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, 2025

☐ 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 141-0022

(Address of Principal Executive Offices) (Zip Code)

+81-3-6409-6966

(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 13, 2025, there were 23,310,770 shares of outstanding common stock 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	1

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

Item 4.	Controls and Procedures	15

PART II - OTHER INFORMATION		16

Item 1.	Legal Proceedings	16

Item 1A.	Risk Factors	16

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3.	Defaults Upon Senior Securities	16

Item 4.	Mine Safety Disclosures	16

Item 5.	Other Information	16

Item 6.	Exhibits	17

Signatures		18

ITEM 1. FINANCIAL STATEMENTS

HEARTCORE ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2025			2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,347,622		$	2,121,089
Accounts receivable		3,000,337			1,950,050
Investments in marketable securities		2,495,016			4,495,703
Prepaid expenses		503,171			458,839
Current portion of long-term note receivable		100,000			100,000
Due from related party		44,148			40,139
Deferred offering costs		250,000			-
Other current assets		186,944			251,545
Total current assets		8,927,238			9,417,365

Non-current assets:
Accounts receivable, non-current		1,058,539			752,930
Property and equipment, net		442,475			584,854
Operating lease right-of-use assets		1,853,466			1,936,097
Long-term investment in warrants		650,446			577,786
Long-term note receivable		100,000			100,000
Deferred tax assets		138,263			152,300
Security deposits		225,649			307,996
Long-term loan receivable from related party		114,230			123,928
Other non-current assets		15,014			11,778
Total non-current assets		4,598,082			4,547,669

Total assets	$	13,525,320		$	13,965,034

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,758,084		$	2,039,323
Accounts payable and accrued expenses – related party		22,924			47,199
Accrued payroll and other employee costs		752,787			675,502
Due to related parties		590			932
Short-term debt – related party		75,000			75,000
Current portion of long-term debts		382,494			401,255
Insurance premium financing		90,869			16,626
Factoring liability		226,212			172,394
Operating lease liabilities, current		290,886			371,951
Finance lease liabilities, current		17,666			15,956
Income tax payables		716,263			822,014
Deferred revenue		1,702,068			1,876,490
Derivative liability		236,141			-
Other current liabilities		821,858			907,080
Total current liabilities		7,093,842			7,421,722

Non-current liabilities:
Long-term debts		1,097,263			1,238,813
Operating lease liabilities, non-current		1,613,378			1,614,996
Finance lease liabilities, non-current		39,085			43,593
Asset retirement obligations		122,735			183,895
Total non-current liabilities		2,872,461			3,081,297

Total liabilities		9,966,303			10,503,019

Shareholders’ equity:
Preferred shares, $0.0001 par value, 20,000,000 shares authorized; Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of June 30, 2025 and December 31, 2024, respectively; aggregate liquidation preference of $2,200,611 and nil as of June 30, 2025 and December 31, 2024, respectively		1,360,586			-
Common shares, $0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively		2,331			2,193
Subscription receivable		-			(103,942	)
Additional paid-in capital		21,316,326			20,656,153
Accumulated deficit		(18,231,933	)		(16,244,843	)
Accumulated other comprehensive income		393,124			343,936
Total HeartCore Enterprises, Inc. shareholders’ equity		4,840,434			4,653,497
Non-controlling interests		(1,281,417	)		(1,191,482	)
Total shareholders’ equity		3,559,017			3,462,015

Total liabilities and shareholders’ equity	$	13,525,320		$	13,965,034

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)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2025			2024			2025			2024

Revenues	$	4,744,246		$	4,066,388		$	8,331,272		$	9,113,120
Cost of revenues (including cost of revenues resulting from transactions with a related party of $31,328 and $56,523 for the three and six months ended June 30, 2025, respectively, and of $25,117 and $25,117 for the three and six months ended June 30, 2024, respectively)		2,526,651			3,260,507			5,013,393			6,275,050
Gross profit		2,217,595			805,881			3,317,879			2,838,070

Operating expenses:
Selling expenses		385,622			179,408			676,782			399,115
General and administrative expenses (including general and administrative expenses resulting from transactions with a related party of $11,433 and $29,048 for the three and six months ended June 30, 2025, respectively, and of $6,473 and $6,473 for the three and six months ended June 30, 2024, respectively)		1,563,027			2,022,409			3,492,415			4,428,712
Research and development expenses		161,481			111,268			285,374			200,402
Total operating expenses		2,110,130			2,313,085			4,454,571			5,028,229

Income (loss) from operations		107,465			(1,507,204	)		(1,136,692	)		(2,190,159	)

Other income (expenses):
Changes in fair value of investments in marketable securities		852,709			(196,249	)		(928,955	)		(430,331	)
Changes in fair value of investment in warrants		124,281			(558,820	)		72,660			(1,237,707	)
Interest income		1,841			2,030			4,861			4,624
Interest expenses		(32,665	)		(37,040	)		(61,798	)		(73,701	)
Other income		21,561			37,858			56,920			134,874
Other expenses		(17,248	)		(23,856	)		(29,797	)		(49,050	)
Total other income (expenses)		950,479			(776,077	)		(886,109	)		(1,651,291	)
Income (loss) before income tax expense (benefit)		1,057,944			(2,283,281	)		(2,022,801	)		(3,841,450	)
Income tax expense (benefit)		(3,562	)		(72,163	)		53,074			(152,330	)
Net income (loss)		1,061,506			(2,211,118	)		(2,075,875	)		(3,689,120	)
Less: net loss attributable to non-controlling interests		(38,396	)		(260,018	)		(88,785	)		(404,670	)
Net income (loss) attributable to HeartCore Enterprises, Inc.		1,099,902			(1,951,100	)		(1,987,090	)		(3,284,450	)
Dividends accrued on Series A convertible preferred shares		(611	)		-			(611	)		-
Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders	$	1,099,291		$	(1,951,100	)	$	(1,987,701	)	$	(3,284,450	)

Other comprehensive income (loss):
Foreign currency translation adjustment		56,052			(24,120	)		48,038			(13,825	)
Total comprehensive income (loss)		1,117,558			(2,235,238	)		(2,027,837	)		(3,702,945	)
Less: comprehensive loss attributable to non-controlling interests		(40,783	)		(262,908	)		(89,935	)		(412,471	)
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.	$	1,158,341		$	(1,972,330	)	$	(1,937,902	)	$	(3,290,474	)

Net income (loss) per common share attributable to HeartCore Enterprises, Inc.
Basic	$	0.05		$	(0.09	)	$	(0.09	)	$	(0.16	)
Diluted	$	0.04		$	(0.09	)	$	(0.09	)	$	(0.16	)
Weighted average common shares outstanding
Basic		22,088,909			20,864,144			22,072,324			20,859,429
Diluted		27,079,975			20,864,144			22,072,324			20,859,429

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

F-2

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

	Preferred Shares				Common Shares							Additional						Accumulated Other			Total HeartCore Enterprises, Inc.			Non-			Total
	Number of				Number of				Subscription			Paid-in			Accumulated			Comprehensive			Shareholders’			controlling			Shareholders’
	Shares		Amount		Shares		Amount		Receivable			Capital			Deficit			Income			Equity			Interests			Equity
Balance, December 31, 2024		-	$	-		21,937,987	$	2,193	$	(103,942	)	$	20,656,153		$	(16,244,843	)	$	343,936		$	4,653,497		$	(1,191,482	)	$	3,462,015
Net loss		-		-		-		-		-			-			(3,086,992	)		-			(3,086,992	)		(50,389	)		(3,137,381	)
Foreign currency translation adjustment		-		-		-		-		-			-			-			(9,251	)		(9,251	)		1,237			(8,014	)
Issuance of common shares		-		-		15,892		2		-			30,443			-			-			30,445			-			30,445
Collection of subscription receivable		-		-		-		-		103,942			-			-			-			103,942			-			103,942
Exercise of stock options		-		-		100,000		10		-			116,990			-			-			117,000			-			117,000
Stock-based compensation		-		-		21,454		2		-			32,278			-			-			32,280			-			32,280
Balance, March 31, 2025		-		-		22,075,333	$	2,207		-			20,835,864			(19,331,835	)		334,685			1,840,921			(1,240,634	)		600,287
Net income (loss)		-		-		-		-		-			-			1,099,902			-			1,099,902			(38,396	)		1,061,506
Foreign currency translation adjustment		-		-		-		-		-			-			-			58,439			58,439			(2,387	)		56,052
Issuance of Series A convertible preferred shares		2,000		1,360,586		-		-		-			-			-			-			1,360,586			-			1,360,586
Issuance of common shares related to securities purchase agreement		-		-		750,000		75		-			203,198			-			-			203,273			-			203,273
Issuance of common shares related to equity purchase agreement		-		-		485,437		49		-			249,951			-			-			250,000			-			250,000
Dividends accrued on Series A convertible preferred shares		-		-		-		-		-			(611	)		-			-			(611	)		-			(611	)
Stock-based compensation		-		-		-		-		-			27,924			-			-			27,924			-			27,924
Balance, June 30, 2025		2,000	$	1,360,586		23,310,770	$	2,331	$	-		$	21,316,326		$	(18,231,933	)	$	393,124		$	4,840,434		$	(1,281,417	)	$	3,559,017

	Common Shares				Additional						Accumulated Other			Total HeartCore Enterprises, Inc.						Total
	Number of				Paid-in			Accumulated			Comprehensive			Shareholders’			Non-controlling			Shareholders’
	Shares		Amount		Capital			Deficit			Income			Equity			Interests			Equity
Balance, December 31, 2023		20,842,690	$	2,083	$	19,594,801		$	(14,763,469	)	$	331,881		$	5,165,296		$	2,501,518		$	7,666,814
Net loss		-		-		-			(1,333,350	)		-			(1,333,350	)		(144,652	)		(1,478,002	)
Foreign currency translation adjustment		-		-		-			-			15,206			15,206			(4,911	)		10,295
Capital contribution from non-controlling shareholder		-		-		-			-			-			-			67,195			67,195
Stock-based compensation		21,454		2		91,710			-			-			91,712			-			91,712
Balance, March 31, 2024		20,864,144		2,085		19,686,511			(16,096,819	)		347,087			3,938,864			2,419,150			6,358,014
Net loss		-		-		-			(1,951,100	)		-			(1,951,100	)		(260,018	)		(2,211,118	)
Distribution of dividends		-		-		(417,283	)		-			-			(417,283	)		-			(417,283	)
Foreign currency translation adjustment		-		-		-			-			(21,230	)		(21,230	)		(2,890	)		(24,120	)
Stock-based compensation		-		-		56,042			-			-			56,042			-			56,042
Balance, June 30, 2024		20,864,144	$	2,085	$	19,325,270		$	(18,047,919	)	$	325,857		$	1,605,293		$	2,156,242		$	3,761,535

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

F-3

HEARTCORE ENTERPRISES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended June 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(2,075,875	)	$	(3,689,120	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation and amortization expenses		42,437			374,946
Loss on disposal of property and equipment		117,305			1,894
Amortization of debt issuance costs		2,194			2,296
Non-cash lease expense		163,354			182,546
Gain on termination of lease		(9,059	)		(469	)
Deferred income taxes		28,008			(153,531	)
Stock-based compensation		60,204			147,754
Changes in fair value of investments in marketable securities		928,955			430,331
Changes in fair value of investment in warrants		(72,660	)		1,237,707
Gain on settlement of asset retirement obligations		(45,873	)		-
Changes in assets and liabilities:
Accounts receivable		(1,145,166	)		(823,402	)
Prepaid expenses		126,001			158,110
Other assets		182,063			(7,526	)
Accounts payable and accrued expenses		(320,566	)		272,375
Accounts payable and accrued expenses – related party		(23,386	)		21,956
Accrued payroll and other employee costs		31,589			(278,361	)
Due to related parties		(370	)		(1,246	)
Operating lease liabilities		(159,030	)		(183,047	)
Income tax payables		(108,943	)		(152,697	)
Deferred revenue		(282,704	)		165,073
Other liabilities		(113,370	)		558,667
Net cash flows used in operating activities		(2,674,892	)		(1,735,744	)

Cash flows from investing activities:
Purchases of property and equipment		(1,235	)		(4,134	)
Prepayment for property and equipment		-			(35,209	)
Purchase of investment in SAFE		-			(75,000	)
Net proceeds from sale of warrants		-			5,640,000
Proceeds from sale of marketable securities		1,071,732			-
Repayment of loan provided to related party		21,139			21,166
Net cash flows provided by investing activities		1,091,636			5,546,823

Cash flows from financing activities:
Payments for finance leases		(8,375	)		(8,526	)
Proceeds from short-term debt		134,689			68,138
Repayment of short-term and long-term debts		(395,495	)		(281,451	)
Repayment of insurance premium financing		(65,257	)		(60,201	)
Net proceeds from factoring arrangement		53,818			-
Net repayment of factoring arrangement		-			(242,008	)
Capital contribution from non-controlling shareholder		-			67,195
Distribution of dividends		-			(417,283	)
Proceeds from issuance of common shares		30,445			-
Proceeds from collection of subscription receivable		103,942			-
Proceeds from exercise of stock options		117,000			-
Proceeds from issuance of Series A convertible preferred shares and common shares related to securities purchase agreement, net of share issuance costs		1,800,000			-
Net cash flows provided by (used in) financing activities		1,770,767			(874,136	)

Effect of exchange rate changes		39,022			(143,073	)

Net change in cash and cash equivalents		226,533			2,793,870
Cash and cash equivalents – beginning of the period		2,121,089			1,012,479
Cash and cash equivalents – end of the period	$	2,347,622		$	3,806,349

SEC Form 10-Q filed by Heartcore Enterprises Inc.