Our other expenses decreased by $40,234, or 83.7%, to $7,852 in the six months ended June 30, 2023 from $48,086 in the six months ended June 30, 2022, primarily attributable to (i) an increase of $166,107 in changes in fair value of investments in warrants; (ii) an increase of $98,551 in other income, primarily attributable to the CMS development subsidy granted by the Japanese government; offset by (iii) a decrease of $229,022 in changes in fair value of investments in marketable securities.

Income Tax Expense

Our income tax expense was $39,446 in the six months ended June 30, 2023, as compared to $8,163 in the six months ended June 30, 2022, mainly due to the net income before income tax of $824,637 in the current period, as compared to a net loss before income tax of $3,273,929 in the prior period.

Net Income (Loss)

As a result of the foregoing, we reported a net income of $785,191 for the six months ended June 30, 2023, representing a $4,067,283, or 123.9%, increase from a net loss of $3,282,092 for the six months ended June 30, 2022.

Net Loss Attributable to Non-controlling Interest

We owned 51% equity ownership interest of Sigmaways and its subsidiaries as of June 30, 2023. Accordingly, we recorded net loss attributable to the non-controlling interest of $185,298 in the six months ended June 30, 2023.

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

As a result of the foregoing, we reported a net income attributable to HeartCore Enterprises, Inc. of $970,489 for the six months ended June 30, 2023, representing a $4,252,581, or 129.6%, increase from a net loss attributable to HeartCore Enterprises, Inc. of $3,282,092 for the six months ended June 30, 2022.

Liquidity and Capital Resources

As of June 30, 2023, we had $4,238,741 in cash, as compared to $7,177,326 as of December 31, 2022. As of June 30, 2023, our working capital was $3,487,961, as compared to $4,887,444 as of December 31, 2022. We also had $2,812,337 in accounts receivable as of June 30, 2023. Our accounts receivable primarily includes balance due from customers for our on-premise software sold and services provided to and accepted by customers, as well as Sigmaways’s accounts receivable related to customized software development and services.

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

		For the Six Months Ended June 30,
		2023				2022
Net cash flows used in operating activities		$	(1,368,562	)		$	(2,093,867	)
Net cash flows used in investing activities			(1,181,646	)			(9,455	)
Net cash flows provided by (used in) financing activities			(243,897	)			11,651,622
Effect of exchange rate changes			(144,480	)			(221,960	)
Net change in cash and cash equivalents			(2,938,585	)			9,326,340
Cash and cash equivalents, beginning of the period			7,177,326				3,136,839
Cash and cash equivalents, end of the period		$	4,238,741			$	12,463,179

Operating Activities

Net cash flows used in operating activities was $1,368,562 for the six months ended June 30, 2023, as compared to $2,093,867 net cash flows used in operating activities for the six months ended June 30, 2022, primarily consisting of the following:

	●	Net income of $785,191 for the six months ended June 30, 2023.
	●	Changes in fair value of investments in warrants of $166,107 and warrants received as non-cash consideration of $4,009,335 as two of our IPO consulting customers completed the IPO during the current period and we recognized investments in warrants and remeasured the fair value at the period end.
	●	An increase of $596,312 in accounts receivable in light of the increase in revenues.
	●	Offset by an increase of $810,639 in deferred revenue, due to the upfront payment received for long-term service contracts.
	●	Offset by stock-based compensation of $1,094,393 for the six months ended June 30, 2023, as we granted equity rewards to our employees and service providers in the first quarter of 2023.
	●	Offset by depreciation and amortization expenses of $360,097, mainly because we acquired Sigmaways and its subsidiaries on February 1, 2023 and recognized amortization expense for the intangible asset identified through the acquisition.
	●	Offset by the loss from changes in fair value of investments in marketable securities of $229,022 due to the decrease in customers’ stock price from the warrant exercise date to the balance sheet date.
	●	Offset by an increase of $106,625 in income tax payables as we generated more taxable income in the current period.

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Investing Activities

Net cash flows used in investing activities amounted to $1,181,646 for the six months ended June 30, 2023, as compared to net cash flows used in investing activities of $9,455 for the six months ended June 30, 2022. Net cash flows used in investing activities for the six months ended June 30, 2023 primarily consisted of (i) payment for acquisition of Sigmaways and its subsidiaries, net of cash acquired, of $724,910; (ii) advance on notes receivable of $300,000; and (iii) purchases of property and equipment of $180,451.

Financing Activities

Net cash flows used in financing activities amounted to $243,897 for the six months ended June 30, 2023, as compared to net cash flows provided by financing activities of $11,651,622 for the six months ended June 30, 2022. Net cash flows used in financing activities primarily consisted of repayment of $411,923 for long-term debts, and repayment of $149,250 for insurance premium financing, offset by the net proceeds of $328,967 from the factoring arrangement.

Contractual Obligations

Lease commitment

The Company has entered into three leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and a lease for a vehicle, and these leases were classified as finance leases.

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

Year Ended December 31,		Finance Leases				Operating Leases
Remaining of 2023		$	7,144			$	148,105
2024			259				286,340
2025			-				286,340
2026			-				286,340
2027			-				286,340
Thereafter			-				1,178,973
Total lease payments			7,403				2,472,438
Less: imputed interest			(17	)			(144,032	)
Total lease liabilities			7,386				2,328,406
Less: current portion			(7,386	)			(262,063	)
Non-current lease liabilities		$	-			$	2,066,343

Long-Term Debts

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

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

		Loan
Year Ended December 31,		Payment
Remaining of 2023		$	295,810
2024			433,421
2025			271,417
2026			258,793
2027			226,359
Thereafter			393,771
Total		$	1,879,571

Off-Balance Sheet Arrangements

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

12

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements. These financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. We continue to evaluate the estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed herein reflect the more significant judgments and estimates used in preparation of our unaudited consolidated financial statements.

Business Combinations

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

The fair value of the intangible asset is estimated using the income approach using the multi-period excess earnings method. Management applies significant judgement related to this fair value method, which included the selection of an expected EBITDA margin assumption for the forecast period, and discount rate assumptions. These significant assumptions are based on company specific information and projections, which are not observable in the market (except for the discount rate assumption) and, therefore, are considered Level 2 and Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

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

Revenue Recognition

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

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

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

Revenues from On-Premise Software

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

13

Revenues from Maintenance and Support Services

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

Revenues from Software as a Service (“SaaS”)

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

Revenues from Software Development and Other Miscellaneous Services

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

Revenues from Customized Software Development and Services

The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. The contract pricing is at stated billing rates per hour. These contracts are generally short-term in nature and not longer than one year in duration. For services provided under the contract that result in the transfer of control over time, the underlying deliverable in the contracts is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.

Revenues from Consulting Services

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

The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.3 million and $1.1 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, 2023. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2023, the Company’s disclosure controls and procedures were not effective, for the same reason as previously disclosed under Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on March 31, 2023.

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, 2023 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, 2022, as updated from time to time.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) None.

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

15

ITEM 6. EXHIBITS

Exhibit Number		Description of Document

10.1		Consulting and Services Agreement, dated as of April 4, 2023, by and between the registrant and rYojbaba Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on April 12, 2023).

10.2		Common Stock Purchase Warrant, dated April 4, 2023, issued by rYojbaba Inc. to the registrant. (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on April 12, 2023).

10.3		Note Purchase Agreement, dated as of May 2, 2023, by and between the registrant and ZEROSPO (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 8, 2023).

10.4		Promissory Note, dated as of May 2, 2023, issued by ZEROSPO in favor of the registrant (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 8, 2023).

10.5		Common Stock Sales Agreement, dated as of May 29, 2023, by and between the registrant and Sutter Securities, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 31, 2023)

10.6		Director Agreement, dated as of June 1, 2023, by and between the registrant and Heather Marie Neville (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 5, 2023)

31.1*		Rule 13a-14(a) Certification of Principal Executive Officer.

31.2*		Rule 13a-14(a) Certification of Principal Financial Officer.

32.1**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Principal Executive Officer and Principal Financial Officer.

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase

104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith.
**	Furnished herewith.

16

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

Dated: August 14, 2023	By:	/s/ Qizhi Gao
		Qizhi Gao
		Chief Financial Officer (principal financial officer and principal accounting officer)

17

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, 2023 of HeartCore Enterprises, Inc.; and

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2023	By:	/s/ Sumitaka Yamamoto
		Sumitaka Yamamoto
		Chief Executive Officer and President (principal executive officer)

Exhibit 31.2

CERTIFICATIONS

I, Qizhi Gao, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2023 of HeartCore Enterprises, Inc.; and

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2023	By:	/s/ Qizhi Gao
		Qizhi Gao
		Chief Financial Officer (principal financial officer)

Exhibit 32.1

CERTIFICATION

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

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

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

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

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

Date: August 14, 2023	/s/ Sumitaka Yamamoto
	Sumitaka Yamamoto
	Chief Executive Officer and President (principal executive officer)

Date: August 14, 2023	/s/ Qizhi Gao
	Qizhi Gao Chief Financial Officer (principal financial officer)

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

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 14, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-41272
Entity Registrant Name	HeartCore Enterprises, Inc.
Entity Central Index Key	0001892322
Entity Tax Identification Number	87-0913420
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1-2-33
Entity Address, Address Line Two	Higashigotanda
Entity Address, Address Line Three	Shinagawa-ku
Entity Address, City or Town	Tokyo
Entity Address, Country	JP
City Area Code	(206)
Local Phone Number	385-0488
Title of 12(b) Security	Common Stock
Trading Symbol	HTCR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,842,690

Consolidated Balance Sheets - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 4,238,741	$ 7,177,326
Accounts receivable	2,812,337	551,064
Investments in marketable securities	1,028,846
Prepaid expenses	878,539	538,230
Note receivable	300,000
Other current assets	79,339	220,070
Total current assets	9,381,584	8,535,137
Non-current assets:
Property and equipment, net	331,389	203,627
Operating lease right-of-use assets	2,275,506	2,644,957
Intangible asset, net	4,834,375
Goodwill	3,276,441
Long-term investments in warrants	2,917,574
Deferred tax assets	238,783	263,339
Security deposits	339,052	244,395
Other non-current assets	69	661
Total non-current assets	14,414,038	3,603,451
Total assets	23,795,622	12,138,588
Current liabilities:
Accounts payable and accrued expenses	1,194,222	497,742
Accrued payroll and other employee costs	561,698	360,222
Current portion of long-term debts	548,297	697,877
Insurance premium financing	239,785
Factoring liability	328,967
Operating lease liabilities, current	262,063	291,863
Finance lease liabilities, current	7,386	19,294
Income tax payables	109,625	2,747
Deferred revenue	2,375,063	1,724,519
Total current liabilities	5,893,623	3,647,693
Non-current liabilities:
Long-term debts	1,324,383	1,123,735
Operating lease liabilities, non-current	2,066,343	2,421,054
Finance lease liabilities, non-current		459
Deferred tax liabilities	1,353,625
Other non-current liabilities	124,936	138,018
Total non-current liabilities	4,869,287	3,683,266
Total liabilities	10,762,910	7,330,959
Shareholders’ equity:
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,842,690 and 17,649,886 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)	2,083	1,764
Additional paid-in capital	19,258,681	15,014,607
Accumulated deficit	(9,603,090)	(10,573,579)
Accumulated other comprehensive income	372,296	364,837
Total HeartCore Enterprises, Inc. shareholders’ equity	10,029,970	4,807,629
Non-controlling interest	3,002,742
Total shareholders’ equity	13,032,712	4,807,629
Total liabilities and shareholders’ equity	23,795,622	12,138,588
Related Party [Member]
Current assets:
Due from related party	43,782	48,447
Non-current assets:
Long-term loan receivable from related party	200,849	246,472
Current liabilities:
Other current liabilities	4,250	402
Nonrelated Party [Member]
Current liabilities:
Other current liabilities	$ 262,267	$ 53,027

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

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Revenues	$ 5,095,373	$ 2,670,297	$ 13,829,523	$ 4,946,298
Cost of revenues	3,586,938	1,337,296	6,688,004	2,392,652
Gross profit	1,508,435	1,333,001	7,141,519	2,553,646
Operating expenses:
Selling expenses	488,062	728,836	1,056,704	934,754
General and administrative expenses	2,447,887	1,850,315	5,133,094	4,319,248
Research and development expenses	39,608	417,228	119,232	525,487
Total operating expenses	2,975,557	2,996,379	6,309,030	5,779,489
Income (loss) from operations	(1,467,122)	(1,663,378)	832,489	(3,225,843)
Other income (expenses):
Changes in fair value of investments in marketable securities	(229,022)		(229,022)
Changes in fair value of investments in warrants	(27,258)		166,107
Interest income	18,665	9,091	50,270	10,549
Interest expenses	(42,614)	(17,590)	(82,454)	(28,861)
Other income	109,800	8,777	124,001	25,450
Other expenses	(7,297)	(31,562)	(36,754)	(55,224)
Total other expenses	(177,726)	(31,284)	(7,852)	(48,086)
Income (loss) before income tax provision	(1,644,848)	(1,694,662)	824,637	(3,273,929)
Income tax expense (benefit)	(622,002)	8,979	39,446	8,163
Net income (loss)	(1,022,846)	(1,703,641)	785,191	(3,282,092)
Less: net loss attributable to non-controlling interest	(111,046)		(185,298)
Net income (loss) attributable to HeartCore Enterprises, Inc.	(911,800)	(1,703,641)	970,489	(3,282,092)
Other comprehensive income:
Foreign currency translation adjustment	30,533	219,360	5,499	299,413
Total comprehensive income (loss)	(992,313)	(1,484,281)	790,690	(2,982,679)
Less: comprehensive loss attributable to non-controlling interest	(110,716)		(187,258)
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.	$ (881,597)	$ (1,484,281)	$ 977,948	$ (2,982,679)
Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Basic	$ (0.04)	$ (0.09)	$ 0.05	$ (0.18)
Diluted	$ (0.04)	$ (0.09)	$ 0.05	$ (0.18)
Weighted average common shares outstanding
Basic	20,842,690	18,936,829	19,959,333	18,105,698
Diluted	20,842,690	18,936,829	19,959,333	18,105,698

Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock, Common [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ 1,554	$ 3,350,779		$ (3,896,113)	$ (15,172)			$ (558,952)
Beginning balance, shares at Dec. 31, 2021	15,546,454
Net loss				(1,578,451)				(1,578,451)
Foreign currency translation adjustment					80,053			80,053
Issuance of common shares for cash	$ 310	13,643,969						13,644,279
Beginning balance, shares	3,096,000
Issuance of common shares from exercise of share options	$ 27	(11)						16
Beginning balance, shares	273,489
Stock-based compensation		422,164						422,164
Stock-based compensation, shares	692,804
Ending balance, value at Mar. 31, 2022	$ 1,891	17,416,901		(5,474,564)	64,881			(12,009,109)
Ending balance, shares at Mar. 31, 2022	18,915,943
Beginning balance, value at Dec. 31, 2021	$ 1,554	3,350,779		(3,896,113)	(15,172)			(558,952)
Beginning balance, shares at Dec. 31, 2021	15,546,454
Net loss								$ (3,282,092)
Beginning balance, shares
Stock-based compensation, shares
Ending balance, value at Jun. 30, 2022	$ 1,899	17,883,555	$ (1,336,762)	(7,178,205)	284,241			$ 9,654,728
Ending balance, shares at Jun. 30, 2022	18,999,276		(558,809)
Beginning balance, value at Mar. 31, 2022	$ 1,891	17,416,901		(5,474,564)	64,881			(12,009,109)
Beginning balance, shares at Mar. 31, 2022	18,915,943
Net loss				(1,703,641)				(1,703,641)
Foreign currency translation adjustment					219,360			219,360
Stock-based compensation	$ 8	466,654						466,662
Stock-based compensation, shares	83,333
Repurchase of common shares			$ (1,336,762)					(1,336,762)
Beginning balance, shares			(558,809)
Ending balance, value at Jun. 30, 2022	$ 1,899	17,883,555	$ (1,336,762)	(7,178,205)	284,241			9,654,728
Ending balance, shares at Jun. 30, 2022	18,999,276		(558,809)
Beginning balance, value at Dec. 31, 2022	$ 1,764	15,014,607		(10,573,579)	364,837	4,807,629		4,807,629
Beginning balance, shares at Dec. 31, 2022	17,649,886
Net loss				1,882,289		1,882,289	(74,252)	1,808,037
Foreign currency translation adjustment					(22,744)	(22,744)	(2,290)	(25,034)
Stock-based compensation	69	915,159				915,228		915,228
Issuance of common shares for acquisition of subsidiary	$ 250	3,149,750				3,150,000		3,150,000
Issuance of common shares for acquisition of subsidiary, shares	2,500,000
Non-controlling interests arising from acquisition of subsidiary							3,190,000	3,190,000
Ending balance, value at Mar. 31, 2023	$ 2,083	19,079,516		(8,691,290)	342,093	10,732,402	3,113,458	13,845,860
Ending balance, shares at Mar. 31, 2023	20,842,690
Beginning balance, value at Dec. 31, 2022	$ 1,764	15,014,607		(10,573,579)	364,837	4,807,629		4,807,629
Beginning balance, shares at Dec. 31, 2022	17,649,886
Net loss								$ 785,191
Stock-based compensation, shares								100,000
Ending balance, value at Jun. 30, 2023	$ 2,083	19,258,681		(9,603,090)	372,296	10,029,970	3,002,742	$ 13,032,712
Ending balance, shares at Jun. 30, 2023	20,842,690
Beginning balance, value at Mar. 31, 2023	$ 2,083	19,079,516		(8,691,290)	342,093	10,732,402	3,113,458	13,845,860
Beginning balance, shares at Mar. 31, 2023	20,842,690
Net loss				(911,800)		(911,800)	(111,046)	(1,022,846)
Foreign currency translation adjustment					30,203	30,203	330	30,533
Stock-based compensation		179,165				179,165		179,165
Ending balance, value at Jun. 30, 2023	$ 2,083	$ 19,258,681		$ (9,603,090)	$ 372,296	$ 10,029,970	$ 3,002,742	$ 13,032,712
Ending balance, shares at Jun. 30, 2023	20,842,690

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income (loss)	$ 785,191	$ (3,282,092)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expenses	306,097	46,688
Amortization of debt issuance costs	1,316	2,768
Non-cash lease expense	155,301	143,845
Deferred income taxes	(75,240)	14,167
Stock-based compensation	1,094,393	888,826
Warrants received as noncash consideration	(4,009,335)
Changes in fair value of investments in marketable securities	229,022
Changes in fair value of investments in warrants	(166,107)
Changes in assets and liabilities:
Accounts receivable	(596,312)	(344,779)
Prepaid expenses	1,245	(266,030)
Other assets	23,277	(5,516)
Accounts payable and accrued expenses	(8,359)	281,567
Accrued payroll and other employee costs	124	175,246
Due to related party	4,214	5,448
Operating lease liabilities	(147,035)	(148,125)
Finance lease liabilities		(288)
Income tax payables	106,625	(8,756)
Deferred revenue	810,639	596,762
Other liabilities	116,382	(193,598)
Net cash flows used in operating activities	(1,368,562)	(2,093,867)
Cash flows from investing activities:
Purchases of property and equipment	(180,451)	(30,963)
Advance on note receivable	(300,000)
Repayment of loan provided to related party	23,715	21,508
Payment for acquisition of subsidiary, net of cash acquired	(724,910)
Net cash flows used in investing activities	(1,181,646)	(9,455)
Cash flows from financing activities:
Proceeds from initial public offering, net of issuance cost		13,602,554
Proceeds from issuance of common shares prior to initial public offering		220,572
Repurchase of common shares		(1,336,762)
Payments for finance leases	(11,243)	(24,189)
Proceeds from long-term debt		258,087
Repayment of long-term debts	(411,923)	(469,166)
Repayment of insurance premium financing	(149,250)	(167,955)
Net proceeds from factoring arrangement	328,967
Payments for debt issuance costs	(448)	(1,030)
Payment for mandatorily redeemable financial interest		(430,489)
Net cash flows provided by (used in) financing activities	(243,897)	11,651,622
Effect of exchange rate changes	(144,480)	(221,960)
Net change in cash and cash equivalents	(2,938,585)	9,326,340
Cash and cash equivalents - beginning of the period	7,177,326	3,136,839
Cash and cash equivalents - end of the period	4,238,741	12,463,179
Supplemental cash flow disclosure:
Interest paid	40,083	28,025
Income taxes paid		3,013
Non-cash investing and financing transactions:
Payroll withheld as repayment of loan receivable from employees		12,034
Liabilities assumed in connection with purchase of property and equipment	2,199	9,676
Share repurchase liability settled by issuance of common shares		16
Deferred offering costs recognized against the proceeds from the offering		178,847
Insurance premium financing	389,035	388,538
Common shares issued for acquisition of subsidiary	3,150,000
Investments in warrants converted to marketable securities	$ 1,257,868

ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

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

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

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

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

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

Use of Estimates

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

COVID-19

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

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,
		2023				2022
Beginning balance		$	138,018			$	155,666
Accretion expense			223				459
Foreign currency translation adjustment			(13,305	)			(18,107	)
Ending balance		$	124,936			$	138,018

Software Development Costs

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

In the six months ended June 30, 2023 and 2022, software development costs expensed as incurred amounted to $119,232 and $525,487, respectively. These software development costs were included in the research and development expenses.

Investments in Warrants

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

Investments in Marketable Securities

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

Intangible Asset, Net

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

Impairment of Long-Lived Assets Other Than Goodwill

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

Goodwill

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

Foreign Currency Translation

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

The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the 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. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.

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

Revenues from On-Premise Software

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

Revenues from Maintenance and Support Services

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

Revenues from Software as a Service (“SaaS”)

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

Revenues from Software Development and Other Miscellaneous Services

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

Revenues from Customized Software Development and Services

The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. The contract pricing is at stated billing rates per hour. These contracts are generally short-term in nature and not longer than one year in duration. For services provided under the contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.

Revenues from Consulting Services

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

The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.3 million and $1.1 million, respectively.

Disaggregation of Revenues

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

SCHEDULE OF DISAGGREGATION OF REVENUES

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from on-premise software		$	704,268			$	716,532			$	1,061,189			$	1,518,133
Revenues from maintenance and support services			874,725				727,277				1,576,199				1,572,616
Revenues from software as a service (“SaaS”)			177,529				103,250				348,573				229,904
Revenues from software development and other miscellaneous services			406,455				674,883				1,086,796				1,177,290
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

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

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from customer experience management platform		$	1,725,872			$	1,831,166			$	3,292,309			$	3,586,219
Revenues from process mining			188,555				118,320				290,756				384,808
Revenues from robotic process automation			127,283				149,031				213,469				247,417
Revenues from task mining			95,679				98,558				202,767				185,435
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Revenues from others			25,588				24,867				73,456				94,064
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

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

Concentration of Credit Risk

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

For the six months ended June 30, 2023, customer C, D and E represent 18.2%, 12.8% and 11.8%, respectively, of the Company’s total revenues. For the six months ended June 30, 2022, customer A and B represent 12.9% and 10.4%, respectively, of the Company’s total revenues.

For the six months ended June 30, 2023, vendor A and B represent 22.7% and 60.9%, respectively, of the Company’s total purchases. For the six months ended June 30, 2022, vendor A and B represent 44.5% and 29.8%, respectively, of the Company’s total purchases.

Stock-based Compensation

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

Business Combinations

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

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

In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive 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, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Investments in Warrants

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

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

SCHEDULE OF INVESTMENTS IN WARRANTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in warrants at beginning of the period		$	-			$	-
Warrants received as noncash consideration			4,009,335				-
Changes in fair value of investments in warrants			166,107				-
Investments in warrants converted to marketable securities			(1,257,868	)			-
Fair value of investments in warrants at end of the period		$	2,917,574			$	-

Investments in Marketable Securities

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

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in marketable securities at beginning of the period		$	-			$	-
Investments in warrants converted to marketable securities			1,257,868				-
Changes in fair value of investments in marketable securities			(229,022	)			-
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	1,028,846			$	-

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

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

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

New Accounting Pronouncements Not Yet Effective

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

ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2023

Credit Loss [Abstract]

ACCOUNTS RECEIVABLE

NOTE 3 — ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		June 30,				December 31,
		2023				2022
Accounts receivable – non-factored		$	2,483,370			$	551,064
Accounts receivable – factored with recourse			328,967				-
Accounts receivable, gross			2,812,337				551,064
Less: allowance for credit losses			-				-
Accounts receivable		$	2,812,337			$	551,064

PREPAID EXPENSES

6 Months Ended

Jun. 30, 2023

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

PREPAID EXPENSES

NOTE 4 — PREPAID EXPENSES

Prepaid expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

		June 30,				December 31,
		2023				2022
Prepayments to software vendors		$	157,782			$	162,046
Prepaid marketing and consulting fees			161,338				99,770
Prepaid subscription fees			113,173				113,685
Prepaid insurance premium			319,133				66,023
Others			127,113				96,706
Total		$	878,539			$	538,230

NOTE RECEIVABLE

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

NOTE RECEIVABLE

NOTE 5 — NOTE RECEIVABLE

On May 2, 2023, the Company purchased a $300,000 promissory note from a non-related company. The note bears an interest rate of 8% per annum and matures on the earlier of 1) the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering 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.

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 6 — RELATED PARTY TRANSACTIONS

As of June 30, 2023 and December 31, 2022, the Company has a due to related party balance of $4,250 and $402, respectively, from Sumitaka Yamamoto, the Chief Executive Officer (“CEO”) and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the 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. During the six months ended June 30, 2022, the related party paid operating expenses on behalf of the Company and received the payments in a net amount of $5,448.

As of June 30, 2023 and December 31, 2022, the Company has a loan receivable balance of $244,631 and $294,919, respectively, from Heartcore Technology Inc., a company controlled by the CEO of the Company. The loan was made to the related party to support its operation. The balance is unsecured, bears an annual interest of 1.475%, and requires repayments in installments starting from February 2022. During the six months ended June 30, 2023 and 2022, the Company received repayments of $23,715 and $21,508, respectively, from this related party.

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

PROPERTY AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

NOTE 7 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

		June 30,				December 31,
		2023				2022
Leasehold improvements		$	272,711			$	298,637
Machinery and equipment			518,022				316,827
Vehicle			96,237				106,490
Software			147,350				163,049
Subtotal			1,034,320				885,003
Less: accumulated depreciation			(702,931	)			(681,376	)
Property and equipment, net		$	331,389			$	203,627

Depreciation expenses were $40,472 and $46,688 for the six months ended June 30, 2023 and 2022, respectively.

INTANGIBLE ASSET, NET

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSET, NET

NOTE 8 — INTANGIBLE ASSET, NET

Intangible asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

		June 30,				December 31,
		2023				2022
Customer relationship		$	5,100,000			$	-
Less: accumulated amortization			(265,625	)			-
Intangible asset, net		$	4,834,375			$	-

Amortization expenses were $265,625 and nil for the six months ended June 30, 2023 and 2022, respectively.

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

		Estimated
Year Ended December 31,		Amortization
Remaining of 2023		$	318,750
2024			637,500
2025			637,500
2026			637,500
2027			637,500
Thereafter			1,965,625
Total		$	4,834,375

LEASES

6 Months Ended

Jun. 30, 2023

NOTE 9 — LEASES

The Company has entered into three leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and a lease for a vehicle, and these leases were classified as finance leases. Right-of-use assets of these finance leases in the amount of $6,506 and $18,335 are included in property and equipment, net as of June 30, 2023 and December 31, 2022, respectively.

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

The components of lease costs are as follows:

SCHEDULE OF LEASE COSTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Finance lease costs
Amortization of right-of-use assets		$	10,902			$	21,972
Interest on lease liabilities			86				288
Total finance lease costs			10,988				22,260
Operating lease costs			176,809				164,513
Total lease costs		$	187,797			$	186,773

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	86			$	288
Operating cash flows from operating leases			164,317				168,793
Financing cash flows from finance leases			11,243				24,189

Weighted average remaining lease term (years)
Finance leases			0.3				1.3
Operating leases			8.7				9.6

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

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

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2023		$	7,144			$	148,105
2024			259				286,340
2025			-				286,340
2026			-				286,340
2027			-				286,340
Thereafter			-				1,178,973
Total lease payments			7,403				2,472,438
Less: imputed interest			(17	)			(144,032	)
Total lease liabilities			7,386				2,328,406
Less: current portion			(7,386	)			(262,063	)
Non-current lease liabilities		$	-			$	2,066,343

Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amounted to $339,052 and $244,395 as of June 30, 2023 and December 31, 2022, respectively.

FACTORING LIABILITY

6 Months Ended

Jun. 30, 2023

Factoring Liability

FACTORING LIABILITY

NOTE 10 — FACTORING LIABILITY

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

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

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

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

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

As of June 30, 2023, there was $328,967 borrowed and outstanding under the Factoring Agreement. There are various fees charged by the Factor, including initial discount purchase fee, factoring fee and interest expense. During the six months ended June 30, 2023, the Company recorded $41,611 in interest expense related to the Factoring Agreement.

INSURANCE PREMIUM FINANCING

6 Months Ended

Jun. 30, 2023

Insurance [Abstract]

INSURANCE PREMIUM FINANCING

NOTE 11 — INSURANCE PREMIUM FINANCING

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

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

As of June 30, 2023 and December 31, 2022, the balance of the insurance premium financing was $239,785 and nil, respectively. During the six months ended June 30, 2023 and 2022, the interest incurred was $18,033 and $14,185, respectively.

LONG-TERM DEBTS

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

LONG-TERM DEBTS

NOTE 12 — LONG-TERM DEBTS

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

SCHEDULE OF LONG-TERM DEBTS

Name of Financial Institutions		Original Amount Borrowed					Loan Duration		Annual Interest Rate					Balance as of June 30, 2023				Balance as of December 31, 2022

Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000	(a)(c)			1/10/2019 – 1/10/2024			0.430	%			$	137,941			$	228,956
Loans with banks and other financial institutions
Resona Bank, Limited			JPY50,000,000	(a)(b)			12/29/2017 – 12/29/2024			0.675	%				74,005				113,677
Resona Bank, Limited			JPY10,000,000	(a)(b)			9/30/2020 – 9/30/2027			0.000	%				41,886				52,705
Resona Bank, Limited			JPY40,000,000	(a)(b)			9/30/2020 – 9/30/2027			0.000	%				167,543				210,822
Resona Bank, Limited			JPY20,000,000	(a)(b)			11/13/2020 – 10/31/2027			1.600	%				85,413				107,227
Sumitomo Mitsui Banking Corporation			JPY100,000,000	(a)			12/28/2018 – 12/28/2023			1.475	%				68,846				165,237
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(a)(b)			12/30/2019 – 12/30/2026			1.975	%				34,498				44,532
The Shoko Chukin Bank, Ltd.			JPY30,000,000				9/28/2018 – 8/31/2023			1.200	%				6,414				34,343
The Shoko Chukin Bank, Ltd.			JPY50,000,000				7/27/2020 – 6/30/2027			1.290	%				200,014				253,377
Japan Finance Corporation			JPY80,000,000				11/17/2020 – 11/30/2027			0.210	%				353,128				442,036
Higashi-Nippon Bank			JPY30,000,000	(a)			3/31/2022 – 3/31/2025			1.400	%				120,008				177,669
First Home Bank			$350,000	(d)			4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%				239,875				-
U.S. Small Business Administration			$350,000	(d)			5/30/2020 – 5/30/2050			3.750	%				350,000				-
Aggregate outstanding principal balances															1,879,571				1,830,581
Less: unamortized debt issuance costs															(6,891	)			(8,969	)
Less: current portion															(548,297	)			(697,877	)
Non-current portion														$	1,324,383			$	1,123,735

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

Interest expense for long-term debts was $22,810 and $14,676 for the six months ended June 30, 2023 and 2022, respectively.

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

Year Ended December 31,		Loan
		Payment
Remaining of 2023		$	295,810
2024			433,421
2025			271,417
2026			258,793
2027			226,359
Thereafter			393,771
Total		$	1,879,571

INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

NOTE 13 — INCOME TAXES

United States

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

Netherlands

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

Canada

Sigmaways Technologies is a company incorporated in British Columbia in Canada in August 2020. It is subject to income tax on income arising in, or derived from, the tax jurisdiction in British Columbia it operates. The basic federal rate of Part I tax is 38% of taxable income, 28% after federal tax abatement. After the general tax reduction, the net federal tax rate is 15%. The provincial and territorial lower and higher tax rates in British Columbia are 2% and 12%, respectively.

Japan

The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory tax rate of approximately 34.59% and 30.62% for the six months ended June 30, 2023 and 2022, respectively.

For the six months ended June 30, 2023 and 2022, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Current		$	114,686			$	(1,464	)
Deferred			(75,240	)			9,627
Income tax expense		$	39,446			$	8,163

The effective tax rate was 4.78% and (0.25)% for the six months ended June 30, 2023 and 2022, respectively.

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 14 – STOCK-BASED COMPENSATION

Options

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

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

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

SCHEDULE OF UNVESTED STOCK OPTION

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

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

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

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

On February 3, 2023, the Company awarded options to purchase 100,000 shares of common shares 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.

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

SCHEDULE OF STOCK OPTION ACTIVITY

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2022			1,534,500			$	2.50				9.99			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			-				-				-				-
As of June 30, 2022			1,534,500			$	2.50				9.49			$	-

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
Vested and exercisable as of June 30, 2023			426,500			$	2.34				8.44			$	13,000

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, 2023, the Company recognized stock-based compensation related to options of $150,481 and $334,816, respectively. For the three and six months ended June 30, 2022, the Company recognized stock-based compensation related to options of $284,938 and $577,750, respectively. The outstanding unamortized stock-based compensation related to options was $730,897 (which will be recognized through August 2026) as of June 30, 2023.

Restricted Stock Units (“RSUs”)

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

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

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

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

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value per Share
Unvested as of January 1, 2022			-			$	-
Granted			169,153				3.84
Vested			(83,333	)			2.70
Forfeited			-				-
Unvested as of June 30, 2022			85,820			$	4.95

Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,805	)			1.15
Forfeited			-				-
Unvested as of June 30, 2023			64,365			$	4.95

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. For the three and six months ended June 30, 2022, the Company recognized stock-based compensation related to RSUs of $181,724 and $311,076, respectively. The outstanding unamortized stock-based compensation related to RSUs was $159,110 (which will be recognized through February 2026) as of June 30, 2023.

SHAREHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

SHAREHOLDERS’ EQUITY

NOTE 15 – SHAREHOLDERS’ EQUITY

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

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

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

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

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

Share Repurchase Program

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

During the period from June 1, 2022 through June 30, 2022, the Company repurchased 558,809 shares of common shares at an average price of $2.39 per share totaling approximately $1.3 million (including commissions) under the 2022 Share Repurchase Program.

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

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

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

NET INCOME (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2023

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

NET INCOME (LOSS) PER SHARE

NOTE 16 – 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, 2023 and 2022 is as follows:

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Net income (loss) per share - basic and diluted:
Numerator:
Allocation of net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders used in calculating net income (loss) per common share		$	(911,800	)		$	(1,703,641	)		$	970,489			$	(3,282,092	)
Net income (loss) attributable to common shareholders			(911,800	)			(1,703,641	)			970,489				(3,282,092	)
Denominator:
Weighted average number of common shares outstanding used in calculating net income (loss) per share			20,842,690				18,936,829				19,959,333				18,105,698
Denominator used for net income (loss) per share			20,842,690				18,936,829				19,959,333				18,105,698
Net income (loss) per share - basic and diluted		$	(0.04	)		$	(0.09	)		$	0.05			$	(0.18	)

For the three and six months ended June 30, 2023 and 2022, 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, 2023

Business Combination and Asset Acquisition [Abstract]

BUSINESS COMBINATION

NOTE 17 – BUSINESS COMBINATION

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

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

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

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

The results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s unaudited consolidated financial statements since the date of acquisition. Sigmaways and its subsidiaries contributed revenues and net loss of $3,926,572 and $378,159, respectively, to the Company from February 1, 2023 to June 30, 2023.

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

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

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 18 - SUBSEQUENT EVENTS

On July 25, 2023, the Company obtained a five-year term loan in the amount of JPY30,000,000 (approximately $207,000) from the Shoko Chukin Bank, Ltd., with a floating interest rate of Tokyo Interbank Offered Rate plus 1.950% per annum.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

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

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

Use of Estimates

Use of Estimates

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

COVID-19

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

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,
		2023				2022
Beginning balance		$	138,018			$	155,666
Accretion expense			223				459
Foreign currency translation adjustment			(13,305	)			(18,107	)
Ending balance		$	124,936			$	138,018

Software Development Costs

Software Development Costs

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

In the six months ended June 30, 2023 and 2022, software development costs expensed as incurred amounted to $119,232 and $525,487, respectively. These software development costs were included in the research and development expenses.

Investments in Warrants

Investments in Warrants

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

Investments in Marketable Securities

Investments in Marketable Securities

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

Intangible Asset, Net

Intangible Asset, Net

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

Impairment of Long-Lived Assets Other Than Goodwill

Impairment of Long-Lived Assets Other Than Goodwill

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

Goodwill

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

Foreign Currency Translation

Foreign Currency Translation

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

The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the 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. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies.

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

Revenues from On-Premise Software

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

Revenues from Maintenance and Support Services

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

Revenues from Software as a Service (“SaaS”)

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

Revenues from Software Development and Other Miscellaneous Services

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

Revenues from Customized Software Development and Services

The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. The contract pricing is at stated billing rates per hour. These contracts are generally short-term in nature and not longer than one year in duration. For services provided under the contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date.

Revenues from Consulting Services

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

The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $1.3 million and $1.1 million, respectively.

Disaggregation of Revenues

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

SCHEDULE OF DISAGGREGATION OF REVENUES

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from on-premise software		$	704,268			$	716,532			$	1,061,189			$	1,518,133
Revenues from maintenance and support services			874,725				727,277				1,576,199				1,572,616
Revenues from software as a service (“SaaS”)			177,529				103,250				348,573				229,904
Revenues from software development and other miscellaneous services			406,455				674,883				1,086,796				1,177,290
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

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

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from customer experience management platform		$	1,725,872			$	1,831,166			$	3,292,309			$	3,586,219
Revenues from process mining			188,555				118,320				290,756				384,808
Revenues from robotic process automation			127,283				149,031				213,469				247,417
Revenues from task mining			95,679				98,558				202,767				185,435
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Revenues from others			25,588				24,867				73,456				94,064
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

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

Concentration of Credit Risk

Concentration of Credit Risk

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

For the six months ended June 30, 2023, customer C, D and E represent 18.2%, 12.8% and 11.8%, respectively, of the Company’s total revenues. For the six months ended June 30, 2022, customer A and B represent 12.9% and 10.4%, respectively, of the Company’s total revenues.

For the six months ended June 30, 2023, vendor A and B represent 22.7% and 60.9%, respectively, of the Company’s total purchases. For the six months ended June 30, 2022, vendor A and B represent 44.5% and 29.8%, respectively, of the Company’s total purchases.

Stock-based Compensation

Stock-based Compensation

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

Business Combinations

Business Combinations

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

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

In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive 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, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Investments in Warrants

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

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

SCHEDULE OF INVESTMENTS IN WARRANTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in warrants at beginning of the period		$	-			$	-
Warrants received as noncash consideration			4,009,335				-
Changes in fair value of investments in warrants			166,107				-
Investments in warrants converted to marketable securities			(1,257,868	)			-
Fair value of investments in warrants at end of the period		$	2,917,574			$	-

Investments in Marketable Securities

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

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in marketable securities at beginning of the period		$	-			$	-
Investments in warrants converted to marketable securities			1,257,868				-
Changes in fair value of investments in marketable securities			(229,022	)			-
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	1,028,846			$	-

Recent Accounting Pronouncements

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

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

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

New Accounting Pronouncements Not Yet Effective

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2023

Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS

		June 30,				December 31,
		2023				2022
Beginning balance		$	138,018			$	155,666
Accretion expense			223				459
Foreign currency translation adjustment			(13,305	)			(18,107	)
Ending balance		$	124,936			$	138,018

SCHEDULE OF DISAGGREGATION OF REVENUES

SCHEDULE OF DISAGGREGATION OF REVENUES

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from on-premise software		$	704,268			$	716,532			$	1,061,189			$	1,518,133
Revenues from maintenance and support services			874,725				727,277				1,576,199				1,572,616
Revenues from software as a service (“SaaS”)			177,529				103,250				348,573				229,904
Revenues from software development and other miscellaneous services			406,455				674,883				1,086,796				1,177,290
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

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

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Revenues from customer experience management platform		$	1,725,872			$	1,831,166			$	3,292,309			$	3,586,219
Revenues from process mining			188,555				118,320				290,756				384,808
Revenues from robotic process automation			127,283				149,031				213,469				247,417
Revenues from task mining			95,679				98,558				202,767				185,435
Revenues from customized software development and services			2,294,953				-				3,926,572				-
Revenues from consulting services			637,443				448,355				5,830,194				448,355
Revenues from others			25,588				24,867				73,456				94,064
Total revenues		$	5,095,373			$	2,670,297			$	13,829,523			$	4,946,298

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

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

SCHEDULE OF INVESTMENTS IN WARRANTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in warrants at beginning of the period		$	-			$	-
Warrants received as noncash consideration			4,009,335				-
Changes in fair value of investments in warrants			166,107				-
Investments in warrants converted to marketable securities			(1,257,868	)			-
Fair value of investments in warrants at end of the period		$	2,917,574			$	-

Marketable Securities [Member]

Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Fair value of investments in marketable securities at beginning of the period		$	-			$	-
Investments in warrants converted to marketable securities			1,257,868				-
Changes in fair value of investments in marketable securities			(229,022	)			-
Marketable securities sold			-				-
Fair value of investments in marketable securities at end of the period		$	1,028,846			$	-

ACCOUNTS RECEIVABLE (Tables)

6 Months Ended

Jun. 30, 2023

Credit Loss [Abstract]

SCHEDULE OF ACCOUNTS RECEIVABLE NET

Accounts receivable consists of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE NET

		June 30,				December 31,
		2023				2022
Accounts receivable – non-factored		$	2,483,370			$	551,064
Accounts receivable – factored with recourse			328,967				-
Accounts receivable, gross			2,812,337				551,064
Less: allowance for credit losses			-				-
Accounts receivable		$	2,812,337			$	551,064

PREPAID EXPENSES (Tables)

6 Months Ended

Jun. 30, 2023

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

SCHEDULE OF PREPAID EXPENSES

Prepaid expenses consist of the following:

SCHEDULE OF PREPAID EXPENSES

		June 30,				December 31,
		2023				2022
Prepayments to software vendors		$	157,782			$	162,046
Prepaid marketing and consulting fees			161,338				99,770
Prepaid subscription fees			113,173				113,685
Prepaid insurance premium			319,133				66,023
Others			127,113				96,706
Total		$	878,539			$	538,230

PROPERTY AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY AND EQUIPMENT NET

Property and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT NET

		June 30,				December 31,
		2023				2022
Leasehold improvements		$	272,711			$	298,637
Machinery and equipment			518,022				316,827
Vehicle			96,237				106,490
Software			147,350				163,049
Subtotal			1,034,320				885,003
Less: accumulated depreciation			(702,931	)			(681,376	)
Property and equipment, net		$	331,389			$	203,627

INTANGIBLE ASSET, NET (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS

Intangible asset, net is as follows:

SCHEDULE OF INTANGIBLE ASSETS

		June 30,				December 31,
		2023				2022
Customer relationship		$	5,100,000			$	-
Less: accumulated amortization			(265,625	)			-
Intangible asset, net		$	4,834,375			$	-

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET

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

		Estimated
Year Ended December 31,		Amortization
Remaining of 2023		$	318,750
2024			637,500
2025			637,500
2026			637,500
2027			637,500
Thereafter			1,965,625
Total		$	4,834,375

LEASES (Tables)

6 Months Ended

Jun. 30, 2023

SCHEDULE OF LEASE COSTS

The components of lease costs are as follows:

SCHEDULE OF LEASE COSTS

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Finance lease costs
Amortization of right-of-use assets		$	10,902			$	21,972
Interest on lease liabilities			86				288
Total finance lease costs			10,988				22,260
Operating lease costs			176,809				164,513
Total lease costs		$	187,797			$	186,773

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES

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

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	86			$	288
Operating cash flows from operating leases			164,317				168,793
Financing cash flows from finance leases			11,243				24,189

Weighted average remaining lease term (years)
Finance leases			0.3				1.3
Operating leases			8.7				9.6

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

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

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

Year Ended December 31,		Finance Lease				Operating Lease
Remaining of 2023		$	7,144			$	148,105
2024			259				286,340
2025			-				286,340
2026			-				286,340
2027			-				286,340
Thereafter			-				1,178,973
Total lease payments			7,403				2,472,438
Less: imputed interest			(17	)			(144,032	)
Total lease liabilities			7,386				2,328,406
Less: current portion			(7,386	)			(262,063	)
Non-current lease liabilities		$	-			$	2,066,343

LONG-TERM DEBTS (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

SCHEDULE OF LONG-TERM DEBTS

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

SCHEDULE OF LONG-TERM DEBTS

Name of Financial Institutions		Original Amount Borrowed					Loan Duration		Annual Interest Rate					Balance as of June 30, 2023				Balance as of December 31, 2022

Bond payable
Corporate bond issued through Resona Bank, Limited			JPY100,000,000	(a)(c)			1/10/2019 – 1/10/2024			0.430	%			$	137,941			$	228,956
Loans with banks and other financial institutions
Resona Bank, Limited			JPY50,000,000	(a)(b)			12/29/2017 – 12/29/2024			0.675	%				74,005				113,677
Resona Bank, Limited			JPY10,000,000	(a)(b)			9/30/2020 – 9/30/2027			0.000	%				41,886				52,705
Resona Bank, Limited			JPY40,000,000	(a)(b)			9/30/2020 – 9/30/2027			0.000	%				167,543				210,822
Resona Bank, Limited			JPY20,000,000	(a)(b)			11/13/2020 – 10/31/2027			1.600	%				85,413				107,227
Sumitomo Mitsui Banking Corporation			JPY100,000,000	(a)			12/28/2018 – 12/28/2023			1.475	%				68,846				165,237
Sumitomo Mitsui Banking Corporation			JPY10,000,000	(a)(b)			12/30/2019 – 12/30/2026			1.975	%				34,498				44,532
The Shoko Chukin Bank, Ltd.			JPY30,000,000				9/28/2018 – 8/31/2023			1.200	%				6,414				34,343
The Shoko Chukin Bank, Ltd.			JPY50,000,000				7/27/2020 – 6/30/2027			1.290	%				200,014				253,377
Japan Finance Corporation			JPY80,000,000				11/17/2020 – 11/30/2027			0.210	%				353,128				442,036
Higashi-Nippon Bank			JPY30,000,000	(a)			3/31/2022 – 3/31/2025			1.400	%				120,008				177,669
First Home Bank			$350,000	(d)			4/18/2019 – 4/18/2029			Wall Street Journal U.S. Prime Rate + 2.750	%				239,875				-
U.S. Small Business Administration			$350,000	(d)			5/30/2020 – 5/30/2050			3.750	%				350,000				-
Aggregate outstanding principal balances															1,879,571				1,830,581
Less: unamortized debt issuance costs															(6,891	)			(8,969	)
Less: current portion															(548,297	)			(697,877	)
Non-current portion														$	1,324,383			$	1,123,735

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

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS

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

Year Ended December 31,		Loan
		Payment
Remaining of 2023		$	295,810
2024			433,421
2025			271,417
2026			258,793
2027			226,359
Thereafter			393,771
Total		$	1,879,571

INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

SCHEDULE OF INCOME TAX EXPENSES

For the six months ended June 30, 2023 and 2022, the Company’s income tax expense are as follows:

SCHEDULE OF INCOME TAX EXPENSES

		2023				2022
		For the Six Months Ended
		June 30,
		2023				2022
Current		$	114,686			$	(1,464	)
Deferred			(75,240	)			9,627
Income tax expense		$	39,446			$	8,163

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

SCHEDULE OF UNVESTED STOCK OPTION

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

SCHEDULE OF UNVESTED STOCK OPTION

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

SCHEDULE OF STOCK OPTION ACTIVITY

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

SCHEDULE OF STOCK OPTION ACTIVITY

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2022			1,534,500			$	2.50				9.99			$	-
Granted			-				-				-				-
Exercised			-				-				-				-
Forfeited			-				-				-				-
As of June 30, 2022			1,534,500			$	2.50				9.49			$	-

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
Vested and exercisable as of June 30, 2023			426,500			$	2.34				8.44			$	13,000

SCHEDULE OF RESTRICTED STOCK UNITS

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

SCHEDULE OF RESTRICTED STOCK UNITS

		Number of RSUs				Weighted Average Grant Date Fair Value per Share
Unvested as of January 1, 2022			-			$	-
Granted			169,153				3.84
Vested			(83,333	)			2.70
Forfeited			-				-
Unvested as of June 30, 2022			85,820			$	4.95

Unvested as of January 1, 2023			85,820			$	4.95
Granted			671,350				1.03
Vested			(692,805	)			1.15
Forfeited			-				-
Unvested as of June 30, 2023			64,365			$	4.95

NET INCOME (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2023

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, 2023 and 2022 is as follows:

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Net income (loss) per share - basic and diluted:
Numerator:
Allocation of net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders used in calculating net income (loss) per common share		$	(911,800	)		$	(1,703,641	)		$	970,489			$	(3,282,092	)
Net income (loss) attributable to common shareholders			(911,800	)			(1,703,641	)			970,489				(3,282,092	)
Denominator:
Weighted average number of common shares outstanding used in calculating net income (loss) per share			20,842,690				18,936,829				19,959,333				18,105,698
Denominator used for net income (loss) per share			20,842,690				18,936,829				19,959,333				18,105,698
Net income (loss) per share - basic and diluted		$	(0.04	)		$	(0.09	)		$	0.05			$	(0.18	)

BUSINESS COMBINATION (Tables)

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION

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

		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					3 Months Ended
	Feb. 24, 2022	Jan. 13, 2022	Jul. 16, 2021	Jul. 15, 2021	Mar. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares		96,000
Common Stock [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares					3,096,000
Share Exchange Agreement [Member] \| Stockholder [Member] \| Common Stock [Member] \| HeartCore Japan [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock issued during period, shares			15,999,994
Stock issued during period, exchange shares	278		10,706	10,984
Ownership percentage			97.50%

SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Beginning balance	$ 138,018	$ 155,666
Accretion expense	223	459
Foreign currency translation adjustment	(13,305)	(18,107)
Ending balance	$ 124,936	$ 138,018

SCHEDULE OF DISAGGREGATION OF REVENUES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Product Information [Line Items]
Total revenues	$ 5,095,373	$ 2,670,297	$ 13,829,523	$ 4,946,298
On Premise Software [Member]
Product Information [Line Items]
Total revenues	704,268	716,532	1,061,189	1,518,133
Maintenance And Support Services [Member]
Product Information [Line Items]
Total revenues	874,725	727,277	1,576,199	1,572,616
Software As A Service Saa S [Member]
Product Information [Line Items]
Total revenues	177,529	103,250	348,573	229,904
Software Development And Other Miscellaneous Services [Member]
Product Information [Line Items]
Total revenues	406,455	674,883	1,086,796	1,177,290
Customised Software Development And Services [Member]
Product Information [Line Items]
Total revenues	2,294,953		3,926,572
Consulting Services [Member]
Product Information [Line Items]
Total revenues	637,443	448,355	5,830,194	448,355
Customer Experience Management Platform [Member]
Product Information [Line Items]
Total revenues	1,725,872	1,831,166	3,292,309	3,586,219
Process Mining [Member]
Product Information [Line Items]
Total revenues	188,555	118,320	290,756	384,808
Robotic Process Automation [Member]
Product Information [Line Items]
Total revenues	127,283	149,031	213,469	247,417
Task Mining [Member]
Product Information [Line Items]
Total revenues	95,679	98,558	202,767	185,435
Others [Member]
Product Information [Line Items]
Total revenues	$ 25,588	$ 24,867	$ 73,456	$ 94,064

SCHEDULE OF INVESTMENTS IN WARRANTS (Details) - USD ($)	6 Months Ended
SCHEDULE OF INVESTMENTS IN WARRANTS (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Accounting Policies [Abstract]
Fair value of investments in warrants at beginning of the period
Warrants received as noncash consideration	4,009,335
Changes in fair value of investments in warrants	166,107
Investments in warrants converted to marketable securities	(1,257,868)
Fair value of investments in warrants at end of the period	$ 2,917,574

SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Fair value of investments in warrants at beginning of the period
Investments in warrants converted to marketable securities	(1,257,868)
Changes in fair value of investments in marketable securities	166,107
Fair value of investments in warrants at end of the period	2,917,574
Marketable Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Fair value of investments in warrants at beginning of the period
Investments in warrants converted to marketable securities	1,257,868
Changes in fair value of investments in marketable securities	(229,022)
Marketable securities sold
Fair value of investments in warrants at end of the period	$ 1,028,846

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Product Information [Line Items]
Software development costs	$ 39,608	$ 417,228	$ 119,232	$ 525,487
Impairments assets			0	0
Revenues recognized included deferred revenues			$ 1,300,000	$ 1,100,000
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer C [Member]
Product Information [Line Items]
Concentration risk percentage			18.20%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer D [Member]
Product Information [Line Items]
Concentration risk percentage			12.80%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer E [Member]
Product Information [Line Items]
Concentration risk percentage			11.80%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer A [Member]
Product Information [Line Items]
Concentration risk percentage			12.90%
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| Customer B [Member]
Product Information [Line Items]
Concentration risk percentage			10.40%
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Vendor A [Member]
Product Information [Line Items]
Concentration risk percentage			22.70%	44.50%
Cost of Goods and Service Benchmark [Member] \| Supplier Concentration Risk [Member] \| Vendor B [Member]
Product Information [Line Items]
Concentration risk percentage			60.90%	29.80%
Customer Relationships [Member]
Product Information [Line Items]
Estimated useful life	8 years		8 years

SCHEDULE OF ACCOUNTS RECEIVABLE NET (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	$ 2,812,337	$ 551,064
Less: allowance for credit losses
Accounts receivable	2,812,337	551,064
Nonfactored [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	2,483,370	551,064
Factored With Recourse [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, gross	$ 328,967

SCHEDULE OF PREPAID EXPENSES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepayments to software vendors	$ 157,782	$ 162,046
Prepaid marketing and consulting fees	161,338	99,770
Prepaid subscription fees	113,173	113,685
Prepaid insurance premium	319,133	66,023
Others	127,113	96,706
Total	$ 878,539	$ 538,230

NOTE RECEIVABLE (Details Narrative) - Promissory Note [Member]	May 02, 2023 USD ($)
Schedule of Investments [Line Items]
Receivables	$ 300,000
Receivables interest rate	8.00%
Interest rate	12.00%

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		6 Months Ended
	Jan. 13, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Loan receivable balance		$ 300,000
Number of common stock issued	96,000
Share price	$ 2.50
Proceeds private placement	$ 220,572
Heartcore Technology Inc., [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Loan receivable balance		$ 244,631		294,919
Related party annual interest rate		1.475%
Repayment of debt related party		$ 23,715	$ 21,508
Sumitaka Yamamoto [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Other Receivables		4,250		$ 402
Operating Costs and Expenses		$ 4,214	$ 5,448
Officers [Member] \| Private Placement [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of common stock issued	30,000
Share price	$ 2.50
Proceeds private placement	$ 75,000

SCHEDULE OF PROPERTY AND EQUIPMENT NET (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Subtotal	$ 1,034,320	$ 885,003
Less: accumulated depreciation	(702,931)	(681,376)
Property and equipment, net	331,389	203,627
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Subtotal	272,711	298,637
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Subtotal	518,022	316,827
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Subtotal	96,237	106,490
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Subtotal	$ 147,350	$ 163,049

PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expenses	$ 40,472	$ 46,688

SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Customer relationship	$ 5,100,000
Less: accumulated amortization	(265,625)
Intangible asset, net	$ 4,834,375

SCHEDULE OF AMORTIZATION INTANGIBLE ASSET (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remaining of 2023	$ 318,750
2024	637,500
2025	637,500
2026	637,500
2027	637,500
Thereafter	1,965,625
Intangible asset, net	$ 4,834,375

INTANGIBLE ASSET, NET (Details Narrative) - USD ($)	6 Months Ended
INTANGIBLE ASSET, NET (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 265,625

SCHEDULE OF LEASE COSTS (Details) - USD ($)	6 Months Ended
SCHEDULE OF LEASE COSTS (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Leases
Amortization of right-of-use assets	$ 10,902	$ 21,972
Interest on lease liabilities	86	288
Total finance lease costs	10,988	22,260
Operating lease costs	176,809	164,513
Total lease costs	$ 187,797	$ 186,773

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Leases
Operating cash flows from finance leases	$ 86	$ 288
Operating cash flows from operating leases	164,317	168,793
Financing cash flows from finance leases	$ 11,243	$ 24,189
Weighted average remaining lease term (years) Finance leases	3 months 18 days	1 year 3 months 18 days
Weighted average remaining lease term (years) Operating leases	8 years 8 months 12 days	9 years 7 months 6 days
Weighted-average discount rate: (per annum) Finance leases	1.32%	1.32%
Weighted-average discount rate: (per annum) Operating leases	1.32%	1.32%

SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Finance Lease, Liability [Abstract]
Remaining of 2023	$ 7,144
2024	259
2025
2026
2027
Thereafter
Total lease payment	7,403
Less: imputed interest	(17)
Total lease liabilities	7,386
Less: current portion	(7,386)	$ (19,294)
Non-current lease liabilities		459
Operating Lease, Liability [Abstract]
Remaining of 2023	148,105
2024	286,340
2025	286,340
2026	286,340
2027	286,340
Thereafter	1,178,973
Total lease payment	2,472,438
Less: imputed interest	(144,032)
Total lease liabilities	2,328,406
Less: current portion	(262,063)	(291,863)
Non-current lease liabilities	$ 2,066,343	$ 2,421,054

LEASES (Details Narrative) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Impairment Effects on Earnings Per Share [Line Items]
Security deposits	$ 339,052	$ 244,395
Property, Plant and Equipment [Member]
Impairment Effects on Earnings Per Share [Line Items]
Finance Lease, Right-of-Use Asset, after Accumulated Amortization	$ 6,506	$ 18,335

FACTORING LIABILITY (Details Narrative) - Factoring Agreement [Member]	6 Months Ended
	Jun. 30, 2023 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accounts receivable purchase	$ 850,000
Percentage of face value of accounts receivable received by wire transfer	90.00%
Total amount outstanding as per agreementr	$ 328,967
Interest expense	$ 41,611

INSURANCE PREMIUM FINANCING (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Feb. 28, 2023	Dec. 31, 2022	Feb. 28, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Insurance premium financing	$ 239,785
Insurance interest incurred	$ 18,033	$ 14,185
Insurance Premium Financing Agreement [Member] \| Bank Direct Capital Finance [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Insurance premium financing			$ 389,035		$ 388,538
Debt Instrument, Interest Rate, Stated Percentage			16.04%		12.80%

SCHEDULE OF LONG-TERM DEBTS (Details)

6 Months Ended

Jun. 30, 2023

JPY (¥)

Jun. 30, 2023

USD ($)

Dec. 31, 2022

USD ($)

Schedule of Investments [Line Items]

$ 1,879,571

$ 1,830,581

Unamortized Debt Issuance Expense

(6,891)

(8,969)

Long-Term Debt, Current Maturities

(548,297)

(697,877)

Long-Term Debt, Excluding Current Maturities

1,324,383

1,123,735

Resona Bank, Limited [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

12/29/2017 – 12/29/2024

Debt Instrument, Interest Rate, Stated Percentage

0.675%

Original Amount Borrowed | ¥

^[1],[2]

¥ 50,000,000

74,005

113,677

Resona Bank, Limited One [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

9/30/2020 – 9/30/2027

Debt Instrument, Interest Rate, Stated Percentage

0.00%

Original Amount Borrowed | ¥

^[1],[2]

¥ 10,000,000

41,886

52,705

Resona Bank, Limited Two [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

9/30/2020 – 9/30/2027

Debt Instrument, Interest Rate, Stated Percentage

0.00%

Original Amount Borrowed | ¥

^[1],[2]

¥ 40,000,000

167,543

210,822

Resona Bank, Limited Three [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

11/13/2020 – 10/31/2027

Debt Instrument, Interest Rate, Stated Percentage

1.60%

Original Amount Borrowed | ¥

^[1],[2]

¥ 20,000,000

85,413

107,227

Sumitomo Mitsui Banking Corporation [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

12/28/2018 – 12/28/2023

Debt Instrument, Interest Rate, Stated Percentage

1.475%

Original Amount Borrowed | ¥

^[1]

¥ 100,000,000

68,846

165,237

Sumitomo Mitsui Banking Corporation One [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

12/30/2019 – 12/30/2026

Debt Instrument, Interest Rate, Stated Percentage

1.975%

Original Amount Borrowed | ¥

^[1],[2]

¥ 10,000,000

34,498

44,532

The Shoko Chukin Bank, Ltd. [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

9/28/2018 – 8/31/2023

Debt Instrument, Interest Rate, Stated Percentage

1.20%

Original Amount Borrowed | ¥

¥ 30,000,000

6,414

34,343

The Shoko Chukin Bank, Ltd One [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

7/27/2020 – 6/30/2027

Debt Instrument, Interest Rate, Stated Percentage

1.29%

Original Amount Borrowed | ¥

¥ 50,000,000

200,014

253,377

Japan Finance Corporation One [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

11/17/2020 – 11/30/2027

Debt Instrument, Interest Rate, Stated Percentage

0.21%

Original Amount Borrowed | ¥

¥ 80,000,000

353,128

442,036

Higashi Nippon Bank [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

3/31/2022 – 3/31/2025

Debt Instrument, Interest Rate, Stated Percentage

1.40%

Original Amount Borrowed | ¥

^[1]

¥ 30,000,000

120,008

177,669

First Home Bank [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

4/18/2019 – 4/18/2029

Debt Instrument, Interest Rate, Stated Percentage

2.75%

Original Amount Borrowed | ¥

^[3]

¥ 350,000

239,875

U S Small Business Administration [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

5/30/2020 – 5/30/2050

Debt Instrument, Interest Rate, Stated Percentage

3.75%

Original Amount Borrowed | ¥

^[3]

¥ 350,000

350,000

Corporate Bond Securities [Member] | Resona Bank, Limited [Member]

Schedule of Investments [Line Items]

Debt Instrument, Maturity Date, Description

1/10/2019 – 1/10/2024

Debt Instrument, Interest Rate, Stated Percentage

0.43%

Original Amount Borrowed | ¥

^[1],[4]

¥ 100,000,000

$ 137,941

$ 228,956

[1]	These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder.
[2]	These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.
[3]	These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.
[4]	The bond is guaranteed by Resona Bank, Limited.

SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Remaining of 2023	$ 295,810
2024	433,421
2025	271,417
2026	258,793
2027	226,359
Thereafter	393,771
Total	$ 1,879,571	$ 1,830,581

LONG-TERM DEBTS (Details Narrative) - USD ($)	6 Months Ended
LONG-TERM DEBTS (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Debt Disclosure [Abstract]
Interest expense for long-term debts	$ 22,810	$ 14,676

SCHEDULE OF INCOME TAX EXPENSES (Details) - USD ($)	3 Months Ended		6 Months Ended
SCHEDULE OF INCOME TAX EXPENSES (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Current			$ 114,686	$ (1,464)
Deferred			(75,240)	9,627
Income tax expense	$ (622,002)	$ 8,979	$ 39,446	$ 8,163

INCOME TAXES (Details Narrative)		6 Months Ended
INCOME TAXES (Details Narrative)	Jan. 01, 2010	Jun. 30, 2023	Jun. 30, 2022
Operating Loss Carryforwards [Line Items]
Income tax examination, description		Sigmaways B.V. is a company incorporated in Amsterdam in Netherlands in November 2019. The first EUR200,000 of taxable income will be taxed at 19% and the remaining taxable income will be taxed at statutory tax rate of 25.80%
Effective tax rate		4.78%	(0.25%)
Domestic Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate		21.00%
Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate	15.00%	34.59%	30.62%
Taxable income, rate		38.00%
Federal tax abatement, after		28.00%
Foreign Tax Authority [Member] \| Minimum [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate		2.00%
Foreign Tax Authority [Member] \| Maximum [Member]
Operating Loss Carryforwards [Line Items]
Effective statutory rate		12.00%

SCHEDULE OF UNVESTED STOCK OPTION (Details) - Equity Option [Member]	6 Months Ended
	Jun. 30, 2022 shares
Offsetting Assets [Line Items]
Issued and unvested as of January 1, 2022	183
Vested and exercised	183
Issued and unvested as of June 30, 2022

SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($)		6 Months Ended
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($)	Feb. 14, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]
Number of Options balance		1,466,500	1,534,500
Weighted Average Exercise Price, balance		$ 2.50	$ 2.50
Weighted Average Remaining Term (Years)		8 years 11 months 8 days	9 years 11 months 26 days
Intrinsic Value
Number of Options, Granted		100,000
Weighted Average Exercise Price, Granted		$ 1.17
Number of Options, Exercised	273,489
Weighted Average Exercise Price, Exercised
Number of Options/Warrants, Forfeited		2,000
Weighted Average Exercise Price, Forfeited
Number of Options, balance		1,564,500	1,534,500
Weighted Average Exercise Price, balance		$ 2.42	$ 2.50
Weighted Average Remaining Term (Years)		8 years 6 months 7 days	9 years 5 months 26 days
Intrinsic Value		$ 26,000
Weighted Average Remaining Term (Years), Granted		9 years 7 months 9 days
Number of Options, Forfeited		(2,000)
Number of Options, Vested and exercisable, balance		426,500
Weighted Average Exercise Price, Vested and exercisable, balance		$ 2.34
Weighted Average Remaining Term (Years), Vested and exercisable, balance		8 years 5 months 8 days
Intrinsic Value		$ 13,000

SCHEDULE OF RESTRICTED STOCK UNITS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Restricted Stock Units, Unvested balance	85,820
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95
Number of Restricted Stock Units, Granted	671,350	169,153
Weighted Average Grant Date Fair Value per Share, Granted	$ 1.03	$ 3.84
Number of Restricted Stock Units, Vested	(692,805)	(83,333)
Weighted Average Grant Date Fair Value per Share, Vested	$ 1.15	$ 2.70
Number of Restricted Stock Units, Forfeited
Weighted Average Grant Date Fair Value per Share, Forfeited
Number of Restricted Stock Units, Unvested balance	64,365	85,820
Weighted Average Grant Date Fair Value per Share, balance	$ 4.95	$ 4.95

STOCK-BASED COMPENSATION (Details Narrative)											1 Months Ended	3 Months Ended				6 Months Ended
STOCK-BASED COMPENSATION (Details Narrative)	Mar. 22, 2023 USD ($) shares	Feb. 03, 2023 $ / shares shares	Aug. 09, 2022 $ / shares shares	Aug. 02, 2022 $ / shares shares	May 15, 2022 shares	Feb. 25, 2022 USD ($) shares	Feb. 14, 2022 shares	Feb. 09, 2022 USD ($) shares	Dec. 25, 2021 $ / shares shares	Nov. 03, 2021 shares	May 31, 2016 $ / shares shares	Jun. 30, 2023 USD ($)	Mar. 31, 2023 shares	Jun. 30, 2022 USD ($) shares	Mar. 31, 2022 shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares	Jan. 13, 2022 $ / shares	Dec. 31, 2021 USD ($)	Dec. 31, 2021 JPY (¥)	Aug. 06, 2021 shares	May 31, 2016 ¥ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted																100,000
Shares issued price per share \| $ / shares																		$ 2.50
Number of option forfeited																2,000
Option exercise price per share \| $ / shares
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share base compensation \| $												$ 28,684		$ 181,724		$ 759,577	$ 311,076
Unamortized share based compensation \| $												159,110				159,110
Service Agreement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of restricted stock issued	671,350				83,333	83,333
RSUs grant date fair value \| $	$ 691,491					$ 224,999
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options vested																	183
Allocated share base compensation \| $												150,481		$ 284,938		334,816	$ 577,750
Unamortized share based compensation \| $												$ 730,897				$ 730,897
2021 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorizied for issuance																					2,400,000
Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted														83,333	692,804
Number of shares issued in acquisition													2,500,000
HeartCore Japan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted										484,056
Other current liabilities																			$ 16	¥ 1,830
Number of options vested																	183
HeartCore Japan [Member] \| Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Repurchase liability, shares \| $																	$ 16
Repurchase liability, value																	273,489
HeartCore Japan [Member] \| IPO [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options vested							183
Allocated share base compensation \| $																	$ 11,005
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted				2,000
Shares issued price per share \| $ / shares				$ 2.94
Percentage of shares expected to be vested		50.00%		25.00%
Expiration date		Feb. 03, 2033		Aug. 02, 2032
Employees [Member] \| HeartCore Japan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted											507
Number of shares issued in acquisition											1,494
Shares issued price per share \| (per share)											$ 0.09											¥ 10
Options granted										324
Chief Executive Officer [Member] \| HeartCore Japan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of option forfeited										324
Officers, Directors, Employees and Consultants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Option to purchase common stock									1,534,500
Option exercise price per share \| $ / shares									$ 2.50
Percentage of shares expected to be vested									25.00%
Expiration date									Dec. 25, 2031
Three Prior Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted		100,000	14,500
Shares issued price per share \| $ / shares		$ 1.17	$ 2.48
Expiration date			Aug. 09, 2026
Five Executives [Member] \| 2021 Equity Incentive Plan [Member] \| Executive Employment Agreements [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Percentage of shares expected to be vested								25.00%
Number of restricted stock issued								85,820
RSUs grant date fair value \| $								$ 424,809

SHAREHOLDERS’ EQUITY (Details Narrative) - USD ($)							1 Months Ended	3 Months Ended		6 Months Ended
SHAREHOLDERS’ EQUITY (Details Narrative) - USD ($)	Mar. 22, 2023	Feb. 01, 2023	May 15, 2022	Feb. 25, 2022	Feb. 14, 2022	Jan. 13, 2022	Jun. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Jun. 01, 2022	Dec. 31, 2021
Subsidiary, Sale of Stock [Line Items]
Common stock, shares authorized										200,000,000		200,000,000
Common stock, par value										$ 0.0001		$ 0.0001
Preferred stock, shares authorized										20,000,000		20,000,000
Preferred stock, par value										$ 0.0001		$ 0.0001
Beginning balance, shares						96,000
Shares Issued, Price Per Share						$ 2.50
Proceeds from Issuance of Private Placement						$ 220,572
Proceeds from issuance initial public offering											$ 13,602,554
Debt Issuance Costs, Net														$ 300,460
Deferred cost recognized														$ 178,847
Common stock issued from exercise of stock option					273,489
Common stock issued from exercise of stock option, shares					$ 16				$ 16
Stock Repurchased During Period, Value								$ 1,336,762
Common stock, shares issued										20,842,690		17,649,886
Preferred stock, shares outstanding										0		0
Preferred stock, shares issued										0		0
Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Beginning balance, shares									3,096,000
Common stock issued from exercise of stock option									273,489
Common stock issued from exercise of stock option, shares									$ 27
Stock Repurchased During Period, Value
2022 Share Repurchase Program [Member]
Subsidiary, Sale of Stock [Line Items]
Repurchase													$ 3,500,000
2022 Share Repurchase Program [Member] \| Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Shares Issued, Price Per Share							$ 2.39	$ 2.39			$ 2.39
Stock Repurchased During Period, Shares							558,809
Stock Repurchased During Period, Value							$ 1,300,000
2022 Share Repurchase Program [Member] \| Common Stock [Member] \| Sigmaways [Member]
Subsidiary, Sale of Stock [Line Items]
Ownership percent		51.00%
2022 Share Repurchase Program [Member] \| Common Stock [Member] \| Sigmaways [Member]
Subsidiary, Sale of Stock [Line Items]
Share issued		2,500,000
Share issued, value		$ 3,150,000
Service Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Number of restricted stock issued	671,350		83,333	83,333
IPO [Member]
Subsidiary, Sale of Stock [Line Items]
Beginning balance, shares					3,000,000
Share Price					$ 5.00
Proceeds from issuance initial public offering					$ 13,724,167
Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Beginning balance, shares						30,000

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Allocation of net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders used in calculating net income (loss) per common share	$ (911,800)	$ (1,703,641)	$ 970,489	$ (3,282,092)
Net income (loss) attributable to common shareholders	$ (911,800)	$ (1,703,641)	$ 970,489	$ (3,282,092)
Weighted average number of common shares outstanding used in calculating net income (loss) per share	20,842,690	18,936,829	19,959,333	18,105,698
Denominator used for net income (loss) per share	20,842,690	18,936,829	19,959,333	18,105,698
Net income (loss) per share - basic	$ (0.04)	$ (0.09)	$ 0.05	$ (0.18)
Net income (loss) per share - diluted	$ (0.04)	$ (0.09)	$ 0.05	$ (0.18)

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

BUSINESS COMBINATION (Details Narrative) - USD ($)		5 Months Ended
BUSINESS COMBINATION (Details Narrative) - USD ($)	Sep. 06, 2022	Jun. 30, 2023
Business Acquisition [Line Items]
Revenue		$ 3,926,572
Net loss		$ 378,159
Purchase Agreement [Member] \| Sigmaways [Member]
Business Acquisition [Line Items]
Purchase combination consideration	$ 41,500
Purchase consideration, cost	$ 10,000
Acquisition, shares	25,000
Debt instrument, fair value	$ 31,500
Purchase Agreement [Member] \| Sigamaways Inc [Member]
Business Acquisition [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired	51.00%

SUBSEQUENT EVENTS (Details Narrative) - The Shoko Chukin Bank, Ltd. [Member]			6 Months Ended
	Jul. 25, 2023 USD ($)	Jul. 25, 2023 JPY (¥)	Jun. 30, 2023 JPY (¥)
Subsequent Event [Line Items]
Debt Conversion, Original Debt, Amount			¥ 30,000,000
Debt Conversion, interest rate			1.20%
Subsequent Event [Member]
Subsequent Event [Line Items]
Debt Conversion, Original Debt, Amount	$ 207,000	¥ 30,000,000
Debt Conversion, interest rate	195.00%	195.00%

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News HeartCore Enterprises Inc

HeartCore Reports First Quarter 2024 Financial Results
Dienstag 14 Mai 2024 (4 Tage vor) • GlobeNewswire Inc.

HeartCore Provides Update on March Go IPO Warrant Sale and Encouraging Outlook
Montag 13 Mai 2024 (5 Tage vor) • GlobeNewswire Inc.

Form 8-K - Current report
Montag 13 Mai 2024 (5 Tage vor) • Edgar (US Regulatory)

HeartCore Expands Partnership with Heart-Tech Health
Montag 22 April 2024 (4 Wochen vor) • GlobeNewswire Inc.

HeartCore Engages with Onside Content to Develop AI-Based Content Marketing Evaluation and Reporting Index Solution
Mittwoch 17 April 2024 (1 Monat vor) • GlobeNewswire Inc.

HeartCore Signs 14th Go IPO Contract
Montag 15 April 2024 (1 Monat vor) • GlobeNewswire Inc.

HeartCore Reports Full Year 2023 Results and Provides Strategic Priorities for 2024
Montag 8 April 2024 (1 Monat vor) • GlobeNewswire Inc.

HeartCore Forms Artificial Intelligence (AI) Software Development Division
Donnerstag 4 April 2024 (1 Monat vor) • GlobeNewswire Inc.

HeartCore to Authorize a Dividend Payment
Montag 1 April 2024 (2 Monate vor) • GlobeNewswire Inc.

HeartCore Signs 13th Go IPO Contract
Montag 18 März 2024 (2 Monate vor) • GlobeNewswire Inc.

HeartCore Announces the Sale of Go IPO Warrant for $9 Million
Montag 4 März 2024 (2 Monate vor) • GlobeNewswire Inc.

Form 8-K - Current report
Donnerstag 29 Februar 2024 (3 Monate vor) • Edgar (US Regulatory)

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