UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington
D.C. 20549

 FORM

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

 For
the fiscal year ended December 31, 2024

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

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

 Commission
File Number 001-41272

 HeartCore
Enterprises, Inc.

 (Exact
name of registrant as specified in its charter)

 Delaware

 87-0913420

 (State or other jurisdiction of
 incorporation or organization)

 (I.R.S. Employer
 Identification No.)

 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)

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

registered pursuant to section 12(g) of the Act:

 N/A

 (Title of class)

 N/A

 (Title
 of class)

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

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

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

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. (Check one):

 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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates based upon the closing price of $0.6976 per
share of common stock as of June 28, 2024, the last business day of the registrant's most recently completed second fiscal quarter
was $ 3,594,334.

 As
of March 31, 2025, there were 22,075,333 shares of common stock, par value $0.0001 per share, of the registrant issued and outstanding.

 Documents
Incorporated by Reference

 None

 Table
of Contents

 Page

 Part
 I

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Part
 II

 Item 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 Reserved

 Item 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative
 Disclosures About Market Risk

 Item 8.

 Financial Statements
 and Supplementary Data

 Item 9.

 Changes in and Disagreements
 with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding
 Foreign Jurisdictions that Prevent Inspections

 Part
 III

 Item 10.

 Directors, Executive
 Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership
 of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships
 and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant
 Fees and Services

 Part
 IV

 Item 15.

 Exhibit and Financial
 Statement Schedules

 Item 16.

 Form 10-K Summary

 i

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 Some
of the statements contained in this annual report may constitute "forward-looking statements" for purposes of the federal
securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's
expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts
or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The
words "anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify forward-looking statements, but
the absence of these words does not mean that a statement is not forward-looking.

 The
forward-looking statements contained in this annual report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions
that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors:

 the level of demand for
 our products and services;

 competition in our markets;

 our ability to grow and
 manage growth profitably;

 our ability to access additional
 capital;

 changes in applicable laws
 or regulations;

 our ability to attract
 and retain qualified personnel;

 the possibility that we
 may be adversely affected by other economic, business, and/or competitive factors; and

 other risks and uncertainties,
 including those listed under the captions "Business," "Risk Factors," and "Management's Discussion
 and Analysis of Financial Condition and Results of Operations."

 Should
one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.

 ii

 PART
I

 ITEM
1. BUSINESS

 This Business section, along with other sections of this annual report
on Form 10-K, includes statistical and other industry and market data that we obtained from industry publications and research, surveys
and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their
information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such
information. While we believe that these industry publications and third-party research, surveys and studies are reliable, we have not
independently verified such data and we do not make any representation as to the accuracy of the information. Unless the context otherwise
requires, "HeartCore," "we," "us," "our," or the "Company" refers to HeartCore
Enterprises, Inc. and its consolidated subsidiaries, including, HeartCore Co., Ltd. ("HeartCore Co."), HeartCore Capital Advisors, Inc. ("HeartCore Capital Advisors"), HeartCore Financial, Inc. ("HeartCore
Financial"), HeartCore Financial, Inc. – Japan Branch Office ("HeartCore Financial - Japan"), HeartCore Luvina
Vietnam Company Limited ("HeartCore Luvina"), and Sigmaways, Inc. ("Sigmaways") and its subsidiaries.

 Overview

 We
are a leading software development company based in Tokyo, Japan. We provide software through two business units. The first business
unit, our CX division, includes a customer experience management business (the "CXM Platform") that has been in existence
for 15 years. Our CXM Platform includes marketing, sales, service and content management systems, as well as other tools and integrations,
that enable companies to attract and engage customers throughout the customer experience. We also provide education, services and support
to help customers be successful with our CXM Platform.

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

 We
have made significant investments in our sales and marketing efforts globally. As of December 31, 2024, our sales and marketing organization
was comprised of 12 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 December 31, 2024, our combined business units (customer experience management business unit and digital
transformation business unit) had 982 total customers in Japan, of which 724, or 73.7%, were paying customers, and 26 total customers
outside Japan, of which 1, or 0.1%, was a paying customer. Our 280 non-paying customers were originally paying customers that utilized
our paid services but now use a free version of the CXM Platform. There is the potential for non-paying customers to become paying customers
again if and when they start utilizing our paid services again.

 During 2022, we started the GO IPO business, which supports Japanese
companies listing on Nasdaq and NYSE in the United States. As of December 31, 2024, we have entered into consulting agreements with 14
companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting fee that ranges from
$380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies
that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share. The revenue in the GO IPO business helped to offset
the decline in sales in the CX and DX divisions in Japan. In the first quarter of 2023, we formed HeartCore Financial as a part of our
Go IPO consulting business. In the fourth quarter of 2023, we formed a 51% owned subsidiary in Vietnam, HeartCore Luvina, which is engaged
in the business of software development. HeartCore Luvina started its operations from February 2024.

 In
February 2023, we acquired 51% of the outstanding shares of Sigmaways and its wholly-owned subsidiaries, which are primarily engaged
in the business of developing and sales of software in the United States.

 On April 1, 2024, HeartCore Financial established a Japan branch
office, HeartCore Financial, Inc. – Japan Branch Office ("HeartCore Financial - Japan"), with focus on GO IPO consulting
services in Japan.

 Industry
Overview

Experience Management Business

 Companies
must manage a huge amount of content, collaborate with other kinds of business processes, and build infrastructure to fulfill customers'
needs. To make it happen, companies need a content management system that allows easy implementation of a wide range of features including
content creation, analysis, search capability and access controls into their websites, and enables them to deliver and receive content
at the best time responding market changes. A customer experience management system is also becoming essential for companies to manage
customers and deliver personalized content based on the users' behavior, device, location and context. A customer experience management
system is also required to analyze big data to deliver even the subconscious wants and needs of customers. Furthermore, these capabilities
are not supposed to be limited to general websites but also to various kinds of services such as E-commerce, smartphone sites, smartphone
apps, social networking services, blogs, and digital signage. Content management systems and customer experience management systems need
to provide rich features to fill the new generation of customers' needs.

Transformation Business

 Robotic
Process Automation ("RPA") is a technology that allows automation for a defined set of tasks. RPA robots can emulate most
human-computer interactions to carry out error-free tasks at high volume and speed. Some common tasks RPA can do include: (i) invoice
processing; (ii) process sales orders; (iii) account reconciliation; (iv) enterprise resource planning data entry for core processes
such as finance, human resources, manufacturing, supply chain, services, and procurement; (v) employee onboarding; (vi) payroll; and
(vii) data queries.

 As
companies have strived to automate, it has become more and more challenging to identify RPA opportunities. This has included uncovering
processes that would be good candidates for automation and having fundamental metrics about those processes (via task mining and process
mining technology) at their disposal – like utilization and the specific steps in the process if it is not already documented –
to aid them in their decision.

 Task
mining is a technology that enables organizations to discover, understand, and analyze the tasks employees perform as they relate to
completing larger processes. Task mining software works by monitoring the actions users take. A recorder is installed on an employee's
computer to capture their interactions in the different applications they use, recording data like keystrokes, clicks, data entry, etc.,
to uncover how tasks are completed within the organization. The purpose of using task mining software is to discover and understand the
tasks employees are performing. The ultimate objective is to find ways to improve how those tasks are carried out or automate them to
increase operational efficiency, reduce errors, and improve employee engagement.

 Process
mining is a technology that investigates the mountains of data in enterprise event logs to discover and present end-to-end processes
that the organization is performing to complete work. Event logs are essentially banks of data that store different information. The
benefit of process mining software is that it presents the process it successfully mined, along with the process' variants and
suggestions on how to optimize and improve that process. Like task mining, the most common use case for adopting process mining technology
is to improve processes, with the ideal goal of automating them for all the benefits and returns that come with automation, like improved
customer and employee experiences.

 Industry
Characteristics

 Explosive
Growth of Cloud-Based Applications Creating a New Era of IT Complexity. Businesses around the world are spending hundreds of billions
of dollars to adopt applications that help advance digital transformation and drive competitive advantages. With the proliferation of
cloud technologies and SaaS, traditional software suites have been disaggregated into point solutions. For example, human capital management
software has been segregated across recruiting, payroll, benefits administration, and other key business functions. As a result, enterprises
have transitioned from managing a handful of multi-purpose, largely on-premises applications to managing hundreds and even thousands
of specialized point solutions deployed across on-premises, cloud, and hybrid environments. According to the Wall Street Journal, in
2019 the number of software applications deployed by large firms across all industries worldwide had increased by approximately 70% over
the previous four years. These applications, which were generally not designed for interoperability, run in tandem with long-running,
legacy technologies. The increasing volume of applications has a compounding effect on the complexity of business processes and the IT
environments that support them.

 The Benefits of Digital
Transformation Have Yet to Make Their Way to the Workforce. Modern enterprise applications enable deep and nuanced functionalities,
such as conducting personalized marketing campaigns, predictive service delivery, and real time visibility of goods movement across the
supply chain. However, despite massive functional advancement, the true promise and potential of digital transformation—reallocating
human capital towards cognitive, higher-value activities—remains elusive, which is limiting improvements in productivity.

 Individual
Business Processes Rely on Multiple Business Applications, and Workers to Orchestrate Them. While specialized applications deliver
extensive functionality, they do not account for the full spectrum of how work gets done. The proliferation of specialized applications
has resulted in humans being the connective tissue in an enterprise, working across a wide range of applications that individually are
not built to address the needs of the actual processes they are supporting. As a result, activities performed by many workers today are
still manual, mundane, and administrative tasks, limiting workers from focusing on higher-value activities that can directly improve
business performance.

 Automation
is the New Frontier of Competitive Differentiation. Enterprises are demanding a new approach to unify, tailor, and run applications
without significant IT resources or changes to existing infrastructure. Automation enables organizations to design and optimize business
processes to improve productivity and business performance. Additionally, automation solutions that can accurately and consistently emulate
human behavior can work within existing business processes in a way that traditional applications cannot. This allows businesses to harness
the power of specialized applications in a differentiated manner. With the ability to emulate human behavior, this new approach to automation
is disrupting traditional automation and transforming data-processing work by allowing customers to find efficiencies without materially
changing business processes and supporting infrastructure.

 Empowering
Workers to Automate their Personal Workflows is Leading to a Democratization of Automation. The emerging workforce is graduating
with increasingly advanced technical skills and training in automation. Individuals are entering the workforce with higher expectations
related to job impact, satisfaction, and efficiency, and view software as a driving force in realizing those expectations. As a result,
organizations are looking to empower workers with tools to optimize the more tedious parts of their jobs. The combination of technology
that can emulate human behavior and a workforce with the knowledge and tools to create their own automations has enabled enterprises
to begin to automate a significant number of use cases, from individual tasks to enterprise-wide processes.

 Cost
of Skilled Human Capital is Accelerating the Evolution Towards the Fully Automated Enterprise. The cost of skilled human capital
continues to rise due to growing demand. We believe it is increasingly imperative for enterprises to leverage automation to liberate
workers from menial, repetitive, and less productive tasks and to better utilize the positive qualities that only humans have, such
as abstract thinking, making connections, dealing with ambiguity, creativity, innovation, passion, and community engagement. We
believe this will drive business value and greater employee engagement. According to a 2024 Gallup study, business units with highly
engaged employees experience 18% higher sales and 14% greater productivity. These units are also more responsive to customer needs
and more committed to adhering to processes, standards, and systems, collectively leading to enhanced organizational
profitability.

 Limitations
of Existing Offerings

 A
number of technology companies have attempted to address the automation needs of organizations through the application of business process
management, application development software offerings, RPA tools, and AI point offerings, as well as other horizontal software applications.
However, these existing offerings are challenged by a number of inherent limitations, including:

 Lack
of An End-to-End Software. Many existing automation software offerings are point technologies and cannot offer end-to-end automation
capabilities on an integrated software.

 Not
Capable of Emulating Human Behavior, Relying too Heavily on APIs. Many existing offerings do not effectively integrate AI computer
vision and machine learning ("ML") capabilities needed to accurately identify and emulate human actions in conjunction with
APIs. Without these capabilities, organizations are limited to pursuing automation only within the narrow pathways permitted by existing
APIs. Even when applications have an API, the functionality provided often does not fully capture what is required to conduct the business
process. As the scope of a task or process expands from a single, discrete action to a sequence of multiple steps and sub-processes,
the limitation in scope and complexity of supported API actions becomes more of an impediment to fully emulating the process. This frequently
prevents this work from being truly automated solely through APIs alone. Bringing APIs together with an emulative approach made possible
by AI computer vision and machine learning greatly expands the use cases for automation.

 Inability
to Automate Across Applications. While business processes typically involve multiple applications, many existing automation capabilities
are built into specific applications and are limited in their ability to automate business processes across multiple applications. Accordingly,
we believe enterprises build inefficient business processes to compensate for limited cross-functional automation capabilities.

 Difficult
to Link AI Capabilities to Execution. AI and ML ("AI/ML") capabilities are needed to automate cognitive, high-value tasks.
In recent years, enterprises have made significant investments in developing AI/ML models. However, it is difficult to leverage these
models as the environments for developing them, typically used by data scientists, are distinct from the environments where processes
are carried out, typically by employees using enterprise applications. This separation of environments limits the ability of an organization
to deploy models that are necessary to automate complex processes.

 Need
to Change an Enterprise's Underlying Infrastructure. Existing offerings generally are unable to emulate the human's role
in executing a business process, requiring organizations to make significant changes either to their applications and infrastructure
or to the business processes themselves. The costs associated with changing underlying infrastructure and business processes make it
uneconomical to automate anything outside of narrowly defined, high-volume tasks.

 Unable
to Realize Full Value of Automation Throughout an Organization. Existing solutions do not typically make automations accessible to
everyone within the organization as they are often built with non-intuitive user interfaces and code heavy technology stacks. These solutions
are too technical for most knowledge workers, limiting their application to a small number of use cases and users with significant developer
experience. Existing solutions also frequently require additional time and resources to enable the resulting automation to be used by
non-technical workers or to adapt the automation to nonstandard circumstances and environments.

 Lack
Governance Capabilities at Scale. Existing offerings do not typically offer centralized, secure governance capabilities to enforce,
manage, and deploy organizational development standards.

 Difficult
to Deploy. We believe existing automation solutions generally require complicated, invasive implementation processes that, in turn,
require extensive upfront and ongoing training and time commitment. This makes it difficult to build and maintain automations, resulting
in the persistence of manual processes throughout enterprises.

 Lack
of Openness and Interoperability. Many existing solutions are not modular and lack the ability to integrate new, third-party technologies
and operate with customized applications. Enterprises using these solutions are locked into a limited set of proprietary options not
built for the future.

 Lack
of an Engaged Community of Automation Developers. Many existing automation vendors do not have open software and have not invested
the time and resources required to cultivate a vibrant ecosystem of automation developers that freely exchange innovations and best practices.

 Addressable
Market

 Our
software targets the intelligent process automation ("IPA") market. According to a market research report published by Precedence
Research, the global IPA market was valued at approximately $17.34 billion in 2024 and is projected to reach approximately $67.73 billion
by 2034, reflecting a compound annual growth rate ("CAGR") of approximately 14.6% during this period. However, we believe that
these market projections may not fully represent the broader opportunities aligned with our vision and strategy of enabling fully automated
enterprises.

 According
to an estimate by Bain & Company in the report Beyond Cost Savings: Reinventing Business Through Automation, the expansion
of automation software by incorporating broader capabilities and technologies has increased the size of the addressable market for automation
software to approximately $65 billion.

 The size of our addressable market opportunity is underpinned by the
substantial amount of business processes that could be improved through automation but are not currently automated. We expect our estimated
global market opportunity will continue to expand as customers increase the size of their business units and hire additional employees,
resulting in a greater number of users and processes that can benefit from automation throughout these enterprises. Additionally, we believe
that we are unlocking a myriad of still unexplored automation possibilities as we continue to contribute to this market. We believe those
possibilities represent a significant greenfield opportunity for us.

 Organizations
across the world are only beginning to understand the power of automation and we believe we are at the forefront of a revolution in the
way that people do work. We believe that the opportunity that lies ahead of us is largely untapped and has the potential to be one of
the largest ever in enterprise software.

 Our
CXM Platform

 Our
CXM Platform includes marketing, sales, service and content management systems, as well as other tools and integrations, that enable
companies to attract and engage customers throughout the customer experience. We also provide education, services and support to help
customers be successful with our CXM Platform.

 We
focus on selling our CXM Platform to mid-market business-to-business companies, which we define as companies that have between 100 and
5,000 employees. We sell our CXM Platform on a subscription basis. As of December 31, 2024, our combined business units (customer experience
management business unit and digital transformation business unit) had 982 total customers in Japan, of which 724, or 73.7%, were paying
customers and 26 total customers outside Japan, of which 1, or 0.1%, was a paying customer. Our 280 non-paying customers were originally
paying customers that utilized our paid services but now use a free version of the CXM Platform. There is the potential for non-paying
customers to become paying customers again if and when they start utilizing our paid services again.

 Advantages
of our CXM Platform

 Our
CXM Platform features a central database of lead and customer interactions and integrated applications designed to help businesses attract
visitors to their websites, convert visitors into leads, close leads into customers, and fulfill the needs of customers so they become
promoters of those businesses.

 Designed
to Help Companies Grow Better. Our CXM Platform was architected from the ground up to enable businesses to transform their marketing,
sales, services, and content management playbook to meet the demands of customers today. Our CXM Platform includes both a system of record
for maintaining a unified view of the customer experience and a system of engagement for efficiently engaging customers through search
engine optimization, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base and more.
And it is also easy to integrate with customer data platforms.

 Ease
of Use of a Single, Extensible Platform. We provide a set of integrated applications on a common platform, which offers businesses
ease of use and simplicity. Our CXM Platform has one login, one user interface, one database, and one team for support. Our CXM Platform
starts free and grows with our customers. It is designed to scale its power and technical sophistication without losing its ease-of-use.
In addition to being a comprehensive suite itself, our CXM Platform seamlessly integrates with external applications, making it easy
to extend the functionality of our CXM Platform and customize it for any business.

 Power
of a Unified Customer View. At the core of our CXM Platform is a single customer experience management database for each business
that captures its lead and customer activity throughout the customer lifecycle. Our CXM Platform creates a unified timeline incorporating
all the interactions with a particular customer. In contrast to many customer experience management system suites which are cobbled together,
we have a set of core functionalities, including reporting, content, messaging, data, and automation, which runs across our product lines,
which we refer to as functions.

 Scalability.
Our CXM Platform was designed and built to serve a large number of customers with demanding use cases. Our CXM Platform currently processes
billions of data points each week, and we use leading global cloud infrastructure providers and our own automation technology to dynamically
allocate capacity to handle processing workloads of all sizes. We have built our CXM Platform on modern, scalable distributed technologies.
We built the infrastructure to support hundreds of microservices and can easily add new features and capabilities to the CXM Platform.
We utilize a variety of open-source distributed systems including customer data platform and consent management platform to scale our
data collection and processing. Our scalability gives us flexibility for future growth and enables us to service a large variety of businesses
of different sizes across different industries.

 Extensible
and Open Architecture. Our CXM Platform features a variety of open APIs that allow easy integration of our platform with other
applications. We enable our customers to connect our platform to their other applications, such as ecommerce, event management and videoconferencing
applications. By connecting third-party applications, our customers can leverage our centralized inbound database to perform additional
functions and analysis.

 CXM
Platform Functions

 Our
CXM Platform features integrated applications and tools that enable companies to create a cohesive and adaptable customer experience.
Each function can be used standalone or in conjunction with the other functions. Our functions are available in both free and paid tiers
(i.e., Starter, Professional and Enterprise) with gradually increasing levels of functionality that support the needs of our customers
as they see success with our tools and their businesses grow.

Experience Management. The core of our CXM Platform is a single database of lead and customer information that allows businesses
to track their interactions with contacts and customers, manage their sales activities, and report on their pipeline and sales. This
allows a complete view of lead and customer interactions across all of our integrated functions, giving our CXM Platform substantial
power. This integration makes it possible to personalize every aspect of the customer interaction across web content, social media engagement,
and email messages across devices, including mobile. The integrated functions on our CXM Platform have a common user interface and are
accessed through a single login. There is a free version of our CXM Platform that can be used standalone, or with any combination of
content management systems function, marketing function, sales function, and/or service function.

 Marketing
Function. The marketing function is an all-in-one toolset for marketers to attract, engage, and nurture new leads towards sales
readiness over the entire customer lifecycle. The marketing function is available in both free and paid tiers, and can be used standalone,
with our customer experience management system, a third party customer experience management system, and/or any version of content management
systems function, sales function or service function. Features include marketing automation and email, social media, search engine optimization,
and reporting and analytics.

 Sales
Function. We designed the sales function to enhance the productivity and effectiveness of sales teams. Businesses can empower
their teams with tools that deliver a personalized experience for prospects with less work for sales representatives. The sales function
is available in both free and paid tiers, and can be used with our customer experience management system, a third party customer experience
management system, and/or any version of marketing function, content management system function or service function. Features include
email templates and tracking, conversations and live chat, meeting and call scheduling, lead and website visit alerts, sales automation,
and lead scoring.

 Service
Function. The service function is our customer service software that is designed to help businesses manage and connect with customers.
The service function is available in free and paid tiers, and can be used standalone, with our customer experience management system,
a third party customer experience management system, and/or any version of marketing function, content management system function or
sales function. Features include tickets and help desk, automation and routing, knowledge base, team emails, feedback and reporting tools,
and set customer goals.

 Content
Management System Function. Our content management system function combines the power of customer experience management and a
content management system into one integrated platform. Our content tools enable businesses to create new and edit existing web content
while also personalizing their websites for different visitors and optimizing their websites to convert more visitors into leads and
customers. Our content management system function can be purchased as a standalone product, with our customer experience management system,
a third party customer experience management system, and/or with any version of marketing function, sales function, or service function.
Features include manage website pages, business blogging, smart content, landing pages and forms, search engine optimization tools, forms
and lead flow, web analytics reporting, calls-to-action, and digital asset management and product information management file manager.

 Platform
Application ("App") Partners. Businesses that use software outside of our software can leverage our ecosystem of
third-party integrations. We make it easy to find and install new or existing software solutions that complement our CXM Platform. Over
20 integrations and applications are available for our users, across a wide range of categories, including integrations with leading
social media, email, sales, video, analytics, content and webinar tools.

 CXM
Platform Services

 We
complement our product offerings with professional services, customer success and support, which we view as critical elements of ensuring
the long-term retention of our customers. The majority of our services and support is offered over email, phone, chat applications and
via web meeting technology rather than in-person, which is a more efficient business model for us and our customers.

 Professional
Services. We offer professional services to educate and train customers on how to leverage our CXM Platform to transform how
their business attracts, engages and delights customers. Depending on which functions and services a customer purchases, they receive
one-on-one training and guidance from one of our onboarding or technical specialists by web meeting and can purchase additional group
training and education in online or in-person classes. Our professional services are also available to customers who need additional
assistance on a one-time or ongoing basis for an additional fee.

Success. Our customers have access to a customer success manager or customer success team which are responsible for our customers'
long term success, retention and growth on the CXM Platform. Our customer success managers and customer success teams address the unique
needs and goals of our customers through a series of ongoing interactions and strategy calls on how to best engage and use our CXM Platform.

 Support.
In addition to assistance provided by our online articles and customer discussion forums, we offer phone and/or email and chat-based
support, which is included in the cost of a subscription for our Hubs. Phone support is available starting at the Professional product
level for all functions while email and chat-based support is available for Starter functions. We strive to maintain an exceptional quality
of customer service. We continuously monitor key customer service metrics such as ticket resolution rates, and we monitor the customer
satisfaction of our customer support interactions. We believe our customer support is an important reason why businesses choose our CXM
Platform and recommend it to their colleagues.

 CXM
Platform Technology

 Our
customers have chosen us as their CXM Platform, which we architected and built to be secure, highly distributed and highly scalable.
Since our founding, we have embraced rapid, iterative product development lifecycles, cloud automation and open-source technologies,
including big data platforms, to power marketing, sales, service, and content management programs and provide insights not previously
possible or available.

 Our
CXM Platform is a multi-tenant, single code-based, globally available software-as-a-service delivered through APIs, web browsers or mobile
applications. Our commitment to a highly available, reliable, and scalable platform for businesses of all sizes is accomplished through
the use of these technologies.

 Platform
Approach. We built our customer experience management system on a single platform with reusable and composable libraries, allowing
us to rapidly address new feature areas and bring new products to market that have a consistent user experience and data model. We have
built this platform with scale in mind, supporting thousands of components including hundreds of microservices.

 Modern
Database Architecture. We process billions of data points weekly across various channels, including social media, email, search
engine optimization and website visits, and continue to drive nearly real-time analytics across these channels. This is possible because
we built our database from the ground up using distributed big data technologies such as content delivery network, Edge computing and
customer data platform to both process and analyze the large amounts of data we collect. We also utilize cloud environment to operate
customer data at scale, allowing our engineers to choose the best datastore for each task.

 Agility.
Our infrastructure and development and software release processes allow us to update our platform for specific groups of customers or
our entire customer base at any time. This means we can rapidly innovate and deliver new functionality frequently, without waiting for
quarterly or annual release cycles. We typically make a significant number of customer data updates to our software platform in a single
day, enabling us to gather immediate customer feedback and improve our product quickly and continuously.

 Cost
Leverage. Because our CXM Platform was built on an almost exclusive footprint of open-source software, own developed source code
and designed to operate in cloud-based data centers, we have benefited from large-scale price reductions by these cloud computing service
providers as they continue to innovate and compete for market share. As our processing volume continues to grow, we continue to receive
larger volume discounts on a per-unit basis for costs such as storage, bandwidth and computing capacity. We also believe that our extensive
use of open-source software will provide additional leverage as we scale our CXM Platform and infrastructure.

 Scalability.
By leveraging leading cloud infrastructure providers along with our automated technology stack, we are able to scale workloads of varying
sizes at any time. This allows us to handle customers of all sizes and demands without traditional operational limitations such as network
bandwidth, computing cycles, or storage capacity as we can scale our platform on-demand.

 Reliability.
Customer data is distributed and processed across multiple data centers within a region to provide redundancy. We built our CXM Platform
on a distributed computing architecture with reduced single points of failure and we operate across data center boundaries daily. In
addition to datacenter level redundancy, this architecture supports multiple live copies of each data set along with snapshot capabilities
for faster, point-in-time data recovery instead of traditional backup and restore methodologies.

 Security.
We leverage industry standard network and perimeter defense technologies, distributed denial-of-service, protection systems (including
web application firewalls) and enterprise grade domain name system services across multiple vendors. Our data-center providers operate
and certify to high industry compliance levels. Due to the broad footprint of our customer base, we regularly test and evaluate our platform
with trusted third-party vendors to ensure the security and integrity of our services.

Transformation Solutions

 Our
mission is to unlock human creativity and ingenuity by enabling the fully automated enterprise and empowering workers through automation.

 The
modern enterprise is complex as employees must navigate an ever-increasing number of systems and applications to perform their day-to-day
work. This dynamic forces workers to constantly execute manual, time-consuming, and repetitive tasks to get their work done. The friction
faced by workers often results in lost productivity that can have a direct impact on a company's bottom line. Traditional automation
solutions intended to reduce this friction have generally been designed to be used by developers and engineers, rather than the employees
directly involved in executing the actual work being automated. As a result, employees are limited by the lack of flexibility of these
traditional automation technologies causing employee productivity, innovation, and satisfaction to suffer.

 Our
software is designed to transform the way humans work. We provide our customers with a robust set of capabilities to discover automation
opportunities and build, manage, run, engage, measure, and govern automations across departments within an organization. Our software
leverages the power of AI based computer vision to enable our software robots to perform a vast array of actions as a human would when
executing business processes. These actions include, but are not limited to, logging into applications, extracting information from documents,
moving folders, filling in forms, and updating information fields and databases. Our robots' ability to learn from and replicate
workers' steps in executing business processes drives continuous improvements in operational efficiencies and enables companies
to deliver on key digital initiatives with greater speed, agility, and accuracy.

 Our
software is designed to interact with and automate processes across a company's existing enterprise stack. As a result, our customers
can leverage the power of our software with lower overall IT infrastructure cost. Our software enables employees to quickly build automations
for both existing and new processes. Employees can seamlessly maintain and scale automations across multiple deployment options, constantly
improve and evolve automations, and continuously track and measure the performance of automations, all without substantial technical
experience.

 At
the core of our automation software is a set of capabilities that emulates human behavior, which provides our customers with the ability
to automate both simple and complex use cases. Automations on our software can be built, consumed, managed, and governed by any employee
who interacts with computers, resulting in the potential for broad applicability of our software across departments within an organization.
Society is at a turning point in how organizations execute work, and we believe the ability to leverage software to enrich the employee
experience will unlock tremendous value and efficiency opportunities. While we are still in the early days of a multi-year journey to
the fully automated enterprise, momentum is growing as organizations across the world are only now beginning to understand the power
of automation.

 Many
of our customers expand the scope and size of use cases of our software across their organizations as they quickly realize the power
of our software. We believe that the success of our land-and-expand business model is centered on our ability to deliver significant
value in a very short time. We grow with our customers as they identify and expand the number of business processes to automate, which
increases the number of robots deployed and the number of users interacting with our robots.

 Advantages
of our Solutions

 Our
mission is to be at the forefront of innovation and thought leadership in enterprise business automation, analyzing enterprise users'
desktops and mission-critical systems, and creating end-to-end software that provides business automation based on the results of that
analysis and further simulating the numbers. We create end-to-end software that provides business automation. Our software uses a combination
of RPA, task mining, and process mining to remove pain points in business operations, allowing software robots to emulate human behavior
and perform specific business processes, thereby eliminating the need for employees to perform specific manual or routine tasks. This
allows employees to focus on higher value-added tasks, and also allows them to seamlessly automate business processes, from legacy IT
systems and on-premise applications to new cloud-native infrastructure and applications, without making significant changes to the organization's
underlying technology infrastructure. It can seamlessly automate business processes. Our software enables you to automate legacy mission-critical
systems as well as work without desktops, and automate across multiple applications where no APIs exist. It is also intended to be used
by employees within an enterprise, and supports a variety of use cases, from simple tasks to complex business processes over time.

 Key
Benefits to Organizations

 Our
software is built to help companies run their operations in a fully automated manner. Our solutions are designed to remove the friction
that exists between employees and departments by increasing operational transparency, fostering collaboration between departments, and
allowing people to focus on the work that matters. In addition, companies can deploy highly customized robots to support agile and fast
automation creation, while reducing the overall cost of their IT infrastructure. Our goal is to shorten the time to value creation, increase
efficiency, and drive innovation. Our software delivers the following key benefits to enterprises:

 Empower
Customers to Achieve Digital Transformation. Our software makes it fast and easy to drive digital transformation, which is typically
time-consuming. Companies use our solutions to continuously discover and automate both simple tasks and complex business processes to
increase operational efficiency and digital transformation. Our software reduces the time it takes for people to complete tasks from
days and hours to minutes and seconds, allowing employees to focus on more creative, mission-critical, and innovative work. As a result,
our software helps companies accelerate innovation, improve productivity, create competitive differentiation, and enrich the employee
and customer experience. We help companies achieve true digital transformation.

 Build
Business Resiliency and Agility into Digital Business Operations. Our software provides our customers with the flexibility they need
to operate under ever-changing conditions. A company's operations change over time. If companies have to modify their robots each
time a change occurs, true efficiency will not be achieved. Our software robots are not only capable of performing tasks just like humans,
but they can also keep changing as the business changes. Our robots can be deployed manned, unmanned, desktop, server-side, or hybrid,
and can adjust seamlessly as conditions change. If necessary, they can also utilize spare resources in the enterprise (such as desktops
at midnight) to perform time-consuming tasks and processes. Our software provides our customers with the ability to have a virtually
unlimited digital workforce that operates 24/7, resulting in a more efficient and less error-prone digital workflow.

 Fast
Time-to-Value. We believe that our solutions provide companies with an immediate return on investment. Our software can be easily
installed on any operating system, or company. It is also designed to be intuitive, minimizing the need for time-consuming and costly
implementation and training. With automatic recording and playback capabilities, workers can create robots by simply performing routine
tasks. Our simulation feature also allows us to verify the efficiency of the automation before it goes live and measure its effectiveness.
By using our software, customers can reap significant benefits such as improved costs and increased worker productivity.

 Organization-Wide
Automation. Powerful, easy-to-use software allows workers across an enterprise organization to automate their work. Our software
is designed to automate any business process or task, from individual desktop tasks to complex mission-critical business processes for
departments across the enterprise. It also provides development software that does not require technical skills, allowing any employee
in the organization to spread the automation. This will help spread automation throughout the organization as employees across departments
and job functions use our technology to improve their performance.

 Inspect,
improve, and analyze business execution. Our solutions provide visibility into how work is actually being done in the enterprise,
enabling our customers to understand, identify, and execute automation opportunities on an ongoing basis. For example, if there is duplication
of work between multiple departments, you can choose to automate one of them but not the other. This allows us to optimize the automation.
Our solution leverages advanced process discovery techniques and ML models from actual log data to understand individual patterns for
executing work and address bottlenecks and inefficiencies. It is a very powerful solution that can optimize the entire company.

 Improve
Employee Productivity, Experience, and Satisfaction. By using our solutions, companies can achieve true digital transformation and
establish a better work environment for their workers. With our software, enterprise workers will be able to automate tasks that can
be used and operated efficiently and automate time-consuming manual tasks. We believe that this will improve the overall experience of
our customers' employees and allow them to focus on developing higher value-added skill sets. As a result, our clients will be
able to retain a high-value, engaged workforce that is capable of delivering optimal business results.

 Improve
Accuracy and Compliance with Speed. Operations automated by our software are designed to be performed consistently as designed, allowing
companies to achieve greater accuracy. For example, a sudden change in the user interface of a website will not affect the execution
of the robot. It is very highly adaptive and is designed to eliminate human errors and inconsistencies that are common to workers who
do their work manually. The work performed by the robot generates a log that can be reviewed and monitored at any time, allowing administrators
to better control and comply with the work.

 Enhance
Customer Experiences. Companies can use our robots to solve known problems faster and more efficiently. We can also identify potential
problems and help solve them. Business is always changing, and our software allows employees to focus on addressing critical customer
issues and concerns, rather than performing repetitive, routine, and low-value tasks. Our robots improve the overall speed, accuracy,
and effectiveness of a company's customer service, increasing customer retention and loyalty.

 Key
Benefits to Employees

 Our
software is designed to eliminate the need for employees to execute low-value, manual tasks, freeing up time to focus on more meaningful,
strategic work. We believe that this, in turn, causes employees to feel empowered and be more valuable in contributing to broader organizational
goals. "Robotics Engineer" remains one of the fastest emerging job roles globally, with Zippia projecting employment growth
of 2% from 2018 to 2028, while a 2024 AIPRM survey indicated that 75% of respondents saw positive workplace impacts from AI and robotics,
and an Amazon-commissioned study found automation could save workers up to 245 hours annually, underscoring strong demand and career
opportunities in this field.

 We
believe the democratization of automation leads to the following benefits tied to an improved employee experience:

 greater
 professional fulfillment and job satisfaction;

 increased
 creativity and innovation;

 improved
 performance and accuracy;

 enhanced
 skillsets;

 increased
 autonomy and job opportunities; and

 more
 collaboration and better human interactions.

 Our
Digital Transformation Software

 Our
software is purpose-built to advance the next generation of automation. By addressing the complete lifecycle of automation, including
identifying specific tasks and processes to automate, building and managing automation software robots, deploying them to execute processes,
and measuring their business impact, our software is intended to address a wide and diverse array of automation opportunities, including
complex, long-running workflows. We believe our software delivers compelling ease-of-use and intuitive user experiences through our low-code
development environment and seamlessly integrates with an ever-expanding ecosystem of third-party technologies and enterprise applications
without changing the existing infrastructure of an organization. In doing all of this, we enable businesses to redefine the relationship
between enterprise applications and business processes.

 Our
software encapsulates seven modular product pillars that together address the automation lifecycle within an enterprise:

 Robot
 Automation Portal. Our RPA and Robot Automation Portal products combine AI with desktop recording, back-end mining of both
 human activity and system logs, and intuitive visualization tools, enabling users to discover, analyze, and identify unique processes
 to automate in a centralized portal.

 Recorder.
 Our RPA products are low-code or no-code development environments with easy-to-use, drag-and-drop functionality that users in an
 organization can learn to use to create attended and unattended automations without any prior knowledge of coding.

 Object-Oriented.
 The products in our automation category offer centralized tools designed to securely and resiliently manage, test, and deploy automations
 and ML models across the entire enterprise, with seamless access, enterprise-grade security, and endless scalability of data.

 Orchestration.
 With our RPA products, an enterprise can deploy our robots in highly immersive attended experiences or in standalone, unattended
 modes behind the scenes, and can leverage hundreds of native connectors built for commonly used line-of-business applications.

 GUI
 and CUI interface. With our RPA products, there are multiple ways for users to remain connected and interact with robots,
 whether they are running in a data center, in the cloud, or right on their desktop. This capability allows our customers to manage
 long running processes that orchestrate work between robots and humans.

 Monitoring.
 Our RPA products enable users to track, measure, and forecast the performance of automation in their enterprise.

 Governance.
 We offer powerful, centralized governance capabilities designed to help businesses ensure compliance with business standards.

 Our
software is powered by the following key differentiating elements that are necessary for end-to-end automation within today's enterprise:

 AI
 Computer Vision. Our robots are powered by a multi-pronged approach, combining proprietary computer vision technology that
 uses highly-trained AI with technical introspection of visual hierarchy to dynamically recognize and interact with constantly changing
 elements of on-screen documents, images, and applications.

 Document
 Understanding. We combine our proprietary computer vision technology with optical character recognition, natural language
 processing, and a variety of ML technologies to classify and extract data from unstructured, semi-structured, and structured documents
 and images, handwriting, and scans.

 Low-Code
 Development Experiences. Our software is built to be intuitive and easy to use with low-code, drag-and-drop development tools,
 and interfaces that knowledge workers can understand.

 Widespread
 and Rich Human and Robot Interaction. Our software facilitates a broad array of interactions between humans and robots, allowing
 users to easily engage with robots when, where, and how they want.

 Enterprise-Grade
 Governance and Security. We deliver centralized governance and data security capabilities built for businesses to securely
 and resiliently deploy and manage automations at enterprise scale.

 Open
 and Extensible Software Architecture. Our software delivers both user interface automation and API integration on a single
 software. We offer hundreds of out-of-the-box, native integrations with a wide range of enterprise applications and productivity
 tools from our technology partners.

 Flexible
 Deployment. We have built our software to be multi-tenant and deployable across on-premises, private and public cloud, and
 hybrid environments to meet any level of scaling, availability, and infrastructure requirements.

 HeartCore
Community

 We
have created and cultivated a vibrant, global network of nearly several hundred thousand automation professionals who are building and
sharing automations that are transforming work and their organizations.

 Our
Digital Transformation Products

 Our
software is built so that automation processes can be used throughout the enterprise. Customers can either adopt our products as a unified
solution or use a subset of our products for each.

 Discover

 Process
Mining. Process mining visualizes the event logs generated through various systems and applications by connecting them in chronological
order and by pattern, by using process mining tools. This enables us to identify problems and their causes, such as exception processing
that creates a burden for corrective actions, insufficient segregation of duties and rule deviations, inefficient business processing,
bottlenecks, etc., so that we can improve our business effectively and speedily. In addition, if using the function to evaluate whether
or not there is a problem by using the best practices of business processes as benchmarks, it becomes easier to examine the image of
appropriate business processes. Furthermore, by updating the data to be captured and monitoring it continuously, it is possible to recognize
the performance of business quality, changes, and anomalies in a timely manner, which can lead to improvements.

 Currently,
business process reforms are rapidly advancing, as exemplified by the automation of routine tasks through the introduction of RPA. In
business process reform efforts, business processes have traditionally been visualized and evaluated in order to identify inefficient
operations that need to be improved. However, these methods require a great deal of time and effort, such as interviewing the person
in charge of the business, manually transcribing the contents of the business manual, which lacks accuracy and completeness, into a business
flow, and repeatedly checking and revising the transcribed contents with various parties involved in the business. Furthermore, depending
on the level of understanding and risk sensitivity of the interviewees, infrequent exceptions and so-called local rules were sometimes
overlooked.

 One
of the concepts that will drive and enhance digital transformation is digital twin technology. Digital twin technology reproduces what
is happening in a factory in a computer, for example, by outputting logs of information on machine tools, manufacturing equipment, and
products in production, and putting the logs into process mining. It is also called a digital twin organization, which is an organization
model that makes it easier to understand and manage business processes in real time, and to plan for the future. Using a model that behaves
like a twin of a real factory system, it is possible to test the effects of production conditions that are not possible in reality, to
test processes for efficiency, and to predict fatigue when manufacturing equipment is kept running. This factory simulation environment
can reproduce the same environment as in reality.

 In
the 5G era, local 5G will be able to collect even more detailed logs of the factory. This will increase the accuracy of the simulations
and enable even more advanced operational efficiency. By recreating not only factories but also white-collar workplaces in a digital
twin, it will be possible to identify problems, eliminate bottlenecks, change workflows, and reform work styles.

 Task
Mining. Task mining is a method of analyzing individual PC operations of staff engaged in various tasks, i.e., detailed PC operation
log data such as "application launch," "screen launch," "file open," "mouse click," "text
input," "copy and paste," etc., to discover issues and problems. Task mining can highlight task-level issues such as,
for example, whether a series of tasks to convert paper documents into digital data by reading them with OCR is taking longer than expected
(inefficient tasks), or copying and pasting from email body to Excel is repeated with high frequency (repetitive tasks).

 The
merit of task mining is that it can point out issues and problems related to tasks, i.e., the various tasks that individual staff members
perform on their PCs, based on facts such as the actual time required and the number of tasks processed. Conventional business analysis
based on interviews can only provide information based on the subjective and sensory perceptions of the workers themselves, and the accuracy
and reliability of the analysis results are not always high. In addition, the on-site measurement work by a researcher with a stopwatch
was not only time-consuming and costly, but also had the possibility of adversely affecting the work itself of the workers to be measured.
On the other hand, in the case of task mining, since the analysis targets the PC operation logs automatically collected through the sensors
(agents) installed on each PC, the flow of work based on the facts as they can be reproduced. Therefore, the analysis results are extremely
accurate and reliable. Moreover, it does not place a burden on the person in charge in the field.

 Using
task mining, the time and cost of collecting detailed business data can be significantly reduced and because it is fact-based, highly
accurate and reliable analysis results can be obtained.

 Manage

 Robot
Automation Portal. Our Robot Automation Portal is a web portal that allows customers to monitor and manage automation with RPA over
a TCP/IP network (Internet and/or Intranet). The Robot Automation Portal records the results generated from the time the robot machine
is registered in the portal. Customers can manage and operate all RPA robots in their company, and also report the results and monitor
their status. Our Robot Automation Portal also provides an orchestration function that allows customers to send a robot to a terminal
where RPA is not installed, run it in free time, and return only the results. This allows our clients to make full use of their internal
resources.

 Orchestrator.
Our Orchestrator can provision, deploy, trigger, monitor, measure, and track the successful operation of robots on any supported device,
and when combined with the Robot Automation Portal, it does so through a GUI interface.

 CUI
interface. There are many cases where GUI is not available for servers such as Linux and UNIX, etc., so our RPA also has a CUI command
interface.

 All
robots are provided as JAR files, so as long as customers have a Java environment, they can run the robots and automate their operations
without installing RPA.

 Run

 Development
RPA. It is possible to create robots freely using flowcharts in a GUI interface, or to create robots by coding in the same way as
Java development, using an interface similar to a Java IDE. It also comes with three types of OCR, making it suitable for creating a
business robot that scans documents.

 Execution
RPA. The license is only for running the robot. Only one robot can be run simultaneously per license. The execution environment can
be any device and any operating system. Although there is only one concurrent execution, there can be an unlimited number of installations.

 Measure

 When
we start to automate with RPA robots, we tend to automate even tasks that would be more efficient without automation. This is an ironic
result of automation becoming inefficient, but it is difficult to identify. Using our simulation and reporting functions, it is possible
to identify inefficient automated tasks and change them to efficient operations. That may possibly be tasks that are performed by people,
but the cost will vary greatly.

 Govern

 We
offer powerful, centralized governance capabilities designed to ensure compliance with business standards. Our software balances compliance
with empowerment through granular control of what can be automated, who can build and publish automations, and complete lifecycle management
with role-based access control and enforcement. Governance capabilities are embedded across our software. The combination of our measurement
and governance capabilities are critical as they are key to enterprise-scale automation programs and are a differentiated feature of
our software.

 Go
IPO Consulting Services

 Since
February 2022, we have been offering "Go IPO" consulting services to a number of private Japanese companies where we assist
such private Japanese companies and/or their affiliates ("issuers") with their initial public offerings in the United States
as well as their simultaneous listings onto the Nasdaq Stock Market, the New York Stock Exchange or the NYSE American. More specifically,
these consulting services (collectively, "Services") include the following:

 Assisting with introductions
 to law firms, underwriters and auditing firms, in order that clients can make their selections, at their sole discretion;

 Provision of process mining
 and task mining licenses for internal audit and internal control;

 Assisting in the preparation
 of documentation for internal controls required for an initial public offering and simultaneous listing on the Nasdaq Stock Market,
 the New York Stock Exchange or the NYSE American;

 Providing support services
 to remove problematic accounting accounts upon listing support;

 Translation of requested
 documents into English;

 Attend and, if requested
 by the other party, lead, meetings of management and employees;

 Provide support services
 related to the Nasdaq, the New York Stock Exchange or the NYSE American listing;

 Conversion of accounting
 data from Japanese standards to U.S. GAAP;

 Assist in the preparation
 of S-1 or F-1 filings;

 Creation of English web
 page; and

 Preparing an investor presentation/deck
 and executive summary of the operations.

 In
providing the Services, we do not perform accounting services, and do not act as an investment advisor or broker/dealer. Pursuant to
the terms of the consulting agreements with the issuers, the parties agree that we will not provide the following services, among others:
negotiation of the sale of the issuers' securities; participation in discussions between the issuers and potential investors; assisting
in structuring any transactions involving the sale of the issuers' securities; pre-screening of potential investors; due diligence
activities; and providing advice relating to valuation of or financial advisability of any investments in the issuers. Additionally,
we do not take part in the selection of, or negotiation of terms with, law firms, underwriters or audit firms. Such selection and negotiation
is the sole responsibility of the client.

to the terms of the consulting agreements with the issuers, the issuers agree to compensate us as follows in return for the provision
of Services during the initial term of the consulting agreements:

 (a)

 A cash fee payable in installment
 payments; and

 (b)

 Issuance by issuers to
 us of warrants or stock acquisition rights to acquire a number of shares of capital stock of the issuer, to initially be equal to
 a designated percentage of the fully diluted share capital of the issuer, subject to adjustment as set forth in the warrants or stock
 acquisition rights.

 As
of December 31, 2024, we have entered into consulting agreements with 14 companies to assist them in their IPO process, whereby we are
entitled to receive from each company a consulting fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights
to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of
$0.01 or JPY1 per share.

 Sales
and Marketing

 We
have an efficient go-to-market model, which consists primarily of an enterprise field sales force supplemented by a high velocity inside
sales team focused on small and mid-sized customers as well as a global strategic sales team focused on the largest global customers.

 We
have made significant investments in our sales and marketing efforts globally. As of December 31, 2024, our sales and marketing organization
was comprised of 12 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. Our sales and marketing strategy is focused on driving growth through selling products to new customers and
driving expansion within our existing customers. Our products officer, together with our sales, marketing, and executive teams, promote
our brand by working to cultivate long-term relationships with current and prospective customers, expand our partnership network and
foster our developer community.

 We
sell our solutions through a direct sales team and through channel partnerships. Our sales organization is segmented into three areas:
enterprise sales, which sells to large businesses and public sector organizations; high-velocity inside-sales, which is focused on landing
a high volume of new small and mid-sized customers; and a global strategic sales team focused on the largest strategic global accounts.
Additionally, our sales team is supported by our renewals team that is focused on identifying upsell potential for our sales team and
handling the operations behind the renewal. In collaboration with the sales team, they can also help execute on small upsells so that
our field sellers can focus on the larger opportunities. Supplementing our direct sales organization are channel sales partnerships with
system integrators, regional developers, business process outsourcing providers and distributors. Our channel partners enable us to extend
our local and global reach, in particular with smaller customers and in geographies where we have less direct sales presence. Additionally,
our customer success team on-boards new customers and accelerates expansion within our largest customers. Our enterprise and high velocity
teams are organized regionally across Japan. In Japan, we maintain specialized vertical teams within our enterprise sales organization
that concentrate their efforts on selling into banking and financial services, healthcare, and government entities. Our sales organization
is supported by a team of pre-sales engineers and our professional services organization that offer technical expertise to help customers
speed adoption and return on investment.

 We
sell to organizations of all sizes across a broad range of industries, with a focus on enterprise customers. Our go-to-market strategy
is focused on a model. Our ability to expand within our existing customer base is facilitated by the breadth of our software. Our customers
frequently see rapid time to value with our products, and we are able to quickly expand sales within organizations as customers add features,
expand use cases and increase the number of software robots beyond their initial deployment. The potential for broad applicability of
our software enables us to sell across all levels of an organization, from the C-Suite to the IT department, and to sell into multiples
departments within an enterprise, which reduces friction for expansion of our products across the enterprise.

 Our marketing team drives brand awareness, cultivates a large and growing
community, and drives demand through a combination of global and local campaigns. We employ a variety of marketing tactics to reach prospective
customers, including community evangelism, in-person and digital events, content marketing, digital advertising, search optimization,
partner marketing, social media, and public relations. We host and present at regional and global events to share customer success stories,
developer breakthroughs, and analyst insights and to deepen customer relationships.

 A
key marketing objective is to have prospective customers try our software. We provide easy access to our software through our website
and partner portal. This 'try-before-you-buy' strategy has been a key driver of developer education and future customer purchases
of our products and software. To democratize automation, we offer a free Community Edition to small businesses, university students,
and individuals. Our Enterprise Trial edition, which is a time-limited license, provides prospective customers with full functionality
of our software to learn, build, and deploy automations. We nurture users through their trial license by providing training and certifications
through our Academy, detailing best practices and use cases, and offering continuous support through our interactive forum or pre-sales
organization.

 Customers

 We
have a large and diversified customer base. One customer accounted for more than 10% of our revenue for the year ended December 31, 2024.
As of December 31, 2024, our combined business units (customer experience management business unit and digital transformation business
unit) had 982 total customers of varying sizes. We pride ourselves in providing what we believe to be a great experience to every
single customer and user of our software. Our customers span a variety of industries and across various departments within an organization
and include:

 Consumer
 and Retail

 Energy

 Financial
 Services

 SONY

 Tohoku
 Electric Power Co

 Bank
 of Japan

 Panasonic

 The
 Kansai Electric Power Co., Inc.

 AEON
 Bank, Ltd

 Bridgestone

 Tokyo
 GAS

 au
 Jibun Bank Corporation

 Philips

 Nomura
 Securities Co., Ltd

 Mitsubishi
 UFJ Morgan Stanley Securities Co., Ltd.

 Healthcare
 / Pharmaceuticals

 Insurance

 Manufacturing

 Takeda
 Pharmaceutical Company

 Aflac

 Hitachi

 GE
 Healthcare

 Sumitomo
 Life Insurance

 Toshiba

 Kobayashi
 Pharmaceutical

 Tokio
 Marine Holdings, Inc.

 FujiFilm

 Sysmex
 Corporation

 The
 Dai-ichi Life Insurance

 Richo

 Nippon
 Steel Corporation

 Technology

 Telecommunications

 Other

 NTT
 Data

 NTT
 Docomo

 TOYOTA

 NEC

 Softbank

 HONDA

 Roland

 KDDI

 NNK

 Canon

 JAL

 ANA

 JR
 East

 These
customers are representative of the Company's overall customer base, but that are also particularly well-known customers and often
appear in the Company's case studies. The objective criteria the Company used to determine which customers to highlight above are
that the customer: (i) be in the top five in its industry; (ii) have a global presence; (iii) have sales in excess of $1 billion; and
(iv) must be well-known through commercials.

 Partnerships

 We
develop and maintain business and technology partnerships that help us seamlessly integrate the latest technology into our software and
market and deliver our software to our customers around the world.

 Our
business partners include more than five global and regional system integrators, value-added resellers, and business consultants. We
provide tiering recognition through Platinum, Gold, and Silver levels for partners that meet competency requirements and deliver and
maintain a specified number of satisfied customers. These partnerships enhance our market presence and drive greater sales efficiencies.

 Our
technology partners bring specialized capabilities to our software. In collaboration with our technology partners, we develop integrations
that simplify the interoperability of our software with their technology, resulting in faster time-to-value. These integrations give
our customers more choices on how they integrate and offer a low-code option of traditional native integration.

 We
also maintain relationships with leading cloud vendors, such as Amazon Web Services Inc., Google Inc., and Microsoft Corporation, to
simplify both the deployment of our software and to extend our software to offer customers the benefits of cloud-based AI capabilities.

 Our
partnerships with other leading technology companies power the significant extensibility of our software and offer our customers the
ability to use the technologies of their choice on our software, driving increased customer affinity and product stickiness.

 Competition

Experience Management Business

 Our
market is evolving, highly competitive and fragmented, and we expect competition to increase in the future. We believe the principal
competitive factors in our market are:

 vision for the market,
 product strategy and pace of innovation;

 inbound marketing focus
 and domain expertise;

 integrated all-in-one CXM
 Platform;

 breadth and depth of product
 functionality;

 ease of use;

 scalable, open architecture;

 time to value and total
 cost of ownership;

 integration with third-party
 applications and data sources;

 name recognition and brand
 reputation; and

 "free products to
 paid services" go-to-market motion.

 We
believe we compete favorably with respect to all of these factors.

 We
face intense competition from other software companies that develop marketing, sales, service, and content management software. Our competitors
offer various point applications that provide certain functions and features that we provide, including:

 cloud-based marketing automation
 providers;

 content management systems;

 email marketing software
 vendors;

 sales force automation
 and customer experience management software vendors;

 customer service platform
 vendors; and

 large-scale enterprise
 suites.

 In
addition, instead of using our CXM Platform, some prospective customers may elect to combine disparate point applications, such as content
management, marketing automation, analytics, social media management, ticketing, and conversational bots. We expect that we will develop
and introduce, or acquire, applications serving customer-facing and other front office functions.

Transformation Business

 The
market for RPA is one of the fastest growing enterprise software markets and is increasingly competitive. We believe our competitors
primarily exist across the across the following three categories:

 RPA software providers
 which provide RPA software, but lack end-to-end automation capabilities.

 Automation lifecycle
 enhancing technology providers, such as low-code, iBPMS, iPaaS, process mining, and test automation vendors, which
 provide additional features that can be useful for automations. We have alliances and integrate with the key vendors in each category,
 but they often develop and market automation capabilities as extensions of their core software.

 Enterprise software
 vendors, which provide horizontal applications and productivity tools and are acquiring, building, or investing in RPA functionality
 or partnering with RPA providers.

 Our
Competitive Strengths

Experience Management Business

 We
believe that our market leadership position is based on the following key strengths:

 Leading
Platform. We have designed and built a world-class CXM Platform. We believe our customers choose our CXM Platform over others
because of its powerful, integrated, and easy-to-use applications. We built our customer experience management system on a single, unified,
and intuitive platform, which we believe contrasts positively with many other customer experience management suites.

 Market
Leadership and Strong Brand. Our focus is to be a recognized thought leader in the cloud-based marketing, sales, customer service,
and content management software industry with a leading brand. Our marketing, sales, service, and content management experience attracts,
engages, and delights customers by being more relevant, more helpful, more personalized, and less interruptive than traditional marketing
and sales tactics.

 Large
and Growing Solutions Partner Program. Our solutions partners promote our brand and offer our CXM Platform to their clients.
Solutions partners and customers referred to us by our solutions partners represented approximately 62% of our customers in Japan, and
approximately 50% of our revenue in Japan for the year ended December 31, 2024. These solutions partners help us to promote the vision
of the inbound experience, efficiently reach new mid-market businesses at scale, and provide our mutual customers with more diverse and
higher-touch services.

 Premium
Pricing Strategy. Our free model attracts customers who begin using our CXM Platform through our free products and then upgrade
to our paid services. Through our free products, our customers are able to receive value from us before converting to a paid product
or engaging with sales.

 Mid-Market
Focus. We believe we have significant competitive advantages reaching mid-market businesses and efficiently reach this market
at scale as a result of our inbound methodology, premium pricing strategy, and our solutions partner channel.

 Powerful
Network Effects. We have built a large and growing ecosystem around our CXM Platform and company. Thousands of our customers
integrate third-party applications with our CXM Platform. We believe this ecosystem drives more businesses and professionals to embrace
the inbound playbook. As our engaged audience grows, more solutions partners collaborate with us, more third-party developers integrate
their applications with our CXM Platform, and more professionals complete our certification programs, all of which help to drive more
businesses to adopt our CXM Platform.

Transformation Business

 We
believe that the following are key strengths of our digital transformation business:

 Broad
Set of Complementary Solutions. Our software combines OCR, AI, task mining, process mining, RPA, and process discovery capabilities
to enable automation across multiple non-desktop systems, mission-critical system-to-system automation deployment environments, and cloud-to-cloud
applications. We can help you automate multiple systems without desktops, automation deployment environments between mission-critical
systems, and across cloud applications. We provide our customers with a comprehensive set of capabilities to discover, build, manage,
execute, engage, measure, and control automation across departments and personas within an organization or agency. Our software can run
on multiple operating systems, including Linux, Unix, Mac, AS-400, as well as Windows, allowing for automation across a variety of systems.
Also, since it is coded in Java, any Java engineer can easily build add-on functions.

 Open
Architecture. Our software embraces an open ecosystem with hundreds of enterprise application integrations that have been built
by us and our community of technology partners. Our solution includes a variety of pre-built activities and connectors so customers can
quickly create and deploy robots that execute operations and seamlessly interact with third-party systems. Our open ecosystem is architecture
agnostic, which allows organizations to automate existing infrastructure and accelerate digital innovation without the need to replace
or make large investments in their existing infrastructure.

 Built-In
AI/ML Capabilities. We incorporate our own Java components into our products to drive continuous improvement in business automation.
Our RPA is a system that allows the reuse of existing programming assets to address complex use cases. Users can incorporate their current
Java applications, if any, into our RPA. Furthermore, it does not only automate that application, but also expands the scope of integration
with other applications. The capabilities of our software are not limited to automating existing operations, but can also adapt to ever-changing
variables, such as the application of new business models, to achieve automation capabilities that dramatically improve business results
and increase the competitive advantage of our customers.

 Human
Emulation Enables Addressing Expansive Use Cases. Our RPA robots emulate human behavior and adapt to the ever-changing external
variables of business. By having the robots emulate the usual business behavior of humans, companies can leverage our software to address
a myriad of use cases, from simple to complex. We believe that the power of our software is only limited by the use cases that human
users can come up with.

 Built
for Mid to Enterprise Deployment. Our software grows as our customers increase their automation operations across their organizations.
Customers can deploy our software on desktops, on-premises, in public clouds, private clouds, or in hybrid environments. In addition,
it can be deployed on multiple operating systems and across multiple devices. Our software is designed with security and governance at
its core, allowing our customers to seamlessly expand the scope of automation while ensuring that IT departments have the security they
need to automate.

 Adoption
Across Workers and Functions. We make sure that workers across the organization have access to automation when they need it.
Workers can interact with robots in the same way they interact with humans. For example, they can use manned robots on their desktops
to get human work done faster, use unmanned robots in the background to run business processes, build applications that interact indirectly
with robots, send email to robots, interact with chatbots, and so on. This will give them the freedom to choose whether to ask a robot
or a human to do the work.

 Simple,
Intuitive, Quickly Deployed. Our software is easy to use, with an intuitive interface and low-code, drag-and-drop, desktop recording
and playback capabilities, so that anyone working across the organization can easily take advantage of our automation features at their
disposal. Automation features can be quickly and efficiently deployed throughout an organization to create immediate value. Our software
can be easily learned and operated by employees with or without technical knowledge, without the need for large implementation costs
or costly professional services.

 Resilient
Automations. Our software is capable of fully emulating the behavior of enterprise workers as they manipulate applications and
systems to execute processes. Our robots can leverage our proprietary capabilities to fully emulate human behavior, interpreting a very
wide variety of document types and adapting and responding to changes in the work environment. It can also adapt to changes in display
resolution and scale, as well as user interface changes, by utilizing our proprietary OCR capabilities. For example, the process of scanning
and importing postal invoices does not require the user to memorize the format of each invoice, and a single template can be used for
all types of invoices. In addition, we have developed a variety of features to enable elasticity in the process and execution of automation.
For example, when testing the user interface of a website, our software can create the same state as a human being browsing the site
and perform operational validation tests. It also allows for management, reuse and reliability of user interface elements. Thanks to
this feature, when changes are made to the application, the operation can continue without having to update the robot. With such flexibility,
robots demonstrate their resilience in automating tasks and reducing the number of errors across the enterprise.

 Integrated
and Portable Object API Models. Our customers can reuse our object-oriented robots. This capability allows them to extend the
capabilities of our software and improve automation results. Our software makes it easy to deploy, manage, and improve objects built
by customers and third parties, allowing you to allocate more human resources to business problems and use cases. objects are designed
to be deployed and customized once created.

 Automation
Performance and Business Outcome Analytics. Our software enables customers to gain powerful insights and generate key performance
indicators with actionable metrics by tracking, measuring, and predicting automation performance through the use of a Robot Automation
Portal. Out-of-the-box dashboards display execution metrics and allow users to measure performance and report on the value of their automation.

 Built
for Collaboration with Human and Robot. Our software is designed to allow humans and robots to work together, so that each can
focus on the tasks they do best. Robots can perform time-consuming, repetitive, and routine tasks that make work less interesting and
satisfying, while humans can focus on more creative thinking, innovation, solving complex problems, and improving the customer experience.
Our software allows our customers to harness the power of automation to create fully automated, highly efficient enterprises where humans
and robots work in harmony.

 Accelerating
the Adoption of Automation within the Enterprise. The adoption of our software will automate simple, duplicative, repetitive
and time-consuming tasks in the organization that are not interesting to people, thus allowing them to focus on creative and rewarding
tasks. Most of our clients use our solutions to find and automate all the tasks that can be automated in their companies. Our solution
works with your employees to evaluate and score high-value automation possibilities. As employees become more comfortable with automation,
they will more easily adopt and implement it, discover new processes to automate within a particular, and provide new automation ideas
to RPA for development and deployment. After a few iterations of this kind of behavior, a phenomenon occurs in which certain employees
build useful automation on their own, which is then deployed throughout the organization. This action is different from the automation
that has been discovered so far and contributes to further operational efficiency. It helps to organically surface a number of automation
ideas that could not be achieved with the traditional top-down approach.

 Our
Growth Strategies

Experience Management Business

 The
key elements to our growth strategy for our customer experience management business are:

 Grow
Our Customer Base. The market for our CXM Platform is large and underserved. Mid-market businesses are particularly underserved
by existing point application vendors and often lack sufficient resources to implement complex solutions. Our all-in-one CXM Platform
allows mid-market businesses to efficiently adopt and execute an effective inbound marketing, sales, customer service, and content management
strategy to help them expand and grow. We will continue to leverage our inbound go-to-market approach, freemium pricing strategy and
our network of solutions partners to keep growing our business.

 Increase
Revenue from Existing Customers. With 982 total customers from our combined business units in Japan as of December 31, 2024,
we believe we have a significant opportunity to increase revenue from our existing customers. We plan to increase revenue from our existing
customers by expanding their use of our CXM Platform by upselling additional offerings and features, adding additional users, and cross-selling
our marketing, sales, service, and content management products to existing customers through touchless or low touch in-product purchases.
Our scalable pricing model allows us to capture more spend as our customers grow, increase the number of their customers and prospects
managed on our CXM Platform, and offer additional functionality available from our higher price tiers and add-ons, providing us with
a substantial opportunity to increase the lifetime value of our customer relationships.

 Keep
Expanding Internationally. We intend to grow our presence in international market through additional investments in local sales,
marketing and professional service capabilities, as well as by leveraging our solutions partner network. We plan to open international
offices. We have significant website traffic from regions outside the United States, and we believe that markets outside the United States
represent a significant growth opportunity.

 Continue
to Innovate and Expand Our CXM Platform. Mid-market businesses are increasingly realizing the value of having an integrated marketing,
sales, customer service, and content management platform. We believe we are well positioned to capitalize on this opportunity by introducing
new products and applications to extend the functionality of our CXM Platform.

 Selectively
Pursue Acquisitions. We plan to selectively pursue acquisitions of complementary businesses, technologies and teams that would
allow us to add new features and functionalities to our platform and accelerate the pace of our innovation.

Transformation Business

 For
our digital transformation business, we are pursuing a large market opportunity with growth strategies that include:

 Acquire
New Customers. Our market is rapidly growing. We believe that as more organizations adopt our automation software and experience
quantifiable competitive advantages, other organizations will also adopt automation as a necessary tool to compete. While we sell to
organizations of all sizes and across a broad range of industries, our go-to-market team's key focus is on the largest organizations,
including large enterprises and governments. We also use an inside sales team focused on small and mid-sized businesses. We plan to continue
to invest in our go-to-market team to grow our customer base both domestically and internationally.

 Expand
Within Our Existing Customer Base. Our customer base represents a significant opportunity for us to become a strategic partner
to our customers in their automation journeys and drive further sales expansion through the following vectors:

 deploy more software robots
 across different departments;

 provide more employees
 with their own robot assistants;

 increase adoption of software
 products; and

 expand use cases for automation
 in the organization.

 Over
time, we seek to deploy our solution where every employee interacts with multiple robots. We believe we will be able to accomplish this
through our continued democratization of automation and enablement of citizen developers.

 Grow
and Cultivate Our Partner and Channel Network. We are focused on maintaining and growing our ecosystem of partners that build,
train, and certify skills on our technology as well as deploy our technology on behalf of their customers. We have built a global partner
ecosystem of more than 40 systems integrators, value-added resellers, business consultants, technology partners, and public cloud vendors.
Our partner network includes, among others, content management systems, customer experience management systems, Heartcore Robo (RPA),
Apromore, myInvenio and Controlio. We intend to continue to expand and enhance our partner relationships to grow our market presence
and drive greater sales efficiencies.

 Extend
Our Technology Leadership Through Continued Innovation and Investment in Our Software. We believe that we have built a differentiated automation software
and intend to continually increase the value we provide to our customers by investing in extending the capabilities of our software. We
have made and will continue to make significant investments in research and development to bolster our existing technology and enhance
usability to improve our customers' productivity.

 Foster
the Next Generation of Workers and Grow Our Community. We have built an extensive ecosystem focused on training and supporting
individuals on working with our software. We have created forums addressing automation in the workplace and learning plans for all the
important roles in automation. We believe automation will be a foundation of the future of work and, as individuals build out their skillsets,
this will drive greater adoption of our software.

 Continue
to Invest in Major Markets.

 Since inception, we have invested in developing an infrastructure that
would allow us to scale globally. We continue seeing adoption of our products across all geographies in which we operate and believe we
have a significant runway ahead of us. We believe there is a significant opportunity to expand use of our software in the top 25 countries
as measured by gross domestic product. As of December 31, 2024, sales to customers located in such countries represented 100% of our total
revenues. We intend to continue to make significant investments to expand our sales and drive adoption of our software throughout those
markets. In particular, we believe that North America represents a significant opportunity for us, and we intend on continuing to expand
our sales and drive adoption of our software across the region. As of December 31, 2024, customers located in the United States represented
25.83% of our total revenues.

 Opportunistically
Pursue Strategic Acquisitions. We will evaluate acquisition opportunities that we believe will be complementary to our existing
software, enhance our technology, and increase the value proposition we deliver to our customers.

 Intellectual
Property

 Intellectual
property rights are important to the success of our business. We rely on a combination of patent, copyright, trademark, and trade secret
laws in the United States and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements
with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology,
software, know-how, and brand.

 As
of December 31, 2024, we held one issued patent in Japan. Our issued patent is scheduled to expire between October 2028 and January 2030.
As of December 31, 2024, we held one pending U.S. trademark application, and more than two active foreign trademark filings. As of December
31, 2024, we held two domain names, one registered in the United States and one registered in foreign jurisdictions. We continually review
our development efforts to assess and identify the existence and patentability of new intellectual property.

 The
terms of individual patents extend for varying periods of time, depending upon the date of filing of the patent application, the date
of patent issuance, and the legal term of patents in the countries in which they are obtained. Generally, patents issued for applications
filed in the United States are effective for 20 years from the earliest effective filing date of a non-provisional patent application.
The duration of patents outside of the United States varies in accordance with provisions of applicable local law, but typically is also
20 years from the earliest effective filing date. However, the actual protection afforded by a patent varies on a country-to-country
basis and depends upon many factors, including the type of patent, the scope of its coverage, the availability of legal remedies in a
particular country, and the validity and enforceability of the patent.

 Although
we rely on intellectual property rights, including patents, copyrights, trademarks, and trade secrets, as well as contractual protections
to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel,
development of new services, features, and functionality, and frequent enhancements to our software are equally essential to establishing
and maintaining our technology leadership position.

 We
control access to and use of our proprietary technology and other confidential information through the use of internal and external controls,
including contractual protections with employees, contractors, customers, and partners. We require our employees, consultants, and other
third parties to enter into confidentiality and proprietary rights agreements and we control and monitor access to our software, documentation,
proprietary technology, and other confidential information. Our policy is to require all employees and independent contractors to sign
agreements assigning to us any inventions, trade secrets, works of authorship, developments, processes, and other intellectual property
generated by them on our behalf and under which they agree to protect our confidential information. In addition, we generally enter into
confidentiality agreements with our customers and partners.

 Despite
our efforts to protect our intellectual property, unauthorized parties may still copy or otherwise obtain and use our technology. In
addition, we intend to continue to expand our international operations, and effective intellectual property, copyright, trademark and
trade secret protection may not be available or may be limited in foreign countries. Any significant impairment of our intellectual property
rights could harm our business or our ability to compete.

 Corporate
History

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

 Share
Exchange Agreement

 On
July 16, 2021, pursuant to the terms of a share exchange agreement among the Company, HeartCore Co., the shareholders of HeartCore Co.
(excluding Dentsu Digital Investment Limited) and Sumitaka Yamamoto, as the representative of the shareholders of HeartCore Co., we issued
15,999,994 shares of our common stock to the shareholders of HeartCore Co. in exchange for 10,706 shares HeartCore Co.'s common
stock, representing 97.5% of the issued and outstanding capital stock of HeartCore Co. As a result of this transaction, HeartCore Co.
became our 97.5%-owned subsidiary and the former shareholders of HeartCore Co. became the owners of 100% of our outstanding common stock
as of July 16, 2021.

 On
February 24, 2022, the Company purchased 278 shares of HeartCore Co. from Dentsu Digital for 50,040,000 Japanese Yen (approximately $435,500).
As a result, effective February 24, 2022, HeartCore Co. is a wholly owned subsidiary of the Company.

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

 In February 2023, HeartCore
USA incorporated a wholly-owned subsidiary, HeartCore Capital Advisors, Inc. ("HeartCore Capital Advisors"), in Japan. HeartCore
Capital Advisors is engaged in the business of providing financial consulting services to Japanese companies. In January 2024, HeartCore
Capital Advisors was meagered into HeartCore Co.

 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 April
2024, we established a Japan Branch Office ("HeartCore Financial - Japan"), with focus on GO IPO consulting services
in Japan.

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

 Memorandum
to Share Exchange Agreement - Information Services International-Dentsu Ltd.

 On
July 15, 2021, the Company, HeartCore Co. and Mr. Yamamoto entered into a memorandum regarding share exchange agreement (the "Memorandum")
with Information Services International-Dentsu Ltd. ("ISI-Dentsu"), a shareholder of HeartCore Co., which became a stockholder
of the Company pursuant to the share exchange agreement.

to the Memorandum, the parties agreed on certain matters related to the operations of the Company and HeartCore Co., which would remain
in place until the earlier of (1) the parties unanimous agreement to terminate the Memorandum; (2) if Dentsu ceases to be a stockholder
of the Company; (3) if an application by the Company for the listing of its shares is approved by Nasdaq; or (4) upon the effectiveness
of a registration statement filed by the Company under the Securities Act for an initial public offering of its stock (which was satisfied
when the Company closed its initial public offering on February 14, 2022). Therefore, the Memorandum ceased to be in effect upon the
closing of our initial public offering on February 14, 2022.

to the Memorandum, the Company and HeartCore Co. agreed to give advance notice to Dentsu when decisions are made with respect to any
of the following matters pertaining to the Company or HeartCore Co.:

 Changes to the certificate
 of incorporation or articles of incorporation, limited to the creation of class shares, changes in the features of common shares
 as class shares, establishment of or changes in share units, and other changes that may affect the position of common shareholders;

 Dissolution, a petition
 for commencement of bankruptcy proceedings, civil rehabilitation proceedings or corporate reorganization proceedings filed by the
 Company, HeartCore Co. or its directors;

 Approval of demand for
 sale of the shares by Mr. Yamamoto;

 Loans, capital investment
 or other investments;

 Issuance of new shares,
 stock options, convertible bonds or debentures;

 Capital reduction;

 Acquisition, disposition
 or cancellation of treasury shares, acquisition, disposition or cancellation of treasury stock acquisition rights, or redemption,
 purchase, cancellation or acquisition of options or other rights;

 Stock split or reverse
 stock split;

 Merger, company split,
 share exchange, share transfer or share delivery;

 Transfer, acquisition,
 suspension or abolition of all or a part of a business, consolidation of branch offices or commencement of new business;

 Significant business alliances
 or their dissolution;

 Approval of transfer of
 shares of the Company or HeartCore Co. (including sales by the Company of HeartCore Co.'s shares);

 Acquisition or disposition
 of shares of any related party of the Company or HeartCore Co.;

 Appointment and dismissal
 of directors, executive officers, auditors, managers and other important employees;

 Any transaction between
 HeartCore Co. and its director which requires approval by the board of directors under the Japanese Companies Act and any equivalent
 transaction between the Company and its director;

 Execution or change of
 important contracts or other legally significant juridical acts;

 Establishment of subsidiary
 and affiliates; and

 Any change of business
 plan.

to the Memorandum, to the extent not in conflict with the laws of the United States or the State of Delaware or the rules and regulations
of any securities exchange or securities market on which the Company's securities are traded or listed for trading, Mr. Yamamoto
agreed to notify Dentsu in advance when making a decision on the following matters pertaining to Mr. Yamamoto:

 A petition for bankruptcy
 or commencement of civil rehabilitation proceedings filed by Mr. Yamamoto himself;

 Transfer or acquisition
 of shares of HeartCore Co. or its related parties;

 Loans, debt guarantees
 or collateral;

 The filing of a lawsuit,
 settlement or conclusion of a suit not based on a judicial decision by Mr. Yamamoto pertaining to a claim on property rights;

 Conclusion or change of
 important contracts or other important juridical act; and

 Offering of the shares
 held by Mr. Yamamoto.

 To
the extent not in conflict with the laws of the United States or the State of Delaware or the rules and regulations of any securities
exchange or securities market on which the Company's securities are traded or listed for trading, and provided that legal counsel
to the Company does not advise the Company that any such notification is inadvisable due to such information being material non-public
information or due to such disclosure being a breach of the fiduciary duties of the officers or Directors of the Company, the Company
or HeartCore Co. also agreed to provide to Dentsu a summary of the following matters pertaining to the Company or HeartCore Co.:

 Damage arising from disasters
 or operations;

 Filing of a lawsuit by
 a third party which may affect its financial condition, or becoming subject to a judgment, or any order or award equivalent thereto
 which may affect its financial condition;

 Petition for an injunction
 of the business or a provisional disposition order equivalent thereto, or conclusion of legal proceedings not based on an order or
 a judgement by the court;

 Revocation of license,
 suspension of business or other equivalent dispositions by an administrative agency based on laws and regulations, or accusation
 by an administrative agency for violation of the laws;

 Merger or other reorganization
 involving the Company, HeartCore Co., or any of their related parties;

 Filing of a petition for
 commencement of bankruptcy proceedings, commencement of civil rehabilitation proceedings, commencement of corporate reorganization
 proceedings, commencement of special liquidation or enforcement of the corporate security interest by a third party, suspension of
 payments or dishonor of bills or checks with regard to HeartCore Co. or the Company;

 Commencement of bankruptcy
 proceedings, commencement of civil rehabilitation proceedings, commencement of corporate reorganization proceedings, commencement
 of special liquidation or petition for exercise of corporate security interest, suspension of payments or dishonor of bills or checks
 pertaining to the Company, HeartCore Co. or any of its related parties;

 Suspension of transactions
 with material customers, suppliers, distributors, agents, or other business partners;

 The occurrence of risk
 of default by an obligor of the Company or HeartCore Co., or a principal obligor of a guarantee obligation of which the Company or
 HeartCore Co. is a guarantor; and

 Cancellation of debts by
 creditors, reduction or extension of interest or assumption or repayment of debts by third parties.

 In
addition, to the extent permitted by applicable law, and provided that legal counsel to the Company does not advise the Company that
any such notification is inadvisable due to such information being material non-public information or due to such disclosure being a
breach of the fiduciary duties of the officers or Directors of the Company, if Sumitaka Yamamoto becomes aware of the occurrence of the
following matters pertaining to himself and other matters that are important in terms of credit status, etc., he agreed to immediately
report in writing the summary of the following matters that occurred to the investors:

 Filing of a lawsuit by
 a third party which may affect the financial condition of Mr. Yamamoto, or becoming subject to a judgement or any order or award
 equivalent thereto which may affect the financial condition of Mr. Yamamoto; and

 Petition for commencement
 of bankruptcy or civil rehabilitation proceedings, suspension of payment or dishonor of bill or check by a third party.

to the Memorandum, Dentsu has the right to demand that Mr. Yamamoto purchase all or part of the shares held by it (including any other
option rights to acquire shares), in the event that the Company, HeartCore Co. or Mr. Yamamoto breaches any of its obligations under
the Memorandum and fails to remedy such breach within 30 days, if the representations and warranties in the Memorandum are not true or
accurate, or where it is subsequently found that the preconditions for the execution of the Memorandum were not been satisfied. Mr. Yamamoto
may cause a third party to acquire such shares with the approval of Dentsu.

 The
per share-transfer price for the shares in this case shall be the purchase price paid by Dentsu for the acquisition of shares of HeartCore
Co., subject to appropriate adjustments for stock splits, stock consolidations, and similar events involving the shares. In the event
any withholding tax is imposed upon the transfer price of the shares the amount equivalent to such withholding tax will be borne by the
purchaser and the purchaser is required to pay Dentsu the entire amount of the transfer amount so that the amount Dentsu receives after
withholding is the transfer price set forth in the Memorandum.

 The
Company and HeartCore Co. also agreed to hold regular business briefings at least once a quarter and to provide Dentsu with reports on
the business execution of the Company and HeartCore Co. and monthly trial balances of the Company and HeartCore Co. (including balance
sheets, profit and loss statements, and cash flow statements).

 Mr.
Yamamoto agreed that if he wished to transfer all or part of the shares of the Company that he held to a third party, he will notify
Dentsu at least 40 business days prior to the scheduled date of payment of the transfer price of such shares, providing the details regarding
the proposed sale. Dentsu then has the right to participate in the transfer under the same terms and conditions and to transfer all of
the shares held by Dentsu to the buyer in the proposed transaction. If Dentsu makes such an election, Mr. Yamamoto agreed to negotiate
with the buyer and take all necessary measures to transfer the shares that Dentsu desires to transfer.

 The
Memorandum also provides that in the event that Mr. Yamamoto voluntary resigns as a director of the Company or HeartCore Co. or his term
of office expires, the Company or HeartCore Co. shall immediately add another person who shall be concurrently responsible for the obligations
incurred by Mr. Yamamoto in connection with the Memorandum, upon approval of Dentsu.

 The
Memorandum contains customary representations and warranties by Mr. Yamamoto relating to the Company and HeartCore Co. and customary
confidentiality, indemnification and other miscellaneous provisions. The Memorandum is governed by and construed in accordance with the
laws of Japan.

 Stock
Purchase Agreement – Dentsu Digital Investment Limited

 On
August 10, 2021, the Company and Dentsu Digital Investment Limited ("Dentsu Digital") entered into a Stock Purchase Agreement,
pursuant to which the Company agreed to purchase the 278 shares of HeartCore Co. from Dentsu Digital in accordance with certain terms
and conditions in the Stock Purchase Agreement. In accordance with the terms of the Stock Purchase Agreement, the Company agreed to purchase
the 278 shares of HeartCore Co. from Dentsu Digital for 50,040,000 Japanese Yen (approximately $435,500) on the earlier of the (i) the
date the SEC declares effective a registration statement on Form S-1, for a firm commitment underwritten initial public offering of common
stock, filed by the Company with the SEC or (ii) December 20, 2022.

 On
February 24, 2022, the Company purchased 278 shares of HeartCore Co. from Dentsu Digital for 50,040,000 Japanese Yen (approximately $435,500).
As a result, effective February 24, 2022, HeartCore Co. is a wholly owned subsidiary of the Company.

 Recent
Developments

 Related
Party Transactions

2023, the Company had a due to related parties balance of $47 and $1,476, respectively, from Sumitaka Yamamoto, the Chief Executive Officer
("CEO") and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the
year ended December 31, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company
in a net amount of $1,338. During the year ended December 31, 2023, the related party paid operating expenses on behalf of the Company
and received the payments in a net amount of $1,123.

2023, the Company had a due to related parties balance of $885 and nil, respectively, from Luvina Software Joint Stock Company ("Luvina
Software"), the non-controlling interest shareholder of HeartCore Luvina. The balance is unsecured, non-interest bearing and due
on demand. During the year ended December 31, 2024, the related party paid operating expenses on behalf of the Company in the amount of
$899. As of December 31, 2024 and 2023, the Company had an accounts payable and accrued expenses balance of $47,199 and nil, respectively,
to Luvina Software. During the year ended December 31, 2024, the Company engaged the related party for software development and other
support services in the amount of $202,288.

2023, the Company had a loan receivable balance of $164,067 and $227,704, respectively, from Heartcore Technology Inc., a company controlled
by the CEO of the Company. The loan is 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 years ended December 31, 2024 and 2023, the
Company received repayments of $42,104 and $45,404, respectively, from this related party.

2023, the Company had a short-term debt balance of $75,000 and nil, respectively, to Prakash Sadasivam, the CEO of Sigmaways and Chief
Strategy Officer ("CSO") of the Company. The debt is borrowed from the related party for working capital purpose. The balance
is unsecured, bears an annual interest of 7.5%, and matures on June 30, 2025.

 Equity
Awards

 On
February 3, 2023, the Company granted stock options to an employee to purchase 100,000 common shares at an exercise price of $1.17 per
share throughout a period of ten years from the grant date. The stock options will vest 50% on the grant date and February 1, 2024, respectively.

 On
March 22, 2023, the Company granted 671,350 shares of common shares to the employees and service providers of Sigmaways.

 On
August 1, 2023, the Board approved, and proposed for stockholder approval, the 2023 Equity Incentive Plan (the "2023 Plan").
The shareholders approved the 2023 Plan at the Annual Shareholder's meeting on September 29, 2023. The 2023 Plan provides for various
stock-based incentive awards, including incentive stock options ("ISOs") and non-qualified stock options ("NQSOs"),
stock appreciation rights ("SARs"), restricted stock and restricted stock units ("RSUs"), and other equity-based
or cash-based awards. As of December 31, 2023, the Company has not granted any stock-based compensation awards to employees, including
officers, or non-employee directors pursuant to the 2023 Plan.

 On
August 25, 2023, the Company awarded options to purchase 2,000 shares of common stock pursuant to our 2021 Plan at an exercise price
of $1.10 per share to an employee. The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of
the applicable shares of common stock, subject to the terms and conditions of the 2021 Plan and the option award agreements pursuant
to which the options were awarded.

 On October 1, 2024, the Company
issued an aggregate 69,653 shares of common stock pursuant to the 2023 Plan. The common stock was fully vested upon issuance.

 At
the Market Offering

 On
October 23, 2023, we entered into the At The Market Offering Agreement with H.C. Wainwright & Co., LLC (the "Manager"),
as sales agent. Pursuant to the prospectus supplement and accompanying base prospectus relating to the offering and under terms of the
At the Market Offering Agreement, filed with the SEC on October 23, 2023, the Company may, from time to time, in transactions that are
deemed to be "at the market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the "Securities
Act") issue and sell through or to the Manager, up to a maximum aggregate amount of $1,988,229 of shares of the Company's
common stock (the "Shares"). The issuance and sale of the Shares to or through the Manager from time to time will be effected
pursuant to the Company's effective shelf registration statement on Form S-3, as amended (File No. 333-270503), which was declared
effective by the Securities and Exchange Commission on April 12, 2023 (the "Registration Statement"), and the related prospectus
supplement and accompanying base prospectus relating to the offering of the Shares.

 Sale
of Warrants

 On February 29, 2024, the
Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer
("Consulting Customer") as noncash consideration from consulting services for $9,000,000 in cash. The warrants to be transferred
are exercisable only upon its Consulting Customer's consummation of the Merger with a special purpose acquisition company or the
occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer. The Company completed its
sale of warrants in September 2024 and recorded $3,970,628 in loss on sale of warrants from this transaction.

 Dividends

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

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

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

 Properties

 Our corporate headquarters are located at 1-2-33, Higashigotanda, Shinagawa-ku,
Tokyo, Japan, where we lease approximately 7,863 rentable square feet of office space from an unaffiliated third party. This lease has
an original term ending in September 2025 with an automatic two-year renewal option. Terms of the office lease provide for a base rent
payment of $21,769 per month and a share of sales taxes of $2,177 per month. In February 2024, we terminated the lease of our previous
Okinawa branch office located at 2-4-35, Mekaru, Naha-city, Okinawa, Japan. We subsequently entered into a new lease agreement for our
current Okinawa branch office at 381-1, Asato, Naha-city, Okinawa, Japan, which we lease from an unaffiliated third party. This lease
has an original term ending in August 2024, with automatic three-month renewals thereafter. Terms of the Okinawa office lease provide
for a base rent payment of $915 per month and a share of sales taxes of $92 per month.

 The Japan branch office of HeartCore Financial, Inc. is located at
3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo, Japan, where we lease approximately 1,379 rentable square feet of office space from an unaffiliated
third party. This lease has lease term ending in June 2026. Terms of the office lease provide for a base rent payment of $8,743 per month
and a share of sales taxes of $874 per month.

 The office of Sigmaways,
Inc. is located at 39737 Paseo Padre PKWY, Suite C1 Fremont, CA U.S., where we lease approximately 765 square feet of office space
from an unaffiliated third party with lease term expected to end in December 2025. Terms of the office lease provide for a base rent
payment of $1,868 per month.

 The office of HeartCore Luvina Vietnam Company Limited is located at
Software Park Building, No.2 Quang Trung, Hai Chau district, Da Nang City, Vietnam, where we lease approximately 915 square feet of office
space from an unaffiliated third party with lease term ending in January 2026. Terms of the office lease provide for a quarterly base
rent payment of $2,516.

 Employees
and Human Capital Management

 Helping
millions of organizations grow better requires a truly remarkable team. We are passionate about building a company culture where people
can do their best work. Our company culture and our people are not just human resources priorities but critical business priorities.
As a result, we consistently focus on how we can continue to help employees grow, both personally and professionally.

 Since 2009, we have expanded beyond our Japanese headquarters to several
offices globally and have built a large remote community. Currently, we are operating primarily from our office in Japan. As of December
31, 2024, we had 91 full-time employees. None of our employees is represented by a union. We consider our relations with our employees
to be good.

 Culture and Values.
 Our culture is built on the firm belief that personal and professional growth is just as important as business growth. We
 believe the best people do not only fit our culture, they further it.

 Diversity, Inclusion,
 and Belonging. We have launched various initiatives to further our goal of being a more diverse, inclusive, and equitable
 workplace. We have a team dedicated to diversity, inclusion, and belonging initiatives, including but not limited to, hiring goals
 focused on increasing black, indigenous and people of color representation company-wide, anti-racism training for employees and managers,
 key external partnerships, and our annual diversity report.

 Compensation and
 Benefits. We provide competitive compensation and benefits for our employees globally. Our compensation packages may include
 base salary, commission or semi-annual bonuses, and stock-based compensation. We evaluate both compensation and benefit offerings
 on an annual basis to ensure competitiveness of both programs and we make adjustments as needed.

 Workplace Awards.
 We are proud to be named a Best Place to Work in 2020 and 2021 by Ministry of Economy, Trade and Industry Japan.

 Government
Regulation

 Our
business is and will continue to be subject to extensive U.S. federal and state and foreign laws and regulations, including laws and
regulations involving privacy, data protection, security, intellectual property, competition, taxation, anti-corruption, anti-bribery,
anti-money laundering, and other similar laws. Many of these laws and regulations are still evolving and are likely to remain uncertain
for the foreseeable future, and these laws and regulations can vary significantly from jurisdiction to jurisdiction. The costs of complying
with these laws and regulations are high and likely to increase in the future. Further, the impact of these laws and regulations may
disproportionately affect our business in comparison to our competitors that have greater resources.

 In
the United States, we are subject to data security and privacy rules and regulations promulgated under the authority of the Federal Trade
Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act of 2018
(the "CCPA"), and other state and federal laws relating to privacy and data security. The CCPA requires covered businesses
to provide new disclosures to California residents and to provide them new ways to opt-out of the sale of personal information, and provides
a private right of action and statutory damages for data breaches. Other jurisdictions in the United States are beginning to propose
laws similar to the CCPA.

 As
a result of our international operations, we must comply with a multitude of data security and privacy laws that may vary significantly
from jurisdiction to jurisdiction. Virtually every jurisdiction in which we operate has established or is in the process of establishing
data security and privacy legal frameworks with which we or our customers must comply. Our failure to comply with the laws of each jurisdiction
may subject us to significant penalties. For example, the data protection landscape in Europe, including with respect to cross-border
data transfers, is currently unstable and other countries outside of Europe have enacted or are considering enacting cross-border data
transfer restrictions and laws requiring local data residency.

 Legal
Proceedings

 From
time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently
a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have
a material adverse effect on our business, operating results, cash flows or financial condition. Defending such proceedings is costly
and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted
with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion
of management resources, and other factors.

 ITEM
1A. RISK FACTORS

 An
investment in our securities carries a significant degree of risk. You should carefully consider the following risks, as well as the
other information contained in this annual report on Form 10-K, including our historical financial statements and related notes included
elsewhere in this annual report on Form 10-K, before you decide to purchase our securities. Any one of these risks and uncertainties
has the potential to cause material adverse effects on our business, prospects, financial condition and operating results which could
cause actual results to differ materially from any forward-looking statements expressed by us and a significant decrease in the value
of our common shares and warrants. Refer to "Cautionary Statement Regarding Forward-Looking Statements."

 We
may not be successful in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential
risks and uncertainties may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties
that we are presently unaware of, or presently consider immaterial, that may become material in the future and have a material adverse
effect on us. You could lose all or a significant portion of your investment due to any of these risks and uncertainties.

 Below
is a summary of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:

 Our industry and the markets in which we operate are highly competitive and increased competitive pressures could reduce our share of the markets we serve and adversely affect our business, financial position, results of operations and cash flows;

 We are a holding company and depend upon our subsidiary for our cash flows;

 We may require additional funding for our growth plans, and such funding may result in a dilution of your investment;

 As a controlled company during 2024, we were not subject to all of the corporate governance rules of Nasdaq Capital Market, and we continue to take advantage of Nasdaq's phase-in rules for compliance with the majority independent board requirement;

 The Company's payment of cash dividends from additional paid-in capital may expose the Company to potential liabilities arising out of state and federal fraudulent conveyance laws and legal distribution requirements.

 If the voting power of our capital stock continues to be highly concentrated, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest;

 Our common stock may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditor given that they are relying upon support from their China-based offices, and the delisting of our common stock, or the threat of their being delisted, may materially and adversely affect the value of your investment;

 We are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued growth of the market for content management, customer experience management, task and process mining, and robotic process automation;

 Our subscription renewal rates may decrease, and any decrease could harm our future revenue and operating results;

 If we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected;

 Because we generally recognize revenue from subscriptions ratably over the term of the agreement, near term changes in sales may not be reflected immediately in our operating results;

 We face significant competition
 from both established and new companies offering digital marketing, task and process mining, content management, customer experience
 management, and robotic process automation, and other related applications, as well as internally developed software, which may harm
 our ability to add new customers, retain existing customers and grow our business;

 We have experienced rapid
 growth and organizational change in recent periods and expect continued future growth. If we fail to manage our growth effectively,
 we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately;

 Failure to effectively
 develop and expand our digital marketing, task and process mining, content management, customer experience management, and robotic
 process automation capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our
 software;

 The rate of growth of our
 business depends on the continued participation and level of service of our third-party partners;

 We may experience quarterly
 fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause
 our operating results to fall below expectations or our guidance;

 If we fail to maintain
 our inbound thought leadership position, our business may suffer;

 If we fail to further enhance
 our brand and maintain our existing strong brand awareness, our ability to expand our customer base will be impaired and our financial
 condition may suffer;

 If we fail to adapt and
 respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our
 software may become less competitive;

 If we fail to offer high-quality
 customer support, our business and reputation may suffer;

 We may not be able to scale
 our business quickly enough to meet our customers' growing needs and if we are not able to grow efficiently, our operating
 results could be harmed;

 Our ability to introduce
 new products and features is dependent on adequate research and development resources. If we do not adequately fund our research
 and development efforts, we may not be able to compete effectively and our business and operating results may be harmed;

 Changes in the sizes or
 types of businesses that purchase our software or in the applications within our software purchased or used by our customers could
 negatively affect our operating results;

 We have in the past completed
 acquisitions and may acquire or invest in other companies or technologies in the future, which could divert management's attention,
 fail to meet our expectations, result in additional dilution to our stockholders, increase expenses, disrupt our operations or harm
 our operating results;

 Because our long-term growth
 strategy involves further expansion of our sales to customers outside Japan, our business will be susceptible to risks associated
 with international operations;

 If we cannot maintain our
 company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to
 our success and our business may be harmed;

 We rely on our management
 team and other key employees, and the loss of one or more key employees could harm our business;

 The failure to attract
 and retain additional qualified personnel could prevent us from executing our business strategy;

 Interruptions or delays
 in service from our third-party data center providers could impair our ability to deliver our software to our customers, resulting
 in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue;

 If our software has outages
 or fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose customers,
 become subject to service performance or warranty claims or incur significant costs;

 We are dependent on the
 continued availability of third-party data hosting and transmission services;

 If we do not or cannot
 maintain the compatibility of our software with third-party applications that our customers use in their businesses, our revenue
 will decline;

 We rely on data provided
 by third parties, the loss of which could limit the functionality of our software and disrupt our business;

 Privacy concerns and end
 users' acceptance of Internet behavior tracking may limit the applicability, use and adoption of our software;

 If our or our customers'
 security measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained, our software
 may be perceived as not being secure, our customers may be harmed and may curtail or cease their use of our software, our reputation
 may be damaged and we may incur significant liabilities;

 Our business may suffer
 if it is alleged or determined that our technology infringes the intellectual property rights of others;

 If we fail to adequately
 protect our proprietary rights, in Japan and abroad, our competitive position could be impaired and we may lose valuable assets,
 experience reduced revenue and incur costly litigation to protect our rights;

 Our use of "open-source"
 software could negatively affect our ability to offer our software and subject us to possible litigation;

 We are subject to governmental
 regulation and other legal obligations, particularly related to privacy, data protection and information security, and our actual
 or perceived failure to comply with such obligations could harm our business. Compliance with such laws could also impair our efforts
 to maintain and expand our customer base, and thereby decrease our revenue;

 The standards that private
 entities use to regulate the use of email have in the past interfered with, and may in the future interfere with, the effectiveness
 of our software and our ability to conduct business;

 Existing federal, state
 and foreign laws regulate Internet tracking software, the senders of commercial emails and text messages, website owners and other
 activities, and could impact the use of our software and potentially subject us to regulatory enforcement or private litigation;

 We are subject to governmental
 export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability
 if we are not in full compliance with applicable laws;

 Our substantial indebtedness
 could have important adverse consequences and adversely affect our financial condition;

 We may be unable to generate
 sufficient cash flow to satisfy our significant debt service obligations, which could have a material adverse effect on our business,
 financial condition and results of operations;

 Despite our level of indebtedness,
 we and our subsidiary may still be able to incur substantially more debt, including off-balance sheet financing, contractual obligations
 and general and commercial liabilities. This could further exacerbate the risks to our financial condition described above; and

 There can be no assurance
 that we will be able to comply with Nasdaq Capital Market's continued listing standards.

 On March 12, 2023, Signature
 Bank was closed by its state chartering authority, the New York State Department of Financial Services. On the same date the Federal
 Deposit Insurance Corporation ("FDIC") was appointed as receiver and transferred all customer deposits and substantially
 all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that is being operated by the FDIC. The Company
 automatically became a customer of Signature Bridge Bank, N.A. as part of this action. The Company held approximately $4.7 million
 cash deposits at Signature Bridge Bank, N.A. as of March 12, 2023. Normal banking activities resumed on Monday, March 13, 2023.

 Risks
Related to Our Business and Strategy

 We
are a holding company and depend upon our subsidiary for our cash flows.

 We
are a holding company. All of our operations are conducted, and almost all of our assets are owned, by our subsidiary. Consequently,
our cash flows and our ability to meet our obligations depend upon the cash flows of our subsidiary and the payment of funds by this
subsidiary to us in the form of dividends, distributions or otherwise. The ability of our subsidiary to make any payments to us depends
on their earnings, the terms of their indebtedness, including the terms of any credit facilities and legal restrictions. Any failure
to receive dividends or distributions from our subsidiary when needed could have a material adverse effect on our business, results of
operations or financial condition.

 We
may require additional funding for our growth plans, and such funding may result in a dilution of your investment.

 We
attempted to estimate our funding requirements in order to implement our growth plans. If the costs of implementing such plans should
exceed these estimates significantly or if we come across opportunities to grow through expansion plans which cannot be predicted at
this time, and our funds generated from our operations prove insufficient for such purposes, we may need to raise additional funds to
meet these funding requirements.

 These
additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources. We cannot assure you
that we will be able to obtain any additional financing on terms that are acceptable to us, or at all. If we fail to obtain additional
financing on terms that are acceptable to us, we will not be able to implement such plans fully if at all. Such financing even if obtained,
may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders' consent for payment of
dividends, or restrict our freedom to operate our business by requiring lender's consent for certain corporate actions.

 Further,
if we raise additional funds by way of a rights offering or through the issuance of new shares, any shareholders who are unable or unwilling
to participate in such an additional round of fund raising may suffer dilution in their investment.

 As
a controlled company during 2024, we were not subject to all of the corporate governance rules of Nasdaq Capital Market, and we continue
to take advantage of Nasdaq's phase-in rules for compliance with the majority independent board requirement.

 The
"controlled company" exception to Nasdaq Capital Market rules provides that a company of which more than 50% of the voting
power is held by an individual, group or another company, a "controlled company," need not comply with certain requirements
of Nasdaq Capital Market corporate governance rules. During the year ended December 31, 2024, Sumitaka Yamamoto, our Chief Executive
Officer and Chairman of the Board, beneficially owned a majority of the voting power of our outstanding common stock. As a "controlled
company" within the meaning of the corporate governance rules of Nasdaq Capital Market, during 2024, we were exempt from Nasdaq
Capital Market's corporate governance rules requiring that listed companies have (i) a majority of the board of directors consist
of "independent" directors under the listing standards of Nasdaq Capital Market, (ii) a nominating/corporate governance committee
composed entirely of independent directors and a written nominating/corporate governance committee charter meeting the requirements of
Nasdaq Capital Market, and (iii) a compensation committee composed entirely of independent directors and a written compensation committee
charter meeting the requirements of Nasdaq Capital Market. We no longer qualify as a controlled company and accordingly, on February
14, 2025, we formed a compensation committee and a nominating and corporate governance committee; however, we currently utilize and presently
intend to continue to utilize the exemption relating to a majority independent board. Accordingly, you may not have the same protections
afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq Capital Market. Pursuant
to Nasdaq's phase-in rules, we have a period of one year from the date on which we ceased to be a controlled company to comply
with the majority independent board.

 The Company's payment of cash dividends
from additional paid-in capital may expose the Company to potential liabilities arising out of state and federal fraudulent conveyance
laws and legal distribution requirements.

 In the past, the Company has
paid cash dividends, and the Company may continue to issue quarterly dividends going forward, contingent upon the Board of Directors'
approval, following review of the Company's then-current financial results. Although the Company believed that it would be adequately
capitalized following payment of each of its cash dividends, the Company's payment of cash dividends could be challenged under various
state and federal fraudulent conveyance laws. Fraudulent conveyances or transfers are generally defined to include transfers made or obligations
incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for
less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or
unable to pay its debts as they become due. Any unpaid creditor could claim that any one or the aggregate of the cash dividends left the
Company insolvent or with unreasonably small capital or that the Company intended or believed the Company would incur debts beyond the
Company's ability to pay such debts as they mature. If a court were to agree with such a plaintiff, then such court could void the
distributions as a fraudulent transfer or impose substantial liabilities on it, which could adversely affect the Company's financial
condition and the Company's results of operations.

 The payment of cash dividends
is also subject to review under state corporate distribution statutes. Under the Delaware General Corporation Law, a corporation may only
pay dividends to its stockholders either (i) out of its surplus (net assets minus capital) or (ii) if there is no such surplus, out of
its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Although the Company's Board
of Directors made the distributions out of its surplus, there can be no assurance that a court will not later determine that some or all
of the distributions were unlawful.

 Our
common stock may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditor given
that they are relying upon support from their China-based offices, and the delisting of our common stock, or the threat of their being
delisted, may materially and adversely affect the value of your investment.

 The
Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines
that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for
three consecutive years beginning in 2021, the SEC shall prohibit our shares of common stock from being traded on a national securities
exchange or in the over the counter trading market in the United States.

 On
March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements
of the HFCA Act. On December 2, 2021, the SEC adopted amendments to finalize such rules. We will be required to comply with these rules
if the SEC identifies us as having a "non-inspection" year by evaluating the annual report we file, in which we will identify
the auditor who provide opinions related to the financial statements presented in our annual report, the location where the auditor's
report has been issued and the PCAOB ID number of such audit firm or branch. If we have three consecutive non-inspection years, the SEC
will implement the trading prohibition of our common stock through stop orders, and the exact timeline for when the SEC will delist an
issuer after three consecutive non-inspection years remain imprecise. On June 22, 2021, the United States Senate passed the Accelerating
Holding Foreign Companies Accountable Act (the "AHFCAA"), which, if enacted, would decrease the number of non-inspection
years from three years to two, thus reducing the time period before our common stock may be prohibited from trading or delisted. On December
29, 2022, the AHFCAA was signed into law.

 On
August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the "Protocol") with the China Securities Regulatory
Commission and the Ministry of Finance of the People's Republic of China (together, the "PRC Authorities"). The Protocol
provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential violations it inspects and investigates,
without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to view complete audit work papers
with all information included and for the PCAOB to retain information as needed; (3) direct access to interview and take testimony from
all personnel associated with the audits the PCAOB inspects or investigates.

 On
December 15, 2022, the PCAOB announced in its 2022 HFCA Act Determination Report (the "2022 Report") its determination that
the PCAOB was able to secure complete access to inspect and investigate audit firms in the People's Republic of China (PRC), and
the PCAOB Board voted to vacate previous determinations to the contrary. According to the 2022 Report, this determination was reached
after the PCAOB had thoroughly tested compliance with every aspect of the Protocol necessary to determine complete access, including
on-site inspections and investigations in a manner fully consistent with the PCAOB's methodology and approach in the U.S. and globally.
According to the 2022 Report, the PRC Authorities had fully assisted and cooperated with the PCAOB in carrying out the inspections and
investigations according to the Protocol, and have agreed to continue to assist the PCAOB's investigations and inspections in the
future. The PCAOB may reassess its determinations and issue new determinations consistent with the HFCAA at any time.

 Our financial statements contained
in this Annual Report on Form 10-K have been audited by MaloneBailey, LLP, an independent registered public accounting firm that is headquartered
in the United States with offices in Beijing and Shenzhen, China, and Tokyo, Japan. MaloneBailey, LLP is not among the PCAOB-registered
public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB's determination on December 16, 2021 of
having been unable to inspect or investigate completely. As of the date of this annual report, we have not been identified by the SEC
as a commission-identified issuer under the HFCA Act.

 We
are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued growth
of the market for content management, customer experience management, task and process mining, and robotic process automation.

 We
derive, and expect to continue to derive, a substantial portion of our revenue from the sale of subscriptions to use our software for
digital marketing, task and process mining, content management, customer experience management, and robotic process animation. The market
for digital marketing, task and process mining, content management, customer experience management, and robotic process animation is
still evolving, and competitive dynamics may cause pricing levels to change as the market matures and as existing and new market participants
introduce new types of point applications and different approaches to enable businesses to address their respective needs. As a result,
we may be forced to reduce the prices we charge for our software and may be unable to renew existing customer agreements or enter into
new customer agreements at the same prices and upon the same terms that we have historically. In addition, our growth strategy involves
a scalable pricing model intended to provide us with an opportunity to increase the value of our customer relationships over time as
we expand their use of our software, sell to other parts of their organizations, cross-sell our sales products to existing marketing
product customers and vice versa through touchless or low touch in product purchases, and upsell additional offerings and features. If
our cross-selling efforts are unsuccessful or if our existing customers do not expand their use of our software or adopt additional offerings
and features, our operating results may suffer.

 Our
subscription renewal rates may decrease, and any decrease could harm our future revenue and operating results.

 Our
customers have no obligation to renew their subscriptions for our software after the expiration of their subscription periods, substantially
all of which are one year or less. In addition, our customers may seek to renew for lower subscription tiers, for fewer contacts or seats,
or for shorter contract lengths. Also, customers may choose not to renew their subscriptions for a variety of reasons. Our renewal rates
may decline or fluctuate as a result of a number of factors, including limited customer resources, pricing changes, the prices of services
offered by our competitors, adoption and utilization of our services and add-on applications by our customers, adoption of our new software,
customer satisfaction with our services, mergers and acquisitions affecting our customer base, reductions in our customers' spending
levels or declines in customer activity as a result of economic downturns or uncertainty in financial markets. If our customers do not
renew their subscriptions for our software or decrease the amount they spend with us, our revenue will decline and our business will
suffer. In addition, a subscription model creates certain risks related to the timing of revenue recognition and potential reductions
in cash flows. A portion of the subscription-based revenue we report each quarter results from the recognition of deferred revenue relating
to subscription agreements entered into during previous quarters. A decline in new or renewed subscriptions in any period may not be
immediately reflected in our reported financial results for that period, but may result in a decline in our revenue in future quarters.
If we were to experience significant downturns in subscription sales and renewal rates, our reported financial results might not reflect
such downturns until future periods.

 If
we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match
our expenditures with corresponding revenue, our operating results could be adversely affected.

 Because
our recent growth has resulted in the rapid expansion of our business, we do not have a long history upon which to base forecasts of
renewal rates with customers or future operating revenue. As a result, our operating results in future reporting periods may be significantly
below the expectations of the public market, equity research analysts or investors, which could harm the price of our common stock.

 Because
we generally recognize revenue from subscriptions ratably over the term of the agreement, near term changes in sales may not be reflected
immediately in our operating results.

 We
offer our software primarily through a mix of monthly, quarterly and single-year subscription agreements, which are generally paid upfront
and some are with ratable revenue recognition over the subscription period. As a result, some of the revenue we report in each quarter
is derived from agreements entered into during prior months, quarters or years. In addition, we do not record deferred revenue beyond
amounts invoiced as a liability on our balance sheet. A decline in new or renewed subscriptions or marketing solutions agreements in
any one quarter is not likely to be reflected immediately in our revenue results for that quarter. Such declines, however, would negatively
affect our revenue and deferred revenue balances in future periods, and the effect of significant downturns in sales and market acceptance
of our software, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future
periods. Our subscription model also makes it difficult for us to rapidly increase our total revenue and deferred revenue balance through
additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term.

 We
face significant competition from both established and new companies offering digital marketing, task and process mining, content management,
customer experience management, and robotic process automation, and other related applications, as well as internally developed software,
which may harm our ability to add new customers, retain existing customers and grow our business.

 The
digital marketing, task and process mining, content management, customer experience management, and robotic process automation market
is evolving, highly competitive and significantly fragmented. With the introduction of new technologies and the potential entry of new
competitors into the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales,
maintain or increase renewals and maintain our prices.

 We
face intense competition from other companies that develop software for digital marketing, task and process mining, content management,
customer experience management, and robotic process automation and from marketing services companies that provide interactive marketing
services. Competition could significantly impede our ability to sell subscriptions to use our software on terms favorable to us. Our
current and potential competitors may develop and market new technologies that render our existing or future products less competitive,
or obsolete. In addition, if these competitors develop software with similar or superior functionality to our software, we may need to
decrease the prices or accept less favorable terms for our software subscriptions in order to remain competitive. If we are unable to
maintain our pricing due to competitive pressures, our margins will be reduced and our operating results will be negatively affected.

 Our
competitors include:

 task and process mining vendors;

 email marketing software vendors;

 content management system providers;

 customer experience management system\ providers;

 robotic process automation vendors;

 cloud-based marketing automation providers;

 large-scale enterprise suites;

 customer service software providers; and

 Customer experience management systems.

 In
addition, instead of using our software, some prospective customers may elect to combine disparate point applications, such as content
management, marketing automation, analytics and social media management. We expect that new competitors, such as enterprise software
vendors that have traditionally focused on enterprise resource planning or other applications supporting back office functions, will
develop and introduce applications serving customer-facing and other front office functions. This development could have an adverse effect
on our business, operating results and financial condition. In addition, sales force automation and contact relationship management vendors
could acquire or develop applications that compete with our marketing software offerings. Some of these companies have acquired social
media marketing and other marketing software providers to integrate with their broader offerings.

 Our
current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, be able
to devote greater resources to the development, promotion, sale and support of their products and services, may have more extensive customer
bases and broader customer relationships than we have, and may have longer operating histories and greater name recognition than we have.
As a result, these competitors may respond faster to new technologies and undertake more extensive marketing campaigns for their products.
In a few cases, these vendors may also be able to offer marketing, sales, customer service and content management software at little
or no additional cost by bundling it with their existing suite of applications. To the extent any of our competitors has existing relationships
with potential customers for either marketing software or other applications, those customers may be unwilling to purchase our software
because of their existing relationships with our competitor. If we are unable to compete with such companies, the demand for our software
could substantially decline.

 In
addition, if one or more of our competitors were to merge or partner with another of our competitors, our ability to compete effectively
could be adversely affected. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic
distribution and technology partners or other parties with whom we have relationships, thereby limiting our ability to promote and implement
our software. We may not be able to compete successfully against current or future competitors, and competitive pressures may harm our
business, operating results and financial condition.

 We expect continued future growth and if
we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive
challenges adequately.

 Our head count and operations
have grown. We plan to open international offices in the future. This growth has placed, and will continue to place, a significant strain
on our management, administrative, operational and financial infrastructure. We anticipate further growth will be required to address
increases in our product offerings and continued expansion. Our success will depend in part upon our ability to recruit, hire, train,
manage and integrate a significant number of qualified managers, technical personnel and employees in specialized roles within our company,
including in technology, sales and marketing. Furthermore, preservation of our corporate culture has been made more difficult as our work
force has been working from home in connection with restrictions placed upon businesses due to the pandemic. A long-term continuation
of these restrictions could, among other things, negatively impact employee morale and productivity. Any failure to preserve our culture
could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively and execute on
our business strategy. Furthermore, as our employees work remotely from geographic areas across the globe and more of our employees work
remotely on a permanent basis due to the pandemic, we may need to reallocate our investment of resources and closely monitor a variety
of local regulations and requirements, including local tax laws, and we may experience unpredictability in our expenses and employee work
culture. If we experience any of these effects in connection with future growth, if our new employees perform poorly, or if we are unsuccessful
in recruiting, hiring, training, managing and integrating these new employees, or retaining these or our existing employees, it could
materially impair our ability to attract new customers, retain existing customers and expand their use of our software, all of which would
materially and adversely affect our business, financial condition and results of operations.

 In addition, to manage the
expected continued growth of our head count, operations and geographic expansion, we will need to continue to improve our information
technology infrastructure, operational, financial and management systems and procedures. Our anticipated additional head count and capital
investments will increase our costs, which will make it more difficult for us to address any future revenue shortfalls by reducing expenses
in the short term. If we fail to successfully manage our growth, we will be unable to successfully execute our business plan, which could
have a negative impact on our business, results of operations or financial condition.

 Failure to effectively develop and expand
our digital marketing, task and process mining, content management, customer experience management, and robotic process automation capabilities
could harm our ability to increase our customer base and achieve broader market acceptance of our software.

 To increase total customers
and achieve broader market acceptance of our software, we will need to expand our digital marketing, task and process mining, content
management, customer experience management, and robotic process automation operations, including our sales force and third-party channel
partners. We will continue to dedicate significant resources to inbound sales and marketing programs. The effectiveness of our inbound
sales and marketing and third-party channel partners has varied over time and may vary in the future and depends on our ability to maintain
and improve our digital marketing, task and process mining, content management, customer experience management, and robotic process automation
capabilities. All of these efforts will require us to invest significant financial and other resources. Our business will be seriously
harmed if our efforts do not generate a correspondingly significant increase in revenue. We may not achieve anticipated revenue growth
from expanding our sales force if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable
to achieve desired productivity levels in a reasonable period of time or if our sales and marketing programs are not effective.

 The rate of growth of our business depends
on the continued participation and level of service of our third-party partners.

 We rely on our task and process
mining third-party partners to provide certain services to our customers, as well as pursue sales of our software to customers. To the
extent we do not attract new partners, or existing or new partners do not refer a growing number of customers to us, our revenue and operating
results would be harmed. In addition, if our partners do not continue to provide services to our customers, we would be required to provide
such services ourselves either by expanding our internal team or engaging other third-party providers, which would increase our operating
costs.

 We may experience quarterly fluctuations
in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating
results to fall below expectations or our guidance.

 Our quarterly operating results
have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our
control. As a result, our past results may not be indicative of our future performance, and comparing our operating results on a period-to-period
basis may not be meaningful. In addition to the other risks described in this Annual Report on Form 10-K, factors that may affect our
quarterly operating results include the following:

 changes in spending on marketing, task and process mining, content management, customer experience management, and robotic process automation software by our current or prospective customers;

 pricing our software subscriptions effectively so that we are able to attract and retain customers without compromising our profitability;

 attracting new customers for our marketing, sales, customer service, and content management software, increasing our existing customers' use of our software and providing our customers with excellent customer support;

 customer renewal rates and the amounts for which agreements are renewed;

 global awareness of our thought leadership and brand;

 changes in the competitive dynamics of our market, including consolidation among competitors or customers and the introduction of new products or product enhancements;

 changes to the commission plans, quotas and other compensation-related metrics for our sales representatives;

 the amount and timing of payment for operating expenses, particularly research and development, sales and marketing expenses and employee benefit expenses;

 the amount and timing of costs associated with recruiting, training and integrating new employees while maintaining our company culture;

 our ability to manage our existing business and future growth, including increases in the number of customers on our software and the introduction and adoption of our software in new markets outside of the United States;

 unforeseen costs and expenses related to the expansion of our business, operations and infrastructure, including disruptions in our hosting network infrastructure and privacy and data security;

 foreign currency exchange rate fluctuations; and

 general economic and political conditions in our domestic and international markets.

 We may not be able to accurately
forecast the amount and mix of future subscriptions, revenue and expenses and, as a result, our operating results may fall below our estimates
or the expectations of public market analysts and investors. If our revenue or operating results fall below the expectations of investors
or securities analysts, or below any guidance we may provide, the price of our common stock could decline.

 If we fail to maintain our inbound thought
leadership position, our business may suffer.

 We believe that maintaining
our thought leadership position in inbound digital marketing, content management, customer experience management, and robotic process
automation, is an important element in attracting new customers. We devote significant resources to develop and maintain our thought leadership
position, with a focus on identifying and interpreting emerging trends in the inbound experience, shaping and guiding industry dialog
and creating and sharing the best inbound practices. Our activities related to developing and maintaining our thought leadership may not
yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in such effort. We rely upon
the continued services of our management and employees with domain expertise with inbound digital marketing, content management, customer
experience management, and robotic process automation, and the loss of any key employees in this area could harm our competitive position
and reputation. If we fail to successfully grow and maintain our thought leadership position, we may not attract enough new customers
or retain our existing customers, and our business could suffer.

 If we fail to further enhance our brand
and maintain our existing strong brand awareness, our ability to expand our customer base will be impaired and our financial condition
may suffer.

 We believe that our development
of the HeartCore brand is critical to achieving widespread awareness of our existing and future inbound and automation experience solutions,
and, as a result, is important to attracting new customers and maintaining existing customers. In the past, our efforts to build our brand
have involved significant expenses, and we believe that this investment has resulted in strong brand recognition. Successful promotion
and maintenance of our brands will depend largely on the effectiveness of our marketing efforts and on our ability to provide a reliable
and useful software at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any increased
revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote and maintain our brand, our
business could suffer.

 If we fail to adapt and respond effectively
to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our software may become less
competitive.

 Our future success depends
on our ability to adapt and innovate our software. To attract new customers and increase revenue from existing customers, we need to continue
to enhance and improve our offerings to meet customer needs at prices that our customers are willing to pay. Such efforts will require
adding new functionality and responding to technological advancements, which will increase our research and development costs. If we are
unable to develop new applications that address our customers' needs, or to enhance and improve our software in a timely manner,
we may not be able to maintain or increase market acceptance of our software. Our ability to grow is also subject to the risk of future
disruptive technologies.

 If we fail to offer high-quality customer
support, our business and reputation may suffer.

 High-quality education, training
and customer support are important for the successful marketing, sale and use of our software and for the renewal of existing customers.
Providing this education, training and support requires that our personnel who manage our online training or provide customer support
have specific inbound experience domain knowledge and expertise, making it more difficult for us to hire qualified personnel and to scale
up our support operations. The importance of high-quality customer support will increase as we expand our business and pursue new customers.
If we do not help our customers use multiple applications within our software and provide effective ongoing support, our ability to sell
additional functionality and services to, or to retain, existing customers may suffer and our reputation with existing or potential customers
may be harmed.

 We may not be able to scale our business
quickly enough to meet our customers' growing needs and if we are not able to grow efficiently, our operating results could be harmed.

 As usage of our software grows
and as customers use our software for additional inbound applications, we will need to devote additional resources to improving our application
architecture, integrating with third-party systems and maintaining infrastructure performance. In addition, we will need to appropriately
scale our internal business systems and our services organization, including customer support and professional services, to serve our
growing customer base, particularly as our customer demographics change over time. Any failure of or delay in these efforts could cause
impaired system performance and reduced customer satisfaction. These issues could reduce the attractiveness of our software to customers,
resulting in decreased sales to new customers, lower renewal rates by existing customers, the issuance of service credits, or requested
refunds, which could impede our revenue growth and harm our reputation. Even if we are able to upgrade our systems and expand our staff,
any such expansion will be expensive and complex, requiring management's time and attention. We could also face inefficiencies or
operational failures as a result of our efforts to scale our infrastructure. Moreover, there are inherent risks associated with upgrading,
improving and expanding our information technology systems. We cannot be sure that the expansion and improvements to our infrastructure
and systems will be fully or effectively implemented on a timely basis, if at all. These efforts may reduce revenue and our margins and
adversely affect our financial results.

 Our ability to introduce new products and
features is dependent on adequate research and development resources. If we do not adequately fund our research and development efforts,
we may not be able to compete effectively and our business and operating results may be harmed.

 To remain competitive, we
must continue to develop new product offerings, applications, features and enhancements to our existing software. Maintaining adequate
research and development personnel and resources to meet the demands of the market is essential. If we are unable to develop our software
internally due to certain constraints, such as high employee turnover, lack of management ability or a lack of other research and development
resources, we may miss market opportunities. Further, many of our competitors expend a considerably greater amount of funds on their research
and development programs, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors'
research and development programs. Our failure to maintain adequate research and development resources or to compete effectively with
the research and development programs of our competitors could materially adversely affect our business.

 Changes in the sizes or types of businesses
that purchase our software or in the applications within our software purchased or used by our customers could negatively affect our operating
results.

 Our strategy is to sell subscriptions
to our software to mid to enterprise-sized businesses, but we have sold and will continue to sell to organizations ranging from small
businesses to enterprises. Our gross margins can vary depending on numerous factors related to the implementation and use of our software,
including the sophistication and intensity of our customers' use of our software and the level of professional services and support
required by a customer. Sales to enterprise customers may entail longer sales cycles and more significant selling efforts. Selling to
small businesses may involve greater credit risk and uncertainty. If there are changes in the mix of businesses that purchase our software
or the mix of the product plans purchased by our customers, our gross margins could decrease and our operating results could be adversely
affected.

 We may acquire or invest in other companies
or technologies in the future, which could divert management's attention, fail to meet our expectations, result in additional dilution
to our stockholders, increase expenses, disrupt our operations or harm our operating results.

 We may in the future acquire
or invest in, businesses, products or technologies that we believe could complement or expand our software, enhance our technical capabilities
or otherwise offer growth opportunities. We may not be able to fully realize the anticipated benefits of these or any future acquisitions.
The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses related to identifying,
investigating and pursuing suitable acquisitions, whether or not they are consummated.

 There are inherent risks in
integrating and managing acquisitions. If we acquire additional businesses, we may not be able to assimilate or integrate the acquired
personnel, operations and technologies successfully or effectively manage the combined business following the acquisition and our management
may be distracted from operating our business. We also may not achieve the anticipated benefits from the acquired business due to a number
of factors, including: unanticipated costs or liabilities associated with the acquisition; incurrence of acquisition-related costs, which
would be recognized as a current period expense; inability to generate sufficient revenue to offset acquisition or investment costs; the
inability to maintain relationships with customers and partners of the acquired business; the difficulty of incorporating acquired technology
and rights into our software and of maintaining quality and security standards consistent with our brand; delays in customer purchases
due to uncertainty related to any acquisition; the need to integrate or implement additional controls, procedures and policies; challenges
caused by distance, language and cultural differences; harm to our existing business relationships with business partners and customers
as a result of the acquisition; the potential loss of key employees; use of resources that are needed in other parts of our business and
diversion of management and employee resources; the inability to recognize acquired deferred revenue in accordance with our revenue recognition
policies; and use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition. Acquisitions
also increase the risk of unforeseen legal liability, including for potential violations of applicable law or industry rules and regulations,
arising from prior or ongoing acts or omissions by the acquired businesses which are not discovered by due diligence during the acquisition
process. Generally, if an acquired business fails to meet our expectations, our operating results, business and financial condition may
suffer. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect
our business, results of operations or financial condition.

 In addition, a significant
portion of the purchase price of companies we acquire may be allocated to goodwill and other intangible asset, which must be assessed
for impairment at least annually. If our acquisitions do not ultimately yield expected returns, we may be required to make charges to
our operating results based on our impairment assessment process, which could harm our results of operations.

 Because our long-term growth strategy involves
further expansion of our sales to customers outside Japan, our business will be susceptible to risks associated with international operations.

 A component of our growth
strategy involves the further expansion of our operations and customer base worldwide. We plan to open international offices in the future.
These international offices will focus primarily on sales, professional services and support. Our future international operations and
future initiatives will involve a variety of risks, including:

 difficulties in maintaining our company culture with a dispersed and distant workforce;

 more stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information;

 the timing of our sales with our international clients and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these clients;

 unexpected changes in regulatory requirements, taxes or trade laws;

 differing labor regulations where labor laws are generally more advantageous to employees as compared to Japan, including deemed hourly wage and overtime regulations in these locations;

 challenges inherent in efficiently managing an increased number of employees, including remote employees, over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;

 difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;

 currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future;

 global economic uncertainty caused by global political events;

 limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;

 limited or insufficient intellectual property protection;

 political instability or terrorist activities;

 likelihood of potential or actual violations of domestic and international anticorruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, or of U.S. and international export control and sanctions regulations, which likelihood may increase with an increase of sales or operations in foreign jurisdictions and operations in certain industries; and

 adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.

 Our inexperience in operating
our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful.
If we invest substantial time and resources to establish our international operations and are unable to do so successfully and in a timely
manner, our business and operating results will suffer. We continue to implement policies and procedures to facilitate our compliance
with U.S. laws and regulations applicable to or arising from our international business. Inadequacies in our past or current compliance
practices may increase the risk of inadvertent violations of such laws and regulations, which could lead to financial and other penalties
that could damage our reputation and impose costs on us.

 Our customers may fail to pay us in accordance
with the terms of their agreements, at times necessitating action by us to attempt to compel payment.

 If our customers fail to pay
us in accordance with the terms of our agreements, we may be adversely affected both from the inability to collect amounts due and the
cost of enforcing the terms of our agreements, including litigation and arbitration costs. The risk of these issues increases with the
term length of our customer arrangements. Furthermore, some of our customers may seek bankruptcy protection or other similar relief and
fail to pay amounts due to us, or pay those amounts more slowly, either of which could adversely affect our results of operations, financial
condition and cash flow.

 We believe our success depends on continuing
to invest in the growth of our worldwide operations by entering new geographic markets. If our investments in these markets are greater
than anticipated, or if our customer growth or sales in these markets do not meet our expectations, our results of operations and financial
condition may be adversely affected.

 We believe our success depends
on expanding our business into new geographic markets and attracting customers in countries other than the United States. We anticipate
continuing to expand our operations worldwide and have made, and will continue to make, substantial investments and incur substantial
costs as we enter new geographic markets. This includes investments in facilities, information technology investments, sales, marketing
and administrative personnel and facilities. Often we must make these investments when it is still unclear whether future sales in the
new market will justify the costs of these investments. In addition, these investments may be more expensive than we initially anticipate.
If our investments are greater than we initially anticipate or if our customer growth or sales in these markets do not meet our expectations
or justify the cost of the initial investments, our results of operations and financial condition may be adverse affected.

 Risks Related to Our GO IPO Consulting Services

 We provide consulting services and ultimately
do not control our client's abilities to go public in the United States or secure a listing on American stock exchanges.

 In
providing our consulting services, we do not perform accounting services, and do not act as an investment advisor or broker/dealer. Pursuant
to the terms of the consulting agreements with the issuers, the parties agree that we will not provide the following services, among others:
negotiation of the sale of the issuers' securities; participation in discussions between the issuers and potential investors; assisting
in structuring any transactions involving the sale of the issuers' securities; pre-screening of potential investors; due diligence
activities; and providing advice relating to valuation of or financial advisability of any investments in the issuers. Additionally, we
do not take part in the selection of, or negotiation of terms with, law firms, underwriters or audit firms. Such selection and negotiation
is the sole responsibility of the client.

 Our
GO IPO clients may rely on advice from their third party advisors, including law firms and underwriters. Any of these third party advisors
may advise our GO IPO clients on strategies that could delay or even terminate their ability to go public in the United States or secure
a listing on an American stock exchange. The ability of our client to go public in the United States or secure a listing on an American
stock exchange is subject to our client's ability to execute their business plan and attract investors. Ultimately, market conditions
could also create delays or terminate our client's plans.

 The value of the equity rights we receive
from our GO IPO clients could be volatile, lose value, and even become worthless.

 We do not control the management
or strategies of our GO IPO client companies. The value of our equity rights received from our consulting Services is tied to the market
value of the client and will likely be volatile. Among other factors the following occurrences, which is not an exhaustive list, could
reduce the value of our equity rights or even cause our equity rights to become worthless:

 If a client company changes management or strategies;

 If a client company is engaged in material litigation;

 If a client company cannot develop a liquid market for their shares underlying our equity rights;

 If a client company cannot satisfy a listing requirement to be listed on an exchange;

 If the market value of the equity rights is too low;

 If the client company cannot secure market makers;

 If the client company cannot meet the rules and requirements mandated by the exchanges and markets;

 If the client company suffers a business downturn, through their fault or caused by a material partner or events that affect the market in general; and/or

 If the market conditions do not provide an opportunity to capitalize on the equity rights.

 Our GO IPO business assists companies in
navigating the initial public offering process in the US markets. We do not provide investment, accounting, or legal advice. If state
or federal regulatory agency determined our Company provided legal or investment advice in violation of existing law, there could be a
material adverse effect on our business operations and stock value.

 Our GO IPO services assist
companies in improving their internal systems, planning, and readiness to take their company through the IPO process. We also assist with
introductions to third party professional advisors such as law firms, investment bankers, and auditors, in order that clients can make
their selections, at their sole discretion.

 We are not an Investment Company
under the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act has restrictions that could make it impractical
for us to continue our business as contemplated. Our GO IPO services providing consulting services and are not in the business of investing,
reinvesting or trading in securities. An entity will generally be deemed an "investment company" under Section 3(a)(1) of
the 1940 Act if: (a) it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing,
reinvesting or trading in securities, or (b) absent an applicable exemption, it owns or proposes to acquire investment securities having
a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
We conduct our operations so that we will not be deemed an investment company.

 General Risks

 Failure to comply with laws and regulations
could harm our business.

 Our business is subject to
regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing
employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls,
federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than
those in the United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory
recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.

 We are exposed to fluctuations in currency
exchange rates.

 We face exposure to movements
in currency exchange rates, which may cause our revenue and operating results to differ materially from expectations. As we have expanded
our international operations, our exposure to exchange rate fluctuations has increased, in particular with respect to the British Pound
Sterling and Japanese Yen. As exchange rates vary, revenue, cost of revenue, operating expenses and other operating results, when re-measured,
may differ materially from expectations. In addition, our operating results are subject to fluctuation if our mix of U.S. and foreign
currency denominated transactions and expenses changes in the future. Furthermore, global political events, including Brexit and similar
geopolitical developments, fluctuating commodity prices and trade tariff developments, have caused global economic uncertainty, which
could amplify the volatility of currency fluctuations. Such volatility, even when it increases our revenues or decreases our expenses,
impacts our ability to predict our future results and earnings accurately. Although we may apply certain strategies to mitigate foreign
currency risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and would involve costs and risks
of their own, such as ongoing management time and expertise, external costs to implement the strategies and potential accounting implications.
Additionally, as we anticipate growing our business further outside of the United States, the effects of movements in currency exchange
rates will increase as our transaction volume outside of the United States increases.

 Weakened global economic conditions may
harm our industry, business and results of operations.

 Our overall performance depends
in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated to us or the software industry
may harm us. The United States and other key international economies have been affected from time to time by falling demand for a variety
of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange
markets, bankruptcies, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues. In particular,
the economies of countries in Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking
sector, uncertainty over the future of the Euro zone and volatility in the value of the pound sterling and the Euro, including instability
surrounding Brexit. We have operations, as well as current and potential new customers, throughout most of Europe. If economic conditions
in Europe and other key markets for our software continue to remain uncertain or deteriorate further, it could adversely affect our customers'
ability or willingness to subscribe to our software, delay prospective customers' purchasing decisions, reduce the value or duration
of their subscriptions or affect renewal rates, all of which could harm our operating results.

 Our ability to raise capital in the future
may be limited, and our failure to raise capital when needed could prevent us from growing.

 Our business and operations
may consume resources faster than we anticipate. In the future, we may need to raise additional funds to invest in future growth opportunities.
Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may
be unable to invest in future growth opportunities, which could seriously harm our business and operating results. If we incur debt, the
debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our
operations, including our ability to pay dividends on our common stock. Furthermore, if we issue equity securities, stockholders will
experience dilution, and the new equity securities could have rights senior to those of our common stock. Any additional equity or equity-linked
financings would be dilutive to our stockholders. Because our decision to issue securities in any future offering will depend on market
conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. As
a result, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting
their interest.

 The certificate of incorporation and bylaws
provides that state or federal court located within the state of Delaware will be the sole and exclusive forum for substantially all disputes
between us and our shareholders, which could limit its stockholders' ability to obtain a favorable judicial forum for disputes with
us or our directors, officers or other employees.

 Section 21 of our certificate
of incorporation and Section 7.4 of our bylaws provides that "[u]nless the corporation consents in writing to the selection of an
alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii)
any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation
or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any
action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located in the county in which the
principal office of the corporation in the State of Delaware is established, in all cases subject to the court's having personal
jurisdiction over the indispensable parties named as defendants. Notwithstanding the foregoing, the exclusive forum provision will not
apply to suits brought to enforce any liability or duty created by the Exchange of 1934, as amended, the Securities Act of 1933, as amended,
or any claim for which the federal courts have exclusive or concurrent jurisdiction." Therefore, the exclusive forum provision in
our certificate of incorporation and our bylaws will not relieve us of our duty to comply with the federal securities laws and the rules
and regulations thereunder, and shareholders will not be deemed to have waived our compliance with these laws, rules and regulations.

 This exclusive forum provision
may limit a shareholder's ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers
or other employees, which may discourage lawsuits against us or our directors, officers or other employees. In addition, shareholders
who do bring a claim in the state or federal court in the State of Delaware could face additional litigation costs in pursuing any such
claim, particularly if they do not reside in or near Delaware. The state or federal court of the State of Delaware may also reach different
judgments or results than would other courts, including courts where a shareholder would otherwise choose to bring the action, and such
judgments or results may be more favorable to us than to our shareholders. However, the enforceability of similar exclusive forum provisions
in other companies' certificates of incorporation have been challenged in legal proceedings, and it is possible that a court could
find this type of provision to be inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings.
If a court were to find the exclusive forum provision contained in our certificate of incorporation and our bylaws to be inapplicable
or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions.

 You are bound by the fee-shifting provision
contained in our bylaws, which may discourage you to pursue actions against us and could discourage shareholder lawsuits that might otherwise
benefit the Company and its shareholders.

 Section 7.4 of our bylaws
provides that "[i]f any action is brought by any party against another party, relating to or arising out of these Bylaws, or the
enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees, costs and
expenses incurred in connection with the prosecution or defense of such action."

 Our bylaws provide that for
this section, the term "attorneys' fees" or "attorneys' fees and costs" means the fees and expenses
of counsel to the Company and any other parties asserting a claim subject to Section 7.4 of the bylaws, which may include printing, photocopying,
duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the
bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection with the enforcement or
collection of any judgment obtained in any such proceeding.

 We adopted the fee-shifting
provision to eliminate or decrease nuisance and frivolous litigation. We intend to apply the fee-shifting provision broadly to all actions
except for claims brought under the Exchange Act and Securities Act.

 There is no set level of recovery
required to be met by a plaintiff to avoid payment under this provision. Instead, whoever is the prevailing party is entitled to recover
the reasonable attorneys' fees, costs and expenses incurred in connection with the prosecution or defense of such action. Any party
who brings an action, and the party against whom such action is brought under Section 7.4 of our bylaws, which could include, but is not
limited to former and current shareholders, Company directors, officers, affiliates, legal counsel, expert witnesses and other parties,
are subject to this provision. Additionally, any party who brings an action, and the party against whom such action is brought under Section
7.4 of our bylaws, which could include, but is not limited to former and current shareholders, Company directors, officers, affiliates,
legal counsel, expert witnesses and other parties, would be able to recover fees under this provision.

 In the event you initiate
or assert a claim against us, in accordance with the dispute resolution provisions contained in our Bylaws, and you do not, in a judgment
prevail, you will be obligated to reimburse us for all reasonable costs and expenses incurred in connection with such claim, including,
but not limited to, reasonable attorney's fees and expenses and costs of appeal, if any. Additionally, this provision in Section
7.4 of our bylaws could discourage shareholder lawsuits that might otherwise benefit the Company and its shareholders.

 THE FEE SHIFTING PROVISION
CONTAINED IN THE BYLAWS IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF COMMON STOCK OF THE COMPANY'S COMPLIANCE WITH THE
U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS
DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 Risks Related to Employee Matters

 If we cannot maintain our company culture
as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success and our business
may be harmed.

 We believe that a critical
component to our success has been our company culture, which is based on transparency and personal autonomy. We have invested substantial
time and resources in building our team within this company culture. Any failure to preserve our culture could negatively affect our ability
to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. As we grow as and continue to develop
the infrastructure of a public company, we may find it difficult to maintain these important aspects of our company culture. If we fail
to maintain our company culture, our business may be adversely impacted.

 We rely on our management team and other
key employees, and the loss of one or more key employees could harm our business.

 Our success and future growth
depend upon the continued services of our management team, including our Chief Executive Officer, Sumitaka Yamamoto, and other key employees
in the areas of research and development, marketing, sales, services, content management, and general and administrative functions. From
time to time, there may be changes in our management team resulting from the hiring or departure of executives, which could disrupt our
business. We also are dependent on the continued service of our existing software engineers and information technology personnel because
of the complexity of our software, technologies and infrastructure. We may terminate any employee's employment at any time, with
or without cause, and any employee may resign at any time, with or without cause (In Japan, termination of employee can only be justified
for material cause). The loss of one or more of our key employees could harm our business.

 The failure to attract and retain additional
qualified personnel could prevent us from executing our business strategy.

 To execute our business strategy,
we must attract and retain highly qualified personnel. In particular, we compete with many other companies for software developers with
high levels of experience in designing, developing and managing cloud-based software, as well as for skilled information technology, marketing,
sales and operations professionals, and we may not be successful in attracting and retaining the professionals we need. Also, inbound
sales, marketing, services, and content management domain experts are very important to our success and are difficult to replace. We have
from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and difficulty
in retaining highly skilled employees with appropriate qualifications. In particular, we have experienced a competitive hiring environment
in Japan, where we are headquartered and will continue to experience a competitive hiring environment as we recruit for remote talent
worldwide. Many of the companies with which we compete for experienced personnel have greater resources than we do. In addition, in making
employment decisions, particularly in the software industry, job candidates often consider the value of the stock options or other equity
incentives they are to receive in connection with their employment. If the price of our stock declines, or experiences significant volatility,
our ability to attract or retain key employees will be adversely affected. If we fail to attract new personnel or fail to retain and motivate
our current personnel, our growth prospects could be severely harmed.

 Risks Related to Our Technical Operations Infrastructure
and Dependence on Third Parties

 Interruptions or delays in service from
our third-party data center providers could impair our ability to deliver our software to our customers, resulting in customer dissatisfaction,
damage to our reputation, loss of customers, limited growth and reduction in revenue.

 We currently serve some parts
of our software functions from third-party data center hosting facilities operated by Amazon and IBM. In addition, we serve ancillary
functions for our customers from third-party data center hosting facilities operated by Amazon, with a backup facility in Amazon. Our
operations depend, in part, on our third-party facility providers' abilities to protect these facilities against damage or interruption
from natural disasters, such as earthquakes and hurricanes, actual or threatened public health emergency (e.g., COVID-19), power or telecommunications
failures, criminal acts and similar events. In the event that any of our third-party facilities arrangements is terminated, or if there
is a lapse of service or damage to a facility, we could experience interruptions in our software as well as delays and additional expenses
in arranging new facilities and services.

 Any damage to, or failure
of, the systems of our third-party providers could result in interruptions to our software. Despite precautions taken at our data centers,
the occurrence of spikes in usage volume, a natural disaster, such as earthquakes or hurricane, an act of terrorism, vandalism or sabotage,
a decision to close a facility without adequate notice, or other unanticipated problems at a facility could result in lengthy interruptions
in the availability of our on-demand software. Even with current and planned disaster recovery arrangements, our business could be harmed.
Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.
These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause customers to fail
to renew their subscriptions, any of which could materially adversely affect our business.

 If our software has outages or fails due
to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose customers, become subject
to service performance or warranty claims or incur significant costs.

 Our software and its underlying
infrastructure are inherently complex and may contain material defects or errors. We release modifications, updates, bug fixes and other
changes to our software several times per day, without traditional human-performed quality control reviews for each release. We have from
time to time found defects in our software and may discover additional defects in the future. We may not be able to detect and correct
defects or errors before customers begin to use our software or its applications. Consequently, we or our customers may discover defects
or errors after our software has been implemented.

 In the past, we have experienced
software outages caused by power supply failures. Although no data was lost due to the outages, our customers experienced disruptions
in using our software as our website stopped operating as well as our marketing campaigns, e-mail newsletters and other functions were
shut down. Notwithstanding, the outages were short in duration and we are not aware of any negative customer reviews and negative press
as a result of the outages. We believe there was no significant damage to our customer relationships, reputation and brand due to these
outages. We believe the outage did not compromise our ability to meet customer expectations, manage our software, or meet our operating
efficiency and profitability goals.

 Defects or errors could result
in product outages and could also cause inaccuracies in the data we collect and process for our customers, or even the loss, damage or
inadvertent release of such confidential data. We implement bug fixes and upgrades as part of our regular system maintenance, which may
lead to system downtime. Even if we are able to implement the bug fixes and upgrades in a timely manner, any history of product outages,
defects or inaccuracies in the data we collect for our customers, or the loss, damage or inadvertent release of confidential data could
cause our reputation to be harmed, and customers may elect not to purchase or renew their agreements with us. Furthermore, these issues
could subject us to service performance credits (whether offered by us or required by contract), warranty claims or increased insurance
costs. The costs associated with product outages, any material defects or errors in our software or other performance problems may be
substantial and could materially adversely affect our operating results.

 In addition, third-party apps
and features on our software may not meet the same quality standards that we apply to our own development efforts and, to the extent they
contain bugs, vulnerabilities or defects, they may create disruptions in our customers' use of our products, lead to data loss,
unauthorized access to customer data, damage our brand and reputation and affect the continued use of our products, any of which could
harm our business, results of operations and financial condition.

 We are dependent on the continued availability
of third-party data hosting and transmission services.

 A significant portion of our
operating cost is from our third-party data hosting and transmission services. If the costs for such services increase due to vendor consolidation,
regulation, contract renegotiation, or otherwise, we may not be able to increase the fees for our software or services to cover the changes.
As a result, our operating results may be significantly worse than forecasted.

 If we do not or cannot maintain the compatibility
of our software with third-party applications that our customers use in their businesses, our revenue will decline.

 A significant percentage of
our customers choose to integrate our software with certain capabilities provided by third-party application providers using APIs published
by these providers. The functionality and popularity of our software depends, in part, on our ability to integrate our software with third-party
applications and software, including content management systems, customer experience management systems, e-commerce, call center, analytics
and social media sites that our customers use and from which they obtain data. Third-party providers of applications and APIs may change
the features of their applications and software, restrict our access to their applications and software, or alter the terms governing
use of their applications and APIs and access to those applications and software in an adverse manner. Such changes could functionally
limit or terminate our ability to use these third-party applications and software in conjunction with our software, which could negatively
impact our offerings and harm our business. If we fail to integrate our software with new third-party applications and software that our
customers use for marketing, content management, customer experience management, or robotic process automation purposes, or fail to renew
existing relationships pursuant to which we currently provide such integration, we may not be able to offer the functionality that our
customers need, which would negatively impact our ability to generate new revenue or maintain existing revenue and adversely impact our
business.

 We rely on data provided by third parties,
the loss of which could limit the functionality of our software and disrupt our business.

 Select functionality of our
software depends on our ability to deliver data, including search engine results and social media updates, provided by unaffiliated third
parties, such as Facebook, Google, Linked In and Twitter. Some of this data is provided to us pursuant to third-party data sharing policies
and terms of use, under data sharing agreements by third-party providers or by customer consent. In the future, any of these third parties
could change its data sharing policies, including making them more restrictive, or alter its algorithms that determine the placement,
display, and accessibility of search results and social media updates, any of which could result in the loss of, or significant impairment
to, our ability to collect and provide useful data to our customers. These third parties could also interpret our, or our service providers',
data collection policies or practices as being inconsistent with their policies, which could result in the loss of our ability to collect
this data for our customers. Any such changes could impair our ability to deliver data to our customers and could adversely impact select
functionality of our software, impairing the return on investment that our customers derive from using our solution, as well as adversely
affecting our business and our ability to generate revenue. We also rely on the availability and accuracy of this data, and any changes
in the availability or accuracy of such data could adversely impact our business and results of operations and harm our reputation and
brand.

 Privacy concerns and end users' acceptance
of Internet behavior tracking may limit the applicability, use and adoption of our software.

 Privacy concerns may cause
end users to resist providing the personal data necessary to allow our customers to use our software effectively. We have implemented
various features intended to enable our customers to better protect end user privacy, but these measures may not alleviate all potential
privacy concerns and threats. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our software,
especially in certain industries that rely on sensitive personal information. Privacy advocacy groups and the technology and other industries
are considering various new, additional or different self-regulatory standards that may place additional burdens on us. The costs of compliance
with, and other burdens imposed by these groups' policies and actions may limit the use and adoption of our software and reduce
overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance or loss of any such action.

 If our or our customers' security
measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained, our software may be
perceived as not being secure, our customers may be harmed and may curtail or cease their use of our software, our reputation may be damaged
and we may incur significant liabilities.

 Our operations involve the
storage and transmission of data of our customers and their customers, including personally identifiable information. Our storage is typically
the sole source of record for portions of our customers' businesses and end user data, such as initial contact information and online
interactions. Security incidents could result in unauthorized access to, loss of or unauthorized disclosure of this information, litigation,
indemnity obligations and other possible liabilities, as well as negative publicity, which could damage our reputation, impair our sales
and harm our customers and our business. Cyber-attacks and other malicious Internet-based activity continue to increase generally, and
cloud-based software providers of marketing services have been targeted. If our security measures are compromised as a result of third-party
action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could
be damaged, our business may be harmed and we could incur significant liability. If third parties with whom we work, such as vendors or
developers, violate applicable laws, our security policies or our acceptable use policy, such violations may also put our customers'
information at risk and could in turn have an adverse effect on our business. In addition, if the security measures of our customers are
compromised, even without any actual compromise of our own systems, we may face negative publicity or reputational harm if our customers
or anyone else incorrectly attributes the blame for such security breaches to us or our systems. We may be unable to anticipate or prevent
techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not detected until
after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, we may become
more of a target for third parties seeking to compromise our security systems or gain unauthorized access to our customers' data.
Additionally, we provide extensive access to our database, which stores our customer data, to our development team to facilitate our rapid
pace of product development. If such access or our own operations cause the loss, damage or destruction of our customers' business
data, their sales, lead generation, support and other business operations may be permanently harmed. As a result, our customers may bring
claims against us for lost profits and other damages.

 Our internal computer systems
and those of our current and any future strategic collaborators, vendors, and other contractors or consultants are vulnerable to damage
from cyber-attacks, computer viruses, unauthorized access, natural disasters, cybersecurity threats, terrorism, war and telecommunication
and electrical failures. Cyber incidents have been increasing in sophistication and frequency and can include third parties gaining access
to employee or customer data using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks, ransomware,
card skimming code, and other deliberate attacks and attempts to gain unauthorized access. Because the techniques used by computer programmers
who may attempt to penetrate and sabotage our network security or our website change frequently and may not be recognized until launched
against a target, we may be unable to anticipate these techniques. Additionally, during the ongoing pandemic, and potentially beyond as
remote work and resource access expand, there is an increased risk that we may experience cybersecurity-related events such as phishing attacks, exploitation of any cybersecurity flaws that may exist, an increase in the number cybersecurity threats or attacks,
and other security challenges as a result of most of our employees and our service providers continuing to work remotely from non-corporate
managed networks.

 If we were to experience a
cyberattack and suffer interruptions in our operations, it could result in a material disruption of our development programs and our business
operations, whether due to a loss of our trade secrets or other proprietary information or other disruptions. These cyber-attacks could
be carried out by threat actors of all types (including but not limited to nation states, organized crime, other criminal enterprises,
individual actors and/or advanced persistent threat groups). In addition, we may experience intrusions on our physical premises by any
of these threat actors. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications,
or inappropriate disclosure of confidential or proprietary information, we could incur liability and our competitive position could be
harmed. Any breach, loss, or compromise of personal data may also subject us to civil fines and penalties, or claims for damages either
under foreign laws, and other relevant state and federal privacy laws.

 Many governments have enacted
laws requiring companies to notify individuals of data security incidents or unauthorized transfers involving certain types of personal
data. In addition, some of our customers contractually require notification of any data security compromise. Security compromises experienced
by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity. Any security
compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of
our security measures, negatively impact our ability to attract new customers, cause existing customers to elect not to renew their subscriptions
or subject us to third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our
business and operating results.

 There can be no assurance
that any limitations of liability provisions in our contracts for a security breach would be enforceable or adequate or would otherwise
protect us from any such liabilities or damages with respect to any particular claim. We also cannot be sure that our existing general
liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available
in sufficient amounts to cover one or more large claims, or that the insurer will not deny coverage as to any future claim. The successful
assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance
policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse
effect on our business, financial condition and operating results.

 Risks Related to Intellectual Property

 Our business may suffer if it is alleged
or determined that our technology infringes the intellectual property rights of others.

 The software industry is characterized
by the existence of a large number of patents, copyrights, trademarks, trade secrets and other intellectual and proprietary rights. Companies
in the software industry, including those in marketing software, are often required to defend against litigation claims based on allegations
of infringement or other violations of intellectual property rights. Many of our competitors and other industry participants have been
issued patents and/or have filed patent applications and may assert patent or other intellectual property rights within the industry.
Moreover, in recent years, individuals and groups that are non-practicing entities, commonly referred to as "patent trolls,"
have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements.
From time to time, we may receive threatening letters or notices or may be the subject of claims that our services and/or software and
underlying technology infringe or violate the intellectual property rights of others. Responding to such claims, regardless of their merit,
can be time consuming, costly to defend in litigation, divert management's attention and resources, damage our reputation and brand
and cause us to incur significant expenses. Our technologies may not be able to withstand any third-party claims or rights against their
use. Claims of intellectual property infringement might require us to redesign our application, delay releases, enter into costly settlement
or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling
our software. If we cannot or do not license the infringed technology on reasonable terms or at all, or substitute similar technology
from another source, our revenue and operating results could be adversely impacted. Additionally, our customers may not purchase our software
if they are concerned that they may infringe third-party intellectual property rights. The occurrence of any of these events may have
a material adverse effect on our business.

 In our subscription agreements
with our customers, we generally do not agree to indemnify our customers against any losses or costs incurred in connection with claims
by a third party alleging that a customer's use of our services or software infringes the intellectual property rights of the third
party. There can be no assurance, however, that customers will not assert a common law indemnity claim or that any existing limitations
of liability provisions in our contracts would be enforceable or adequate, or would otherwise protect us from any such liabilities or
damages with respect to any particular claim. Our customers who are accused of intellectual property infringement may in the future seek
indemnification from us under common law or other legal theories. If such claims are successful, or if we are required to indemnify or
defend our customers from these or other claims, these matters could be disruptive to our business and management and have a material
adverse effect on our business, operating results and financial condition.

 If we fail to adequately protect our proprietary
rights, in Japan and abroad, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and
incur costly litigation to protect our rights.

 Our success is dependent,
in part, upon protecting our proprietary technology. We rely on a combination of copyrights, trademarks, service marks, trade secret laws
and contractual restrictions to establish and protect our proprietary rights in our products and services. However, the steps we take
to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce
our rights or if we do not detect unauthorized use of our intellectual property. Any of our trademarks or other intellectual property
rights may be challenged by others or invalidated through administrative process or litigation. Furthermore, legal standards relating
to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may
be possible for unauthorized third parties to copy our technology and use information that we regard as proprietary to create products
and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure of
our offerings may be unenforceable under the laws of certain jurisdictions and foreign countries. In addition, the laws of some countries
do not protect proprietary rights to the same extent as the laws of Japan or the United States. To the extent we expand our international
activities, our exposure to unauthorized copying and use of our technology and proprietary information may increase.

 We enter into confidentiality
and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with
whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling
access to and distribution of our products and proprietary information. Further, these agreements may not prevent our competitors from
independently developing technologies that are substantially equivalent or superior to our software and offerings.

 We may be required to spend
significant resources to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our
intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming and distracting to management
and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual
property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual
property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation,
could delay further sales or the implementation of our software and offerings, impair the functionality of our software and offerings,
delay introductions of new features or enhancements, result in our substituting inferior or more costly technologies into our software
and offerings, or injure our reputation.

 Our use of "open-source" software
could negatively affect our ability to offer our software and subject us to possible litigation.

 A substantial portion of our
cloud-based software incorporates so-called "open source" software, and we may incorporate additional open-source software
in the future. Open-source software is generally freely accessible, usable and modifiable. Certain open-source licenses may, in certain
circumstances, require us to offer the components of our software that incorporate the open-source software for no cost, that we make
available source code for modifications or derivative works we create based upon, incorporating or using the open-source software and
that we license such modifications or derivative works under the terms of the particular open source license. If an author or other third
party that distributes open source software we use were to allege that we had not complied with the conditions of one or more of these
licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant
damages, including being enjoined from the offering of the components of our software that contained the open source software and being
required to comply with the foregoing conditions, which could disrupt our ability to offer the affected software. We could also be subject
to suits by parties claiming ownership of what we believe to be open-source software. Litigation could be costly for us to defend, have
a negative effect on our operating results and financial condition and require us to devote additional research and development resources
to change our products.

 Risks Related to Government Regulation

 We are subject to governmental regulation
and other legal obligations, particularly related to privacy, data protection and information security, and our actual or perceived failure
to comply with such obligations could harm our business. Compliance with such laws could also impair our efforts to maintain and expand
our customer base, and thereby decrease our revenue.

 Our handling of data is subject
to a variety of laws and regulations, including regulation by various government agencies, including the Ministry of Internal Affairs
and Communications, Personal Information Protection Commission Japan (the "PPCJ"), the U.S. Federal Trade Commission (the
"FTC"), and various state, local and foreign agencies. We collect personally identifiable information and other data from
our customers and leads. We also handle personally identifiable information about our customers' customers. We use this information
to provide services to our customers, to support, expand and improve our business. We may also share customers' personally identifiable
information with third parties as authorized by the customer or as described in our privacy policy.

 The Japanese and U.S. federal
and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use and storage of personal
information of individuals. In the United States, the FTC and many state attorneys general are applying federal and state consumer protection
laws, and in Japan, the PPCJ are issuing orders and guidelines based on the Personal Information Protection Act, as imposing standards
for the online collection, use and dissemination of data. However, these obligations may be interpreted and applied in a manner that is
inconsistent from one jurisdiction to another and may conflict with other requirements or our practices. Any failure or perceived failure
by us to comply with privacy or security laws, policies, legal obligations or industry standards or any security incident that results
in the unauthorized release or transfer of personally identifiable information or other customer data may result in governmental enforcement
actions, litigation, fines and penalties and/or adverse publicity, and could cause our customers to lose trust in us, which could have
an adverse effect on our reputation and business.

 Laws and regulations concerning
privacy, data protection and information security are evolving, and changes to such laws and regulations could require us to change features
of our software or restrict our customers' ability to collect and use email addresses, page viewing data and personal information,
which may reduce demand for our software. Our failure to comply with national, federal, state and international data privacy laws and
regulations could harm our ability to successfully operate our business and pursue our business goals. For example, California recently
enacted the California Consumer Privacy Act (the "CCPA") that, among other things, require covered companies to provide new
disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. The CCPA
recently was amended and it is not yet fully clear how the CCPA will be enforced and how certain of its requirements will be interpreted.
We cannot yet predict the impact of the CCPA on our business or operations, but it may require us to modify our data processing practices
and policies and to incur substantial costs and expenses in an effort to comply.

 Additionally, a new California
ballot initiative, the California Privacy Rights Act (the "CPRA") was passed in November 2020 and became effective starting
on January 1, 2023, the CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the
CCPA, including by expanding consumers' rights with respect to certain sensitive personal information. The CPRA also creates a new
state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The effects of the CCPA and the CPRA are
potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial
costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.

 Certain other state laws impose
similar privacy obligations and we also expect anticipate that more states to may enact legislation similar to the CCPA, which provides
consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal information
of such consumers. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation. Such proposed legislation,
if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment
of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance
costs and/or changes in business practices and policies.

 In addition, on March 2, 2021,
Virginia enacted the Consumer Data Protection Act (the "CDPA"), which become effective on January 1, 2023. The CDPA regulates
how businesses (which the CDPA refers to as "controllers") collect and share personal information. While the CDPA incorporates
many similar concepts of the CCPA and CPRA, there are also several key differences in the scope, application, and enforcement of the law
that will change the operational practices of controllers. The new law impacts how controllers collect and process personal sensitive
data, conduct data protection assessments, transfer personal data to affiliates, and respond to consumer rights requests.

 In addition, several foreign
jurisdictions, including the European Union and Canada, have regulations dealing with the collection and use of personal information obtained
from their residents, which are often more restrictive than those in the U.S. Laws and regulations in these jurisdictions apply broadly
to the collection, use, storage, disclosure and security of personal information that identifies or may be used to identify an individual.
In relevant part, these laws and regulations may affect our ability to engage in lead generation activities by imposing heightened requirements,
such as affirmative opt-ins or consent prior to sending commercial correspondence or engaging in electronic tracking activities. For example,
a recent ruling of the European Court of Justice in Case C-673/17 provides that a pre-checked opt-in is insufficient to constitute a valid
active consumer consent to cookie storage. In order to obtain "the adequate protection" status under the European Union's
General Data Protection Regulation (the "GDPR"), the Japanese laws and regulations in this area were amended as much as practically
possible by January 23, 2019 and thus the collection, use and transfer of personal data is similarly restricted.

 Within the European Union,
legislators have adopted the GDPR and which became effective in May 2018 which may impose additional obligations and risk upon our business
and which may increase substantially the penalties to which we could be subject in the event of any non-compliance. In addition, further
to the United Kingdom's exit from the European Union on January 31, 2020, the GDPR ceased to apply in the United Kingdom at the
end of the transition period on December 31, 2020. However, as of January 1, 2021, the United Kingdom's European Union (Withdrawal)
Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain United Kingdom specific amendments) into United
Kingdom law (the "UK GDPR"). The UK GDPR and the UK Data Protection Act 2018 set out the United Kingdom's data protection
regime, which is independent from but aligned to the European Union's data protection regime. Non-compliance with the UK GDPR may
result in monetary penalties of up to 17.5 million or 4% of worldwide revenue, whichever is higher. The United Kingdom, however,
is now regarded as a third country under the European Union's GDPR which means that transfers of personal data from the European
Economic Area to the United Kingdom will be restricted unless an appropriate safeguard, as recognized by the European Union's GDPR,
has been put in place. However, under the EU-UK Trade Cooperation Agreement it is lawful to transfer personal data between the United
Kingdom and the European Economic Area for a 6 month period following the end of the transition period, with a view to achieving an adequacy
decision from the European Commission during that period. Like the GDPR, the UK GDPR restricts personal data transfers outside the United
Kingdom to countries not regarded by the United Kingdom as providing adequate protection (this means that personal data transfers from
the United Kingdom to the European Economic Area remain free flowing).

 On July 12, 2016, the European
Commission adopted the EU-US Privacy Shield, a framework for the transfer of personal data from the European Union to the United States,
as a successor to the Safe Harbor framework that was invalidated by the European Court of Justice in October 2015. On July 16, 2020, the
European Court of Justice invalidated the EU–US Privacy Shield ruling that it failed to offer adequate protections for European
Union personal data transferred to the United States. The European Court of Justice, in the same decision, deemed that the Standard Contractual
Clauses ("SCCs"), approved by the European Commission for transfers of personal data between European Union controllers and
non-European Union processors are valid, however the European Court of Justice deemed that transfers made pursuant to the SCCs need to
be analyzed on a case-by-case basis to ensure the European Union's standards of data protection are met. Our customer agreements
include SCCs. However, as a result of this decision, companies may be required to adopt additional measures to accomplish transfers of
personal data to the United States and other third countries in compliance with the GDPR, and there continue to be concerns about whether
the SCCs will face additional challenges. Until the remaining legal uncertainties regarding how to legally continue these transfers are
settled, we will continue to face uncertainty as to whether our customers will be permitted to transfer personal data to the United States
for processing by us as part of our software services. If such data transfer to the United States is not permitted, it could have a negative
effect on our existing business and on our ability to attract and retain new customers. Our customers may view alternative data transfer
mechanisms as being too costly, too burdensome, too legally uncertain or otherwise objectionable and therefore decide not to do business
with us. For example, some of our customers or potential customers who do business in the European Union may require their vendors to
host all personal data within the European Union and may decide to do business with one of our competitors who hosts personal data within
the European Union instead of doing business with us.

 The regulatory framework governing
the collection, processing, storage, use and sharing of certain information, particularly financial and other personal information, is
rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations. It is possible that these laws may
be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our services
and software capabilities. Any failure or perceived failure by us, or any third parties with which we do business, to comply with our
posted privacy policies, changing consumer expectations, evolving laws, rules and regulations, industry standards, or contractual obligations
to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities
or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or
other liabilities. In addition, any such action, particularly to the extent we were found to be guilty of violations or otherwise liable
for damages, would damage our reputation and adversely affect our business, financial condition and results of operations.

 We publicly post documentation
regarding our practices concerning the collection, processing, use and disclosure of data. Although we endeavor to comply with our published
policies and documentation, we may at times fail to do so or be alleged to have failed to do so. Any failure or perceived failure by us
to comply with our privacy policies or any applicable privacy, security or data protection, information security or consumer-protection
related laws, regulations, orders or industry standards could expose us to costly litigation, significant awards, fines or judgments,
civil and/or criminal penalties or negative publicity, and could materially and adversely affect our business, financial condition and
results of operations. The publication of our privacy policy and other documentation that provide promises and assurances about privacy
and security can subject us to potential state and federal action if they are found to be deceptive, unfair, or misrepresentative of our
actual practices, which could, individually or in the aggregate, materially and adversely affect our business, financial condition and
results of operations.

 If our privacy or data security
measures fail to comply with current or future laws and regulations, we may be subject to claims, legal proceedings or other actions by
individuals or governmental authorities based on privacy or data protection regulations and our commitments to customers or others, as
well as negative publicity and a potential loss of business. Moreover, if future laws and regulations limit our subscribers' ability
to use and share personal information or our ability to store, process and share personal information, demand for our solutions could
decrease, our costs could increase, and our business, results of operations and financial condition could be harmed.

 We could face liability, or our reputation
might be harmed, as a result of the activities of our customers, the content of their websites or the data they store on our servers.

 As a provider of a cloud-based
inbound marketing, content management, customer experience management, and robotic process automation software, we may be subject to potential
liability for the activities of our customers on or in connection with the data they store on our servers. Although our customer terms
of use prohibit illegal use of our services by our customers and permit us to take down websites or take other appropriate actions for
illegal use, customers may nonetheless engage in prohibited activities or upload or store content with us in violation of applicable law
or the customer's own policies, which could subject us to liability or harm our reputation. Furthermore, customers may upload, store,
or use content on our software that may violate our policy on acceptable use which prohibits content that is threatening, abusive, harassing,
deceptive, false, misleading, vulgar, obscene, or indecent. While such content may not be illegal, use of our software for such content
could harm our reputation resulting in a loss of business.

 Several U.S. federal statutes
may apply to us with respect to various customer activities:

 The Digital Millennium Copyright Act of 1998 ("DMCA") provides recourse for owners of copyrighted material who believe that their rights under U.S. copyright law have been infringed on the Internet. Under the DMCA, based on our current business activity as an Internet service provider that does not own or control website content posted by our customers, we generally are not liable for infringing content posted by our customers or other third parties, provided that we follow the procedures for handling copyright infringement claims set forth in the DMCA. Generally, if we receive a proper notice from, or on behalf, of a copyright owner alleging infringement of copyrighted material located on websites we host, and we fail to expeditiously remove or disable access to the allegedly infringing material or otherwise fail to meet the requirements of the safe harbor provided by the DMCA, the copyright owner may seek to impose liability on us. Technical mistakes in complying with the detailed DMCA take-down procedures could subject us to liability for copyright infringement.

 The Communications Decency Act of 1996 (the "CDA") generally protects online service providers, such as us, from liability for certain activities of their customers, such as the posting of defamatory or obscene content, unless the online service provider is participating in the unlawful conduct. Under the CDA, we are generally not responsible for the customer-created content hosted on our servers. Consequently, we do not monitor hosted websites or prescreen the content placed by our customers on their sites. However, the CDA does not apply in foreign jurisdictions and we may nonetheless be brought into disputes between our customers and third parties which would require us to devote management time and resources to resolve such matters and any publicity from such matters could also have an adverse effect on our reputation and therefore our business.

 In addition to the CDA, the Securing the Protection of our Enduring and Established Constitutional Heritage Act (the "SPEECH Act") provides a statutory exception to the enforcement by a U.S. court of a foreign judgment for defamation under certain circumstances. Generally, the exception applies if the defamation law applied in the foreign court did not provide at least as much protection for freedom of speech and press as would be provided by the First Amendment of the U.S. Constitution or by the constitution and law of the state in which the U.S. court is located, or if no finding of defamation would be supported under the First Amendment of the U.S. Constitution or under the constitution and law of the state in which the U.S. court is located. Although the SPEECH Act may protect us from the enforcement of foreign judgments in the United States, it does not affect the enforceability of the judgment in the foreign country that issued the judgment. Given our international presence, we may therefore, nonetheless, have to defend against or comply with any foreign judgments made against us, which could take up substantial management time and resources and damage our reputation.

 In Japan, the statute which provides similar protection is the Provide Liability Limitation Act (the law No, 137 of 2001, as amended). This law provides for the limitation of liability on Internet service providers and the rights of persons whose copyrights or privacy have been infringed or who were subject to defamation on the Internet, to request disclosure of relevant information on the sender of such infringing materials. Under this law, based on our current business activity as an Internet service provider that does not own or control website content posted by our customers, we generally are not liable for infringing content posted by our customers or other third parties, provided that we meet the requirements under this law.

 Although these statutes and
case law in the United States have generally shielded us from liability for customer activities to date, court rulings in pending or future
litigation may narrow the scope of protection afforded us under these laws. In addition, laws governing these activities are unsettled
in many international jurisdictions, or may prove difficult or impossible for us to comply with in some international jurisdictions. Also,
notwithstanding the exculpatory language of these bodies of law, we may become involved in complaints and lawsuits which, even if ultimately
resolved in our favor, add cost to our doing business and may divert management's time and attention. Finally, other existing bodies
of law, including the criminal laws of various states, may be deemed to apply or new statutes or regulations may be adopted in the future,
any of which could expose us to further liability and increase our costs of doing business.

 The standards that private entities use
to regulate the use of email have in the past interfered with, and may in the future interfere with, the effectiveness of our software
and our ability to conduct business.

 Our customers rely on email
to communicate with their existing or prospective customers. Various private entities attempt to regulate the use of email for commercial
solicitation. These entities often advocate standards of conduct or practice that significantly exceed current legal requirements and
classify certain email solicitations that comply with current legal requirements as spam. Some of these entities maintain "blacklists"
of companies and individuals, and the websites, internet service providers and internet protocol addresses associated with those entities
or individuals that do not adhere to those standards of conduct or practices for commercial email solicitations that the blacklisting
entity believes are appropriate. If a company's internet protocol addresses are listed by a blacklisting entity, emails sent from
those addresses may be blocked if they are sent to any internet domain or internet address that subscribes to the blacklisting entity's
service or purchases its blacklist.

 From time to time, some of
our internet protocol addresses may become listed with one or more blacklisting entities due to the messaging practices of our customers.
There can be no guarantee that we will be able to successfully remove ourselves from those lists. Blacklisting of this type could interfere
with our ability to market our software and services and communicate with our customers and, because we fulfill email delivery on behalf
of our customers, could undermine the effectiveness of our customers' email marketing campaigns, all of which could have a material
negative impact on our business and results of operations.

 Existing federal, state and foreign laws
regulate Internet tracking software, the senders of commercial emails and text messages, website owners and other activities, and could
impact the use of our software and potentially subject us to regulatory enforcement or private litigation.

 Certain aspects of how our
customers utilize our software are subject to regulations in the United States, European Union and elsewhere. In recent years, U.S. and
European lawmakers and regulators have expressed concern over the use of third-party cookies or web beacons for online behavioral advertising,
and legislation adopted recently in the European Union requires informed consent for the placement of a cookie on a user's device.
Regulation of cookies and web beacons may lead to restrictions on our activities, such as efforts to understand users' Internet
usage. New and expanding "Do Not Track" regulations have recently been enacted or proposed that protect users' right
to choose whether or not to be tracked online. These regulations seek, among other things, to allow end users to have greater control
over the use of private information collected online, to forbid the collection or use of online information, to demand a business to comply
with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to third party websites.
These policies could have a significant impact on the operation of our software and could impair our attractiveness to customers, which
would harm our business.

 Many of our customers and
potential customers in the healthcare, financial services and other industries are subject to substantial regulation regarding their collection,
use and protection of data and may be the subject of further regulation in the future. Accordingly, these laws or significant new laws
or regulations or changes in, or repeals of, existing laws, regulations or governmental policy may change the way these customers do business
and may require us to implement additional features or offer additional contractual terms to satisfy customer and regulatory requirements,
or could cause the demand for and sales of our software to decrease and adversely impact our financial results.

 In addition, the Controlling
the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the "CAN-SPAM Act") establishes certain requirements for
commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the recipient
as to source or content. The CAN-SPAM Act, among other things, obligates the sender of commercial emails to provide recipients with the
ability to opt out of receiving future commercial emails from the sender. The ability of our customers' message recipients to opt
out of receiving commercial emails may minimize the effectiveness of the email components of our software. In addition, certain states
and foreign jurisdictions, such as Australia, Canada and the European Union, have enacted laws that regulate sending email, and some of
these laws are more restrictive than U.S. laws. For example, some foreign laws prohibit sending unsolicited email unless the recipient
has provided the sender advance consent to receipt of such email, or in other words has "opted-in" to receiving it. A requirement
that recipients opt into, or the ability of recipients to opt out of, receiving commercial emails may minimize the effectiveness of our
software.

 While these laws and regulations
generally govern our customers' use of our software, we may be subject to certain laws as a data processor on behalf of, or as a
business associate of, our customers. For example, laws and regulations governing the collection, use and disclosure of personal information
include, in the United States, rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance
Portability and Accountability Act of 1996, the Gramm-Leach-Bliley Act of 1999 and state breach notification laws, and internationally,
the Data Protection Directive in the European Union and the Federal Data Protection Act in Germany. If we were found to be in violation
of any of these laws or regulations as a result of government enforcement or private litigation, we could be subjected to civil and criminal
sanctions, including both monetary fines and injunctive action that could force us to change our business practices, all of which could
adversely affect our financial performance and significantly harm our reputation and our business.

 We are subject to governmental export controls
and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not
in full compliance with applicable laws.

 Our business activities are
subject to various restrictions under U.S. export controls and trade and economic sanctions laws, including the U.S. Commerce Department's
Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S. Treasury Department's Office
of Foreign Assets Control. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil
or criminal penalties and reputational harm. Obtaining the necessary authorizations, including any required license, for a particular
transaction may be time-consuming, is not guaranteed, and may result in the delay or loss of sales opportunities. Furthermore, U.S. export
control laws and economic sanctions laws prohibit certain transactions with U.S. embargoed or sanctioned countries, governments, persons
and entities. Although we take precautions to prevent transactions with U.S. sanction targets, the possibility exists that we could inadvertently
provide our solutions to persons prohibited by U.S. sanctions. This could result in negative consequences to us, including government
investigations, penalties and reputational harm.

 Risks Related to Taxation

 We may be subject to additional obligations
to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which could harm our business.

 State, local, and non-U.S.
jurisdictions have differing rules and regulations governing sales, use, value added, Digital Services Tax, and other taxes, and these
rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of such taxes
to our software in various jurisdictions is unclear. Further, these jurisdictions' rules regarding tax nexus are complex and vary
significantly. As a result, we could face the possibility of tax assessments and audits, and our liability for these taxes and associated
penalties could exceed our original estimates. A successful assertion that we should be collecting additional sales, use, value added
or other taxes in those jurisdictions where we have not historically done so and do not accrue for such taxes could result in substantial
tax liabilities and related penalties for past sales, discourage customers from purchasing our application or otherwise harm our business
and operating results.

 Changes in tax laws or regulations that
are applied adversely to us or our customers could increase the costs of our software and adversely impact our business.

 New income, sales, use or
other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Any new taxes could adversely affect our domestic
and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations
or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us or our customers to pay
additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines and/or penalties and
interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future
customers may elect not to continue or purchase our software in the future. Additionally, new, changed, modified or newly interpreted
or applied tax laws could increase our customers' and our compliance, operating and other costs, as well as the costs of our software.
Any or all of these events could adversely impact our business and financial performance. Furthermore, as our employees continue to work
remotely from geographic locations across the United States and internationally due to the pandemic and other reasons, we may become subject
to additional taxes and our compliance burdens with respect to the tax laws of additional jurisdictions may be increased.

 We are a multinational organization faced
with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.

 As a multinational organization,
we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can
be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable
tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could
have a material adverse effect on our liquidity and operating results. In addition, the authorities in these jurisdictions could review
our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements
apply to us or our subsidiary or assert that benefits of tax treaties are not available to us or our subsidiary, any of which could have
a material impact on us and the results of our operations.

 Related to Ownership of Our Common Stock

 There can be no assurance that we will be
able to comply with Nasdaq Capital Market's continued listing standards.

 Our common stock is listed
on Nasdaq Capital Market under the symbol "HTCR." There can be no assurance any broker will continue to be interested in trading
our stock. Therefore, it may be difficult to sell your shares of common stock if you desire or need to sell them. We cannot provide any
assurance that an active and liquid trading market in our common stock will develop or, if developed, that such market will continue.

 There is no guarantee that
we will be able to maintain a listing on the Nasdaq Capital Market for any period of time by perpetually satisfying Nasdaq's continued
listing requirements. Our failure to continue to meet these requirements may result in our common stock being delisted from Nasdaq Capital
Market.

 The market price of our common stock may
be volatile, and you could lose all or part of your investment.

 We cannot predict the prices
at which our common stock will trade. The market price of our common stock depends on a number of factors, including those described in
this "Risk Factors" section, many of which are beyond our control and may not be related to our operating performance. In
addition, the limited public float of our common stock will tend to increase the volatility of the trading price of our common stock.
These fluctuations could cause you to lose all or part of your investment in our common stock, since you might not be able to sell your
shares at or above the price you paid for them. Factors that could cause fluctuations in the market price of our common stock include,
but are not limited to, the following:

 actual or anticipated changes or fluctuations in our results of operations;

 the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

 announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships, or capital commitments;

 industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC;

 rumors and market speculation involving us or other companies in our industry;

 price and volume fluctuations in the overall stock market from time to time;

 changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

 the expiration of market stand-off or contractual lock-up agreements and sales of shares of our common stock by us or our stockholders;

 failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

 actual or anticipated developments in our business, or our competitors' businesses, or the competitive landscape generally;

 litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;

 developments or disputes concerning our intellectual property rights, our products, or third-party proprietary rights;

 announced or completed acquisitions of businesses or technologies by us or our competitors;

 new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

 any major changes in our management or our board of directors, particularly with respect to Mr. Lai;

 general economic conditions and slow or negative growth of our markets; and

 other events or factors, including those resulting from war, incidents of terrorism, or responses to these events.

 In addition, the stock market
in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance
of companies. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating
performance. In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company's
securities, securities class action litigation has often been instituted against that company. Securities litigation, if instituted against
us, could result in substantial costs and divert our management's attention and resources from our business. This could materially
adversely affect our business, financial condition, results of operations, and prospects.

 Our common stock may be subject to the "penny
stock" rules in the future. It may be more difficult to resell securities classified as "penny stock."

 Our common stock may be subject
to "penny stock" rules (generally defined as non-exchange traded stock with a per-share price below $5.00) in the future.
While our common stock is not currently considered "penny stock" since it is listed on Nasdaq, if we are unable to maintain
that listing and our common stock is no longer listed on Nasdaq, unless we maintain a per-share price above $5.00, our common stock will
become "penny stock." These rules impose additional sales practice requirements on broker-dealers that recommend the purchase
or sale of penny stocks to persons other than those who qualify as "established customers" or "accredited investors."
For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers
must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document
that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer
with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction,
furnish monthly account statements showing the market value of each penny stock held in the customer's account, provide a special
written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement
to the transaction.

 Legal remedies available to
an investor in "penny stocks" may include the following:

 If a "penny stock" is sold to the investor in violation
of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive
a refund of the investment.

 If a "penny stock" is sold to the investor in a
fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.

 These requirements may have
the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny
stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions
in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability
of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

 Many brokerage firms will
discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In
addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally
associated with these investments.

 For these reasons, penny stocks
may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will
not be classified as a "penny stock" in the future.

 If the benefits of any proposed acquisition
do not meet the expectations of investors, stockholders or financial analysts, the market price of our common stock may decline.

 If the benefits of any proposed
acquisition do not meet the expectations of investors or securities analysts, the market price of our common stock prior to the closing
of the proposed acquisition may decline. The market values of our common stock at the time of the proposed acquisition may vary significantly
from their prices on the date the acquisition target was identified.

 In addition, broad market
and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock market
in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance
of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable.
A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar
to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in
the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional
financing in the future.

 As an "emerging growth company"
under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements.

 We qualify as an "emerging
growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure
requirements. For so long as we are an emerging growth company, we will not be required to:

 have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

 comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors' report providing additional information about the audit and the consolidated financial statements (i.e., an auditor discussion and analysis);

 submit certain executive compensation matters to stockholder advisory votes, such as "say-on-pay" and "say-on-frequency"; and

 disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.

 In addition, Section 102 of
the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the
adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage
of the benefits of this extended transition period. Our consolidated financial statements may therefore not be comparable to those of
companies that comply with such new or revised accounting standards.

 We will remain an emerging
growth company until the earliest to occur of: (i) the end of the first fiscal year in which our annual gross revenue is $1.07 billion
or more; (ii) the end of the fiscal year in which the market value of our common shares that are held by non-affiliates is at least $700.0
million as of the last business day of our most recently completed second fiscal quarter; (iii) the date on which we have, during the
previous three-year period, issued more than $1.0 billion in non-convertible debt; and (iv) the end of the fiscal year during which the
fifth anniversary of our initial public offering (which closed on February 14, 2022) occurs.

 Until such time, however,
we cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find
our securities less attractive as a result, there may be a less active trading market for our securities and the price of our securities
may be more volatile.

 If we are unable to implement and maintain
effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our
financial reports and have an adverse effect on the value of our securities.

 As a public company, we are
required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Further,
we will be required to report any changes in internal controls on a quarterly basis. In addition, we are required to furnish a report
by management on the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We
will design, implement, and test the internal control over financial reporting required to comply with these obligations. If we identify
material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404
in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public
accounting firm is unable to express an opinion as to the effectiveness of its internal control over financial reporting when required,
investors may lose confidence in the accuracy and completeness of our financial reports and the value of our securities could be negatively
affected. We also could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial
and management resources.

 As an emerging growth company, our auditor
is not required to attest to the effectiveness of our internal controls.

 Our independent registered
public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting while we are an
emerging growth company. This means that the effectiveness of our financial operations may differ from our peer companies in that they
may be required to obtain independent registered public accounting firm attestations as to the effectiveness of their internal controls
over financial reporting and we are not. While our management will be required to attest to internal control over financial reporting
and we will be required to detail changes to our internal controls on a quarterly basis, we cannot provide assurance that the independent
registered public accounting firm's review process in assessing the effectiveness of our internal controls over financial reporting,
if obtained, would not find one or more material weaknesses or significant deficiencies. Further, once we cease to be an emerging growth
company and cease to be a smaller reporting company (as described below), we will be subject to independent registered public accounting
firm attestation regarding the effectiveness of our internal controls over financial reporting. Even if management finds such controls
to be effective, our independent registered public accounting firm may decline to attest to the effectiveness of such internal controls
and issue a qualified report.

 We believe we will be considered a smaller
reporting company and will be exempt from certain disclosure requirements, which could make our common stock less attractive to potential
investors.

 Rule 12b-2 of the Exchange
Act defines a "smaller reporting company" as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned
subsidiary of a parent that is not a smaller reporting company and that:

 had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or

 in the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or

 in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero or whose public float was less than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available.

 As a smaller reporting company,
we are not be required to, and may not, include a Compensation Discussion and Analysis section in our proxy statements; we will provide
only two years of financial statements; and we need not provide the table of selected financial data. We also will have other "scaled"
disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our common
stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.

 We incur significant costs as a result of
operating as a public company, and our management is required to devote substantial time to new compliance initiatives.

 As a public company, we incur
significant legal, accounting and other expenses that we did not previously incur as a private company. In addition, the Sarbanes-Oxley
Act has imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and
financial controls. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover,
these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities
more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the
timing of such costs.

 The Sarbanes-Oxley Act requires,
among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular,
we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report
on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition,
will be required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial
reporting the later of our second annual report on Form 10-K or the first annual report on Form 10-K following the date on which we are
no longer an emerging growth company or a smaller reporting company. Our compliance with Section 404 of the Sarbanes-Oxley Act will require
that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group,
and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting
knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered
public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses,
the value of our securities could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities,
which would require additional financial and management resources.

 Our ability to successfully
implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We
expect that we will need to continue to improve existing, and implement new operational and financial systems, procedures and controls
to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures
or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is
effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley
Act. This, in turn, could have an adverse impact on value of our securities, and could adversely affect our ability to access the capital
markets.

 Anti-takeover provisions contained in our
certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

 The Company's certificate
of incorporation and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our
management without the consent of our board of directors. These provisions include:

 no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

 the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

 the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

 limiting the liability of, and providing indemnification to, our directors and officers;

 providing that a special meeting of the stockholders may only be called by a majority of the board of directors;

 providing that directors may be removed prior to the expiration of their terms by the affirmative vote of the holders of not less than 2/3 of the voting power of the issued and outstanding stock entitled to vote; and

 advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of the Company.

 These provisions, alone or
together, could delay hostile takeovers and changes in control of the Company or changes in our board of directors and management.

 Any provision of our certificate
of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity
for our security holders to receive a premium for their securities and could also affect the price that some investors are willing to
pay for our securities.

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM 1C. CYBERSECURITY

 Cybersecurity Risk
Management and Strategy

 The
cybersecurity risk management program, processes and strategy described in this section are limited to the personal and business information
belonging to or maintained by the Company (collectively, "Confidential Information"), our own third-party critical systems
and services supporting or used by the Company (collectively, "Critical Systems"), and service providers.

 We
will develop and implement a company-wide cybersecurity risk management program intended to protect the confidentiality, integrity,
and availability of our Confidential Information and Critical Systems. Our cybersecurity risk management program will be integrated
into our overall enterprise risk management program and includes a cybersecurity incident response plan.

 Our
cybersecurity risk management program shall include:

 risk assessments designed to help identify material cybersecurity risks to our Confidential Information, Critical Systems and the broader enterprise IT environment;

 a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

 cybersecurity awareness and spear-phishing resistance training of our employees, and senior management;

 a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and

 a vendor management policy for service providers.

 We
have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially
affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial
condition. We face risks from cybersecurity threats that, if realized, could have a material adverse effect on us including
an adverse effect on our business, financial condition and results of operations.

 Cybersecurity Governance

 Our
executive management team, along with our managed information technology service provider, is responsible for assessing and managing risks
from cybersecurity threats to the Company, including our Confidential Information and Critical Systems. The team has primary responsibility
for our overall cybersecurity risk management program. Our management team works closely with our information technology service provider.

 Our
management team meets with our information technology service provider periodically to discuss then-current cybersecurity issues, which
may include efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, including threat
intelligence and other information obtained from governmental, public or private sources, and external service providers engaged by us;
and alerts and reports produced by security tools deployed in the information technology environment including a spear-phishing report.

 Our
Board considers cybersecurity risk as part of its risk oversight function and oversight of cybersecurity and other information technology
risks.

 Our
Board oversees management's implementation of our cybersecurity risk management program. Our executive management team is responsible
for updating the Board, as necessary, regarding significant cybersecurity incidents.

 Our
Board shall also receive period reports from management on our cybersecurity risks and cybersecurity risk management program.

 ITEM 2. PROPERTIES

 Our corporate headquarters are located at 1-2-33, Higashigotanda, Shinagawa-ku,
Tokyo, Japan, where we lease approximately 7,863 rentable square feet of office space from an unaffiliated third party. This lease has
an original term ending in September 2025 with an automatic two-year renewal option. Terms of the office lease provide for a base rent
payment of $21,769 per month and a share of sales taxes of $2,177 per month. In February 2024, we terminated the lease of our previous
Okinawa branch office located at 2-4-35, Mekaru, Naha-city, Okinawa, Japan. We subsequently entered into a new lease agreement for our
current Okinawa branch office at 381-1, Asato, Naha-city, Okinawa, Japan, which we lease from an unaffiliated third party. This lease
has an original term ending in August 2024, with automatic three-month renewals thereafter. Terms of the Okinawa office lease provide
for a base rent payment of $915 per month and a share of sales taxes of $92 per month. We believe that these facilities are adequate for
our current and near-term future needs.

 The Japan branch office of HeartCore Financial, Inc. are located at
3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo, Japan, where we lease approximately 1,379 rentable square feet of office space from an unaffiliated
third party. This lease has lease term ending in June 2026. Terms of the office lease provide for a base rent payment of $8,743 per month
and a share of sales taxes of $874 per month.

 The office of Sigmaways, Inc. are located at 39737 Paseo Padre PKWY,
Suite C1 Fremont, CA, the United States, where we lease approximately 765 square feet of office space from an unaffiliated third party
with lease term ending in December 2025. Terms of the office lease provide for a base rent payment of $1,868 per month.

 The office of HeartCore Luvina Vietnam Company Limited is located at
Software Park Building, No.2 Quang Trung, Hai Chau district, Da Nang City, Vietnam, where we lease approximately 915 square feet of office
space from an unaffiliated third party with lease term ending in January 2026. Terms of the office lease provide for a quarterly base
rent payment of $2,516 per month.

 ITEM 3. LEGAL PROCEEDINGS

 From time to time, we are
involved in various legal proceedings arising from the normal course of business activities. 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. Defending
such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation
cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and
settlement costs, diversion of management resources, and other factors.

 ITEM 4. MINE SAFETY DISCLOSURES

 ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market Information

 Our common stock is listed the Nasdaq Capital Market and its stock
symbol is "HTCR." The closing price of our common stock on Nasdaq on March 28, 2025 was $0.8573.

 Holders

 As of December 31, 2024, there were 21,937,987 shares of common stock
issued and outstanding, and we had approximately 32 holders of record of our common stock. The number of record holders does not include
beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.

 Dividends

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

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

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

 Securities Authorized for Issuance Under
Equity Compensation Plans

 Our Board of Directors and
stockholders approved the 2021 Equity Incentive Plan (the "2021 Plan") on August 6, 2021. Under the 2021 Plan, 2,400,000 shares
of common stock are authorized for issuance to employees, directors and independent contractors (except those performing services in connection
with the offer or sale of the Company's securities in a capital raising transaction or promoting or maintaining a market for the
Company's securities) of the Company or its subsidiary. The 2021 Plan authorizes equity-based and cash-based incentives for participants.
As of December 31, 2024, there were 4,330 shares authorized for issuance under the 2021 Plan.

 On December 25, 2021, the
Company awarded options to purchase 1,534,500 shares of common stock pursuant to our 2021 Plan at an exercise price of $2.50 per share
to various officers, directors, employees and consultants of the Company. The options vest on each annual anniversary of the date of issuance,
in an amount equal to 25% of the applicable shares of common stock, subject to the terms and conditions of the 2021 Plan and the option
award agreements pursuant to which the options were awarded.

 On February 9, 2022, the Company
entered into executive employment agreements with five executives and granted 85,820 restricted stock units pursuant to the 2021 Plan.
These common stock 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.

 On August 2, 2022, the Company
awarded options to purchase 2,000 shares of common stock pursuant to our 2021 Plan at an exercise price of $2.94 per share to an employee.
The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common stock,
subject to the terms and conditions of the 2021 Plan and the option award agreements pursuant to which the options were awarded.

 On
February 3, 2023, the Company granted stock options to an employee to purchase 100,000 common shares at an exercise price of $1.17 per
share throughout a period of ten years from the grant date. The stock options vested 50% on the grant date and February 1, 2024, respectively.

 On
March 22, 2023, the Company granted 671,350 shares of common shares to the employees and service providers of Sigmaways.

 On August 1, 2023, the Board
approved, and proposed for stockholder approval, the 2023 Equity Incentive Plan (the "2023 Plan"). The shareholders approved
the 2023 Plan at the Annual Shareholder's meeting on September 29, 2023. The 2023 Plan provides for various stock-based incentive
awards, including incentive stock options ("ISOs") and non-qualified stock options ("NQSOs"), stock appreciation
rights ("SARs"), restricted stock and restricted stock units ("RSUs"), and other equity-based or cash-based awards.
As of December 31, 2024, the Company has not granted any stock-based compensation awards to employees, including officers, or non-employee
directors pursuant to the 2023 Plan.

 On August 25, 2023, the Company
awarded options to purchase 2,000 shares of common stock pursuant to our 2021 Plan at an exercise price of $1.10 per share to an employee.
The options vest on each annual anniversary of the date of issuance, in an amount equal to 25% of the applicable shares of common stock,
subject to the terms and conditions of the 2021 Plan and the option award agreements pursuant to which the options were awarded.

 On October 1, 2024, the Company issued an aggregate 69,653 shares of common stock pursuant to the 2023 Plan. The common stock was fully
vested upon issuance.

 Purchases of Equity Securities by the Issuer

 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 at any time.

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

 On October 18, 2022, the Board
of Directors approved to retire all the repurchased shares. As of December 31, 2022, all of the 1,349,390 treasury shares have been retired.

 Transfer Agent and Registrar

 The Company's transfer
agent is Transhare Corporation. The transfer agent's address is Bayside Center 1, 17755 US Highway 19 N, Suite 140, Clearwater,
Florida 33764, and its telephone number is (303) 662-1112.

 ITEM 6. RESERVED

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 Special Note Regarding Forward-Looking Statements

 All statements other than
statements of historical fact included in this annual report, including, without limitation, statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business
strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this annual report,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company's
management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors
detailed in our filings with the SEC.

 The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this annual report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties. References herein to "we," "us"
or the "Company" refers to HeartCore Enterprises, Inc. and its consolidated subsidiaries, including HeartCore Co., Ltd. ("HeartCore
Co."), HeartCore Capital Advisors, Inc. ("HeartCore Capital Advisors"), HeartCore Financial, Inc. ("HeartCore
Financial") and its branch office in Japan, HeartCore Luvina Vietnam Company Limited ("HeartCore Luvina"), and Sigmaways,
Inc. ("Sigmaways") and its subsidiaries. HeartCore Capital Advisors was merged into HeartCore Japan in January 2024. HeartCore
Luvina was incorporated in the fourth quarter 2023 and started to operate in February 2024.

 Business Overview

 We are a leading software development company based in Tokyo, Japan.
We provide software through two business units. The first business unit, our CX division, includes a customer experience management business
(the "CXM Platform") that has been in existence for 15 years. Our CXM Platform includes marketing, sales, service and content
management systems, as well as other tools and integrations, that enable companies to attract and engage customers throughout the customer
experience. We also provide education, services and support to help customers be successful with our CXM Platform.

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

 We have made significant investments
in our sales and marketing efforts globally. As of December 31, 2024, our sales and marketing organization was comprised of 12 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 December 31, 2024, our combined business units (customer experience management business unit and digital transformation business unit)
had 982 total customers in Japan, of which 724, or 73.7%, were paying customers, and 26 total customers outside Japan, of which 1, or
0.1%, was a paying customer. Our 280 non-paying customers were originally paying customers that utilized our paid services but now use
a free version of the CXM Platform. There is the potential for non-paying customers to become paying customers again if and when they
start utilizing our paid services again.

 During 2022, we started the GO IPO business, which supports Japanese
companies listing on Nasdaq and NYSE in the United States. As of December 31, 2024, we have entered into consulting agreements with 14
companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting fee that ranges from
$380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies
that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share.

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

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

 In the first quarter of 2023, we formed HeartCore Financial in the
U.S. and HeartCore Capital Advisors as part of our Go IPO consulting business. In the fourth quarter of 2023, we formed HeartCore Luvina
in Vietnam, which is engaged in the business of software development.

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

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

 For the fiscal years ended December 31, 2024 and 2023, we generated
revenues of $30,407,229 and $21,845,830, respectively, and reported net loss of $5,212,900 and $4,876,700, respectively, and cash flows
used in operating activities of $4,774,971 and $4,331,209, respectively. As noted in our consolidated financial statements, as of December
31, 2024, we had an accumulated deficit of $16,244,843.

 Key Factors that Affect Our Results of Operations

 We believe the following key
factors may affect our financial condition and results of operations:

 Our Ability to Strength Our Competitive
Advantages

 Our mission is to be at the
forefront of innovation and thought leadership in enterprise business automation, analyzing enterprise users' desktops and mission-critical
systems, and creating end-to-end software that provides business automation based on the results of that analysis and further simulating
the numbers. We create end-to-end software that provides business automation. Our customers use our software across their organizations
so that they can run their operations in a more fully automated manner. Our ability to successfully implement the automation in our software
greatly affects our profitability.

 Our Ability to Expand International Market

 We maintain a physical sales
presence in the Japanese software market. Using our global go-to-market strategy we believe we have established a diversified revenue
and customer base. We will continue to develop our global operation. International expansion over the long term represents a significant
opportunity and we plan to continue to invest in growing our presence internationally, both through expanding our sales and marketing
efforts and leveraging channel and other ecosystem partners.

 Our Ability to Control Costs and Expenses
and Improve Our Operating Efficiency

 Our business growth is dependent
on our ability to attract and retain qualified and productive employees, identify business opportunities, secure new contracts with customers
and our ability to control costs and expenses to improve our operating efficiency. Our software costs (mostly including purchased software
license, salaries and welfare, and outsourcing expenses) have a direct impact on our profitability. Our success is dependent, in part,
on our ability to reduce our exposure to increase in those costs through a variety of ways, while maintaining and improving margins and
market share. In addition, our staffing costs (including salaries and welfare) and administrative expenses also have a direct impact on
our profitability. Our ability to drive the productivity of our staff and enhance our operating efficiency affects our profitability.

 Our Ability to Manage and Retain Customer
Renewals

 Our ability to manage and
retain customer renewals is vital to our expansion of renewals in our customer base and continuous and growing revenue. By achieving and
maintaining high retention of customer renewals, we are able to cover most of our expenses from the revenue generated from such retained
customer renewals. In order to achieve and maintain a high retention of customer renewals, we engage in the following actions: (i) we
conduct annual surveys of existing customers; (ii) we conduct Net Promoter Scoring (NPS), whereby we measure customer loyalty and satisfaction
by asking our customers how likely they are to recommend our product and service to others; and (iii) we have sales representatives visit
important customers to increase customer retention. Our ability to expand within our customer base is demonstrated by our net retention
rate, which represents the rate of net expansion of annualized renewal run-rate from existing customers over the last 12 months.

 As of December 31, 2024, our
combined business units (customer experience management business unit and digital transformation business unit) had 982 total customers
in Japan, of which 724, or 73.7%, were paying customers and 26 total customers outside Japan, of which 1, or 0.1%, was a paying customer.
Our 280 non-paying customers were originally paying customers that utilized our paid services but now use a free version of the CXM Platform. Our
net retention rate for our paying customers of our customer experience management business unit (CMS business) was 95%, 88%, and 92% as
of December 31, 2024, 2023, and 2022, respectively. There is an insignificant impact (below 10%) on our net retention rate as to former
paying customers of our CMS business utilizing the free version of your CXM Platform.

 A Severe or Prolonged Slowdown in the Global
and Japan Economy Could Materially and Adversely Affect Our Business and Our Financial Condition

 In recent years, the economic
indicators in Japan have shown mixed signs, and future growth of the Japanese economy is subject to many factors beyond our control. The
current administration of Prime Minster Shigeru Ishiba and the former administration of Prime Minister Fumio Kishida have introduced policies
to combat deflation and promote economic growth. In addition, the Bank of Japan introduced a plan for quantitative and qualitative monetary
easing in April 2013 and announced a negative interest rate policy in January 2016. However, the long-term impact of these policy initiatives
on Japan's economy remains uncertain. The impact of Brexit on the Japanese economy and on the value of the Japanese yen against
currencies of other countries in which we generate revenue, in both the short and long term, is also uncertain. In addition, an increase
in the consumption tax rate, which took place in April 2014 with a further increase in October 2019, may also adversely impact the Japanese
economy, potentially impacting consumer spending, and advertising spending by businesses. Any future deterioration of the Japanese or
global economy may result in a decline in consumption that would have a negative impact on demand for our products and their prices.

 GO IPO consulting services
business may experience a decrease in clients due to external factors such as the slowdown of the Japanese economy. In addition, an increase
in the number of competitors may have an impact on the business.

 Results of Operations

 Comparison of Results of Operations for the
Fiscal Years Ended December 31, 2024 and 2023

 The following table summarizes
our operating results as reflected in our statements of operations for the fiscal years ended December 31, 2024 and 2023, respectively,
and provides information regarding the dollar and percentage increase or (decrease) during such periods.

 2024

 2023

 % of

 % of

 %

 $

 100.0
 %

 $

 100.0
 %

 $
 8,561,399

 39.2
 %

 Cost of revenues

 12,579,359

 41.4
 %

 13,778,416

 63.1
 %

 (1,199,057
)

 -8.7
 %

 Gross profit

 17,827,870

 58.6
 %

 8,067,414

 36.9
 %

 9,760,456

 121.0
 %

 Operating expenses:

 4.1
 %

 6.9
 %

 (260,879
)

 -17.2
 %

 28.4
 %

 44.2
 %

 (1,027,794
)

 -10.6
 %

 2.4
 %

 4.7
 %

 (289,557
)

 -28.4
 %

 12.8
 %

 -

 -

 100.0
 %

 10.7
 %

 -

 -

 100.0
 %

 Total operating expenses

 17,763,105

 58.4
 %

 12,186,769

 55.8
 %

 5,576,336

 45.8
 %

 Income (loss) from operations

 64,765

 0.2
 %

 (4,119,355
)

 -18.9
 %

 4,184,120

 -101.6
 %

 Other expenses

 (5,414,487
)

 -17.8
 %

 (891,009
)

 -4.0
 %

 (4,523,478
)

 507.7
 %

 Loss before income tax benefit

 (5,349,722
)

 -17.6
 %

 (5,010,364
)

 -22.9
 %

 (339,358
)

 6.8
 %

 Income tax benefit

 (136,822
)

 -0.5
 %

 (133,664
)

 -0.6
 %

 (3,158
)

 2.4
 %

 (5,212,900
)

 -17.1
 %

 (4,876,700
)

 -22.3
 %

 (336,200
)

 6.9
 %

 Less: net loss attributable to non-controlling interests

 (3,731,526
)

 -12.2
 %

 (686,810
)

 -3.1
 %

 (3,044,716
)

 443.3
 %

 Net loss attributable to HeartCore Enterprises, Inc.

 $
 (1,481,374
)

 -4.9
 %

 $
 (4,189,890
)

 -19.2
 %

 $
 2,708,516

 -64.6
 %

 2024

 2023

 %

 %

 %

 Revenues from on-premise software

 $
 2,700,769

 8.9
 %

 $
 1,586,218

 7.3
 %

 $
 1,114,551

 70.3
 %

 Revenues from maintenance and support services

 2,625,992

 8.6
 %

 2,646,148

 12.1
 %

 (20,156
)

 -0.8
 %

 Revenues from software as a service ("SaaS")

 564,292

 1.9
 %

 635,927

 2.9
 %

 (71,635
)

 -11.3
 %

 Revenues from software development and other miscellaneous services

 1,925,117

 6.3
 %

 1,980,979

 9.1
 %

 (55,862
)

 -2.8
 %

 Revenues from customized software development and services

 7,854,285

 25.8
 %

 8,784,239

 40.2
 %

 (929,954
)

 -10.6
 %

 Revenues from consulting services

 14,736,774

 48.5
 %

 6,212,319

 28.4
 %

 8,524,455

 137.2
 %

 100.0
 %

 100.0
 %

 8,561,399

 39.2
 %

 Cost of revenues

 Costs of on-premise software

 1,608,105

 12.8
 %

 1,485,769

 10.8
 %

 122,336

 8.2
 %

 Costs of maintenance and support services

 692,026

 5.5
 %

 1,024,059

 7.4
 %

 (332,033
)

 -32.4
 %

 Costs of software as a service ("SaaS")

 415,835

 3.3
 %

 366,277

 2.7
 %

 49,558

 13.5
 %

 Costs of software development and other miscellaneous services

 1,635,953

 13.0
 %

 1,655,461

 12.0
 %

 (19,508
)

 -1.2
 %

 Costs of customized software development and services

 7,285,674

 57.9
 %

 7,219,892

 52.4
 %

 65,782

 0.9
 %

 Costs of consulting services

 941,766

 7.5
 %

 2,026,958

 14.7
 %

 (1,085,192
)

 -53.5
 %

 Total cost of revenues

 12,579,359

 100.0
 %

 13,778,416

 100.0
 %

 (1,199,057
)

 -8.7
 %

 Gross profit

 On-premise software

 1,092,664

 6.2
 %

 100,449

 1.3
 %

 992,215

 987.8
 %

 Maintenance and support services

 1,933,966

 10.8
 %

 1,622,089

 20.2
 %

 311,877

 19.2
 %

 Software as a service ("SaaS")

 148,457

 0.8
 %

 269,650

 3.3
 %

 (121,193
)

 -44.9
 %

 Software development and other miscellaneous services

 289,164

 1.6
 %

 325,518

 4.0
 %

 (36,354
)

 -11.2
 %

 Customized software development and services

 568,611

 3.2
 %

 1,564,347

 19.4
 %

 (995,736
)

 -63.7
 %

 Consulting services

 13,795,008

 77.4
 %

 4,185,361

 51.8
 %

 9,609,647

 229.6
 %

 Total gross profit

 $
 17,827,870

 100.0
 %

 $
 8,067,414

 100.0
 %

 $
 9,760,456

 121.0
 %

 Our total revenues increased by $8,561,399, or 39.2%, to $30,407,229
for the year ended December 31, 2024 from $21,845,830 for the year ended December 31, 2023, mainly
attributable to (i) the increased revenue of $8,524,455 from GO IPO consulting services as two of the Company's GO IPO consulting
customers successfully listed on the Nasdaq in the fiscal year 2024 and the Company recognized revenues from noncash consideration in
the form of warrants and ordinary shares from the consulting services customers of $13.5 million, while only $3.8 million of revenue recognized
from noncash consideration in the form of warrants in the fiscal year 2023; and (ii) an increase of $1,114,551 in on-premise software
revenue as we entered into multiple long-term license contracts with relatively large contract price and revenue amount in the fiscal
year 2024; and offset by (iii) a decrease of $929,954 in revenue from customized software development and services due to intense market
competition and we obtained fewer customer orders in the fiscal year 2024.

 Cost of Revenues

 Our total costs of revenues decreased by $1,199,057, or 8.7%, to $12,579,359
for the year ended December 31, 2024 from $13,778,416 for the year ended December 31, 2023, mainly
attributable to (i) a decrease of $1,085,192 in the cost of GO IPO consulting services in line with the decrease in revenues of GO IPO
consulting services by excluding the amount recognized from noncash consideration; and (ii) a decrease of $332,033 in cost of maintenance
and support services as we gradually used internal resources to provide the services in 2024, which
was less costly when compared with using outsourcing resources.

 Gross Profit

 Our total gross profit
increased by $9,760,456, or 121.0%, to $17,827,870 for the year ended December 31, 2024 from $8,067,414 for the year ended December
31, 2023, mainly attributable to an increase in gross profit of $9,609,647 from GO IPO
consulting services, as we recognized greater revenues from noncash consideration from IPO customers upon their IPO effectiveness
with no associated costs in the fiscal year 2024 than that recognized in 2023.

 For the reasons discussed
above, our overall gross profit margin increased by 21.7% to 58.6% for the year ended December 31, 2024 from 36.9% in the fiscal year
2023.

 Operating Expenses

 The following table sets forth
the breakdown of our operating expenses for the fiscal years ended December 31, 2024 and 2023:

 2024

 2023

 % of

 % of

 % of

 $

 100.0
 %

 $

 100.0
 %

 $
 8,561,399

 39.2
 %

 Operating expenses:

 4.1
 %

 6.9
 %

 (260,879
)

 -17.2
 %

 28.4
 %

 44.2
 %

 (1,027,794
)

 -10.6
 %

 2.4
 %

 4.7
 %

 (289,557
)

 -28.4
 %

 12.8
 %

 -

 -

 100.0
 %

 10.7
 %

 -

 -

 100.0
 %

 Total operating expenses

 $
 17,763,105

 58.4
 %

 $
 12,186,769

 55.8
 %

 $
 5,576,336

 45.8
 %

 Selling Expenses

 Our selling expenses primarily include advertising expenses, sales
salaries, commissions, and welfare, sales promotion expenses, referral expense, and stock-based compensation.

 2024

 2023

 %

 %

 %

 Advertising expenses

 $
 473,132

 37.7
 %

 $
 832,491

 54.9
 %

 $
 (359,359
)

 -43.2
 %

 Sales salaries, commissions and welfare

 584,699

 46.6
 %

 119,736

 7.9
 %

 464,963

 388.3
 %

 Sales promotion expenses

 2,924

 0.2
 %

 2,931

 0.2
 %

 (7
)

 -0.2
 %

 Referral expenses

 50,000

 4.0
 %

 -

 -

 50,000

 100.0
 %

 144,613

 11.5
 %

 561,089

 37.0
 %

 (416,476
)

 -74.2
 %

 Total selling expenses

 $

 100.0
 %

 $

 100.0
 %

 $
 (260,879
)

 -17.2
 %

 Our selling expenses decreased
by $260,879, or 17.2%, to $1,255,368 for the year ended December 31, 2024 from $1,516,247 in the fiscal year 2023, primarily attributable
to (i) a decrease of $359,359 in advertising expenses due to less advertising activities in the current year, (ii) a decrease of $416,476
in stock-based compensation, as the Company granted restricted common stocks which immediately vested upon issuance and stock options
to employees of Sigmaways in 2023, and there was no such amount restricted common stocks and stock options granted in the current year,
the decrease is also contributed by the graded vesting method of stock options for those issued in previous years, which generally more
stock-based compensation will recognize in the early stage, offset by (iii) the increase of $464,963 in sales salaries, commissions and
welfare as the Company shifted marketing strategy in the fiscal year 2024.

 As a percentage of revenues,
our selling expenses accounted for 4.1% and 6.9% of our total revenues for the years ended December 31, 2024 and 2023, respectively.

 General and Administrative Expenses

 Our general and administrative expenses primarily consist of employee
salaries and welfare expenses, consulting and professional service fees, depreciation and amortization expenses, rent expense, office,
utility and other expenses, travel and entertainment expenses, and stock-based compensation.

 2024

 2023

 %

 %

 %

 Salaries and welfare expenses

 $
 3,707,501

 43.0
 %

 $
 4,532,749

 47.0
 %

 $
 (825,248
)

 -18.2
 %

 Consulting and professional service fees

 1,999,844

 23.2
 %

 1,520,176

 15.8
 %

 479,668

 31.6
 %

 Depreciation and amortization expenses

 737,541

 8.6
 %

 666,721

 6.9
 %

 70,820

 10.6
 %

 Rent expense

 252,330

 2.9
 %

 302,844

 3.1
 %

 (50,514
)

 -16.7
 %

 Office, utility and other expenses

 1,434,740

 16.6
 %

 1,505,981

 15.6
 %

 (71,241
)

 -4.7
 %

 Travel and entertainment expenses

 285,867

 3.3
 %

 359,105

 3.7
 %

 (73,238
)

 -20.4
 %

 205,764

 2.4
 %

 763,805

 7.9
 %

 (558,041
)

 -73.1
 %

 Total general and administrative expenses

 $

 100.0
 %

 $

 100.0
 %

 $
 (1,027,794
)

 -10.6
 %

 Our general and administrative expenses decreased by $1,027,794 or
10.6%, to $8,628,587 for the year ended December 31, 2024 from $9,651,381 in the fiscal year 2023, primarily attributable to (i) a decrease
of $825,248 in salaries and welfare expenses due decrease in numbers of directors, change in bonus structures, and dissolution of HeartCore
Capital Advisors in the fiscal year 2024; (ii) a decrease of $558,041 in stock-based compensation, as the Company granted restricted common
stocks which immediately vested upon issuance and stock options to employees of Sigmaways in 2023, and there was no such amount restricted
common stocks and stock options granted in the current year, the decrease is also contributed by the graded vesting method of stock options
for those issued in previous years, which generally more stock-based compensation will recognize in the early stage; offset by (iii) an
increase of $479,668 in consulting and professional service fees, primarily because the Company newly engaged public relations related
activities in 2024 to enhance compliance and regulation information, while no such activities occurred in previous year.

 As a percentage of revenues,
general and administrative expenses were 28.4% and 44.2% of our revenues for the fiscal years ended December 31, 2024 and 2023, respectively.

 Research and Development Expenses

 Our research and development
expenses primarily consist of employee salaries and welfare expenses, outsourcing expenses, and stock-based compensation.

 2024

 2023

 %

 %

 %

 Salaries and welfare expenses

 $
 371,748

 51.0
 %

 $
 -

 -

 $
 371,748

 100.0
 %

 Outsourcing expenses

 355,463

 48.7
 %

 958,830

 94.1
 %

 (603,367
)

 -62.9
 %

 2,373

 0.3
 %

 60,311

 5.9
 %

 (57,938
)

 -96.1
 %

 Total research and development expenses

 $

 100.0
 %

 $

 100.0
 %

 $
 (289,557
)

 -28.4
 %

 Our research and development
expenses decreased by $289,557 or 28.4%, to $729,584 in the year ended December 31, 2024 from $1,019,141 in the year ended December 31,
2023, primarily attributable to a decrease of $603,367 in outsourcing expenses relating to the development
of new CMS management screen features, which stared in 2023 and about to completed in the current year; and offset by an increase of $371,748
in salaries and welfare expenses for the employees assigned to the development of a new product, Global CMS, started in 2024.

 As a percentage of revenues,
research and development expenses were 2.4% and 4.7% of our revenues for the fiscal years ended December 31, 2024 and 2023, respectively.

 Impairment of Intangible Asset

 Our intangible asset represents
the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries. As of December 31, 2024, we accessed the
value of such intangible asset become zero by engaging a third-party valuation appraiser, accordingly, we recorded an impairment of intangible
asset of $3,878,125, excluding an amortization expense of $637,500 in the year ended December 31, 2024.

 Impairment of Goodwill

 Our goodwill represents the
excess of the purchase price over the fair value of the net identifiable assets acquired in business acquisition of Sigmaways and its
subsidiaries. As of December 31, 2024, we evaluated the fair value of the reporting unit of Sigmaways and its subsidiaries and estimated
the value of goodwill become zero by engaging a third-party valuation appraiser, accordingly, we recorded an impairment of goodwill of
$3,276,441 in the year ended December 31, 2024.

 Other Income (Expenses), Net

 Our other income (expenses) primarily includes changes in fair value
of investments in marketable securities, changes in fair value of investment in warrants, loss on sale of warrants, interest income generated
from bank deposits, interest expenses for bank loans and bonds, government grants, impairment of investment in equity securities, loss
on forgiveness of note receivable, other income, and other expenses. Total other expenses, net, increased by $4,523,478 or 507.7%, from
other expenses, net, of $891,009 for the year ended December 31, 2023 to other expenses, net, of $5,414,487 for the year ended December
31, 2024, primarily attributable to an increase of $1,796,865 in loss on fair value changes in investments
in marketable securities, an increase of $3,970,628 in loss on sale of warrants, and an increase of $300,000 in impairment of investment
in equity securities, offset by an increase of $2,159,144 in gain on fair value changes in investment in warrants.

 Income Tax Benefit

 Income tax benefit was $136,822
for the year ended December 31, 2024, a slight increase of $3,158, or 2.4% from income tax benefit of $133,664 in the fiscal year 2023.

 Net Loss

 As a result of the foregoing,
we reported a net loss of $5,212,900 for the fiscal year ended December 31, 2024, representing a $336,200 or 6.9% increase from a net
loss of $4,876,700 for the fiscal year ended December 31, 2023.

 Net Loss Attributable to Non-controlling
Interests

 We
owned 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina as of December 31, 2024.
Accordingly, we recorded net loss attributable to the non-controlling interests of $3,731,526 and $686,810 in the year ended
December 31, 2024 and 2023, respectively.

 Net Loss Attributable to HeartCore Enterprises,
Inc.

 As a result of the foregoing, we reported a net loss attributable to
HeartCore Enterprises, Inc. of $1,481,374 for the fiscal year ended December 31, 2024, representing a $2,708,516 or 64.6% decrease from
a net loss attributable to HeartCore Enterprise, Inc. of $4,189,890 for the fiscal year ended December 31, 2023.

 Liquidity and Capital Resources

 As of December 31, 2024, we had $2,121,089 in cash and cash equivalents
as compared to $1,012,479 as of December 31, 2023. We also had $1,950,050 in accounts receivable as of December 31, 2024. Our accounts
receivable primarily include balance due from customers for our on-premise software sold and services provided and accepted by customers,
as well as amounts billable to the customers for customized software development and services.

 As of December 31, 2024, our working capital was $1,995,643. In assessing
our liquidity, management monitors and analyzes our cash, our ability to generate sufficient revenues in the future, and our operating
and capital expenditure commitments.

 Cash Flows for the Years Ended December
31, 2024 and 2023

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

 2024

 2023

 Net cash used in operating activities

 $
 (4,774,971
)

 $
 (4,331,209
)

 Net cash provided by (used in) investing activities

 6,349,204

 (1,780,952
)

 Net cash provided by (used in) financing activities

 (318,646
)

 136,194

 Effect of exchange rate changes

 (146,977
)

 (188,880
)

 Net change in cash and cash equivalents

 1,108,610

 (6,164,847
)

 Cash and cash equivalents, beginning of the year

 7,177,326

 Cash and cash equivalents, end of the year

 $
 2,121,089

 $

 Operating Activities

 Net cash used in operating
activities was $4,774,971 for the year ended December 31, 2024, primarily consisting of the following:

 Net
loss of $5,212,900 for the fiscal year.

 Marketable
securities and warrants received as noncash consideration in total of $13,541,693 as two of our IPO consulting customers completed the
IPO during the current year.

 A deferred income tax benefits of $1,076,600 mainly brought by amortization
and impairment of intangible asset.

 A
gain of $1,657,699 on fair value changes in investment in warrants.

by loss of $3,970,628 recognized on sale of warrants to a third party.

by a total of $7,154,566 loss recognized on impairment of goodwill and intangible asset acquired from business acquisition of Sigmaways
and its subsidiaries.

by a loss of $2,412,385 on fair value changes in investments in marketable securities.

by depreciation and amortization expenses of $749,639.

by an increase of $669,142 in income tax payable.

by an increase of $710,001 in other liabilities, mainly because the increase of liability to refund a customer.

 Net cash used in operating
activities was $4,331,209 for the year ended December 31, 2023, primarily consisting of the following:

 Net loss of $4,876,700 for the fiscal year.

 Warrants received as non-cash consideration of $3,763,621 as our IPO consulting customers completed the IPO during the current year.

 An increase in accounts receivable of $338,312. The increase was primarily due to the increase in our sales generated by our newly acquired subsidiary, Sigmaways. The collected accounts receivable is available cash, which can be used as working capital for our business operation, if necessary.

 A decrease of $327,877 in operating lease liabilities, due to the rent payment made.

 Offset by stock-based compensation of $1,430,513, as we granted equity rewards to our employees and service providers in 2023.

 Offset by a loss of $615,520 from the changes in fair value of investments in marketable securities.

 Offset by a loss of $501,445 from the changes in fair value of investment in warrants.

 Offset by depreciation and amortization expenses of $683,019, 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 an increase of $532,790 in accounts payable and accrued expenses as we incurred more operating expenses due to the expansion of our business.

 Offset by an increase in deferred revenue of $553,130, due to the upfront payment received for IPO consulting services while most IPO customer were not declared IPO effective as of the balance sheet date.

 Offset by non-cash lease expense of $346,070.

 Investing Activities

 Net cash provided by investing activities amounted to $6,349,204 for
the year ended December 31, 2024, primarily consisted of (i) net proceeds of $5,640,000 from sale
of warrants, and (ii) net proceeds of $749,546 from sale of marketable securities.

 Net cash used in investing
activities amounted to $1,780,952 for the year ended December 31, 2023, primarily consisted of (i)
payment for acquisition of Sigmaways and its subsidiaries, net of cash acquired, of $724,910; (ii) advances on notes receivable of $600,000;
and (iii) purchases of property and equipment of $526,260.

 Financing Activities

 Net cash used in financing
activities amounted to $318,646 for the year ended December 31, 2024, primarily consisted of (i)
dividends distribution of $834,566; (ii) repayment of $554,553 for short-term and long-term debts; (iii) net repayment of $390,373 for
factoring arrangement, and (iv) proceeds of $1,423,342 from issuance of common stocks.

 Net cash provided by financing
activities amounted to $136,194 for the fiscal year ended December 31, 2023, primarily consisted
of proceeds of $710,107 from short-term and long-term debts, and net proceeds of $562,767 from factoring arrangement, offset by repayment
of $711,395 for long-term debts, and repayment of 389,035 for insurance premium financing.

 Contractual Obligations

 Lease Commitment

 The Company has entered into
operating leases for office space with terms ranging from two to fifteen years, and finance leases for office equipment and vehicle with
terms of five years.

 As of December 31, 2024, future
minimum lease payments under the non-cancelable lease agreements are as follows:

 Year Ended December 31,

 Finance Lease

 Operating Leases

 2025

 $

 $
 394,538

 2026

 301,182

 2027

 2028

 11,093

 2029

 -

 Thereafter

 -

 603,091

 Total lease payments

 61,013

 2,077,335

 Less: imputed interest

 (1,464
)

 (90,388
)

 Total lease liabilities

 59,549

 1,986,947

 Less: current portion

 (15,956
)

 (371,951
)

 Non-current lease liabilities

 $
 43,593

 $
 1,614,996

 Debt s

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

 As of December 31, 2024, future
minimum payments for long-term debts are as follows:

 Principal

 Year Ended December 31,

 Payment

 2025

 $
 404,827

 2026

 358,590

 2027

 384,912

 2028

 173,900

 2029

 25,116

 Thereafter

 304,723

 Total

 $
 1,652,068

 Off-Balance Sheet Arrangements

 We did not have any off-balance sheet arrangements
as of December 31, 2024.

 Critical Accounting Policies and
Estimates

 Our discussion and analysis
of our financial condition and results of operations are based upon our 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 reflect the more significant judgments and estimates used in
preparation of our consolidated financial statements.

 Revenue Recognition

 We generate revenues from the following main sources:
on-premise software sales, maintenance and support services, software as a service ("SaaS"), software development and other
miscellaneous services, customized software development and services and consulting
services. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance
obligations, we allocate the total transaction price to each performance obligation based on its relative standalone selling price.

 Revenue is recognized when control of the goods
and services provided are transferred to our customers and in an amount that reflects the consideration we expect to be entitled to in
exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3)
determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue
as or when we satisfy the performance obligations.

 We satisfy our performance obligations for maintenance
and support services, software as a service ("SaaS"), customized software development and services and consulting services
over time as the related services are provided. We satisfy our performance obligations for on-premise software sales and software development
and other miscellaneous services at point in time.

 We provide public listing related consulting services
to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary
parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service
contracts normally include both cash and noncash considerations. Cash consideration is paid in installment payments and is recognized
in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash
consideration is primarily 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. We assess 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 valuation of noncash
consideration in the form of warrants of the customers are estimates are based on all available information and in some cases
assumptions with respect to the timing and amount of future revenues and expenses and are reviewed by consulting with third-party
valuation appraisers. The fair value of the warrants received from the customers are estimated using the Black-Scholes model and
binomial model. In connection with assessing the stock price as one of the inputs to the valuation model, income approach, through
the discounted cash flow method, and market approach, through the guideline company method, are used in the valuation process.
Management applies significant judgement related to these valuation models and approaches, such as future cash flows estimate,
discount rate assumption, selection of comparable companies, and etc. These significant assumptions are based on company specific
information and projections, which may not be observable in the market, 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. We believe the accounting estimate for revenue recognition in connection with the valuation of the warrants received by
the Company as part of the consideration for consulting services is a critical accounting estimate because it requires estimates and
judgement as to expectations that are highly subjective, but which are inherently uncertain and, as a result, actual results may
differ from estimates.

 Impairment of Intangible Asset and Goodwill

 We review our intangible asset
for impairment and perform a goodwill impairment assessment on an annual basis through a qualitative or quantitative assessment and when
events and circumstances indicate that the estimated fair value of a reporting unit may no longer exceed its carrying value. The process
of evaluating the potential impairment of intangible asset and goodwill is subjective because it requires the use of estimates and assumptions
in determining a reporting unit's fair value, as well as the fair value of the intangible asset. We calculate the fair values by
using the income approach, through the discounted cash flow method and multi-period excess earnings method, based on the present value
of future discounted cash flows, which requires us to use estimates and judgments about the future cash flows of the reporting unit, primarily
including forecasted revenue and revenue growth rates, weighted average cost of capital, and forecasted operating cash flows. We believe
the accounting estimate for impairment of intangible asset and reporting unit are critical accounting estimates because our estimates
of fair values of intangible asset and reporting unit are based upon assumptions that are highly subjective, but which are inherently
uncertain and, as a result, actual results may differ from estimates.

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

 Reference is made to pages
F-1 through F-29 comprising a portion of this annual report.

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM 9A. CONTROLS AND PROCEDURES

 Evaluation of Disclosure Controls and Procedures

 Disclosure controls are procedures
that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act,
such as this annual report, is recorded, processed, summarized, and reported within the time period specified in the SEC's rules
and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated
to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding
required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer
(our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of December 31, 2024, pursuant
to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2024,
our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to the
existence of the material weakness identified below.

 Lack of sufficient financial
reporting and accounting personnel with appropriate knowledge of U.S. GAAP and the Securities and Exchange Commission ("SEC")
reporting and compliance requirements to design, implement and operate key controls over financial reporting process to address complex
technical accounting issues and related disclosures in accordance with U.S. GAAP and financial reporting requirements set forth by the
SEC.

 We do not expect that our
disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how
well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures
are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the
benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no
evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and
instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions.

 Management's Report on Internal Control
Over Financial Reporting

 Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and
14d-14(f). Our internal control over financial reporting is designed 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.

 All internal control systems,
no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined
to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation
and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become
inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

 Management assessed the effectiveness
of the Company's internal control over financial reporting as of December 31, 2024. In making the assessment, management used the
criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal Control-Integrated
Framework. Based on its assessment, management concluded that, as of December 31, 2024, our Company's internal control over financial
reporting was not effective.

 Changes in Internal Control over Financial
Reporting

 There were no changes in our
internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three
months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

 ITEM 9B. OTHER INFORMATION

 None.

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE

 Officers and Directors

 The following table sets forth
the names and ages of the members of our Board of Directors and our executive officers and the positions held by each. Each director's
term continues until his or her successor is elected or qualified at the next annual meeting, unless such director earlier resigns or
is removed.

 Name

 Age

 Positions

 Chairman of Board, Chief Executive Officer and President

 Chief Operating Officer and Director

 Prakash Sadasivam

 Chief Strategy Officer and Director

 Hidekazu Miyata

 Chief Technical Officer

 Qizhi Gao

 Chief Financial Officer

 Keisuke Kuno

 CX Division Vice President

 Ferdinand Groenewald

 Heather Neville

 Koji Sato

 Biographical information
concerning our directors and executive officers listed above is set forth below.

 Sumitaka Yamamoto.
Mr. Yamamoto has served as our Chairman of the Board of Directors since August 16, 2021 and served as our Chief Executive Officer and
President and been a member of our Board of Directors since May 18, 2021. Mr. Yamamoto is also the founder of HeartCore Co. and has served
as the Chief Executive Officer and member of the Board of Directors of HeartCore Co. since June 2009. Mr. Yamamoto is a seasoned information
technology software programmer. Mr. Yamamoto graduated with a bachelor's degree in Spanish from Kansai Gaidai University, Tokyo,
Japan. Mr. Yamamoto does not hold, and has not previously held, any directorships in any reporting companies. We believe that Mr. Yamamoto
is qualified to serve on our Board of Directors due to his experience in all aspects of our business and his ability to provide an insider's
perspective in board discussions about the business and strategic direction of the Company. We believe that his experience gives him unique
insights into our opportunities, challenges and operations.

 Kimio Hosaka.
Mr. Hosaka has served as our Chief Operating Officer and been a member of our Board of Directors since May 18, 2021. Mr. Hosaka has served
as the Chief Operating Officer and member of the Board of Managers of HeartCore Co. since August 2015. Mr. Hosaka graduated with a bachelor's
degree in physics from Chuo University, Tokyo, Japan. Mr. Hosaka does not hold, and has not previously held, any directorships in any
reporting companies. We believe that Mr. Hosaka is qualified to serve on our Board of Directors due to his experience in business and
operations matters.

 Prakash Sadasivam. Mr.
Sadasivam has served as our Chief Strategy Officer and been a member of our Board of Directors since February 1, 2023. Mr. Sadasivam is
a technology entrepreneur and the founder of Sigmaways. Under his leadership, Sigmaways has grown into a global organization with a diverse
team of experts in various technology fields. Mr. Sadasivam completed his undergraduate studies in Computer Science and Engineering from
Vellore Institute of Technology in India. He has also completed Management Development for Entrepreneurs from UCLA, Anderson School of
Management. He has also been official member of Forbes Technology Council since 2020. We believe that Mr. Sadasivam is qualified to serve
on our Board of Directors due to his experience in business, and technology.

 Hidekazu Miyata.
Mr. Miyata has served as our Chief Technical Officer since June 1, 2021. Mr. Miyata has also served as the head of the DX division of
HeartCore Co. from October 1, 2019 to May 31, 2021. Mr. Miyata graduated with a bachelor's degree in economics from Doshisha University,
Japan. Mr. Miyata does not hold, and has not previously held, any directorships in any reporting companies.

 Qizhi Gao. Mr.
Gao has served as our Chief Financial Officer since May 18, 2021. Mr. Gao has also served as the Chief Financial Officer of HeartCore
Co. since May 2017. From December 2007 through April 2017, Mr. Gao served as the Group Leader, Finance & Accounting Department at
Marubishi Corporation in Tokyo, Japan. Mr. Gao graduated with a bachelor's degree in computer accounting from Chuo College of Information
and Accounting, Japan. Mr. Gao does not hold, and has not previously held, any directorships in any reporting companies.

 Keisuke Kuno.
Mr. Kuno has served as our CX division Vice President since October 1, 2019. Since August 30, 2021, Mr. Kuno has also served as the head
of the CX division and member of the Board of Directors of HeartCore Co. Mr. Kuno graduated with a bachelor's degree in business
administration from Hosei University, Tokyo, Japan. Mr. Kuno does not hold, and has not previously held, any directorships in any reporting
companies.

 Ferdinand Groenewald.
Mr. Groenewald has been an independent member of our Board of Directors since January 24, 2022. From January 2022 to July 2022, Mr. Groenewald
served as the Chief Accounting Officer of Sadot Group, Inc. (f/k/a Muscle Maker, Inc., a Nasdaq listed company). From September 2018 to
January 2, 2022, Mr. Groenewald served as the Chief Financial Officer of Muscle Maker, Inc. From January 25, 2018 through May 29, 2018,
Mr. Groenewald served as the Vice President of Finance, Principal Financial Officer and Principal Accounting Officer of Muscle Maker,
Inc., Muscle Maker Development, LLC and Muscle Maker Corp., LLC. In addition, from October 2017 through May 29, 2018, he served as the
controller of Muscle Maker, Inc. Mr. Groenewald is a certified public accountant with significant experience in finance and accounting.
From July 2018 through August 2018, he served as senior financial reporting accountant of Wrinkle Gardner & Company, a full service
tax, accounting and business consulting firm. From February 2017 to October 2017, Mr. Groenewald served as Senior Financial Accounting
Consultant at Pharos Advisors, Inc. serving a broad range of industries. From November 2013 to February 2017, he served as a Senior Staff
Accountant at Financial Consulting Strategies, LLC where he provided a broad range of accounting, financial reporting, and pre-auditing
services to various industries. From August 2015 to December 2015, Mr. Groenewald served as a Financial Reporting Analyst at Valley National
Bank. Mr. Groenewald holds a Bachelor of Science in accounting from the University of South Africa. Mr. Groenewald does not hold, and
has not previously held, any directorships in any reporting companies.

 Heather
Neville. Ms. Neville has served as Vice President of People Operations (Human Resources) at PlayStation since January 2021. From
June 2019 to January 2021, she was Senior Director of People Operations (Human Resources) at StubHub, an eBay Inc. (Nasdaq: EBAY) company,
and from 2018 to 2019, Ms. Neville served as Senior Director of Go-to-Market Operations at Adobe Inc. (Nasdaq: ADBE). Prior to that time,
she served as Senior Director, North American Business Operations (2017-2018) and Senior Director, Head of HR operations & Chief of
Staff (2015-2017) at eBay Inc. She also previously held various positions at Dell Inc. (NYSE: DELL). Ms. Neville earned a Bachelor of
Arts from Ecole Superieure de Gestion in Paris, France, and a Master of Business Administration from Paris Graduate School of Management
in Paris, France. We believe that Ms. Neville is qualified to serve on our Board of Directors due to her experience in business, financial
and public company matters.

 K oji Sato. Mr.
Sato has served as a member of our Board since September 2023. He is founder and Managing Partner of GIIP Global Advisory, Inc., a multi-country
accounting and CFO service business. He has served as Managing Partner since its founding in 2009. Mr. Sato previously served as Senior
Financial Officer and fund of funds manager for Japanese investors for AIFAM Inc. and as Senior Consultant at KPMG, LLP and PricewaterhouseCoopers
Japan (Chuo-Aoyama Audit Corporation). Mr. Sato received a Masters in Business Administration from University of Southern California,
Marshall School of Business, and a B.S. in Social Science from Hitotsubashi University in Tokyo, Japan. We believe that Mr. Sato is qualified
to serve on our Board of Directors due to his experience in business, financial and accounting matters.

 Our Board of Directors elects
our executive officers annually by majority vote. Each director's term continues until his or her successor is elected or qualified
at the next annual meeting, unless such director earlier resigns or is removed.

 Family Relationships

 There are no family relationships
among any of our directors or executive officers.

 Involvement in Certain Legal Proceedings

 No executive officer, member
of the board of directors or control person of our Company has been involved in any legal proceeding listed in Item 401(f) of Regulation
S-K in the past 10 years.

 Board Leadership Structure and Board's
Role in Risk Oversight

 We have not separated the
positions of Chairman of the Board and Chief Executive Officer. Mr. Yamamoto has served as our Chairman of the Board of Directors since
August 16, 2021 and Chief Executive Officer since May 18, 2021. We believe that combining the positions of Chairman and Chief Executive
Officer allows for focused leadership of our organization which benefits us in our relationships with investors, customers, suppliers,
employees and other constituencies. We believe that consolidating the leadership of the Company under Mr. Yamamoto is the appropriate
leadership structure for our Company and that any risks inherent in that structure are balanced by the oversight of our other independent
directors on our Board. However, no single leadership model is right for all companies and at all times. The Board recognizes that depending
on the circumstances, other leadership models, such as the appointment of a lead independent director, might be appropriate. Accordingly,
the Board may periodically review its leadership structure. In addition, our Board holds executive sessions in which only independent
directors are present.

 Our Board is generally responsible
for the oversight of corporate risk in its review and deliberations relating to our activities. Our principal source of risk falls into
two categories, financial and product commercialization. The audit committee oversees management of financial risks, and our Board regularly
reviews information regarding our cash position, liquidity and operations, as well as the risks associated with each. The Board regularly
reviews plans, results and potential risks related to our business. The Board is also expected to oversee risk management as it relates
to our compensation plans, policies and practices for all employees including executives and directors, particularly whether our compensation
programs may create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect on
the Company.

 Change in Controlled Company Status and Director
Independence

 Upon initially listing with
Nasdaq and during the fiscal year ended December 31, 2024, the Company qualified as a "controlled company" because more than
50% of the voting power for the election of directors was held by Mr. Yamamoto, the Company's Chairman of the Board, Chief Executive
Officer and President. As a result of certain sales under the Company's previously announced at-the-market offering, Mr. Yamamoto
no longer holds more than 50% of the voting power for the election of directors and therefore, the Company no longer qualifies as a "controlled
company." As a result, the Company is required, subject to phase-in rules, to comply with Nasdaq requirements that:

 a majority of the Board consist of "independent directors" as defined by Nasdaq's applicable rules and regulations;

 the compensation of the Company's executive officers be determined, or recommended to the Board of Directors for determination, by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors participate or by a compensation committee comprised solely of independent directors; and

 director nominees be selected, or recommended to the Board of Directors for selection, by independent directors constituting a majority of the independent directors of the Board in a vote in which only independent directors participate or by a nomination committee comprised solely of independent directors.

 The Company previously availed
itself of certain of the controlled company exemptions. More specifically, the Company did not have a compensation committee or a nominating
and corporate governance committee.

 We no longer qualify as a
controlled company and accordingly, on February 14, 2025, we formed a compensation committee and a nominating and corporate governance
committee; however, we currently utilize and presently intend to continue to utilize, the exemption relating to a majority independent
board. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate
governance requirements of Nasdaq Capital Market. Pursuant to Nasdaq's phase-in rules, we have a period of one year from the date
on which we ceased to be a controlled company to comply with the majority independent board.

 The Company's Board
of Directors has affirmatively determined that three of its six directors (Ferdinand Groenewald, Heather Neville, and Koji Sato) are independent
directors of the Company within the meaning of Nasdaq Capital Market's rules.

 Committees of the Board of Directors

 Our Board of Directors has established three standing
committees—the audit committee, compensation committee, and nominating and corporate governance committee—each of which operates
under a charter that has been approved by our Board of Directors.

 Audit Committee

 We have established an audit
committee, which consists of three independent directors: Ferdinand Groenewald, Heather Neville and Koji Sato. Mr. Groenewald is the chair
of the audit committee. Mr. Groenewald qualifies as an "audit committee financial expert" under SEC rules. Our audit committee
adopted a written charter, a copy of which is posted on the Corporate Governance section of our website, at www.heartcore.co.jp.

 Our audit committee is authorized
to:

 approve and retain the independent auditors to conduct the annual audit of our financial statements;

 review the proposed scope and results of the audit;

 review and pre-approve audit and non-audit fees and services;

 review accounting and financial controls with the independent auditors and our financial and accounting staff;

 review and approve transactions between us and our directors, officers and affiliates;

 recognize and prevent prohibited non-audit services;

 establish procedures for complaints received by us regarding accounting matters; and

 oversee internal audit functions, if any.

 Compensation Committee

 Because we were a "controlled
company" within the meaning of the corporate governance standards of Nasdaq Capital Market, during the fiscal year ended December
31, 2024, we were not required to, and did not, have a compensation committee. We no longer qualify as a controlled company and accordingly,
on February 14, 2025, we formed a compensation committee. The compensation committee is comprised of three independent directors: Ferdinand
Groenewald, Heather Neville and Koji Sato, with Ms. Neville as the Chair of the compensation committee.

 Our compensation committee
assists our Board of Directors in the discharge of its responsibilities relating to the compensation of our executive officers. Our compensation
committee is responsible for, among other things:

 To review and approve the compensation of the Chief Executive Officer and to approve the compensation of all other executive officers.

 To review, and approve and, when appropriate, recommend to the Board for approval, any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the CEO and other executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans.

 To review our incentive compensation arrangements.

 To review and recommend to the Board for approval the frequency with which we will conduct Say on Pay Votes.

 To review director compensation for service on the Board and Board committees at least once a year and to recommend any changes to the Board.

 To meet at least two times a year.

 To review the compensation committee charter at least annually and recommend any proposed changes to the Board for approval.

 Nominating and Corporate Governance Committee

 Because we were a "controlled
company" within the meaning of the corporate governance standards of Nasdaq Capital Market, during the fiscal year ended December
31, 2024, we were not required to, and did not, have a nominating and corporate governance committee. We no longer qualify as a controlled
company and accordingly, on February 14, 2025, we formed a nominating and corporate governance committee. The nominating and corporate
governance committee is comprised of three independent directors: Ferdinand Groenewald, Heather Neville and Koji Sato, with Mr. Sato as
the Chair of the nominating and corporate governance committee.

 Our nominating and corporate
governance committee is responsible for, among other things:

 To determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director.

 To select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders.

 To review the Board's committee structure and composition and to appoint directors to serve as members of each committee and committee chairmen.

 To develop and recommend to the Board for approval standards for determining whether a director has a relationship with us that would impair its independence.

 To review and discuss with management the disclosure regarding the operations of the nominating and corporate governance committee and director independence, and to recommend that this disclosure be included in our proxy statement or annual report on Form 10-K, as applicable.

 To monitor compliance with our Code of Ethics and Business Conduct (the "Code of Ethics"), to investigate any alleged breach or violation of the Code of Ethics and to enforce the provisions of the Code of Ethics.

 To meet at least two times a year.

 To review the nominating and corporate governance committee charter at least annually and recommend any proposed changes to the Board for approval

 Procedures for Contacting the Board

 The Board has established
a process for stockholders and other interested parties to send written communications to the Board, the independent directors, a particular
committee or to individual directors, as applicable. Such communications should be addressed to:

 HeartCore Enterprises, Inc. Board of
Directors

 c/o HeartCore Enterprises, Inc.

 Attention: Corporate Secretary

 1-2-33, Higashigotanda, Shinagawa-ku

 Tokyo, Japan

 The Board has instructed the
Corporate Secretary to promptly forward all communications so received to the full Board, the independent directors or the individual
Board member(s) specifically addressed in the communication. Comments or questions regarding our accounting, internal controls or auditing
matters, our compensation and benefit programs, or the nomination of directors and other corporate governance matters will remain with
the full Board.

 Depending on the subject matter,
the Company's Corporate Secretary will:

 Forward the communication to the director or directors to whom it is addressed;

 Attempt to handle the inquiry directly, for example, where it is a request for information about our Company or if it is a stock-related matter; or

 Not forward the communication if it is primarily commercial in nature or if it relates to a topic that is not relevant to the Board or a particular committee or is otherwise improper.

 Procedures for Recommending, Nominating and
Evaluating Director Candidates

 A stockholder may nominate
one or more persons for election as a director at an annual meeting of stockholders if the stockholder complies with the notice and information
provisions contained in our bylaws. Such notice must be in writing to our company not less than 90 days and not more than 120 days prior
to the anniversary date of the preceding year's annual meeting of stockholders or as otherwise required by requirements of the Exchange
Act. In addition, stockholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice and (ii)
the record date for the determination of stockholders entitled to vote at such meeting.

 We have not formally established
any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying
and evaluating nominees for director, the Board of Directors considers educational background, diversity of professional experience, knowledge
of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.

 Compensation Committee Interlocks and Insider
Participation

 None of our executive officers
serve on the board of directors or compensation committee of a company that has an executive officer that serves on our board or compensation
committee. No member of our board is an executive officer of a company in which one of our executive officers serves as a member of the
board of directors or compensation committee of that company.

 Code of Ethics

 The Company has adopted a
Code of Ethics and Business Conduct that applies to all of its directors, officers (including our principal executive officer, principal
financial officer, principal accounting officer or controller, and any person performing similar functions) and employees. The Code of
Ethics and Business Conduct is available on our website at www.heartcore.co.jp.

 We are required to disclose
any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial
officer, principal accounting officer, controller, or persons performing similar functions. We intend to use our website as a method of
disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to our website within four business
days following the date of any such amendment to, or waiver from, a provision of our code of ethics.

 Insider Trading Arrangements and Policies

 We have adopted an insider trading policy that
governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees. A copy of our insider
trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In addition, with
regard to us trading in our own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing
requirements in all respects.

 Anti-Hedging Policy

 Under the terms of our insider trading policy,
we prohibit each officer, director and employee, and each of their family members and controlled entities, from engaging in certain forms
of hedging or monetization transactions. Such transactions include those, such as zero-cost collars and forward sale contracts, that would
allow them to lock in much of the value of their stock holdings, often in exchange for all or part of the potential for upside appreciation
in the stock, and to continue to own the covered securities but without the full risks and rewards of ownership.

 Delinquent
Section 16(a) Reports

 Under U.S. securities laws,
directors, certain officers and persons holding more than 10% of our common stock must report their initial ownership of our common stock
and any changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this
Report on Form 10-K those persons who did not file these reports when due. Based solely on our review of copies of the reports filed with
the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for fiscal
year 2024 were complied with by each person who at any time during the 2024 fiscal year was a director or an executive officer or held
more than 10% of our common stock, except for the following: Mr. Yamamoto failed to timely file a Form 4 relating to two transactions,
and each of Messrs. Gao, Kuno and Hosaka failed to timely file a Form 4 relating to one transaction.

 Limitation on Liability and Indemnification
of Officers and Directors

 Our certificate of incorporation
provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists
or may in the future be amended. In addition, our certificate of incorporation provides that our directors will not be personally liable
for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption from liability or limitation
thereof is not permitted by the General Corporation Law of the State of Delaware.

 On June 1, 2023, the Company
entered into a Director Agreement with Heather Neville, and this Director Agreement was converted into an Independent Director Agreement
on November 1, 2023. On September 29, 2023 the Company entered into an Independent Director Agreement as well as an Indemnification Agreement
with Koji Sato. Previously, Ferdinand Groenewald entered into an indemnification agreement with the Company. Each director agreement and
indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and our certificate
of incorporation and bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The
indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to us if it
is found that such indemnitee is not entitled to such indemnification under applicable law and our certificate of incorporation and bylaws.

 Our certificate of incorporation
also permits us to maintain insurance on behalf of any officer, director or employee for any liability arising out of his or her actions,
regardless of whether Delaware law would permit such indemnification. We have purchased a policy of directors' and officers'
liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances
and insures us against our obligations to indemnify our officers and directors.

 These provisions may discourage
stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect
of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise
benefit us and our stockholders. Furthermore, a stockholder's investment may be adversely affected to the extent we pay the costs
of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

 We believe that these provisions
and the insurance are necessary to attract and retain talented and experienced officers and directors.

 Any repeal or amendment of
provisions of our certificate of incorporation affecting indemnification rights, whether by our board of directors, stockholders or by
changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be
prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive
basis, and will not in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission
occurring prior to such repeal or amendment or adoption of such inconsistent provision.

 Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions
described above, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other
than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.

 ITEM 11. EXECUTIVE COMPENSATION

 2024 Summary Compensation Table

 The following summary compensation
table provides information regarding the compensation paid during our fiscal years ended December 31, 2024 and 2023 to certain of our
executive officers, who we collectively refer to as our "named executive officers", or "NEOs".

 Name and Position

 Year

 Salary

 ($)

 Bonus

 ($)

 Stock

 Awards

 ($)

 Option

 Awards

 ($)

 Non-Equity

 Incentive

Plan

 Compensation

 ($)

 Non-qualified

 Deferred

 Compensation

 Earnings

 ($)

 All Other

 Compensation

 ($)

 Total

 ($)

 2024

 $

 505,714

 —

 $

 34,917

 $

 —

 —

 —

 $

 —

 $

 540,631

 Chief Executive Officer

 2023

 $
 525,102

 —

 —

 $
 —

 —

 —

 $
 —

 $
 525,102

 Prakash Sadasivam

 2024

 $
 286,833

 —

 —

 $
 —

 —

 —

 $
 —

 $
 286,833

 Chief Strategy Officer and Director

 2023

 $
 316,000

 —

 —

 $
 —

 —

 —

 $
 —

 $
 316,000

 2024

 $
 139,714

 —

 $
 6,316

 $
 —

 —

 —

 $
 —

 $
 146,030

 Chief Operating Officer

 2023

 $
 159,102

 —

 —

 $
 —

 —

 —

 $
 —

 $
 159,102

 Employment Agreements

 Executive Employment Agreement with Sumitaka
Yamamoto

 On October 28, 2022, we entered
in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022. Pursuant to the Amendment Agreement, Mr.
Yamamoto's annual salary increased from $381,000 to $450,000, effective November 1, 2022.

 Executive Employment Agreement with Kimio Hosaka

 On January 10, 2023, we entered
in an Amendment Agreement to the Executive Employment Agreement dated as of February 9, 2022. Pursuant to the Amendment Agreement, Mr.
Hosaka's annual salary increased from $95,459 to $164,770, effective January 1, 2023.

 Employment Agreement with Prakash Sadasivam

 On February 1, 2023, we entered
into an Employment Agreement with Prakash Sadasivam whereby Mr. Sadasivam serves as our Chief Strategy Officer. Mr. Sadasivam's
annual salary is $96,000.

 Provisions Applicable to All Employment Agreements

 Each of the Employment Agreements
as described above, has an initial term of one year, provided that the term of each agreement will automatically be extended for one or
more additional terms of one year each unless either the Company or applicable executive provides notice to the other of their desire
to not so renew the initial term or renewal term (as applicable) at least 30 days prior to the expiration of then-current initial term
or renewal term (as applicable). Each of the agreements provide that the applicable executive's employment with the Company shall
be "at will," meaning that either applicable executive or the Company may terminate the applicable executive's employment
at any time and for any reason, subject to the other provisions of the agreement.

 Each of the agreements may
be terminated by the Company, either with or without "Cause", or by the applicable executive, either with or without "Good
Reason".

 For purposes of each agreement,
"Cause" means:

 a violation of any material written rule or policy of the Company for which violation any employee may be terminated pursuant to the written policies of the Company reasonably applicable to an executive employee;

 misconduct by the applicable executive to the material detriment of the Company;

 the applicable executive's conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony;

 the applicable executive's gross negligence in the performance of the applicable executive's duties and responsibilities to the Company as described in this Agreement; or

 the applicable executive's material failure to perform the applicable executive's duties and responsibilities to the Company as described in the agreement (other than any such failure resulting from the applicable executive's incapacity due to physical or mental illness or any such failure subsequent to the applicable executive being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company), in either case after written notice from the Board to the applicable executive of the specific nature of such material failure and the applicable executive's failure to cure such material failure within 10 days following receipt of such notice.

 For purposes of each agreement,
"Good Reason" means:

 at any time following a Change of Control (as defined below), a material diminution by the Company of compensation and benefits (taken as a whole) provided to the applicable executive immediately prior to a Change of Control;

 a reduction in base salary or target or maximum bonus, other than as part of an across-the-board reduction in salaries of management personnel;

 the relocation of the applicable executive's principal executive office to a location more than 50 miles further from the applicable executive's principal executive office immediately prior to such relocation; or

 a material breach by the Company of any of the terms and conditions of the agreement which the Company fails to correct within 10 days after the Company receives written notice from the applicable executive of such violation.

 For purposes of each agreement
a "Change of Control" of the Company will be deemed to have occurred if, after the effective date of the applicable agreement,
(i) the beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of securities representing more than 50% of the combined
voting power of the Company is acquired by any "person" as defined in sections 13(d) and 14(d) of the Exchange Act (other
than the Company, any subsidiary of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of
the Company), (ii) the merger or consolidation of the Company with or into another corporation where the shareholders of the Company,
immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the
combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate
parent corporation, if any) in substantially the same proportion as their ownership of the Company immediately prior to such merger or
consolidation, or (iii) the sale or other disposition of all or substantially all of the Company's assets to an entity, other than
a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of the combined
voting power of the voting securities of which are owned directly or indirectly by shareholders of the Company, immediately prior to the
sale or disposition, in substantially the same proportion as their ownership of the Company immediately prior to such sale or disposition.

 In the event that the Company
terminates the term of the applicable agreement or the applicable executive's employment with Cause, or if the applicable executive
terminates their agreement without good reason, then, subject to any other agreements between the company with respect to other equity
grants made to such executive:

 the Company will pay to the applicable executive any unpaid base salary and benefits then owed or accrued, and any unreimbursed expenses;

 any unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will immediately be forfeited; and

 all of the parties' rights and obligations under the agreement will cease, other than those rights or obligations which arose prior to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

 In the event that the Company
terminates the term of the applicable agreement or the applicable executive's employment without Cause, or if the applicable executive
terminates their agreement with good reason, then, subject to any other agreements between the company with respect to other equity grants
made to such executive:

 the Company will pay to the applicable executive any base salary, bonuses, and benefits then owed or accrued, and any unreimbursed expenses;

 the Company will pay to the applicable executive, in one lump sum, an amount equal to the base salary that would have been paid to the applicable executive for the remainder of the initial term of the applicable agreement (if the termination occurs during the initial term of the applicable agreement) or renewal term of the applicable agreement (if the termination occurs during a renewal term of the applicable agreement);

 any unvested portion of any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will, to the extent not already vested, be deemed automatically vested; and

 all of the parties' rights and obligations under the agreement will cease, other than those rights or obligations which arose prior to the termination date or in connection with such termination, and subject to the survival provisions of the agreements.

 In the event of the applicable
executive's death or total disability during the term of the applicable agreement, the term of the applicable agreement and the
applicable executive's employment shall terminate on the date of death or total disability. In the event of such termination, the
Company's sole obligations hereunder to the applicable executive (or the applicable executive's estate) shall be for unpaid
base salary, accrued but unpaid bonus and benefits (then owed or accrued and owed in the future), a pro-rata bonus for the year of termination
based on the applicable executive's target bonus for such year and the portion of such year in which the applicable executive was
employed, and reimbursement of expenses pursuant to the terms hereon through the effective date of termination, and any unvested portion
of any equity granted to the applicable executive under the applicable agreement or any other agreements with the Company will immediately
be forfeited as of the termination date.

 In the event that the term
of the applicable agreement is not renewed by either party, any unvested portion of any equity granted to the applicable executive under
the applicable agreement or any other agreements with the Company will immediately be forfeited as of the expiration of the term of the
applicable agreement without any further action of the parties.

 If it is determined that any
payment provided to the applicable executive under the applicable agreement or otherwise, whether or not in connection with a Change of
Control (a "Payment"), would constitute an "excess parachute payment" within the meaning of section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), such that the Payment would be subject to an excise tax under section
4999 of the Code (the "Excise Tax"), the Company will pay to the applicable executive an additional amount (the "Gross-Up
Payment") such that the net amount of the Gross-Up Payment retained by the applicable executive after the payment of any Excise
Tax and any federal, state and local income and employment tax on the Gross-Up Payment, shall be equal to the Excise Tax due on the Payment
and any interest and penalties in respect of such Excise Tax.

 During the term of the applicable
agreement, the applicable executive is entitled to fringe benefits consistent with the practices of the Company, and to the extent the
Company provides similar benefits to the Company's executive officers, and is entitled to reimbursement for all reasonable and necessary
out-of-pocket business, entertainment and travel expenses incurred by the applicable executive in connection with the performance of the
applicable executive's duties hereunder and in accordance with the Company's expense reimbursement policies and procedures.

 Each of the agreements provides
that, during the term of the applicable agreement, the applicable executive will be entitled to indemnification and insurance coverage
for officers' liability, fiduciary liability and other liabilities arising out of the applicable executive's position with
the Company in any capacity, in an amount not less than the highest amount available to any other executive, and such coverage and protections,
with respect to the various liabilities as to which the applicable executive has been customarily indemnified prior to termination of
employment, shall continue for at least six years following the end of the term of the applicable agreement. Any indemnification agreement
entered into between the Company and the applicable executive shall continue in full force and effect in accordance with its terms following
the termination of the applicable.

 Each of the employment agreements
contains customary confidentiality provisions, and customary provisions related to Company ownership of intellectual property conceived
or made by the applicable executive in connection with the performance of their duties under the applicable agreement (i.e., a "work-made-for-hire"
provision).

 Each of the agreements contains
a non-compete provision which provides that, for the term of the applicable agreement and for a period of two years thereafter, the applicable
executive shall not, directly or indirectly: (i) engage in any other business, association or relationship of any kind with any business
which provides, in whole or in part, the same or similar services and/or products offered by the which directly or indirectly competes
with Company; nor (ii) solicit or accept, or induce any person or entity to reduce goods or services to Company, or in any manner assist
others in the solicitation, acceptance, or inducement of, any business transactions with Company's existing and prospective clients,
accounts, suppliers and/or other persons or entities with whom the Company has had business relationships (or whom Company had specifically
identified for a prospective business relationship). These restrictions extend to the geographic area in which Company actively conducted
business immediately prior to termination of the applicable agreement.

 Each of the agreements also
contains a customary non-solicitation provision, in which the applicable executive agrees that, for the term of the applicable agreement
and for a period of three years thereafter, the applicable executive will not, directly or indirectly solicit or discuss with any employee
of Company the employment of such Company employee by any other commercial enterprise other than Company, nor recruit, attempt to recruit,
hire or attempt to hire any such Company employee on behalf of any commercial enterprise other than Company, provided that this provision
does not prohibit the applicable executive from undertaking a general recruitment advertisement provided that the foregoing is not targeted
towards any person or entity identified above, or from hiring, employing or engaging any such person or entity who responds to such general
recruitment advertisement.

 Due to the application of
various states' laws, there is no assurance that the non-compete provisions or the non-solicitation provisions as set forth in each
of the agreements will be enforced. Each of the agreements contains a "blue pencil" provision that, in the event that a court
determines that any of these restrictions are unenforceable, the parties to the agreement agreed that it is their desire that the court
substitute an enforceable restriction in place of any restriction deemed unenforceable, and that the substitute restriction be deemed
incorporated in the agreement and enforceable against the applicable executive.

 Each of the agreements contains
customary representations and warranties by the applicable executive, relating to the agreement, and any securities of the Company that
may be issued to the executive, 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.

 Each of the agreements is
governed by and construed and enforced in accordance with the internal laws of the State of Delaware, and for all purposes shall be construed
in accordance with the laws of such state, without giving effect to the choice of law provisions of such state. Each of the agreements
provide that all legal proceedings concerning the applicable agreement will be in the state and federal courts sitting in Santa Clara
County, California, provided that each agreement also includes a provision relating to any disputes being settled by arbitration.

 Outstanding Equity Awards at Fiscal Year-End

 The following table sets forth
information on outstanding options and stock awards held by the executive officers as of December 31, 2024.

 Option Awards

 Stock Awards

 Name

 Underlying

 Unexercised

 Options (#)

 Exercisable

 Underlying

 Unexercised

 Options (#)

 Unexercisable

 Option

 Exercise

 Price ($)

 Option

 Expiration

 Date

 Shares or

 Units Of

 Stock that

 Have Not

 Vested (#)

 Market

 Value Per

 Share Of

 Shares Or

 Units of

 Stock That

 Have Not

 Vested ($)

 -

 -

 $
 -

 -

 22,860

 1.815

 75,000

 25,000

 $
 2.5

 12/25/2031

 5,729

 1.815

 Additional Narrative Disclosure

 Retirement Benefits

 We have not maintained, and
do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan, or other retirement benefits.

 Potential Payments Upon Termination or Change
in Control

 As described under "
Employment Agreements" above, each of the executives with whom the Company has entered into employment agreements are entitled severance
if their employment is terminated by the Company without "Cause" or is terminated by the applicable executive with "Good
Reason", in each case as described above.

 Policies and Practices Related to the Grant
of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

 We do not have any formal policy that requires
us to grant, or avoid granting, stock options at particular times. Consistent with its annual compensation cycle, if options are to be
granted, the Compensation Committee generally seeks to grant annual stock option awards after its Annual Report on Form 10-K has been
filed. The timing of any stock option grants in connection with new hires, promotions, or other non-routine grants is tied to the event
giving rise to the award (such as an employee's commencement of employment or promotion effective date). As a result, in all cases,
the timing of grants of stock options occurs independent of the release of any material nonpublic information, and we do not time the
disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

 No stock options were issued to executive officers
in 2024 during any period beginning four business days before the filing of a periodic report or current report disclosing material non-public
information and ending one business day after the filing or furnishing of such report with the SEC.

 Director Compensation

 Other than as set forth in
the table and described more fully below, we did not pay any compensation or make any equity awards or non-equity awards to any of our
non-employee directors during fiscal year 2024.

 Non-employee Board members
received $50,000 for their service on our Board of Directors. In addition, in exchange for their service on the Audit Committee, the Chair
of the Audit Committee receives an additional $7,000 annually, and the other Audit Committee members receives an additional $4,000 annually.
In exchange for their service on the Compensation Committee, the Chair of the Compensation Committee receives an additional $7,000 annually,
and the other Compensation Committee members receive an additional $4,000 annually. In exchange for their service on the Nominating and
Corporate Governance Committee, the Chair of the Nominating and Corporate Governance Committee receives an additional $6,000 annually,
and the other Nominating and Corporate Governance Committee members receive an additional $3,000 annually.

 Directors may be reimbursed
for travel and other expenses directly related to their activities as directors. Directors who also serve as employees receive no additional
compensation for their service as directors. During fiscal year 2024, each of Sumitaka Yamamoto, our Chief Executive Officer, Kimio Hosaka,
our Chief Operating Officer, and Prakash Sadasivam, our Chief Strategy Officer, was a member of our board of directors, as well as an
employee, and received no additional compensation for their services as a director. See the section titled "Executive Compensation"
for more information about the compensation for these individuals for fiscal year 2024.

 The following table presents
the total compensation for each person who served as a non-employee director of the Company during fiscal year 2024.

 Name

 Fees Earned or Paid in Cash ($)

 All Other Compensation ($)

 Total ($)

 Ferdinand Groenewald

 57,000

 -

 57,000

 Heather Marie Neville

 54,000

 -

 54,000

 Koji Sato

 54,000

 -

 54,000

 Independent Director Agreements

 On June 1, 2023, Heather Marie
Neville entered into a Director Agreement, and on November 1, 2023, Ms. Neville entered into an Independent Director Agreement. On September
29, 2023, Koji Sato entered into an Independent Director Agreement. Previously, Ferdinand Groenewald entered into the Company's
form of Independent Director Agreement.

 The Independent Director Agreements
provide that each non-employee director will be compensated as follows:

 Each director will be paid the sum of $50,000 annually for director's service as a director of the Company, to be paid $12,500 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.

 Each director shall be paid $4,000 annually for service as a member of the Audit Committee and an additional sum of $3,000 annually for service as the Chairman of the Audit Committee, with each of these payments to be paid quarterly in equal portions, within five business days of the end of each calendar quarter, and with any amount for any partial calendar quarter being appropriately prorated.

 The Independent Director Agreements
contain additional terms. During the term of the applicable director agreement, the Company will reimburse the applicable director for
all reasonable out-of-pocket expenses incurred by the applicable director in attending any in-person meetings, provided that the applicable
director 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 of the applicable
director in excess of $500) must be approved in advance by the Company.

 Each of the agreements contains
customary confidentiality provisions, and customary provisions related to Company ownership of intellectual property conceived or made
by the applicable director in connection with the performance of their duties under the applicable agreement (i.e., a "work-made-for-hire"
provision).

 Each of the agreements provide
that, during the term (which continues as long as the applicable director is serving as a director of the Company), the applicable director
is be entitled to indemnification and insurance coverage for officers' liability, fiduciary liability and other liabilities arising
out of the applicable director's 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 the applicable director
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 the applicable director will continue in full force and effect in accordance
with its terms following the termination of the applicable agreement.

 Each of the agreements contains
customary representations and warranties by the applicable director, relating to the 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.

 Each of the agreements is
governed by and construed and enforced in accordance with the internal laws of the State of Delaware, and for all purposes shall be construed
in accordance with the laws of such state, without giving effect to the choice of law provisions of such state. Each of the agreements
provide that all legal proceedings concerning the applicable agreement will be in the state and federal courts sitting in Santa Clara
County, California, provided that each agreement also includes a provision relating to any disputes being settled by arbitration.

 2023 Equity Incentive Plan

 On August 1, 2023, the Board
approved, and proposed for stockholder approval, the 2023 Equity Incentive Plan (the "2023 Plan"). The shareholders approved
the 2023 Plan at the Annual Shareholder's meeting on September 29, 2023. The 2023 Plan provides for various stock-based incentive
awards, including incentive stock options ("ISOs") and non-qualified stock options ("NQSOs"), stock appreciation
rights ("SARs"), restricted stock and restricted stock units ("RSUs"), and other equity-based or cash-based awards.
As of December 31, 2024, there were 1,930,347 shares available for award under the 2023 Plan.

 Highlights of the 2023 Plan
are as follows:

 The Board or a committee of the Board will administer the 2023 Plan.

 The total number of shares of common stock authorized for issuance under the 2023 Plan is 2,000,000 shares, or approximately 9.60% of the common stock outstanding at the time of approval.

 No non-employee director may be granted awards under the 2023 Plan during any calendar year if such awards would exceed a total value of $300,000 (calculated in accordance with the terms of the 2023 Plan).

 The exercise price of options and SARs may not be less than the fair market value of the common stock on the date of grant.

 In addition to other vesting requirements, the administrator may condition the vesting of awards on the achievement of specific performance targets.

 Material features of the 2023
Plan are set forth below.

 Term

 The 2023 Plan is effective
August 1, 2023 and will terminate on August 1, 2033, unless the Board terminates it earlier.

 Purpose

 The purpose of the 2023 Plan
is to provide a means through with the Company and its subsidiaries may attract and retain key personnel, and to provide a means whereby
directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest
in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare of the Company and its subsidiaries
and aligning their interests with those of the Company's stockholders.

 Administration

 Pursuant to the terms of the
2023 Plan, the Board or a committee of the Board shall administer the 2023 Plan. The administrator will have the authority to, among other
things, (i) determine fair market value under the 2023 Plan; (ii) select the service providers to whom awards may be granted; (iii) determine
the number of shares to be covered by each award granted under the 2023 Plan; (iv) approve forms of award agreements for use under the
2023 Plan; (v) determine the terms and conditions, not inconsistent with the terms of the 2023 Plan, of any award, with such terms and
conditions including, but not being limited to, the exercise price, the time or times when awards may be exercised (which may be based
on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any
award or the shares relating thereto, based in each case on such factors as the administrator will determine; (vi) determine whether an
award will be settled in shares, cash, other property or in any combination thereof; (vii) construe and interpret the terms of the 2023
Plan and awards granted pursuant to the 2023 Plan; (viii) prescribe, amend and rescind rules and regulations relating to the 2023 Plan,
including rules and regulations relating to sub-plans; (ix) modify or amend awards; (x) correct any defect, supply any omission or reconcile
any inconsistency in the 2023 Plan or any award agreement and make all other determinations and take such other actions with respect to
the 2023 Plan or any award as the administrator may deem advisable to the extent not inconsistent with the provisions of the 2023 Plan
or applicable law; and (xi) make all other determinations deemed necessary or advisable for administering the 2023 Plan.

 The administrator will have
the discretion to select particular performance targets in connection with awards under the 2023 Plan.

 Eligibility

 Employees, directors and consultants
(except those performing services in connection with the offer or sale of the Company's securities in a capital raising transaction,
or promoting or maintaining a market for the Company's securities) of the Company or its subsidiaries will be eligible to receive
awards under the 2023 Plan. ISOs may only be granted to employees.

 Grants

 The administrator may, from
time to time, grant awards under the 2023 Plan to one or more eligible participants. All awards will vest and become exercisable in such
manner and on such date or dates or upon such event or events as determined by the administrator and as set forth in any applicable award
agreement, including, without limitation, attainment of performance targets, consistent with the terms of the 2023 Plan.

 Maximum Shares Available

 Subject to the provisions
of the 2023 Plan, the maximum aggregate number of shares that may be subject to awards and sold under the 2023 Plan is 2,000,000. The
shares may be authorized but unissued, or reacquired common stock. If an award expires or becomes unexercisable without having been exercised
in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, RSUs, performance units or performance
shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for awards other than options
or SARs, the forfeited or repurchased shares) which were subject thereto will become available for future grant or sale under the 2023
Plan (unless the 2023 Plan has terminated).

 Adjustments

 In the event that any dividend
or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure of the Company
affecting the Company's common stock occurs, the administrator, in order to prevent diminution or enlargement of the benefits or
potential benefits intended to be made available under the 2023 Plan, will adjust the number and class of shares of stock that may be
delivered under the 2023 Plan and/or the number, class, and price of shares of stock covered by each outstanding award, and the numerical
share limits provided in the 2023 Plan.

 Stock Options

options to purchase shares of common stock under the 2023 Plan to eligible participants for such numbers of shares and having such terms
as the administrator designates and consistent with the 2023 Plan. However, ISOs may only be granted to employees of the Company or its
subsidiaries. The administrator will also determine the type of option granted (e.g., ISO) or a combination of various types of options.
Each option granted under the 2023 Plan will be evidenced by an award agreement.

 The exercise price for an
option may not be less than 100% of the fair market value of the Company's common stock on the date the option is granted; provided,
however, that in the case of an ISO granted to an employee who, at the time of the grant, owns stock representing more than 10% of the
voting power of all classes of stock of the Company or any subsidiary, the exercise price will be no less than 110% of the fair market
value on the grant date.

 The term of each option will
be stated in the applicable award agreement. In the case of an ISO, the term will be no more than 10 years from the date of grant. In
the case of an ISO granted to a participant who, at the time the ISO is granted, owns stock representing more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary, the term of the ISO will be five years from the date
of grant or such shorter term as may be provided in the award agreement.

 Stock Appreciation Rights

SARs under the 2023 Plan to eligible participants having such terms as the administrator designates and consistent with the 2023 Plan.
Each SAR granted under the 2023 Plan will be evidenced by a SAR agreement. The exercise price for a SAR may not be less than 100% of the
fair market value of the Company's common stock on the date the SAR is granted.

 Restricted Stock

shares of restricted stock under the 2023 Plan to eligible participants in such amounts and upon such terms as the administrator determines
and consistent with the 2023 Plan.

 Except as provided in the
2023 Plan or as the administrator determines, shares of restricted stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable period of restriction. The administrator, in its sole discretion, may impose
such other restrictions on shares of restricted stock as it may deem advisable or appropriate. Except as otherwise provided in the 2023
Plan, shares of restricted stock will be released from escrow as soon as practicable after the last day of the period of restriction or
at such other time as the administrator may determine. The administrator, in its discretion, may accelerate the time at which any restrictions
will lapse or be removed.

 During the period of restriction,
grantees holding shares of restricted stock granted under the 2023 Plan may exercise full voting rights with respect to those shares,
unless the administrator determines otherwise. During the period of restriction, grantees holding shares of restricted stock will be entitled
to receive all dividends and other distributions paid with respect to such shares, unless the administrator provides otherwise. If any
such dividends or distributions are paid in shares of common stock, the shares will be subject to the same restrictions on transferability
and forfeitability as the shares of restricted stock with respect to which they were paid.

 On the date set forth in the
award agreement, the restricted stock for which restrictions have not lapsed will revert to the Company and again will become available
for grant under the 2023 Plan.

 Restricted Stock Units

RSUs under the 2023 Plan to eligible participants in such amounts and upon such terms as the administrator determines and consistent with
the 2023 Plan. The administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are
met, will determine the number of RSUs that will be paid out to the grantee. The administrator may set vesting criteria based upon the
achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service),
applicable federal or state securities laws, or any other basis determined by the administrator in its discretion.

 Upon meeting the applicable
vesting criteria, the grantee will be entitled to receive a payout as determined by the administrator or as set forth in the applicable
award agreement. Notwithstanding the foregoing, at any time after the grant of RSUs, the administrator, in its sole discretion, may reduce
or waive any vesting criteria that must be met to receive a payout. Payment of earned RSUs will be made as soon as practicable after the
date(s) determined by the administrator and set forth in the award agreement. The administrator, in its sole discretion, may settle earned
RSUs in cash, shares of common stock, or a combination of both.

 Grantees will have no voting
rights with respect to shares of common stock represented by RSUs until the date of the issuance of such shares. However, the administrator,
in its discretion, may provide in the applicable award agreement that the grantee will be entitled to dividend equivalent rights with
respect to the payment of cash dividends on common stock during the period beginning on the date such award is granted and ending, with
respect to each share subject to the award, on the earlier of the date the award is settled or the date on which it is terminated. Dividend
equivalent rights, if any, shall be paid by crediting the grantee with a cash amount or with additional whole RSUs as of the date of payment
of such cash dividends on common stock, as determined by the administrator. The number of additional RSUs (rounded to the nearest whole
number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with
respect to the number of shares of common stock represented by the RSUs previously credited to the grantee by (b) the fair market value
per share of common stock on such date. Such cash amount or additional RSUs will be subject to the same terms and conditions and will
be settled in the same manner and at the same time as the RSUs originally subject to the RSU award. In the event of a dividend or distribution
paid in shares of common stock or other property or any other adjustment made upon a change in the capital structure of the Company as
provided in the 2023 Plan, appropriate adjustments will be made in the grantee's RSU award so that it represents the right to receive
upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends)
to which the grantee would be entitled by reason of the shares of common stock issuable upon settlement of the award, and all such new,
substituted or additional securities or other property shall be immediately subject to the same vesting conditions as are applicable to
the award.

 On the date set forth in the
award agreement, all unearned RSUs will be forfeited to the Company.

 Performance Units and Performance Shares

 Performance awards may be
granted to eligible participants at any time and from time to time, as will be determined by the Administrator, in its sole discretion.
Each performance unit will have an initial value that is established by the administrator on or before the date of grant. Each performance
share will have an initial value equal to the fair market value of a share of common stock on the date of grant.

 The administrator will set
performance objectives or other vesting provisions in its discretion which, depending on the extent to which they are met, will determine
the number or value of performance units/shares that will be paid out to the grantees. Each performance award will be evidenced by an
award agreement that will specify the performance period, and such other terms and conditions as the administrator, in its sole discretion,
will determine.

 The administrator may set
performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited
to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the administrator
in its discretion ("Performance Goals"). Performance Goals shall be established by the administrator on the basis of targets
to be attained ("Performance Targets") with respect to one or more measures of business or financial performance (each, a
"Performance Measure"), subject to the terms of the 2023 Plan.

 Performance measures may be
based upon one or more of the following, as determined by the administrator: (1) revenue; (2) sales; (3) expenses; (4) operating income;
(5) gross margin; (6) operating margin; (7) earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation
and amortization; (8) pre-tax profit; (9) net operating income; (10) net income; (11) economic value added; (12) free cash flow; (13)
operating cash flow; (14) balance of cash, cash equivalents and marketable securities; (15) stock price; (16) earnings per share; (17)
return on stockholder equity; (18) return on capital; (19) return on assets; (20) return on investment; (21) total stockholder return;
(22) employee satisfaction; (23) employee retention; (24) market share; (25) customer satisfaction; (26) product development; (27) research
and development expenses; (28) completion of an identified special project; and (29) completion of a joint venture or other corporate
transaction.

 After the applicable performance
period has ended, the holder of performance units/shares will be entitled to receive a payout of the number of performance units/shares
earned by the participant over the performance period, to be determined as a function of the extent to which the corresponding performance
objectives or other vesting provisions have been achieved. After the grant of a performance unit/share, the administrator, in its sole
discretion, may reduce or waive any performance objectives or other vesting provisions for such performance unit/share.

 Payment of earned performance
units or performance shares will be made as soon as practicable after the expiration of the applicable performance period. The administrator,
in its sole discretion, may pay earned performance units/shares in the form of cash, in shares of common stock (which have an aggregate
fair market value equal to the value of the earned performance units/shares at the close of the applicable performance period) or in a
combination thereof.

 On the date set forth in the
award agreement, all unearned or unvested performance units or performance shares will be forfeited to the Company, and again will be
available for grant under the 2023 Plan.

 Restricted stock and RSUs
granted to officers and employees may be granted with the intent that the award satisfy the "Performance-Based Exception"
(any such award intended to satisfy the Performance-Based Exception, a "Qualified Performance-Based Award"). The grant, vesting,
or payment of a Qualified Performance-Based Award may depend on the degree of achievement of one or more performance goals relative to
a pre-established targeted level or levels using one or more performance targets as determined by the administrator (on an absolute or
relative (including, without limitation, relative to the performance of one or more other companies or upon comparisons of any of the
indicators of performance relative to one or more other companies) basis, any of which may also be expressed as a growth or decline measure
relative to an amount or performance for a prior date or period) for the Company on a consolidated basis or for one or more of the Company's
subsidiaries, segments, divisions, or business or operational units, or any combination of the foregoing. The performance period applicable
to any performance units or performance shares may not be less than three months nor more than 10 years. To satisfy the Performance-Based
Exception, the performance measure(s) applicable to the Qualified Performance-Based Award and specific performance formula, goal or goals
("targets") must be established and approved by the administrator during the first 90 days of the applicable performance period
(and, in the case of performance periods of less than one year, in no event after 25% or more of the performance period has elapsed) and
while performance relating to such target(s) remains substantially uncertain within the meaning of Section 162(m) of the Code.

 Participants shall have no
voting rights with respect to shares of common stock represented by performance share awards until the date of the issuance of such shares
of common stock, if any. However, the administrator, in its discretion, may provide in the award agreement evidencing any performance
share award that the participant shall be entitled to dividend equivalent rights with respect to the payment of cash dividends on common
stock during the period beginning on the date the award is granted and ending, with respect to each share subject to the award, on the
earlier of the date on which the performance shares are settled or the date on which they are forfeited. Such dividend equivalent rights,
if any, shall be credited to the participant either in cash or in the form of additional whole performance shares as of the date of payment
of such cash dividends on common stock, as determined by the administrator and as provided in the 2023 Plan. Dividend equivalent rights
shall not be paid with respect to performance units.

 Other Equity-Based Awards and Other Cash-Based
Awards

other equity-based awards and other cash-based awards under the 2023 Plan to eligible persons, pursuant to the terms of the 2023 Plan.

 Amendment and Termination

 The administrator may amend,
alter, suspend or terminate the 2023 Plan. However, the Company will obtain stockholder approval of any amendment to the extent necessary
and desirable to comply with applicable laws.

 Federal Income Tax Effects of the 2023 Plan

 The federal income tax consequences
applicable to the Company in connection with ISOs, NQSOs, SARs, restricted stock, RSUs and performance awards are complex and depend,
in large part, on the surrounding facts and circumstances. A participant should consult with his or her tax advisor regarding the taxation
of awards under the Plan. Under current federal income tax laws, however, a participant will generally recognize income with respect to
grants of stock options, SARs, restricted stock, RSUs and performance awards as described below.

 Stock Options

 Stock options may be granted
in the form of ISOs or NQSOs. ISOs are eligible for favorable tax treatment under the Code. To meet the Code requirements, the maximum
value of ISOs that first become exercisable in any one year (determined as of the dates of grants of the ISOs) is limited to $100,000.
Under the Code, persons do not realize compensation income upon the grant of an ISO or NQSO. At the time of exercise of a NQSO, the holder
realizes compensation income in the amount of the difference between the grant price and the fair market value of the Company stock on
the date of exercise multiplied by the number of shares for which the option is exercised. At the time of exercise of an ISO, no compensation
income, however, is recognized but the difference between the grant price and the fair market value of the Company's common stock
on the date of exercise multiplied by the number of shares for which the option is exercised is an item of tax preference which may require
the payment of alternative minimum tax. The tax basis for determining capital gain or loss from the sale of stock acquired pursuant to
a NQSO is the fair market value of the stock or the date of exercise. If the shares acquired on exercise of an ISO are held for at least
two years after grant of the option and one year after exercise, the excess of the amount realized on sale over the exercise price is
taxed as capital gains. If the shares acquired on exercise of an ISO are disposed of, including disposition by gift, within two years
after grant or one year of exercise, the holder realizes compensation income equal to the excess of the fair market value of shares on
the date of exercise over the option price. Additional amounts realized are taxed as capital gains. The Company generally is entitled
to a deduction under the Code at the time and equal to the amount of compensation income realized by the holder of an option under the
2023 Plan.

 Compensation income recognized
by the exercise of NQSOs is subject to Federal Insurance Contributions Act ("FICA") and Medicare taxes when the optionee is
an employer and self-employment tax when the optionee is a director. Compensation income realized upon the premature disposition of stock
acquired pursuant to an ISO is not subject to FICA and Medicare taxes.

 SARs and RSUs

 SARs are taxed on the date
of exercise and RSUs are taxed on the date of vesting. A participant is taxed on the amount he or she is paid upon exercise of an SAR
or vesting of an RSU. The Company accrues a corresponding deduction. The amount taxed is also subject to FICA and Medicare taxes in the
case of an employee and self-employment tax in the case of a director.

 Restricted Stock

 Participants recognize as
taxable income the fair market value of restricted stock on the date the restriction period ends. The amount taxed is subject to FICA
and Medicare taxes in the case of an employee and self-employment tax in the case of a director. The Company is entitled to a corresponding
tax deduction at the same time. Dividends paid during the restricted period are taxable compensation/income to the participant and are
deductible by the Company. The value of the stock on the date the restriction period ends becomes the participant's tax basis for
determining subsequent capital gain or loss on the sale of the stock. A participant may elect to have the fair market value of restricted
stock taxed to him or her at the time of grant. In this event, the participant recognizes no income when the restrictions lapse. The participant's
tax basis in the stock, for determining capital gain or loss upon the subsequent sale of the stock, is the fair market value of the stock
on the date of grant. In this event, the Company accrues a tax deduction equal to the amount of income recognized by the participant on
the grant date, and the participant does not accrue a tax deduction or benefit in the event the stock is subsequently forfeited.

 Performance Awards

 Cash payments pursuant to
performance awards are taxable as compensatory income to a participant when it is paid and the Company accrues a corresponding income
tax deduction in this amount. The amount taxed is subject to FICA and Medicare taxes.

 Code Section 162(m)

 Section 162(m) of the Code
limits the deductibility by the Company of compensation paid to the CEO and the other four most highly compensated executives. Section
162(m) of the Code provides an exception to this deduction limitation for certain "qualified performance-based compensation."
Payments or grants under the 2023 Plan are intended to qualify as "qualified performance-based compensation" under the Code
and applicable regulations.

 Code Section 280G and 4999

 A 20% excise tax is imposed
under Code Section 4999 on participants who receive certain payments in connection with a change of control of the Company and the Company
cannot deduct such payments. It is possible that the value of accelerated vesting and lapse of restrictions on 2023 Plan awards could
constitute change of control payments and that (i) the value of the acceleration could be subject to the excise tax, (ii) this could cause
other Company change of control payments to be subject to the tax, and (iii) in this event, the Company would not be able to deduct these
items for income tax purposes.

 2021 Equity Incentive Plan

 Overview

 The Board of Directors and
stockholders of the Company approved the 2021 Equity Incentive Plan (the "2021 Plan") on August 6, 2021. Under the 2021 Plan,
2,400,000 shares of common stock are authorized for issuance to employees, directors and independent contractors (except those performing
services in connection with the offer or sale of the Company's securities in a capital raising transaction, or promoting or maintaining
a market for the Company's securities) of the Company or its subsidiary. The 2021 Plan authorizes equity-based and cash-based incentives
for participants. There were 4,330 shares available for award as of December 31, 2024 under the 2021 Plan.

 The purpose of 2021 Plan is
to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to
attract, motivate, retain and reward selected employees and other eligible persons. The Board may, at any time, terminate or, from time
to time, amend, modify or suspend this 2021 Plan, in whole or in part. To the extent then required by applicable law or any applicable
stock exchange or required under the Internal Revenue Code of 1986, as amended (the "Code"), to preserve the intended tax
consequences of the 2021 Plan, or deemed necessary or advisable by the Board, the 2021 Plan and any amendment to the 2021 Plan shall be
subject to stockholder approval. Unless earlier terminated by the Board, the 2021 Plan will terminate 10 years from the date of adoption.

 Authorized Shares

 A total of 2,400,000 shares
of the Company's common stock are authorized for issuance pursuant to the 2021 Plan. Subject to adjustment as provided in the 2021
Plan, the maximum aggregate number of shares that may be issued under the 2021 Plan will be cumulatively increased on January 1, 2022
and on each subsequent January 1, by a number of shares equal to the smaller of (i) 3% of the number of shares of common stock issued
and outstanding on the immediately preceding December 31, or (ii) an amount determined by the Board.

 Additionally, if any award
issued pursuant to the 2021 Plan expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an
exchange program, as provided in the 2021 Plan, or, with respect to restricted stock, restricted stock units ("RSUs"), performance
units or performance shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for
awards other than stock options or stock appreciation rights the forfeited or repurchased shares) which were subject thereto will become
available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated). With respect to stock appreciation rights,
only shares actually issued pursuant to a stock appreciation right will cease to be available under the 2021 Plan; all remaining shares
under stock appreciation rights will remain available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).
Shares that have actually been issued under the 2021 Plan under any award will not be returned to the 2021 Plan and will not become available
for future distribution under the 2021 Plan; provided, however, that if shares issued pursuant to awards of restricted stock, restricted
stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company due to the failure
to vest, such shares will become available for future grant under the 2021 Plan. Shares used to pay the exercise price of an award or
to satisfy the tax withholdings related to an award will become available for future grant or sale under the 2021 Plan. To the extent
an award under the 2021 Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares
available for issuance under the 2021 Plan.

 Notwithstanding the foregoing
and, subject to adjustment as provided in the 2021 Plan, the maximum number of shares that may be issued upon the exercise of incentive
stock options will equal the aggregate share number stated above, plus, to the extent allowable under Section 422 of the Code and regulations
promulgated thereunder, any shares that become available for issuance under the 2021 Plan in accordance with the foregoing.

 Plan Administration

 The Board or one or more committees
appointed by the Board will administer the 2021 Plan. In addition, if the Company determines it is desirable to qualify transactions under
the 2021 Plan as exempt under Rule 16b-3 of the Exchange Act, such transactions will be structured with the intent that they satisfy the
requirements for exemption under Rule 16b-3. Subject to the provisions of the 2021 Plan, the administrator has the power to administer
the 2021 Plan and make all determinations deemed necessary or advisable for administering the 2021 Plan, including the power to determine
the fair market value of the Company's common stock, select the service providers to whom awards may be granted, determine the number
of shares covered by each award, approve forms of award agreements for use under the 2021 Plan, determine the terms and conditions of
awards (including the exercise price, the time or times at which the awards may be exercised, any vesting acceleration or waiver or forfeiture
restrictions and any restriction or limitation regarding any award or the shares relating thereto), construe and interpret the terms of
the 2021 Plan and awards granted under it, prescribe, amend and rescind rules relating to the 2021 Plan, including creating sub-plans
and modify or amend each award, including the discretionary authority to extend the post-termination exercisability period of awards (provided
that no option or stock appreciation right will be extended past its original maximum term), and to allow a participant to defer the receipt
of payment of cash or the delivery of shares that would otherwise be due to such participant under an award. The administrator also has
the authority to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity
selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered or cancelled in exchange
for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type or cash, or
by which the exercise price of an outstanding award is increased or reduced. The administrator's decisions, interpretations and
other actions are final and binding on all participants.

 Eligibility

 Awards under the 2021 Plan,
other than incentive stock options, may be granted to employees (including officers) of the Company or a subsidiary, members of the Company's
Board, or consultants engaged to render bona fide services to the Company or a subsidiary. Incentive stock options may be granted only
to employees of the Company or a subsidiary.

 Stock Options

 Stock options may be granted
under the 2021 Plan. The exercise price of options granted under the 2021 Plan generally must at least be equal to the fair market value
of the Company's common stock on the date of grant. The term of each option will be as stated in the applicable award agreement;
provided, however, that the term may be no more than 10 years from the date of grant. The administrator will determine the methods of
payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well
as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant,
they may exercise their option for the period of time stated in their option agreement. In the absence of a specified time in an award
agreement, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, in the
absence of a specified time in an award agreement, the option will remain exercisable for three months following the termination of service.
An option may not be exercised later than the expiration of its term. Subject to the provisions of the 2021 Plan, the administrator determines
the other terms of options.

 Stock Appreciation Rights

 Stock appreciation rights
may be granted under the 2021 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value
of the Company's common stock between the exercise date and the date of grant. Stock appreciation rights may not have a term exceeding
10 years. After the termination of service of an employee, director or consultant, they may exercise their stock appreciation right for
the period of time stated in their stock appreciation right agreement. In the absence of a specified time in an award agreement, if termination
is due to death or disability, the stock appreciation rights will remain exercisable for 12 months. In all other cases, in the absence
of a specified time in an award agreement, the stock appreciation rights will remain exercisable for three months following the termination
of service. However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions
of the 2021 Plan, the administrator determines the other terms of stock appreciation rights, including when such rights become exercisable
and whether to pay any increased appreciation in cash or with shares of the Company's common stock, or a combination thereof, except
that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than
100% of the fair market value per share on the date of grant.

 Restricted Stock

 Restricted stock may be granted
under the 2021 Plan. Restricted stock awards are grants of shares of the Company's common stock that vest in accordance with terms
and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to
any employee, director or consultant and, subject to the provisions of the 2021 Plan, will determine the terms and conditions of such
awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may
set restrictions based on the achievement of specific performance goals or continued service to the Company); provided, however, that
the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted
stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the
administrator provides otherwise. Shares of restricted stock that do not vest are subject to the Company's right of repurchase or
forfeiture.

 Restricted Stock Units

 RSUs may be granted under
the 2021 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of the Company's
common stock. Subject to the provisions of the 2021 Plan, the administrator determines the terms and conditions of RSUs, including the
vesting criteria and the form and timing of payment. The administrator may set vesting criteria based upon the achievement of Company-wide,
divisional, business unit or individual goals (including continued employment or service), applicable federal or state securities laws
or any other basis determined by the administrator in its discretion. The administrator, in its sole discretion, may pay earned RSUs in
the form of cash, in shares of the Company's common stock or in some combination thereof. Notwithstanding the foregoing, the administrator,
in its sole discretion, may accelerate the time at which any vesting requirements will be deemed satisfied.

 Performance Units and Performance Shares

 Performance units and performance
shares may be granted under the 2021 Plan. Performance units and performance shares are awards that will result in a payment to a participant
only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish
performance objectives or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine
the number or the value of performance units and performance shares to be paid out to participants. The administrator may set performance
objectives based on the achievement of Company-wide, divisional, business unit or individual goals (including continued employment or
service), applicable federal or state securities laws or any other basis determined by the administrator in its discretion. After the
grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance criteria
or other vesting provisions for such performance units or performance shares. Performance units shall have an initial dollar value established
by the administrator on or prior to the grant date. Performance shares shall have an initial value equal to the fair market value of the
Company's common stock on the grant date. The administrator, in its sole discretion, may pay earned performance units or performance
shares in the form of cash, in shares or in some combination thereof.

 Non-Employee Directors

 The 2021 Plan provides that
all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2021 Plan. The
2021 Plan includes a maximum limit of $750,000 of equity awards that may be granted to a non-employee director in any fiscal year, increased
to $1,500,000 in connection with his or her initial service. For purposes of this limitation, the value of equity awards is based on the
grant date fair value (determined in accordance with accounting principles generally accepted in the United States). Any equity awards
granted to a person for their services as an employee, or for their services as a consultant (other than as a non-employee director),
will not count for purposes of the limitation. The maximum limit does not reflect the intended size of any potential compensation or equity
awards to the Company's non-employee directors.

 Non-transferability of Awards

 Unless the administrator provides
otherwise, the 2021 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award
during their lifetime. If the administrator makes an award transferrable, such award will contain such additional terms and conditions
as the administrator deems appropriate.

 Certain Adjustments

 In the event of certain changes
in the Company's capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the
2021 Plan, the administrator will adjust the number and class of shares that may be delivered under the 2021 Plan or the number, and price
of shares covered by each outstanding award and the numerical share limits set forth in the 2021 Plan.

 Dissolution or Liquidation

 In the event of the Company's
proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all awards will terminate immediately
prior to the consummation of such proposed transaction.

 Merger or Change in Control

 The 2021 Plan provides that
in the event of the Company's merger with or into another corporation or entity or a "change in control" (as defined
in the 2021 Plan), each outstanding award will be treated as the administrator determines, including, without limitation, that (i) awards
will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof)
with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a participant, that the participant's
awards will terminate upon or immediately prior to the consummation of such merger or change in control; (iii) outstanding awards will
vest and become exercisable, realizable or payable, or restrictions applicable to an award will lapse, in whole or in part, prior to or
upon consummation of such merger or change in control and, to the extent the administrator determines, terminate upon or immediately prior
to the effectiveness of such merger or change in control; (iv) (A) the termination of an award in exchange for an amount of cash or property,
if any, equal to the amount that would have been attained upon the exercise of such award or realization of the participant's rights
as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction
the administrator determines in good faith that no amount would have been attained upon the exercise of such award or realization of the
participant's rights, then such award may be terminated by the Company without payment) or (B) the replacement of such award with
other rights or property selected by the administrator in its sole discretion; or (v) any combination of the foregoing. The administrator
will not be obligated to treat all awards, all awards a participant holds, or all awards of the same type, similarly. In the event that
awards (or portion thereof) are not assumed or substituted for in the event of a merger or change in control, the participant will fully
vest in and have the right to exercise all of their outstanding options and stock appreciation rights, including shares as to which such
awards would not otherwise be vested or exercisable, all restrictions on restricted stock and RSUs will lapse and, with respect to awards
with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all
other terms and conditions met, in all cases, unless specifically provided otherwise under the applicable award agreement or other written
agreement between the participant and the Company or any of the Company's subsidiary or parents, as applicable. If an option or
stock appreciation right is not assumed or substituted in the event of a merger or change in control, the administrator will notify the
participant in writing or electronically that the option or stock appreciation right will be exercisable for a period of time determined
by the administrator in its sole discretion and the vested option or stock appreciation right will terminate upon the expiration of such
period.

 For awards granted to an outside
director, the outside director will fully vest in and have the right to exercise all of their outstanding options and stock appreciation
rights, all restrictions on restricted stock and RSUs will lapse and, for awards with performance-based vesting, unless specifically provided
for in the award agreement, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other
terms and conditions met.

 Clawback

 Awards will be subject to
any Company clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange
or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and
Consumer Protection Act or other applicable laws. The administrator also may specify in an award agreement that the participant's
rights, payments or benefits with respect to an award will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
of certain specified events. The Board may require a participant to forfeit, return or reimburse the Company all or a portion of the award
or shares issued under the award, any amounts paid under the award and any payments or proceeds paid or provided upon disposition of the
shares issued under the award in order to comply with such clawback policy or applicable laws.

 Amendment and Termination

 The administrator has the
authority to amend, suspend or terminate the 2021 Plan provided such action does not impair the existing rights of any participant. The
2021 Plan automatically will terminate on August 6, 2031, unless it is terminated sooner.

 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The following table sets forth
information regarding the beneficial ownership of our common stock as of December 31, 2024 by:

 each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

 each of our executive officers and directors that beneficially owns shares of our common stock; and

 all our executive officers and directors as a group.

 In the table below, percentage
ownership is based on 21,937,987 shares of our common stock issued and outstanding as of December 31, 2024. Unless otherwise
noted below, the address for each beneficial owner listed on the table is c/o HeartCore Enterprises, Inc., 1-2-33, Higashigotanda, Shinagawa-ku,
Tokyo, Japan. We have determined beneficial ownership in accordance with the rules of the SEC. We believe, based on the information furnished
to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common
stock that they beneficially own, subject to applicable community property laws.

 Name and Address of Beneficial Owner

 Number and

 Nature of Shares

 Beneficially

 Owned (1)

 Percentage of

 Outstanding

 Common Stock

 Directors and Executive Officers:

 10,647,393

 48.5
 %

 Keisuke Kuno

 69,239

 *

 109,705

 *

 Prakash Sadasivam

 2,500,000

 11.4
 %

 Ferdinand Groenewald

 -

 -

 Heather Marie Neville

 -

 -

 Koji Sato

 -

 -

 All executive officers and directors as a group (9 persons) (2)

 13,429,943

 61.2
 %

 Other 5% Stockholders:

 Daishin Yasui

 2,322,625

 10.6
 %

 *

 less than 1%.

 (1)

 The percentages in the table have been calculated based on 21,937,987 shares of our common stock outstanding on December 31, 2024. To calculate a stockholder's percentage of beneficial ownership, we include in the numerator and denominator the common stock outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other derivative securities owned by that person which are exercisable within 60 days of December 31, 2024. Common stock options and derivative securities held by other stockholders are disregarded in this calculation. Therefore, the denominator used in calculating beneficial ownership among our stockholders may differ. Unless we have indicated otherwise, each person named in the table has sole voting power and sole investment power for the shares listed opposite such person's name.

 (2)

 Includes the directors and named executive officers listed above, as well as (i) 72,048 shares beneficially owned by Hidekazu Miyata, our Chief Technical Officer, and (ii) 21,620 shares beneficially owned by Qizhi Gao, our Chief Financial Officer.

 Securities Authorized for Issuance under Equity
Compensation Plans

 The following table provides
information as of December 31, 2024, regarding our compensation plans under which equity securities are authorized for issuance:

 Plan Category

 Securities to

 be

 Issued Upon

 Exercise of

 Outstanding

 Options,

 Warrants

 and

 Rights

 Weighted-

 average

 Exercise

 Price of

 Outstanding

 Options,

 Warrants

 and

 Rights

 Remaining

 Available for

 Future

 Issuance

 Under Equity

 Compensation

 Plans

 (Excluding

 Reflected in

 Column (a))

 (a)

 (b)

 (c)

 Equity compensation plans approved by security holders

 2,395,670

 1.65

 1,934,677
 (1)

 Equity compensation plans not approved by security holders

 Total

 2,395,670

 1.65

 1,934,677

 (1)
 This represents shares of common stock issuable pursuant to
the 2023 Plan and the 2021 Plan.

 There were an aggregate of
1,934,677 shares available for award under the 2021 and 2023 Plans as of December 31, 2024.

 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 Policies and Procedures for Related Party Transactions

 Under Item 404 of SEC Regulation
S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions,
arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiary
were or are a party, or in which we or our subsidiary were or are a participant, in which the amount involved exceeded or exceeds the
lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which any of our
directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a "significant
shareholder"), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material
interest.

 We recognize that transactions
between us and any of our directors or executives or with a third party in which one of our officers, directors or significant shareholders
has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations
other than the best interests of our Company and stockholders.

 The Audit Committee of the
Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any
related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such transactions,
as reported or disclosed to the Audit Committee by the independent auditors, employees, officers, members of the Board of Directors or
otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated
party.

 From time to time, we engage
in transactions with related parties. The following is a summary of the related party transactions during the fiscal years ended December
31, 2024 and 2023, and any proposed transactions, requiring disclosure pursuant to Item 404 of Regulation S-K. We believe the terms obtained
or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms
available or the amounts that would be paid or received, as applicable, in arm's-length transactions.

 Related Party Transactions

2023, the Company had a due to related parties balance of $47 and $1,476, respectively, from Sumitaka Yamamoto, the Chief Executive Officer
("CEO") and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the
year ended December 31, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company
in a net amount of $1,338. During the year ended December 31, 2023, the related party paid operating expenses on behalf of the Company
and received the payments in a net amount of $1,123.

2023, the Company had a due to related parties balance of $885 and nil, respectively, from Luvina Software Joint Stock Company ("Luvina
Software"), the non-controlling interest shareholder of HeartCore Luvina. The balance is unsecured, non-interest bearing and due
on demand. During the year ended December 31, 2024, the related party paid operating expenses on behalf of the Company in the amount of
$899. As of December 31, 2024 and 2023, the Company had an accounts payable and accrued expenses balance of $47,199 and nil, respectively,
to Luvina Software. During the year ended December 31, 2024, the Company engaged the related party for software development and other
support services in the amount of $202,288.

2023, the Company had a loan receivable balance of $164,067 and $227,704, respectively, from Heartcore Technology Inc., a company controlled
by the CEO of the Company. The loan is 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 years ended December 31, 2024 and 2023, the
Company received repayments of $42,104 and $45,404, respectively, from this related party.

2023, the Company had a short-term debt balance of $75,000 and nil, respectively, to Prakash Sadasivam, the CEO of Sigmaways and Chief
Strategy Officer ("CSO") of the Company. The debt is borrowed from the related party for working capital purpose. The balance
is unsecured, bears an annual interest of 7.5%, and matures on June 30, 2025.

 Director Independence

 The Company's Board
of Directors has affirmatively determined that three of its six directors (Ferdinand Groenewald, Heather Neville, and Koji Sato) are independent
directors of the Company within the meaning of Nasdaq Capital Market's rules. During the fiscal year ended December 31, 2024, we
were a "controlled company" under Nasdaq Capital Market rules and therefore, were not required to have a majority of independent
directors on the Board.

 As a controlled company during
2024, the Company was not required to comply with certain corporate governance requirements under Nasdaq Capital Market rules, including,
but not limited to, the requirement that a majority of the Company's Board of Directors consist of "independent directors"
as defined by the applicable rules and regulations of Nasdaq Capital Market. Because we no longer qualify as a controlled company, on
February 14, 2025, we formed a compensation committee and a nominating and corporate governance committee, and we are required, subject
to a phase-in period, to have a majority of independent directors on the Board. We expect to comply with the majority independent director
requirement no later than the end of the phase-in period, which ends one year after we ceased to be a controlled company.

 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 The following is a summary
of fees paid or to be paid to MaloneBailey, LLP, our independent registered public accounting firm, for the fiscal years ended December
31, 2024 and 2023.

 Years Ended December 31,

 2024

 2023

 Audit Fees

 $
 609,779

 $
 620,000

 Audit Related Fees

 $
 -

 $
 -

 Tax Fees

 $
 -

 $
 -

 All Other Fees

 $
 -

 $
 -

 Total

 $
 609,779

 $
 620,000

 Audit Fees. Audit fees
consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally
provided by our independent registered public accounting firm in connection with regulatory filings. The above amounts include interim
procedures and audit fees, as well as attendance at Board meetings.

 Audit-Related Fees.
Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit
or review of our financial statements and are not reported under "Audit Fees." These services include attest services that
are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

 Tax Fees. Tax fees
consist of fees billed for tax planning services and tax advice. The board of directors must specifically approve all other tax services.

 All Other Fees. Other
services are services provided by the independent registered public accounting firm that do not fall within the established audit, audit-related,
and tax services categories. The board of directors preapproves specified other services that do not fall within any of the specified
prohibited categories of services.

 Pre-Approval Policy

 Since formation of our audit
committee, all of the foregoing services were pre-approved by our audit committee. Our audit committee will pre-approve all auditing services
and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis
exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the
audit).

 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)

 The following documents are filed as part of this annual report:

 (1)

 Financial Statements

 See Index to Financial Statements on page F-1.

 (2)

 Financial Statements Schedules

 All financial statements schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto beginning on page F-1 of this annual report.

 (3)

 Exhibits

 We hereby file as part of this annual report the exhibits listed in the Exhibit Index immediately before the signature page to this Annual Report on Form 10-K. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.

 Item
16. Form 10-K Summary

 INDEX TO FINANCIAL STATEMENTS

 Report of Independent Registered Public Accounting Firm (PCAOB ID 206)

 Consolidated Balance Sheets as of December 31, 2024 and 2023

 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

 Notes to Consolidated Financial Statements

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Shareholders and Board of Directors of

 HeartCore Enterprises, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of HeartCore Enterprises, Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2024 and
2023, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity, and cash flows
for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023,
and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ MaloneBailey, LLP

 www.malonebailey.com

 We have served as the Company's auditor since 2021.

 Houston, Texas

 F- 2

 CONSOLIDATED BALANCE SHEETS

 2024

 2023

 ASSETS

 Current assets:

 Cash and cash equivalents

 $
 2,121,089

 $

 Accounts receivable

 1,950,050

 2,623,682

 Investments in marketable securities

 4,495,703

 Investment in equity securities

 -

 300,000

 Prepaid expenses

 458,839

 536,865

 Current portion of long-term
 note receivable

 100,000

 100,000

 Due from related party

 40,139

 44,758

 Other
 current assets

 251,545

 234,761

 Total current
 assets

 9,417,365

 5,494,893

 Non-current assets:

 Accounts
 receivable, non-current

 752,930

 -

 Property and equipment, net

 584,854

 763,730

 Operating lease right-of-use
 assets

 1,936,097

 2,467,889

 Intangible asset, net

 -

 4,515,625

 Goodwill

 -

 Long-term investment in warrants

 577,786

 Long-term note receivable

 100,000

 200,000

 Deferred tax assets

 152,300

 369,436

 Security deposits

 307,996

 348,428

 Long-term loan receivable from
 related party

 123,928

 182,946

 Other
 non-current assets

 11,778

 Total non-current
 assets

 4,547,669

 14,128,874

 Total assets

 $
 13,965,034

 $
 19,623,767

 LIABILITIES AND SHAREHOLDERS'
 EQUITY

 Current liabilities:

 Accounts payable and accrued
 expenses

 $
 2,039,323

 $
 1,757,038

 Accounts payable and accrued
 expenses – related party

 47,199

 -

 Accrued payroll and other employee
 costs

 675,502

 723,305

 Due to related parties

 1,476

 Short-term debt

 -

 135,937

 Short-term debt – related
 party

 75,000

 -

 Current portion of long-term
 debts

 401,255

 371,783

 Insurance premium financing

 16,626

 -

 Factoring liability

 172,394

 562,767

 Operating lease liabilities,
 current

 371,951

 396,535

 Finance lease liabilities, current

 15,956

 17,445

 Income tax payables

 822,014

 162,689

 Deferred revenue

 1,876,490

 2,166,175

 Other
 current liabilities

 907,080

 216,405

 Total current
 liabilities

 7,421,722

 6,511,555

 Non-current liabilities:

 Long-term debts

 1,238,813

 1,770,352

 Operating lease liabilities,
 non-current

 1,614,996

 2,135,160

 Finance lease liabilities, non-current

 43,593

 66,779

 Deferred tax liabilities

 -

 1,264,375

 Other
 non-current liabilities

 183,895

 208,732

 Total non-current
 liabilities

 3,081,297

 5,445,398

 Total liabilities

 10,503,019

 11,956,953

 Shareholders' equity:

 Preferred shares ($ 0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of December 31, 2024 and 2023)

 -

 -

 Common shares ($ 0.0001 par value, 200,000,000 shares authorized; 21,937,987 and 20,842,690 shares issued and outstanding as of December 31, 2024 and 2023, respectively)

 2,193

 2,083

 Subscription
 receivable

 ( 103,942
)

 -

 Additional
 paid-in capital

 20,656,153

 19,594,801

 Accumulated
 deficit

 ( 16,244,843
)

 ( 14,763,469
)

 Accumulated
 other comprehensive income

 343,936

 331,881

 Total HeartCore Enterprises, Inc.
 shareholders' equity

 4,653,497

 5,165,296

 Non-controlling
 interests

 ( 1,191,482
)

 2,501,518

 Total shareholders'
 equity

 3,462,015

 7,666,814

 Total liabilities
 and shareholders' equity

 $
 13,965,034

 $
 19,623,767

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

 F- 3

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

 2024

 2023

 $

 $

 Cost of revenues

 12,579,359

 13,778,416

 Gross profit

 17,827,870

 8,067,414

 Operating expenses:

 -

 -

 Total operating expenses

 17,763,105

 12,186,769

 Income (loss) from operations

 64,765

 ( 4,119,355
)

 Other income (expenses):

 Changes in fair value of investments in marketable securities

 ( 2,412,385
)

 ( 615,520
)

 Changes in fair value of investment in warrants

 1,657,699

 ( 501,445
)

 Loss on sale of warrants

 ( 3,970,628
)

 -

 Impairment of investment in equity securities

 ( 300,000
)

 -

 Loss on forgiveness of note receivable

 ( 100,000
)

 -

 Interest income

 18,835

 70,624

 Interest expenses

 ( 144,033
)

 ( 162,968
)

 Government grants

 -

 76,612

 Other income

 260,918

 366,283

 Other expenses

 ( 424,893
)

 ( 124,595
)

 Total other expenses

 ( 5,414,487
)

 ( 891,009
)

 Loss before income tax benefit

 ( 5,349,722
)

 ( 5,010,364
)

 Income tax benefit

 ( 136,822
)

 ( 133,664
)

 ( 5,212,900
)

 ( 4,876,700
)

 Less: net loss attributable to non-controlling interests

 ( 3,731,526
)

 ( 686,810
)

 Net loss attributable to HeartCore Enterprises, Inc.

 $
 ( 1,481,374
)

 $
 ( 4,189,890
)

 Other comprehensive loss:

 Foreign currency translation adjustment

 ( 16,614
)

 ( 34,628
)

 Total comprehensive loss

 ( 5,229,514
)

 ( 4,911,328
)

 Less: comprehensive loss attributable to non-controlling interests

 ( 3,760,195
)

 ( 688,482
)

 Comprehensive loss attributable to HeartCore Enterprises, Inc.

 $
 ( 1,469,319
)

 $
 ( 4,222,846
)

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

 Basic

 $
 ( 0.07
)

 $
 ( 0.21
)

 Diluted

 $
 ( 0.07
)

 $
 ( 0.21
)

 Weighted average common shares outstanding

 Basic

 20,940,956

 20,404,642

 Diluted

 20,940,956

 20,404,642

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

 F- 4

 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY

 FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

 Common Shares

 Additional

 Accumulated Other

 Total HeartCore
 Enterprises, Inc.

 Non-

 Total

 Subscription

 Paid-in

 Accumulated

 Comprehensive

 Shareholders'

 controlling

 Shareholders'

 Shares

 Receivable

 Capital

 Deficit

 Income

 Equity

 Interests

 Equity

 Balance, December 31, 2022

 17,649,886

 $
 1,764

 $
 -

 $
 15,014,607

 $
 ( 10,573,579
)

 $
 364,837

 $
 4,807,629

 $
 -

 $
 4,807,629

 -

 -

 -

 -

 ( 4,189,890
)

 -

 ( 4,189,890
)

 ( 686,810
)

 ( 4,876,700
)

 Foreign currency translation adjustment

 -

 -

 -

 -

 -

 ( 32,956
)

 ( 32,956
)

 ( 1,672
)

 ( 34,628
)

 Issuance of common shares for acquisition of subsidiary

 2,500,000

 -

 3,149,750

 -

 -

 3,150,000

 -

 3,150,000

 Non-controlling interest arising from acquisition of subsidiary

 -

 -

 -

 -

 -

 -

 -

 3,190,000

 3,190,000

 692,804

 -

 1,430,444

 -

 -

 1,430,513

 -

 1,430,513

 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

 -

 -

 -

 -

 ( 1,481,374
)

 -

 ( 1,481,374
)

 ( 3,731,526
)

 ( 5,212,900
)

 Foreign currency translation adjustment

 -

 -

 -

 -

 -

 12,055

 12,055

 ( 28,669
)

 ( 16,614
)

 Capital contribution from non-controlling shareholder

 -

 -

 -

 -

 -

 -

 -

 67,195

 67,195

 Issuance of common shares

 1,004,190

 ( 103,942
)

 1,527,183

 -

 -

 1,423,342

 -

 1,423,342

 Distribution of dividends

 -

 -

 -

 ( 834,566
)

 -

 -

 ( 834,566
)

 -

 ( 834,566
)

 91,107

 -

 368,735

 -

 -

 368,744

 -

 368,744

 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

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

 F- 5

 HEARTCORE ENTERPRISE, INC.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 2024

 2023

 Cash flows from operating activities:

 $
 ( 5,212,900
)

 $
 ( 4,876,700
)

 Adjustments to reconcile net loss to net cash flows used in
 operating activities:

 Depreciation and amortization expenses

 749,639

 683,019

 Loss (gain) on disposal of property and equipment

 1,894

 ( 4,514
)

 Amortization of debt issuance costs

 4,567

 3,733

 Non-cash lease expense

 365,531

 346,070

 Loss (gain) on termination of lease

 ( 469
)

 -

 -

 Deferred income taxes

 ( 1,076,600
)

 ( 291,596
)

 368,744

 1,430,513

 Marketable securities received as noncash consideration

 ( 572,010
)

 -

 Warrants received as noncash consideration

 ( 12,969,683
)

 ( 3,763,621
)

 Changes in fair value of investments in marketable securities

 2,412,385

 615,520

 Changes in fair value of investment in warrants

 ( 1,657,699
)

 501,445

 Loss on sale of warrants

 3,970,628

 -

 Impairment of investment in equity securities

 300,000

 -

 Impairment of investment in SAFE

 75,000

 -

 Loss on forgiveness of note receivable

 100,000

 -

 Changes in assets and liabilities:

 Accounts receivable

 ( 193,369
)

 ( 338,312
)

 Prepaid expenses

 210,477

 359,310

 Other assets

 ( 38,336
)

 ( 133,550
)

 Accounts payable and accrued expenses

 331,685

 532,790

 Accounts payable and accrued expenses – related party

 47,955

 -

 Accrued payroll and other employee costs

 3,623

 152,101

 Due to related parties

 ( 1,338
)

 1,123

 Operating lease liabilities

 ( 371,877
)

 ( 327,877
)

 Income tax payables

 669,142

 162,045

 Deferred revenue

 ( 156,527
)

 553,130

 Other liabilities

 710,001

 64,086

 Net cash flows used in operating activities

 ( 4,774,971
)

 ( 4,331,209
)

 Cash flows from investing activities:

 Purchases of property and equipment

 ( 7,446
)

 ( 526,260
)

 Proceeds from disposal of property and equipment

 -

 24,814

 Advances on note receivable

 -

 ( 600,000
)

 Purchase of investment in SAFE

 ( 75,000
)

 -

 Net proceeds from sale of warrants

 5,640,000

 -

 Proceeds from sale of marketable securities

 749,546

 -

 Repayment of loan provided to related party

 42,104

 45,404

 Payment for acquisition of subsidiary, net of cash acquired

 -

 ( 724,910
)

 Net cash flows provided by (used in) investing activities

 6,349,204

 ( 1,780,952
)

 Cash flows from financing activities:

 Payments for finance leases

 ( 16,766
)

 ( 22,422
)

 Proceeds from short-term and long-term debts

 68,138

 710,107

 Proceeds from related party debt

 75,000

 -

 Repayment of short-term and long-term debts

 ( 554,553
)

 ( 711,395
)

 Repayment of insurance premium financing

 ( 156,063
)

 ( 389,035
)

 Net proceeds from factoring arrangement

 -

 562,767

 Net repayment of factoring arrangement

 ( 390,373
)

 -

 Payments for debt issuance costs

 -

 ( 13,828
)

 Distribution of dividends

 ( 834,566
)

 -

 Capital contribution from non-controlling shareholder

 67,195

 -

 Proceeds from issuance of common shares

 1,423,342

 -

 Net cash flows provided by (used in) financing activities

 ( 318,646
)

 136,194

 Effect of exchange rate changes

 ( 146,977
)

 ( 188,880
)

 Net change in cash and cash equivalents

 1,108,610

 ( 6,164,847
)

 Cash and cash equivalents – beginning of the year

 7,177,326

 Cash and cash equivalents – end of the year

 $
 2,121,089

 $

 Supplemental cash flow disclosure:

 Interest paid

 $
 143,101

 $
 85,634

 Income taxes paid

 $
 298,466

 $
 91,707

 Non-cash investing and financing transactions:

 Finance lease right-of-use assets obtained in exchange for finance
lease liabilities

 $
 -

 $
 93,217

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

 $
 125,735

 $
 317,040

 Remeasurement of operating lease liabilities and right-of-use assets
due to lease modification

 $
 23,956

 $
 30,186

 Insurance premium financing

 $
 172,689

 $
 389,035

 Common shares issued for acquisition of subsidiary

 $
 -

 $
 3,150,000

 Warrants converted to marketable securities

 $
 6,443,276

 $
 1,257,868

 Note receivable converted to investment in equity securities

 $
 -

 $
 300,000

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

 F- 6

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS

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

 On July 16, 2021, HeartCore USA 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, HeartCore USA 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, HeartCore USA purchased the
remaining 278 shares of common shares of HeartCore Japan. As a result, HeartCore Japan became a wholly-owned operating subsidiary of HeartCore
USA.

 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 HeartCore USA 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
consolidated financial statements.

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

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

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

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

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

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

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

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

 F- 7

 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

 Basis of Presentation and Principles of Consolidation

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

 Non-controlling Interests

 The portion of the income or loss applicable to
the non-controlling interests in subsidiaries is separately reflected in the consolidated statements of operations and comprehensive loss.

 Use of Estimates

 In preparing the 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 consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information
available as of the date of the consolidated financial statements. Significant estimates required to be made by management include,
but are not limited to, useful lives of property and equipment and intangible asset, the impairment of long-lived assets and
goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and
finance leases, valuation of asset retirement obligations, valuation of investment in warrants, revenue recognition with respect to
fair value of noncash consideration and allocation of transaction price, and purchase price allocation with respect to business
combination. Actual results could differ from those estimates.

 Cash and Cash Equivalents

 Cash and cash equivalents include cash on hand
and deposits in banks and other financial institutions that are unrestricted as to withdrawal or use.

 Accounts Receivable

 Accounts receivable represents the amounts that
the Company has an unconditional right to consideration, which are stated at the original amount less an allowance for credit losses.
The allowance for credit losses reflects the Company's current estimate of credit losses expected to be incurred over the life of
the receivables. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including
the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company
also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect
a customer's ability to pay in establishing and adjusting its allowance for credit losses. Accounts receivable balances are written
off after all collection efforts have ceased. The allowance is recorded against accounts receivable balances, with a corresponding charge
recorded in the consolidated statements of operations and comprehensive loss. In circumstances in which the Company receives payment for
accounts receivable that have previously been written off, the Company reverses the allowance and credit losses.

 Property and Equipment, Net

 Property and equipment are stated at cost less
accumulated depreciation. Depreciation is calculated using the straight-line and declining methods over the estimated useful lives, as
more details follow:

 Depreciation
 Method

 Useful
 Life

 Leasehold improvements

 Straight-line method

 Shorter of estimated useful life or lease term

 Machinery and equipment

 Straight-line or declining balance method

 2 – 19 years

 Vehicle

 Straight-line method

 5 years

 Software

 Straight-line method

 5 years

 Expenditures for maintenance and repairs, which
do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments,
which substantially extend the useful lives of the assets, are capitalized. The cost and related accumulated depreciation of assets retired
or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and
comprehensive loss.

 F- 8

 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 ("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:

2024

2023

 Beginning balance

 $
 208,732

 $
 138,018

 Liabilities incurred

 -

 83,821

 Accretion expense

 Liabilities settled

 ( 3,779
)

 -

 Foreign currency translation adjustment

 ( 21,400
)

 ( 13,535
)

 Ending balance

 $
 183,895

 $
 208,732

 Lease – Lessee

 The Company determines whether a contract is or
contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease.
Lease terms of certain operating leases include the non-cancellable period for which the Company has the right to use the underlying asset,
together with renewal option periods when the exercise of the renewal option is reasonably certain.

 The Company leases office facilities, which are
classified as operating leases and leases office equipment and vehicles, which are classified as finance leases in accordance with ASC
Topic 842, "Leases". Under ASC Topic 842, lessees are required to recognize the following for all leases on the commencement
date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted
basis; and (ii) right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified
asset for the lease term. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current,
and operating lease liabilities, non-current, and finance leases are included in property and equipment, net, finance lease liabilities,
current, and finance lease liabilities, non-current in the consolidated balance sheets.

 As most of the Company's leases do not provide
an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining
the present value of future payments.

 The Company has elected the short-term lease exception,
and therefore operating lease right-of-use assets and liabilities do not include leases with a lease term of twelve months or less.

 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 years ended December 31, 2024 and 2023,
software development costs expensed as incurred amounted to $ 729,584 and $ 1,019,141, respectively. These software development costs were
included in the research and development expenses.

 F- 9

 Investment in Warrants

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

 Investments in Marketable Securities

 Investments in marketable securities represent
equity securities registered for public sale with readily determinable fair value. The marketable securities are obtained through stocks
of its customers received as noncash consideration from consulting services and through exercise of stock warrants of its consulting service
customers and measured at fair value with changes in fair value recognized in other income (expenses).

 Investment in Equity Securities

 Investment in equity securities represents investment
in a privately held entity that does not have a readily determinable fair value or report net asset value. Investment in equity securities
is accounted for using a measurement alternative, under which this investment is measured at cost, adjusted for observable price changes
and impairments, with changes recognized in other income (expenses). Investment in equity securities is classified as current asset if
the Company anticipates to dispose of the investment within one year from the date of receipt.

 Intangible Asset, Net

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

 Impairment of Long-Lived Assets Other Than
Goodwill

 Long-lived assets with finite lives, primarily
property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the
asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down
to its fair value.

 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 assessment for impairment at the reporting unit level at least annually or
more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value
is generally determined using a discounted cash flow analysis.

 Foreign Currency Translation

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

 The reporting currency of the Company is the US$,
and the accompanying consolidated financial statements have been expressed in US$. 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 consolidated statements of changes in shareholders' equity.

 F- 10

 Translation of amounts from the functional currency
of the Company into US$ 1 has been made at the following exchange rates:

2024

2023

 Current JPY: US$1 exchange rate

 158.15

 141.83

 Average JPY: US$1 exchange rate

 150.77

 139.81

 Current EUR: US$1 exchange rate

 0.97

 0.91

 Average EUR: US$1 exchange rate

 0.92

 0.92

 Current CAD: US$1 exchange rate

 1.44

 1.34

 Average CAD: US$1 exchange rate

 1.37

 1.35

 Current VND: US$1 exchange rate

 25,435.50

 24,264.20

 Average VND: US$1 exchange rate

 25,034.67

 23,825.87

 Revenue Recognition

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

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

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

 Revenues from On-premise Software

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

 F- 11

 Revenues from Software Development and Other
Miscellaneous Services

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

from Customized Software Development and Services

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

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 services
contracts normally include both cash and noncash considerations. Cash consideration is paid in installment payments and is recognized
in revenues over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash
consideration is in the form of stocks and 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.

 Sales Returns and Allowances

 The Company records reduction to revenues for
estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well
as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain,
may differ from the Company's estimates. If the Company determines that actual or expected returns or allowances are significantly
higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in
which it makes such a determination. Reserves for customer refunds are included within other current liabilities on the consolidated balance
sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

 Contract Balances

 The timing of revenue recognition may differ from
the timing of invoicing to the customers. The Company determines that its contracts do not include a significant financing component.
The Company records a contract asset, which is included in accounts receivable, current or non-current, in the consolidated balance sheets,
when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation
is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash
collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets.
The amount of revenues recognized during the years ended December 31, 2024 and 2023 that were included in the opening deferred revenue
balance are approximately $ 1.8 million and $ 1.6 million, respectively.

 Disaggregation of Revenues

 The Company disaggregates its revenues from contracts
by product/service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash
flows are affected by economic factors. The Company's disaggregation of revenues by revenue stream for the years ended December
31, 2024 and 2023 is as following:

 2024

 2023

 Revenues from on-premise software

 $
 2,700,769

 $
 1,586,218

 Revenues from maintenance and support services

 2,625,992

 2,646,148

 Revenues from software as a service ("SaaS")

 564,292

 635,927

 Revenues from software development and other miscellaneous services

 1,925,117

 1,980,979

 Revenues from customized software development and services

 7,854,285

 8,784,239

 Revenues from consulting services

 14,736,774

 6,212,319

 $

 $

 F- 12

 The Company's disaggregation of revenues
by product/service for the years ended December 31, 2024 and 2023 is as following:

 2024

 2023

 Revenues from customer experience management platform

 $
 6,880,708

 $
 5,602,473

 Revenues from process mining

 214,085

 399,300

 Revenues from robotic process automation

 256,796

 325,986

 Revenues from task mining

 285,643

 376,682

 Revenues from customized software development and services

 7,854,285

 8,784,239

 Revenues from consulting services

 14,736,774

 6,212,319

 Revenues from others

 178,938

 144,831

 $

 $

 Cost of Revenues

 Cost of revenues primarily consists of salaries
and outsourcing expenses (e.g., bonuses, employee benefits, payroll taxes, outsourcing professional fees) for personnel and parties directly
involved in the delivery of products and services to customers. Cost of revenues also includes royal/license payments to vendors, and
hosting and infrastructure costs related to the delivery of the Company's products and services.

 Advertising Expenses

 Advertising expenses consist primarily of costs
of promotion and marketing for the Company's image and products and services, and costs of direct advertising, and are included
in selling expenses. The Company expenses advertising costs as incurred or the first time the advertising takes place, whichever is earlier,
in accordance with the ASC Topic 720-35, "Advertising Costs". The advertising expenses are $ 473,132 and $ 832,491 for the years
ended December 31, 2024 and 2023, respectively.

 Concentration of Credit Risk

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

 For the year ended December 31, 2024, customer
A represents 43.8 % of the Company's total revenues. For the year ended December 31, 2023, customer B, C and D represent 15.1 %, 10.4 %
and 10.1 %, respectively, of the Company's total revenues.

 For the years ended December 31, 2024 and 2023,
no vendor accounts for more than 10% of the Company's total purchases.

 Segment Reporting

 ASC Topic 280, "Segment Reporting",
requires use of the management approach model for segment reporting. The management approach model is based on the way a company's
chief operating decision maker ("CODM") organizes segments within the Company for making operating decisions assessing performance
and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or
any other manner in which management disaggregates a company (see NOTE 20).

 Comprehensive Income or Loss

 ASC Topic 220, "Comprehensive
Income", establishes standards for reporting and display of comprehensive income or loss, its components and accumulated
balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated
other comprehensive income (loss), as presented in the accompanying consolidated statements of changes in shareholders' equity,
consists of changes in unrealized gains and losses on foreign currency translation.

 F- 13

 Loss Per Share

 The Company computes basic and diluted loss per
share in accordance with ASC Topic 260, "Earnings Per Share". Basic loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during the reporting period. Diluted loss per share is computed by dividing net loss
by the weighted average number of common shares and potentially dilutive common shares outstanding during the reporting period. Potentially
dilutive common shares are not included in the calculation of diluted loss per share if their effect would be anti-dilutive.

 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 consolidated statements of operations and comprehensive
loss based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service
period or vesting period. The Company records forfeitures as they occur.

 Related Parties and Transactions

 The Company identifies related parties, and accounts
for and discloses related party transactions in accordance with ASC Topic 850, "Related Party Disclosures" and other relevant
ASC standards.

 Parties, which can be an entity or individual,
are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence
over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common
control or common significant influence.

 Transactions involving related parties cannot
be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive and free market dealings may
not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions are consummated
on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 Income Taxes

 Income taxes are accounted for using an asset
and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes". Under this method, income
tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences
of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred
tax assets also include the prior years' net operating losses carried forward. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the
period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the
weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will
not be realized.

 The Company follows ASC Topic 740, which prescribes
a more-likely-than-not threshold for financial statements recognition and measurement of a tax position taken or expected to be taken
in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and
deferred tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes
in interim periods, and income tax disclosures.

 Under the provisions of ASC Topic 740, when tax
returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others
are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The
benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits
is classified as interest expenses and penalties are classified in general and administrative expenses in the consolidated statements
of operations and comprehensive loss.

 F- 14

 Business Combinations

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

 Consideration transferred in a business combination
is measured at the fair value as of the acquisition date. 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 consolidated statements of operations and comprehensive loss.

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

 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 December 31, 2024 and 2023, the carrying
values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported
in the consolidated balance sheets due to the short-term maturities of these instruments.

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

 Fair Value Measurements as of December 31, 2024

 Quoted Prices in Active Markets for Identical Assets
 (Level 1)

 Significant Other
 Observable
 Inputs
 (Level 2)

 Unobservable
 Inputs
 (Level 3)

 Fair Value at
 2024

 Investments in marketable securities

 4,495,703

 -

 -

 4,495,703

 Long-term investment in warrants

 -

 577,786

 -

 577,786

 Fair Value Measurements as of December 31, 2023

 Quoted Prices in Active Markets for Identical Assets
 (Level 1)

 Significant Other
 Observable
 Inputs
 (Level 2)

 Unobservable
 Inputs
 (Level 3)

 Fair Value at
 2023

 Investments in marketable securities

 -

 -

 Long-term investment in warrants

 -

 -

 F- 15

 Recent Accounting Pronouncements

 New Accounting Pronouncements Recently Adopted

 In November 2023, the FASB issued Accounting Standards
Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual
and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.
ASU No. 2023-07 is effective for public companies for annual reporting periods beginning after December 15, 2023, on a retrospective basis.
The Company adopted ASU No. 2023-07 on January 1, 2024 (see NOTE 20).

 New Accounting Pronouncements Not Yet Effective

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

 In November 2024, the FASB issued ASU No. 2024-03,
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of
Income Statement Expenses, requiring public companies to disclose additional information about specific expense categories in the notes
to the consolidated financial statements on an annual and interim basis. ASU No. 2024-03 is effective for fiscal years beginning after
December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating
the impact of this ASU on its consolidated financial statements and related disclosures.

 NOTE 3 – ACCOUNTS RECEIVABLE

 Accounts receivable consist of the following:

2024

2023

 Accounts receivable – non-factored

 $
 2,485,417

 $
 2,060,915

 Accounts receivable – factored with recourse

 217,563

 562,767

 Total accounts receivable, gross

 2,702,980

 2,623,682

 Less: allowance for credit losses

 -

 -

 Total accounts receivable

 2,702,980

 2,623,682

 Less: current portion

 ( 1,950,050
)

 ( 2,623,682
)

 Accounts receivable, non-current

 $
 752,930

 $
 -

 NOTE 4 – PREPAID EXPENSES

 Prepaid expenses consist of the following:

2024

2023

 Prepayments to software and consulting services vendors

 $
 188,528

 $
 199,376

 Prepaid marketing fees

 32,129

 92,546

 Prepaid subscription fees

 115,593

 95,971

 Prepaid insurance premium

 44,023

 72,668

 Others

 78,566

 76,304

 Total prepaid expenses

 $
 458,839

 $
 536,865

 F- 16

 NOTE 5 – RELATED PARTY TRANSACTIONS

 As of December 31, 2024 and 2023, the Company
had a due to related parties balance of $ 47 and $ 1,476, respectively, from Sumitaka Yamamoto, the Chief Executive Officer ("CEO")
and major shareholder of the Company. The balance is unsecured, non-interest bearing and due on demand. During the year ended December
31, 2024, the Company repaid to the related party for operating expenses the related party paid on behalf of the Company in a net amount
of $ 1,338. During the year ended December 31, 2023, the related party paid operating expenses on behalf of the Company and received the
payments in a net amount of $ 1,123.

 As of December 31, 2024 and 2023, the Company
had a due to related parties balance of $ 885 and nil, respectively, from Luvina Software Joint Stock Company ("Luvina Software"),
the non-controlling interest shareholder of HeartCore Luvina. The balance is unsecured, non-interest bearing and due on demand. During
the year ended December 31, 2024, the related party paid operating expenses on behalf of the Company in the amount of $ 899. As of December
31, 2024 and 2023, the Company had an accounts payable and accrued expenses balance of $ 47,199 and nil, respectively, to Luvina Software.
During the year ended December 31, 2024, the Company engaged the related party for software development and other support services in
the amount of $ 202,288.

 As of December 31, 2024 and 2023, the Company
had a loan receivable balance of $ 164,067 and $ 227,704, respectively, from Heartcore Technology Inc., a company controlled by the CEO
of the Company. The loan is 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 years ended December 31, 2024 and 2023, the Company
received repayments of $ 42,104 and $ 45,404, respectively, from this related party.

 As of December 31, 2024 and 2023, the Company
had a short-term debt balance of $ 75,000 and nil, respectively, to Prakash Sadasivam, the CEO of Sigmaways and Chief Strategy Officer
("CSO") of the Company. The debt is borrowed from the related party for working capital purpose. The balance is unsecured,
bears an annual interest of 7.5 %, and matures on June 30, 2025.

 NOTE 6 – INVESTMENTS

 Investment in Equity Securities

 On May 2, 2023, the Company purchased a $ 300,000
promissory note from a non-related company. The note bears an interest rate of 8 % per annum and matures on the earlier of 1) the date
of the closing of capital-raising transactions in the amount of $ 300,000 or more consummated by the promissory note issuer, 2) the date
on which the promissory note issuer completes its initial public offering on the Nasdaq Capital Market or New York Stock Exchange, or
3) 180 days following the note issuance. The interest rate would be 12 % per annum for any amount that is unpaid when due. On July 27,
2023, the Company entered into a note exchange agreement with the promissory note issuer to convert all of the promissory note principal
amount and accrued interest into 600,000 shares of common shares of the promissory note issuer. The Company recognized impairment loss
on investment in equity securities of $ 300,000 and nil for the years ended December 31, 2024 and 2023, respectively.

 Investment in Warrants

 The Company received warrants from its customers
as noncash consideration from consulting services. The warrants are not registered for public sale and are initially measured at fair
value at contract inception using the Black-Scholes model and binomial model with the assistance of a third-party valuation appraiser.
 The following table summarizes the inputs to the models used to estimate the fair value of the warrants received and recognized as consulting
services revenues for the years ended December 31, 2024 and 2023:

 2024

 2023

 Stock price

 $
 4.14

 $
 3.38 – 439.99

 Exercise price

 $
 0.01

 $
 0.01

 Expected volatility

 50.00
 %

 52.57 % – 96.30
 %

 Time to maturity (in years)

 Risk-free interest rate

 3.88
 %

 3.52 % – 4.12
 %

 F- 17

 The Company's investment in warrants is
measured on a recurring basis and carried on the balance sheets at an estimated fair value at the end of the year. The valuation of investment
in warrants is determined using the Black-Scholes model. The following table summarizes the inputs to the model used to estimate the fair
value of the investment in warrants as of December 31, 2024 and 2023:

2024

2023

 Stock price

 $

 $

 Exercise price

 $
 0.01

 $
 0.01

 Expected volatility

 145.94
 %

 48.52
 %

 Time to maturity (in years)

 8.25

 9.25

 Risk-free interest rate

 4.48
 %

 3.88
 %

 The following table summarizes the Company's
investment in warrants activities for the years ended December 31, 2024 and 2023:

 2024

 2023

 Fair value of investment in warrants at beginning of the year

 $

 $
 -

 Warrants received as noncash consideration

 12,969,683

 3,763,621

 Changes in fair value of investment in warrants

 1,657,699

 ( 501,445
)

 Warrants converted to marketable securities

 ( 6,443,276
)

 ( 1,257,868
)

 Warrants sold*

 ( 9,610,628
)

 -

 Fair value of investment in warrants at end of the year

 $
 577,786

 $

 *
 On
February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants
it received from a customer ("Consulting Customer") as noncash consideration from consulting services for $ 9,000,000 in cash.
The warrants to be transferred are exercisable only upon its Consulting Customer's consummation of the Merger with a special purpose
acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.
The Company completed its sale of warrants in September 2024 and recorded $ 3,970,628 in loss on sale of warrants from this transaction.

 Investments in Marketable Securities

 The Company's investments in marketable
securities represent stocks received from its customers as noncash consideration from consulting services and stocks received upon the
exercise of warrants described above. They are registered for public sale with readily determinable fair values, and are measured at quoted
prices on a recurring basis at the end of the year. The following table summarizes the Company's investments in marketable securities
activities for the years ended December 31, 2024 and 2023:

 2024

 2023

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

 $

 $
 -

 Marketable securities received as noncash consideration

 572,010

 -

 Marketable securities converted from warrants

 6,443,276

 1,257,868

 Changes in fair value of investments in marketable securities

 ( 2,412,385
)

 ( 615,520
)

 Marketable securities sold

 ( 749,546
)

 -

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

 $
 4,495,703

 $

 F- 18

 NOTE 7 – LONG-TERM NOTE RECEIVABLE

 On September 1, 2023, the Company purchased a
$ 300,000 promissory note from a non-related company. The note bears an interest rate of 4 % per annum and matures on September 2, 2026.
On the first business day following each annual anniversary of September 1, 2023, the promissory note issuer shall pay to the Company
the sum of one-third of the total promissory note amount due and outstanding, including all accrued and unpaid interest as of such time,
unless such annual payment has been forgiven by the Company pursuant to certain conditions. The interest rate would be 10 % per annum for
any amount that is unpaid when due. The Company forgave the first annual payment of the promissory note and recognized loss on forgiveness
of long-term note receivable of $ 100,000 during the year ended December 31, 2024.

 NOTE 8 – PROPERTY AND EQUIPMENT, NET

 Property and equipment, net consist of the following:

2024

2023

 Leasehold improvements

 $
 440,333

 $
 496,810

 Machinery and equipment

 646,252

 706,145

 Vehicle

 80,586

 89,859

 Software

 135,089

 150,633

 Subtotal

 1,302,260

 1,443,447

 Less: accumulated depreciation

 ( 717,406
)

 ( 679,717
)

 Property and equipment, net

 $
 584,854

 $
 763,730

 Depreciation expenses are $ 112,139 and $ 98,644
for the years ended December 31, 2024 and 2023, respectively.

 NOTE 9 – INTANGIBLE ASSET, NET

 Intangible asset, net is as follows:

 2024

 2023

 Customer relationship

 $
 5,100,000

 $
 5,100,000

 Less: accumulated amortization

 ( 1,221,875
)

 ( 584,375
)

 Less: accumulated impairment

 ( 3,878,125
)

 -

 Intangible asset, net

 $
 -

 $
 4,515,625

 Amortization expenses are $ 637,500 and $ 584,375
for the years ended December 31, 2024 and 2023, respectively.

 NOTE 10 – LEASES

 The Company has entered into operating leases
for office space with terms ranging from two to fifteen years, and finance leases for office equipment and vehicle with terms of five
years. The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the
determination of the lease term and initial measurement of right-of-use assets and lease liabilities is included in the consolidated financial
statements. Right-of-use assets of finance leases of $ 60,440 and $ 85,613 are included in property and equipment, net as of December 31,
2024 and 2023, respectively.

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

 F- 19

 The components of lease costs are as follows:

 2024

 2023

 Finance lease costs

 Amortization of right-of-use assets

 $
 17,139

 $
 19,699

 Interest on lease liabilities

 Total finance lease costs

 18,076

 20,087

 Operating lease costs

 400,840

 388,633

 Short-term lease costs

 -

 51,582

 Total lease costs

 $
 418,916

 $
 460,302

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

 2024

 2023

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

 Operating cash flows from finance leases

 $

 $

 Operating cash flows from operating leases

 408,962

 361,929

 Financing cash flows from finance leases

 16,766

 22,422

 Finance lease right-of-use assets obtained in exchange for finance lease liabilities

 -

 93,217

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

 125,735

 317,040

 Remeasurement of operating lease liabilities and right-of-use assets due to lease modification

 23,956

 30,186

 Weighted average remaining lease term (years)

 Finance leases

 3.8

 4.7

 Operating leases

 6.8

 7.5

 Weighted-average discount rate (per annum)

 Finance leases

 1.32
 %

 1.32
 %

 Operating leases

 1.37
 %

 1.34
 %

 As of December 31, 2024, the future maturity of
lease liabilities is as follows:

 Year Ended December 31,

 Finance

Lease

 Operating

Leases

 2025

 $

 $
 394,538

 2026

 301,182

 2027

 2028

 11,093

 2029

 -

 Thereafter

 -

 603,091

 Total lease payments

 61,013

 2,077,335

 Less: imputed interest

 ( 1,464
)

 ( 90,388
)

 Total lease liabilities

 59,549

 1,986,947

 Less: current portion

 ( 15,956
)

 ( 371,951
)

 Non-current lease liabilities

 $
 43,593

 $
 1,614,996

 Pursuant to the operating lease agreements, the
Company made security deposits to the lessors. The security deposits amounted to $ 307,996 and $ 348,428 as of December 31, 2024 and 2023,
respectively.

 F- 20

 NOTE 11 – OTHER CURRENT LIABILITIES

 Other current liabilities consist of the following:

2024

2023

 Accrued consumption taxes

 $
 277,593

 $
 143,702

 Customer refund liability*

 500,000

 -

 Others

 129,487

 72,703

 Total other current liabilities

 $
 907,080

 $
 216,405

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

 NOTE 12 – FACTORING LIABILITY

 Sigmaways, the subsidiary acquired by the Company
in February 2023, entered into a factoring and security agreement ("Factoring Agreement") with The Southern Bank Company,
an unrelated factor ("Factor"), in 2017, for the purpose of factoring certain accounts receivable. Under the terms of the
Factoring Agreement, Sigmaways may offer for sale, and the Factor may purchase in its sole discretion, certain accounts receivable of
Sigmaways ("Purchased Receivable"). The Factoring Agreement provided for a maximum of $ 850,000 in Purchased Receivable.

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

 The Factoring Agreement specifies that eligible
accounts receivable is factored with recourse. Under the terms of the recourse provision, Sigmaways is required to reimburse the Factor,
upon demand, for Purchased Receivable that is not paid on time by the customers. The performance of all obligations and payments to the
Factor is personally guaranteed by Prakash Sadasivam, the CEO of Sigmaways and 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 Sigmaways.

 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. Sigmaways may terminate the Factoring Agreement with sixty days' written notice to the Factor and is subject to certain
early termination fee.

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

 As of December 31, 2024 and 2023, there were $ 172,394
and $ 562,767 borrowed and outstanding under the Factoring Agreement, respectively. There are various fees charged by the Factor, including
initial discount purchase fee, factoring fee and interest expense. During the years ended December 31, 2024 and 2023, the Company recorded
$ 60,451 and $ 67,257 in interest expenses related to the Factoring Agreement, respectively.

 NOTE 13 – INSURANCE PREMIUM FINANCING

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

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

 As of December 31, 2024 and 2023, the balances
of the insurance premium financing were $ 16,626 and nil, respectively. During the years ended December 31, 2024 and 2023, the Company
recorded $ 12,047 and $ 29,171, respectively, in interest expenses related to the insurance premium financing.

 F- 21

 NOTE 14 – DEBTS

 Short-term Debt

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

 Name of Financial Institutions

 Original Amount
 Borrowed

 Loan
 Duration

 Annual
 Interest Rate

 Balance as of

2024

 Balance as of

2023

 Biz Forward Co., Ltd.

 JPY 19,280,001
 (a)
 12/26/2023 – 1/31/2024

 36.840
 %

 $
 -

 $
 135,937

 (a)
 The debt is secured by accounts receivable of HeartCore Japan in the amount of JPY 23,882,562.

 Long-term Debts

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

 Name of Banks/Financial Institutions

 Original Amount

Borrowed

 Loan

Duration

 Annual

Interest

Rate

 Balance as of

2024

 Balance as of

2023

 Bond payable

 Corporate bond issued through Resona Bank, Limited

 JPY 100,000,000
 (b)(d)
 1/10/2019 – 1/10/2024

 0.430
 %

 $
 -

 $
 70,507

 Loans with banks and financial institutions

 Resona Bank, Limited

 JPY 50,000,000
 12/29/2017 – 12/29/2024

 0.675
 %

 -

 54,678

 Resona Bank, Limited

 JPY 10,000,000
 9/30/2020 – 9/30/2027

 1.000
 %

 29,440

 38,624

 Resona Bank, Limited

 JPY 40,000,000
 9/30/2020 – 9/30/2027

 1.000
 %

 117,762

 154,495

 Resona Bank, Limited

 JPY 20,000,000
 11/13/2020 – 10/31/2027

 1.600
 %

 60,386

 78,925

 Sumitomo Mitsui Banking Corporation

 JPY 100,000,000
 (b)
 12/28/2018 – 7/1/2024

 1.475
 %

 -

 11,612

 Sumitomo Mitsui Banking Corporation

 JPY 10,000,000
 12/30/2019 – 12/30/2026

 1.975
 %

 22,441

 31,072

 Sumitomo Mitsui Banking Corporation

 JPY 10,000,000
 10/4/2023 – 9/30/2028

 0.600
 %

 54,062

 68,152

 Sumitomo Mitsui Banking Corporation

 JPY 10,000,000
 10/4/2023 – 9/30/2028

 0.000
 %

 54,062

 68,152

 The Shoko Chukin Bank, Ltd.

 JPY 50,000,000

 7/27/2020 – 6/30/2027

 1.290
 %

 141,638

 183,319

 The Shoko Chukin Bank, Ltd.

 JPY 30,000,000

 7/25/2023 – 6/30/2028

 Tokyo Interbank Offered Rate +
 1.950

 %

 154,220

 197,137

 Japan Finance Corporation

 JPY 80,000,000

 11/17/2020 – 11/30/2027

 0.210
 %

 256,971

 327,152

 Higashi-Nippon Bank

 JPY 30,000,000
 (b)
 3/31/2022 – 3/31/2025

 1.550
 %

 51,597

 93,070

 Higashi-Nippon Bank

 JPY 30,000,000
 10/11/2023 – 9/30/2028

 1.600
 %

 164,401

 204,471

 First Home Bank

 $ 350,000
 (e)
 4/18/2019 – 4/18/2029

 Wall Street Journal U.S. Prime Rate +
 2.750

 %

 195,766

 229,007

 U.S. Small Business Administration

 $ 350,000
 (e)
 5/30/2020 – 5/30/2050

 3.750
 %

 349,322

 350,000

 Aggregate outstanding principal balances

 1,652,068

 2,160,373

 Less: unamortized debt issuance costs

 ( 12,000
)

 ( 18,238
)

 Less: current portion

 ( 401,255
)

 ( 371,783
)

 Non-current portion

 $
 1,238,813

 $
 1,770,352

 (b)
 These debts are guaranteed by Sumitaka Yamamoto, the Company's CEO and major shareholder.

 (c)
 These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.

 (d)
 The bond is guaranteed by Resona Bank, Limited.

 (e)
 These debts are guaranteed by Prakash Sadasivam, the CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.

 F- 22

 Interest expenses for short-term debt and long-term
debts are $ 3,245 and $ 68,290, respectively, for the year ended December 31, 2024. Interest expenses for short-term debt and long-term
debts are $ 5,150 and $ 61,390, respectively, for the year ended December 31, 2023.

 During the year ended December 31, 2023, the Company
entered into amended loan agreements with banks and a financial institution for certain debts. The amended terms mainly include changes
of installment payment amount and maturity date. The Company analyzed the amendments under ASC Topic 470 and concluded that the amended
debts are not considered substantially different and the transactions are accounted for as debt modifications with no gain or loss recognized.

 As of December 31, 2024, future minimum principal
payments for long-term debts are as follows:

 Principal

 Year Ended December 31,

 Payment

 2025

 $
 404,827

 2026

 358,590

 2027

 384,912

 2028

 173,900

 2029

 25,116

 Thereafter

 304,723

 Total

 $
 1,652,068

 NOTE 15 – INCOME TAXES

 United States

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

 Netherlands

 Sigmaways B.V. is a company incorporated in Netherlands
in November 2019. The first EUR 200,000 of taxable income is subject to a statutory tax rate of 19 % and the remaining taxable income is
subject to a statutory tax rate of 25.80 %.

 Canada

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

 Vietnam

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

 Japan

 The Company conducts its major businesses in Japan
and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to
examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural and municipal
governments, and in the aggregate result in an effective statutory tax rate of approximately 34.59 % for the years ended December 31, 2024
and 2023.

 F- 23

 For the years ended December 31, 2024 and 2023,
the Company's income tax benefit are as follows:

 2024

 2023

 Current

 $
 939,778

 $
 157,932

 Deferred

 ( 1,076,600
)

 ( 291,596
)

 Income tax benefit

 $
 ( 136,822
)

 $
 ( 133,664
)

 A reconciliation of the effective income tax rates
reflected in the accompanying consolidated statements of operations and comprehensive loss to the Japanese statutory tax rate for the
years ended December 31, 2024 and 2023 is as follows:

 2024

 2023

 Japanese statutory tax rate

 34.59
 %

 34.59
 %

 Effect of income tax difference under different tax jurisdictions

 ( 4.57
)%

 ( 15.14
)%

 Effect of expenses not deductible for tax purpose

 ( 1.51
)%

 ( 6.74
)%

 Goodwill impairment

 ( 21.18
)%

 0.00
 %

 Change in valuation allowance

 ( 3.99
)%

 ( 9.64
)%

 Other adjustments

 ( 0.78
)%

 ( 0.40
)%

 Effective income tax rate

 2.56
 %

 2.67
 %

 The tax effects of temporary differences that
give rise to the deferred tax assets and liabilities at December 31, 2024 and 2023 are presented below:

2024

2023

 Deferred tax assets

 Revenue adjustments

 $
 1,171,882

 $
 320,773

 Expense adjustments

 206,805

 163,219

 Research and development – costs capitalized for tax purposes

 -

 4,241

 Lease liabilities

 700,798

 901,690

 Asset retirement obligations

 63,609

 72,200

 Fair value change on investment securities

 52,654

 307,709

 Net operating losses carried forward

 1,748,306

 2,547,886

 Total deferred tax assets, gross

 3,944,054

 4,317,718

 Less: valuation allowance

 ( 3,076,229
)

 ( 3,020,512
)

 Total deferred tax assets, net

 $
 867,825

 $
 1,297,206

 Deferred tax liabilities

 Right-of-use assets

 $
 ( 683,775
)

 $
 ( 880,157
)

 Asset retirement costs

 ( 31,750
)

 ( 47,613
)

 Intangible asset acquired through business combination

 -

 ( 1,264,375
)

 Total deferred tax liabilities

 $
 ( 715,525
)

 $
 ( 2,192,145
)

 Deferred tax assets, net

 $
 152,300

 $
 369,436

 Deferred tax liabilities, net

 $
 -

 $
 ( 1,264,375
)

 The realization of deferred tax assets is dependent
upon the generation of sufficient taxable income of the appropriate character in future periods. The Company regularly assesses the ability
to realize its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred
tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results
of recent operations, projected future taxable income, and tax planning strategies.

 F- 24

 The amount of the deferred tax asset considered
realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or
if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective
evidence such as the Company's projections for growth. The adjustments of a valuation allowance against deferred tax assets may
cause greater volatility in the effective income tax rate in the periods in which the valuation allowance is adjusted.

 Uncertain Tax Positions

 The Company evaluates each uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits
associated with the tax positions. As of December 31, 2024 and 2023, the management considered the Company did not have any significant
unrecognized uncertain tax positions. The Company did not incur any interest or penalties tax for the years ended December 31, 2024 and
2023. The Company does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months from
December 31, 2024. The Company's Japan subsidiaries income tax returns filed for the tax years ending from May 31, 2020 through
December 31, 2024 are subject to examination by the relevant taxing authorities. The Company files income tax returns in the U.S. federal
and state jurisdictions. The tax years ending from December 31, 2021 through December 31, 2023 generally remain subject to examination
by the Internal Revenue Service and various state taxing authorities. The Company is not currently under examination in any jurisdictions.

 NOTE 16 – STOCK-BASED COMPENSATION

 Options

 On August 6, 2021, the Board of Directors and
shareholders of the Company approved a 2021 Equity Incentive Plan ("2021 Plan"), under which 2,400,000 shares of common shares
are authorized for issuance.

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

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

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

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

 On August 1, 2023, the Board of Directors of the
Company approved a 2023 Equity Incentive Plan ("2023 Plan"), under which 2,000,000 shares of common shares are authorized
for issuance.

 The following table summarizes the stock options
activity and related information for the years ended December 31, 2024 and 2023:

 Options

 Weighted
 Average
 Exercise
 Price

 Weighted
 Average
 Remaining
 Term
 (Years)

 Intrinsic
 Value

 As of January 1, 2023

 1,466,500

 $
 2.50

 8.94

 $
 -

 Granted

 102,000

 1.17

 9.11

 -

 Exercised

 -

 -

 -

 -

 Forfeited

 ( 21,500
)

 2.54

 -

 -

 As of December 31, 2023

 1,547,000

 $
 2.41

 8.01

 $
 -

 Granted

 -

 -

 -

 -

 Exercised

 -

 -

 -

 -

 Forfeited

 ( 40,500
)

 2.43

 -

 -

 As of December 31, 2024

 1,506,500

 $
 2.41

 7.01

 $
 64,500

 Vested and exercisable as of December 31, 2024

 1,158,500

 $
 2.38

 7.01

 $
 64,500

 F- 25

 The Company calculated the fair value of options
granted in the year ended December 31, 2023 using the Black-Scholes model. The following table summarizes the inputs to the model used
to estimate the fair value of the options granted for the year ended December 31, 2023:

 For the Year Ended December 31,
 2023

 Expected volatility

 54.63 % – 178.13
 %

 Risk-free interest rate

 3.67 % – 4.37
 %

 Dividend yield

 0.00
 %

 Exercise term (in years)

 5.25 – 6.25

 The Company recognized stock-based compensation
related to options of $ 247,859 and $ 612,937 during the years ended December 31, 2024 and 2023, respectively. The outstanding unamortized
stock-based compensation related to options was $ 121,550 (which will be recognized through December 2025) as of December 31, 2024.

 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 is $ 424,809.

 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 are fully vested upon issuance.
The fair value of the RSUs at grant date is $ 691,491.

 On October 1, 2024, the Company granted 69,653
RSUs pursuant to the 2023 Plan to four executives of the Company. The RSUs are fully vested upon issuance. The fair value of the RSUs
at grant date is $ 52,944.

 The following table summarizes the RSUs activity
for the years ended December 31, 2024 and 2023:

 Number of RSUs

 Weighted Average

Grant Date Fair
 Value Per Share

 Unvested as of January 1, 2023

 85,820

 $
 4.95

 Granted

 671,350

 1.03

 Vested

 ( 692,804
)

 1.15

 Forfeited

 -

 -

 Unvested as of December 31, 2023

 64,366

 $
 4.95

 Granted

 69,653

 0.76

 Vested

 ( 91,107
)

 1.75

 Forfeited

 -

 -

 Unvested as of December 31, 2024

 42,912

 $
 4.95

 The Company recognized stock-based compensation
related to RSUs of $ 120,885 and $ 817,576 during the years ended December 31, 2024 and 2023, respectively. The outstanding unamortized
stock-based compensation related to RSUs was $ 33,169 (which will be recognized through February 2026) as of December 31, 2024.

 NOTE 17 – SHAREHOLDERS' EQUITY

 The Company is 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.

 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
(see NOTE 19).

 On October 23, 2023, the Company entered into an at the market offering
agreement ("ATM Agreement") with H.C. Wainwright & Co., LLC ("Wainwright"), as sales agent, pursuant to which
the Company may offer and sell, from time to time, through Wainwright, shares of the Company's common shares, par value of $ 0.0001
per share, having an aggregate offering price of up to approximately $ 2 million ("ATM Shares"). The Company pays commission
fees of 4 % for each completed sale of ATM Shares under the terms of the ATM Agreement. During the years ended December 31, 2024 and 2023,
the Company sold a total of 1,004,190 and nil shares of the ATM Shares for net proceeds of approximately $ 1.4 million and nil after deducting
commission fees and other transaction costs, respectively.

 F- 26

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

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

 On July 22, 2024, the Board of Directors approved
a dividend declaration of $ 0.02 per share of common share for the shareholders of record at the close of business on August 19, 2024.
The dividends in the amount of $ 417,283 were paid on August 26, 2024.

 As of December 31, 2024 and 2023, there were 21,937,987
and 20,842,690 shares of common shares issued and outstanding, respectively.

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

 NOTE 18 – NET LOSS PER SHARE

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

 The computation of basic and diluted net loss
per share for the years ended December 31, 2024 and 2023 is as follows:

 2024

 2023

 Net loss per share – basic and diluted

 Numerator

 Net loss attributable to HeartCore Enterprises, Inc. common shareholders

 $
 ( 1,481,374
)

 $
 ( 4,189,890
)

 Denominator

 Weighted average number of common shares outstanding used in calculating net loss per share

 20,940,956

 20,404,642

 Net loss per share – basic and diluted

 $
 ( 0.07
)

 $
 ( 0.21
)

 For the years ended December 31, 2024 and 2023,
the weighted average common shares outstanding are the same for basic and diluted net loss per share calculations, as the inclusion of
common share equivalents would have an anti-dilutive effect.

 F- 27

 NOTE 19 – BUSINESS COMBINATION AND GOODWILL

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

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

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

 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

 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 consolidated financial statements since the
date of acquisition.

 Pro forma results of operations for the business
combination have not been presented because they are not material to the consolidated statements of operations and comprehensive loss
for the years ended December 31, 2024 and 2023.

 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. As a result of the assessment over the operating results of Sigmaways and its subsidiaries due
to changes in long-term financial plan assumptions, the Company recognized impairment loss on goodwill of $ 3,276,441 and intangible asset
of $ 3,878,125 for the year ended December 31, 2024. The Company used the income approach with the discounted cash flow valuation method
to estimate the fair value of Sigmaways and its subsidiaries, and used the multi-period excess earnings method to estimate the fair value
of intangible asset with the assistance of a third-party valuation appraiser. The determination of fair value requires management to make
significant estimates and assumptions related to forecasted revenues and cash flows and discount rate.

 F- 28

 NOTE 20 – SEGMENT AND GEOGRAPHIC INFORMATION

 Segment Information

 Operating segments are defined as components of
an entity for which discrete financial information is available and is regularly reviewed by the CODM, the CEO of the Company, in making
decisions regarding resource allocation and performance assessment. The Company determines its operations constitute a single operating
segment and reportable segment in accordance with ASC Topic 280. The CODM assesses financial performance and decides how to allocate resources
based on consolidated net income. Segment assets are reported on the Company's consolidated balance sheets.

 The following table summarizes selected financial
information with respect to the Company's single operating segment and reportable segment for the years ended December 31, 2024
and 2023:

 2024

 2023

 $

 $

 Less:

 Software related cost of revenues

 11,637,593

 11,751,458

 Consulting related cost of revenues

 941,766

 2,026,958

 -

 -

 Income (loss) from operations

 64,765

 ( 4,119,355
)

 Total other expenses

 ( 5,414,487
)

 ( 891,009
)

 Loss before income tax benefit

 ( 5,349,722
)

 ( 5,010,364
)

 Income tax benefit

 ( 136,822
)

 ( 133,664
)

 $
 ( 5,212,900
)

 $
 ( 4,876,700
)

 Geographic Information

 The following table summarizes the breakdown of
revenues by geography for the years ended December 31, 2024 and 2023:

 2024

 2023

 Japan

 $
 22,471,333

 $
 13,061,591

 United States

 7,467,393

 8,065,194

 International

 468,503

 719,045

 $

 $

 The following table summarizes the breakdown of
long-lived assets by geography as of December 31, 2024 and 2023:

2024

2023

 Japan

 $
 2,470,598

 $
 3,192,693

 United States

 39,996

 4,554,551

 International

 10,357

 -

 Total long-lived assets

 $
 2,520,951

 $
 7,747,244

 NOTE 21 – SUBSEQUENT EVENTS

 In January 2025, the Company entered into an insurance
premium financing agreement with AFCO Direct, a division of AFCO Credit Corporation, for $ 139,500 at an annual interest rate of 13.9 %
for eleven months from February 1, 2025, payable in eleven monthly installments of principal and interest.

 During the subsequent period, the Company sold
marketable securities for proceeds of approximately $ 460,000.

 F- 29

 EXHIBIT INDEX

 Exhibit No.

 Exhibit

 3.1

 Certificate of Incorporation of HeartCore Enterprises, Inc. (incorporated by reference to Exhibit 3.1 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 3.2

 Bylaws of HeartCore Enterprises, Inc. (incorporated by reference to Exhibit 3.2 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 4.1

 Description of Securities (incorporated by reference to Exhibit 4.1 to the registrant's Amended Annual Report on Form 10-K/A filed with the SEC on October 23, 2023).

 10.1

 Memorandum to Share Exchange Agreement dated July 15, 2021, among HeartCore Co., Sumitaka. Yamamoto, and Information Services International-Dentsu Ltd. (incorporated by reference to Exhibit 10.1 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 10.2

 Share Exchange Agreement dated July 16, 2021, among HeartCore Enterprises, Inc., all shareholders of HeartCore Co., Ltd., and Sumitaka Yamamoto as representative of the shareholders of HeartCore Co., Ltd. (incorporated by reference to Exhibit 10.2 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 10.3

 Stock Purchase Agreement dated August 10, 2021, between HeartCore Enterprises, Inc. and Dentsu Digital Investment Limited (incorporated by reference to Exhibit 10.3 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 10.4

 HeartCore Enterprises, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 10.5

 Employment Agreement, dated February 9, 2022, between the Company and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on February 14, 2022).

 10.6

 Employment Agreement, dated February 9, 2022, between the Company and Kimio Hosaka (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed with the SEC on February 14, 2022).

 10.7

 Employment Agreement, dated February 9, 2022, between the Company and Keisuke Kuno (incorporated by reference to Exhibit 10.5 to the registrant's Current Report on Form 8-K filed with the SEC on February 14, 2022).

 10.8

 Employment Agreement, dated February 9, 2022, between the Company and Qizhi Gao (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on February 14, 2022).

 10.9

 Employment Agreement, dated February 9, 2022, between the Company and Hidekazu Miyata (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed with the SEC on February 14, 2022).

 10.10

 Form of Independent Director Agreement between HeartCore Enterprises, Inc. and each independent director (incorporated by reference to Exhibit 10.10 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 10.11

 Form of Indemnification Agreement between HeartCore Enterprises, Inc. and each independent director (incorporated by reference to Exhibit 10.11 to the registrant's Registration Statement on Form S-1 (File No. 333-261984) filed with the SEC on January 3, 2022).

 10.12

 Consulting and Services Agreement, dated as of March 31, 2022, by and between the registrant and Moveaction Co., Ltd. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on April 6, 2022).

 10.13

 Common Stock Purchase Warrant issued by Moveaction Co., Ltd. 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 6, 2022).

 10.14

 Consulting and Services Agreement, dated as of April 13, 2022, by and between the registrant and A.L.I. Technologies Inc. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on May 11, 2022).

 10.15

 Common Stock Purchase Warrant issued by A.L.I. Technologies 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 May 11, 2022).

 10.16

 Consulting and Services Agreement, dated as of May 13, 2022, by and between the registrant and SYLA Holdings Co. Ltd. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on May 25, 2022).

 10.17

 Common Stock Purchase Warrant issued by SYLA Holdings Co. Ltd. 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 May 25, 2022).

 10.18

 Amendment No. 1 to Consulting and Services Agreement, dated as of August 17, 2022, by and between the registrant and Syla Technologies Co. Ltd. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on August 18, 2022).

 10.19

 Common Stock Purchase Warrant issued on August 17, 2022 by Syla Technologies Co. Ltd. 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 August 18, 2022).

 10.20

 Share Exchange and Purchase Agreement, dated as of September 6, 2022, by and among the registrant, Sigmaways, Inc. and Prakash Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on September 8, 2022).

 10.21

 Consulting and Services Agreement, dated as of October 20, 2022, by and between HeartCore Enterprises, Inc. and Metros Development Co., Ltd. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.22

 Common Stock Purchase Warrant, issued on October 20, 2022, by Metros Development Co., Ltd. in favor of HeartCore Enterprises, Inc. (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.23

 Consulting and Services Agreement, dated as of October 20, 2022, by and between HeartCore Inc. and Metros Development Co., Ltd. (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.24

 Common Stock Purchase Warrant, issued on October 20, 2022, by Metros Development Co., Ltd. in favor of HeartCore Inc. (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.25

 Termination of Consulting and Services Agreement and Warrant, dated as of October 26, 2022, by and between HeartCore Inc. and Metros Development Co., Ltd. (incorporated by reference to Exhibit 10.5 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.26

 Amendment No. 1 to Consulting and Services Agreement, dated as of October 26, 2022, by and between HeartCore Enterprises, Inc. and Metros Development Co., Ltd. (incorporated by reference to Exhibit 10.6 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.27

 Common Stock Purchase Warrant, issued on October 26, 2022, by Metros Development Co., Ltd. in favor of HeartCore Enterprises, Inc. (incorporated by reference to Exhibit 10.7 to the registrant's Current Report on Form 8-K filed with the SEC on October 26, 2022).

 10.28

 Amendment No. 1 to Executive Employment Agreement, dated as of October 28, 2022, by and between the registrant and Sumitaka Yamamoto (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on November 4, 2022).

 10.29

 9th Stock Acquisition Rights Allotment Agreement, dated as of November 9, 2022, by and between the registrant and SYLA Technologies Co., Ltd. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on November 23, 2022).

 10.30

 Amendment No. 2 to Consulting and Services Agreement, dated as of November 15, 2022, by and between the registrant and SYLA Technologies Co., Ltd. (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on November 23, 2022).

 10.31

 Consulting and Services Agreement, dated as of November 18, 2022, by and between the registrant and SBC Medical Group, Inc. (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed with the SEC on November 23, 2022).

 10.32

 Common Stock Purchase Warrant, issued on November 18, 2022, by SBC Medical Group, Inc. in favor of the registrant (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed with the SEC on November 23, 2022).

 10.33

 Consulting and Services Agreement, dated as of January 11, 2023, by and between the registrant and kk. BloomZ (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on January 17, 2023).

 10.34

 Common Stock Purchase Warrant, issued on January 11, 2023, by kk. BloomZ 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 January 17, 2023).

 10.35

 Amendment No. 2 to Share Exchange and Purchase Agreement, dated as of February 1, 2023, by and among the registrant, Sigmaways, Inc. and Prakash Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on February 6, 2023).

 10.36

 Common Stock Purchase Warrant, dated February 1, 2023 (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on February 6, 2023).

 10.37

 Employment Agreement, dated February 1, 2023, by and between the registrant and Prakash Sadasivam (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed with the SEC on February 6, 2023).

 10.38

 Amended and Restated Common Stock Purchase Warrant, dated February 6, 2023 (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K/A (Amendment No. 1) filed with the SEC on February 9, 2023).

 10.39

 Addendum to Share Exchange and Purchase Agreement, dated as of February 8, 2023, by and among the registrant, Sigmaways, Inc. and Prakash Sadasivam. (incorporated by reference to Exhibit 10.5 to the registrant's Current Report on Form 8-K/A (Amendment No. 1) filed with the SEC on February 10, 2023)

 10.40

 Consulting and Services Agreement, dated as of March 13, 2023, by and between the registrant and Libera Gaming Operations, Inc. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on March 16, 2023).

 10.41

 Common Stock Purchase Warrant, dated March 13, 2023, issued by Libera Gaming Operations, 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 March 16, 2023).

 10.42

 Consulting and Services Agreement, dated as of March 13, 2023, by and between the registrant and ICheck Co., Ltd. (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed with the SEC on March 16, 2023).

 10.43

 Common Stock Purchase Warrant, dated March 13, 2023, issued by ICheck Co., Ltd. to the registrant (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed with the SEC on March 16, 2023).

 10.44

 Amendment No. 1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Hidekazu Miyata (incorporated by reference to Exhibit 10.44 to the registrant's Annual Report on Form 10-K filed with the SEC on April 9, 2024).

 10.45

 Amendment No. 1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Keisuke Kuno (incorporated by reference to Exhibit 10.45 to the registrant's Annual Report on Form 10-K filed with the SEC on April 9, 2024).

 10.46

 Amendment No. 1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Kimio Hosaka (incorporated by reference to Exhibit 10.46 to the registrant's Annual Report on Form 10-K filed with the SEC on April 9, 2024).

 10.47

 Amendment No. 1 to Executive Employment Agreement, dated as of January 10, 2023, by and between the registrant and Qizhi Gao (incorporated by reference to Exhibit 10.47 to the registrant's Annual Report on Form 10-K filed with the SEC on April 9, 2024).

 10.48

 Service Agreement, dated as of October 2, 2023, by and between the registrant and GATES GROUP Inc. (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on October 3, 2023).

 10.49

 Common Stock Purchase Warrant, dated October 2, 2023, issued by GATES GROUP Inc. to the registrant (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on October 3, 2023).

 10.50

 At The Market Offering Agreement, dated October 23, 2023, by and between HeartCore Enterprises, Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on October 23, 2023).

 10.51

 Director Agreement, dated June 1, 2023, by and between the registrant and Heather 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).

 10.52

 Indemnification Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the SEC on October 5, 2023).

 10.53

 Independent Director Agreement dated September 29, 2023, by and between the registrant and Koji Sato (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the SEC on October 5, 2023).

 10.54

 Independent Director Agreement dated November 1, 2023, by and between the registrant and Heather Neville (incorporated by reference to Exhibit 10.54 to the registrant's Annual Report on Form 10-K filed with the SEC on April 9, 2024).

 14.1*

 Code of Ethics and Business Conduct.

 19.1*

 Insider Trading Policy.

 21.1*

 List of Subsidiaries

 23.1*

 Consent of independent registered public accounting firm.

 24.1*

 Power of Attorney (included on the signature page)

 31.1*

 Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a) under the Securities Exchange Act of 1934, as amended.

 31.2*

 Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a) under the Securities Exchange Act of 1934, as amended.

 32.1**

 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 97.1*

 Compensation Recovery Policy.

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 104*

 *
 Filed herewith

 **
 Furnished herewith.

 Management contracts and compensation plans and arrangements

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

 Dated: March 31, 2025

 By:

 /s/ Sumitaka Yamamoto

 Chief Executive Officer and President

 POWER OF ATTORNEY

 Each person whose signature appears below hereby
appoints Sumitaka Yamamoto and Qizhi Gao, and each of them, as attorneys-in-fact with full power of substitution to execute in the name
and on behalf of the registrant and each such person, individually and in each capacity stated below, one or more amendments to the annual
report on Form 10-K, which amendments may make such changes in the report as the attorney-in-fact acting deems appropriate and to file
any such amendment to the annual report on Form 10-K with the Securities and Exchange Commission. Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 Signature

 Title

 Date

 /s/ Sumitaka Yamamoto

 Chairman of Board, Chief Executive Officer and President

 (Principal Executive Officer)

 /s/ Qizhi Gao

 Chief Financial Officer (Principal Financial Officer and

 Principal Accounting Officer)

 Qizhi Gao

 /s/ Kimio Hosaka

 /s/ Ferdinand Groenewald

 Ferdinand Groenewald

 /s/ Prakash Sadasivam

 Prakash Sadasivam

 /s/ Heather Neville

 Heather Neville

 /s/ Koji Sato

 Koji Sato

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