Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 13, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-41272 | |
Entity Registrant Name | HeartCore Enterprises, Inc. | |
Entity Central Index Key | 0001892322 | |
Entity Tax Identification Number | 87-0913420 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 1-2-33 | |
Entity Address, Address Line Two | Higashigotanda | |
Entity Address, Address Line Three | Shinagawa-ku | |
Entity Address, City or Town | Tokyo | |
Entity Address, Country | JP | |
City Area Code | (206) | |
Local Phone Number | 385-0488 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | HTCR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 20,842,690 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 2,199,565 | $ 7,177,326 |
Accounts receivable | 2,562,239 | 551,064 |
Investments in marketable securities | 757,106 | |
Prepaid expenses | 683,327 | 538,230 |
Note receivable | 300,000 | |
Current portion of long-term note receivable | 100,000 | |
Other current assets | 111,326 | 220,070 |
Total current assets | 6,756,002 | 8,535,137 |
Non-current assets: | ||
Property and equipment, net | 752,940 | 203,627 |
Operating lease right-of-use assets | 2,413,814 | 2,644,957 |
Intangible asset, net | 4,675,000 | |
Goodwill | 3,276,441 | |
Long-term investments in warrants | 2,456,902 | |
Long-term note receivable | 200,000 | |
Deferred tax assets | 222,172 | 263,339 |
Security deposits | 338,220 | 244,395 |
Other non-current assets | 67 | 661 |
Total non-current assets | 14,519,632 | 3,603,451 |
Total assets | 21,275,634 | 12,138,588 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,779,953 | 497,742 |
Accrued payroll and other employee costs | 558,394 | 360,222 |
Current portion of long-term debts | 525,440 | 697,877 |
Insurance premium financing | 122,279 | |
Factoring liability | 217,250 | |
Operating lease liabilities, current | 365,241 | 291,863 |
Finance lease liabilities, current | 17,076 | 19,294 |
Income tax payables | 103,935 | 2,747 |
Deferred revenue | 1,740,877 | 1,724,519 |
Total current liabilities | 5,660,393 | 3,647,693 |
Non-current liabilities: | ||
Long-term debts | 1,351,830 | 1,123,735 |
Operating lease liabilities, non-current | 2,113,917 | 2,421,054 |
Finance lease liabilities, non-current | 68,535 | 459 |
Deferred tax liabilities | 1,309,000 | |
Other non-current liabilities | 197,817 | 138,018 |
Total non-current liabilities | 5,041,099 | 3,683,266 |
Total liabilities | 10,701,492 | 7,330,959 |
Shareholders’ equity: | ||
Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) | ||
Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,842,690 and 17,649,886 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) | 2,083 | 1,764 |
Additional paid-in capital | 19,431,987 | 15,014,607 |
Accumulated deficit | (11,910,310) | (10,573,579) |
Accumulated other comprehensive income | 282,734 | 364,837 |
Total HeartCore Enterprises, Inc. shareholders’ equity | 7,806,494 | 4,807,629 |
Non-controlling interest | 2,767,648 | |
Total shareholders’ equity | 10,574,142 | 4,807,629 |
Total liabilities and shareholders’ equity | 21,275,634 | 12,138,588 |
Related Party [Member] | ||
Current assets: | ||
Due from related party | 42,439 | 48,447 |
Non-current assets: | ||
Long-term loan receivable from related party | 184,076 | 246,472 |
Current liabilities: | ||
Other current liabilities | 7,859 | 402 |
Nonrelated Party [Member] | ||
Current liabilities: | ||
Other current liabilities | $ 222,089 | $ 53,027 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 20,842,690 | 17,649,886 |
Common stock, shares outstanding | 20,842,690 | 17,649,886 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 4,688,908 | $ 1,872,476 | $ 18,518,431 | $ 6,818,774 |
Cost of revenues | 3,860,241 | 1,543,256 | 10,548,245 | 3,935,908 |
Gross profit | 828,667 | 329,220 | 7,970,186 | 2,882,866 |
Operating expenses: | ||||
Selling expenses | 274,043 | 771,496 | 1,330,747 | 1,706,250 |
General and administrative expenses | 2,172,298 | 1,513,028 | 7,305,392 | 5,832,276 |
Research and development expenses | 170,071 | 58,275 | 289,303 | 583,762 |
Total operating expenses | 2,616,412 | 2,342,799 | 8,925,442 | 8,122,288 |
Loss from operations | (1,787,745) | (2,013,579) | (955,256) | (5,239,422) |
Other income (expenses): | ||||
Changes in fair value of investments in marketable securities | (271,740) | (500,762) | ||
Changes in fair value of investments in warrants | (460,672) | (294,565) | ||
Interest income | 14,363 | 21,707 | 64,633 | 32,256 |
Interest expenses | (42,619) | (10,500) | (125,073) | (39,361) |
Other income | 52,640 | 15,195 | 176,641 | 40,645 |
Other expenses | (25,947) | (2,826) | (62,701) | (58,050) |
Total other income (expenses) | (733,975) | 23,576 | (741,827) | (24,510) |
Loss before income tax provision | (2,521,720) | (1,990,003) | (1,697,083) | (5,263,932) |
Income tax expense (benefit) | 19,413 | (19,069) | 58,859 | (10,906) |
Net loss | (2,541,133) | (1,970,934) | (1,755,942) | (5,253,026) |
Less: net loss attributable to non-controlling interest | (233,913) | (419,211) | ||
Net loss attributable to HeartCore Enterprises, Inc. | (2,307,220) | (1,970,934) | (1,336,731) | (5,253,026) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (90,743) | 128,705 | (85,244) | 428,118 |
Total comprehensive loss | (2,631,876) | (1,842,229) | (1,841,186) | (4,824,908) |
Less: comprehensive loss attributable to non-controlling interest | (235,094) | (422,352) | ||
Comprehensive loss attributable to HeartCore Enterprises, Inc. | $ (2,396,782) | $ (1,842,229) | $ (1,418,834) | $ (4,824,908) |
Net loss per common share attributable to HeartCore Enterprises, Inc. | ||||
Basic | $ (0.11) | $ (0.11) | $ (0.07) | $ (0.29) |
Diluted | $ (0.11) | $ (0.11) | $ (0.07) | $ (0.29) |
Weighted average common shares outstanding | ||||
Basic | 20,842,690 | 17,835,027 | 20,257,020 | 18,014,483 |
Diluted | 20,842,690 | 17,835,027 | 20,257,020 | 18,014,483 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock, Common [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Parent [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2021 | $ 1,554 | $ 3,350,779 | $ (3,896,113) | $ (15,172) | $ (558,952) | |||
Balance, shares at Dec. 31, 2021 | 15,546,454 | |||||||
Net loss | (1,578,451) | (1,578,451) | ||||||
Foreign currency translation adjustment | 80,053 | 80,053 | ||||||
Issuance of common shares for cash | $ 310 | 13,643,969 | 13,644,279 | |||||
Issuance of common shares for cash, shares | 3,096,000 | |||||||
Issuance of common shares from exercise of share options | $ 27 | (11) | 16 | |||||
Issuance of common shares from exercise of share options, shares | 273,489 | |||||||
Stock-based compensation | 422,164 | 422,164 | ||||||
Balance at Mar. 31, 2022 | $ 1,891 | 17,416,901 | (5,474,564) | 64,881 | 12,009,109 | |||
Balance, shares at Mar. 31, 2022 | 18,915,943 | |||||||
Balance at Dec. 31, 2021 | $ 1,554 | 3,350,779 | (3,896,113) | (15,172) | (558,952) | |||
Balance, shares at Dec. 31, 2021 | 15,546,454 | |||||||
Net loss | $ (5,253,026) | |||||||
Issuance of common shares from exercise of share options, shares | ||||||||
Stock-based compensation, shares | 16,500 | |||||||
Balance at Sep. 30, 2022 | $ 1,899 | 18,220,206 | $ (3,500,000) | (9,149,139) | 412,946 | $ 5,985,912 | ||
Balance, shares at Sep. 30, 2022 | 18,999,276 | (1,349,390) | ||||||
Balance at Mar. 31, 2022 | $ 1,891 | 17,416,901 | (5,474,564) | 64,881 | 12,009,109 | |||
Balance, shares at Mar. 31, 2022 | 18,915,943 | |||||||
Net loss | (1,703,641) | (1,703,641) | ||||||
Foreign currency translation adjustment | 219,360 | 219,360 | ||||||
Stock-based compensation | $ 8 | 466,654 | 466,662 | |||||
Stock-based compensation, shares | 83,333 | |||||||
Repurchase of common shares | $ (1,336,762) | (1,336,762) | ||||||
Repurchase of common shares, shares | (558,809) | |||||||
Balance at Jun. 30, 2022 | $ 1,899 | 17,883,555 | $ (1,336,762) | (7,178,205) | 284,241 | 9,654,728 | ||
Balance, shares at Jun. 30, 2022 | 18,999,276 | (558,809) | ||||||
Net loss | (1,970,934) | (1,970,934) | ||||||
Foreign currency translation adjustment | 128,705 | 128,705 | ||||||
Stock-based compensation | 336,651 | 336,651 | ||||||
Repurchase of common shares | $ (2,163,238) | (2,163,238) | ||||||
Repurchase of common shares, shares | (790,581) | |||||||
Balance at Sep. 30, 2022 | $ 1,899 | 18,220,206 | $ (3,500,000) | (9,149,139) | 412,946 | 5,985,912 | ||
Balance, shares at Sep. 30, 2022 | 18,999,276 | (1,349,390) | ||||||
Balance at Dec. 31, 2022 | $ 1,764 | 15,014,607 | (10,573,579) | 364,837 | 4,807,629 | 4,807,629 | ||
Balance, shares at Dec. 31, 2022 | 17,649,886 | |||||||
Net loss | 1,882,289 | 1,882,289 | (74,252) | 1,808,037 | ||||
Foreign currency translation adjustment | (22,744) | (22,744) | (2,290) | (25,034) | ||||
Stock-based compensation | $ 69 | 915,159 | 915,228 | 915,228 | ||||
Stock-based compensation, shares | 692,804 | |||||||
Issuance of common shares for acquisition of subsidiary | $ 250 | 3,149,750 | 3,150,000 | 3,150,000 | ||||
Issuance of common shares for acquisition of subsidiary, shares | 2,500,000 | |||||||
Non-controlling interests arising from acquisition of subsidiary | 3,190,000 | 3,190,000 | ||||||
Balance at Mar. 31, 2023 | $ 2,083 | 19,079,516 | (8,691,290) | 342,093 | 10,732,402 | 3,113,458 | 13,845,860 | |
Balance, shares at Mar. 31, 2023 | 20,842,690 | |||||||
Balance at Dec. 31, 2022 | $ 1,764 | 15,014,607 | (10,573,579) | 364,837 | 4,807,629 | 4,807,629 | ||
Balance, shares at Dec. 31, 2022 | 17,649,886 | |||||||
Net loss | $ (1,755,942) | |||||||
Issuance of common shares from exercise of share options, shares | ||||||||
Stock-based compensation, shares | 102,000 | |||||||
Balance at Sep. 30, 2023 | $ 2,083 | 19,431,987 | (11,910,310) | 282,734 | 7,806,494 | 2,767,648 | $ 10,574,142 | |
Balance, shares at Sep. 30, 2023 | 20,842,690 | |||||||
Balance at Mar. 31, 2023 | $ 2,083 | 19,079,516 | (8,691,290) | 342,093 | 10,732,402 | 3,113,458 | 13,845,860 | |
Balance, shares at Mar. 31, 2023 | 20,842,690 | |||||||
Net loss | (911,800) | (911,800) | (111,046) | (1,022,846) | ||||
Foreign currency translation adjustment | 30,203 | 30,203 | 330 | 30,533 | ||||
Stock-based compensation | 179,165 | 179,165 | 179,165 | |||||
Balance at Jun. 30, 2023 | $ 2,083 | 19,258,681 | (9,603,090) | 372,296 | 10,029,970 | 3,002,742 | 13,032,712 | |
Balance, shares at Jun. 30, 2023 | 20,842,690 | |||||||
Net loss | (2,307,220) | (2,307,220) | (233,913) | (2,541,133) | ||||
Foreign currency translation adjustment | (89,562) | (89,562) | (1,181) | (90,743) | ||||
Stock-based compensation | 173,306 | 173,306 | 173,306 | |||||
Balance at Sep. 30, 2023 | $ 2,083 | $ 19,431,987 | $ (11,910,310) | $ 282,734 | $ 7,806,494 | $ 2,767,648 | $ 10,574,142 | |
Balance, shares at Sep. 30, 2023 | 20,842,690 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (1,755,942) | $ (5,253,026) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expenses | 495,200 | 64,398 |
Gain on disposal of property and equipment | (4,737) | |
Amortization of debt issuance costs | 2,257 | 3,051 |
Non-cash lease expense | 254,876 | 207,549 |
Loss on termination of lease | 76 | |
Deferred income taxes | (109,690) | (5,843) |
Stock-based compensation | 1,267,699 | 1,225,477 |
Warrants received as noncash consideration | (4,009,335) | |
Changes in fair value of investments in marketable securities | 500,762 | |
Changes in fair value of investments in warrants | 294,565 | |
Changes in assets and liabilities: | ||
Accounts receivable | (322,583) | 168,021 |
Prepaid expenses | 187,269 | (56,553) |
Other assets | (23,982) | (142,967) |
Accounts payable and accrued expenses | 597,247 | (96,238) |
Accrued payroll and other employee costs | 7,471 | 59,059 |
Due to related party | 7,562 | 3,098 |
Operating lease liabilities | (231,499) | (213,691) |
Finance lease liabilities | (370) | |
Income tax payables | 101,058 | (7,704) |
Deferred revenue | 200,256 | 45,938 |
Other liabilities | 83,809 | (206,569) |
Net cash flows used in operating activities | (2,457,661) | (4,206,370) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (516,658) | (41,672) |
Proceeds from disposal of property and equipment | 24,935 | |
Advances on note receivable | (600,000) | |
Repayment of loan provided to related party | 34,823 | 33,042 |
Payment for acquisition of subsidiary, net of cash acquired | (724,910) | |
Net cash flows used in investing activities | (1,781,810) | (8,630) |
Cash flows from financing activities: | ||
Proceeds from initial public offering, net of issuance cost | 13,602,554 | |
Proceeds from issuance of common shares prior to initial public offering | 220,572 | |
Repurchase of common shares | (3,500,000) | |
Payments for finance leases | (16,537) | (29,051) |
Proceeds from long-term debt | 219,427 | 258,087 |
Repayment of long-term debts | (584,779) | (699,407) |
Repayment of insurance premium financing | (266,756) | (298,886) |
Net proceeds from factoring arrangement | 217,250 | |
Payments for debt issuance costs | (656) | (1,030) |
Payment for mandatorily redeemable financial interest | (430,489) | |
Net cash flows provided by (used in) financing activities | (432,051) | 9,122,350 |
Effect of exchange rate changes | (306,239) | (200,981) |
Net change in cash and cash equivalents | (4,977,761) | 4,706,369 |
Cash and cash equivalents - beginning of the period | 7,177,326 | 3,136,839 |
Cash and cash equivalents - end of the period | 2,199,565 | 7,843,208 |
Supplemental cash flow disclosure: | ||
Interest paid | 59,290 | 38,387 |
Income taxes paid | 91,657 | 3,013 |
Non-cash investing and financing transactions: | ||
Payroll withheld as repayment of loan receivable from employees | 12,034 | |
Liabilities assumed in connection with purchase of property and equipment | 9,602 | 17,731 |
Share repurchase liability settled by issuance of common shares | 16 | |
Deferred offering costs recognized against the proceeds from the offering | 178,847 | |
Insurance premium financing | 389,035 | 388,538 |
Common shares issued for acquisition of subsidiary | 3,150,000 | |
Investments in warrants converted to marketable securities | 1,257,868 | |
Finance lease right-of-use asset obtained in exchange for finance lease liability | 93,117 | |
Operating lease right-of-use asset obtained in exchange for operating lease liability | 317,040 | |
Remeasurement of operating lease liability and right-of-use asset due to lease modification | $ 12,579 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS HeartCore Enterprises, Inc. (“HeartCore USA” or the “Company”), a holding company, was incorporated under the laws of the State of Delaware on May 18, 2021. On July 16, 2021, the Company executed a Share Exchange Agreement with certain shareholders of HeartCore Co., Ltd. (“HeartCore Japan”), a company that was incorporated in Japan on June 12, 2009. Pursuant to the terms of the Share Exchange Agreement, the Company issued 15,999,994 10,706 10,984 97.5 278 The share exchange on July 16, 2021 has been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled these two entities before and after the transaction. The consolidation of the Company and its subsidiary has been accounted for at historical cost and prepared on the basis as if the transaction had become effective as of the beginning of the earliest period presented in the accompanying unaudited consolidated financial statements. The Company, via its wholly-owned operating subsidiary, HeartCore Japan, is mainly engaged in the business of developing and sales of comprehensive software. Beginning from early 2022, HeartCore USA is engaged in business of providing consulting services to Japanese companies with intention to go public in the United States capital market. On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51 In January 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Financial, Inc. (“HeartCore Financial”), under the laws of the State of Delaware. HeartCore Financial is engaged in the business of providing financial consulting services. In February 2023, HeartCore USA incorporated a wholly-owned subsidiary, HeartCore Capital Advisors, Inc. (“HeartCore Capital Advisors”), in Japan. HeartCore Capital Advisors is engaged in the business of providing financial consulting services to Japanese companies. HeartCore USA, HeartCore Japan, Sigmaways, Sigmaways B.V., Sigmaways Technologies, HeartCore Financial and HeartCore Capital Advisors are hereafter referred to as the Company. HEARTCORE ENTERPRISES, INC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. These unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022. Use of Estimates In preparing the unaudited consolidated financial statements in conformity U.S. GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses, useful lives of property and equipment, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and financing leases, valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates. COVID-19 While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the unaudited consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s unaudited consolidated financial statements. HEARTCORE ENTERPRISES, INC. Asset Retirement Obligations Pursuant to the lease agreements for the office space, the Company is responsible to restore these spaces back to its original statute at the time of leaving. The Company recognizes an obligation related to these restorations as asset retirement obligation included in other non-current liabilities in the consolidated balance sheets, in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset Retirement Obligation Accounting”. The Company capitalizes the associated asset retirement cost by increasing the carrying amount of the related property and equipment. The following table presents changes in asset retirement obligations: SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS September 30, December 31, 2023 2022 Beginning balance $ 138,018 $ 155,666 Liabilities incurred 83,821 - Accretion expense 328 459 Foreign currency translation adjustment (24,350 ) (18,107 ) Ending balance $ 197,817 $ 138,018 Software Development Costs Software development costs are expensed as incurred until the point the Company establishes technological feasibility. Technological feasibility is established upon completion of a detailed program design or the completion of a working model. Costs incurred by the Company between establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products. The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred. In the nine months ended September 30, 2023 and 2022, software development costs expensed as incurred amounted to $ 289,303 583,762 Investments in Warrants Investments in warrants represent stock warrants of its consulting service customers and are not registered for public sale. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investments in warrants are classified as long-term if the warrants are exercisable over one year after the date of receipt. Investments in Marketable Securities Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities as of September 30, 2023 were obtained through exercise of stock warrants of its consulting service customers and measured at fair value with changes in fair value recognized in other income (expenses). Intangible Asset, Net Intangible asset represents the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries. The acquired intangible asset is recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective assets. The estimated useful life of the customer relationship is 8 Impairment of Long-Lived Assets Other Than Goodwill Long-lived assets with finite lives, primarily property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with ASC Topic 350, “Intangibles – Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis. Foreign Currency Translation The functional currency of HeartCore Japan and HeartCore Capital Advisors is the Japanese Yen (“JPY”). The functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”). The functional currency of Sigmaways B.V. is the Euro (“EUR”). The functional currency of Sigmaways Technologies is the Canada Dollar (“CAD”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited consolidated statements of operations. HEARTCORE ENTERPRISES, INC. The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited statements of changes in shareholders’ equity (deficit). Revenue Recognition The Company recognizes revenues under ASC Topic 606, “Revenue from Contracts with customers”. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies. The Company currently generates its revenues from the following main sources: Revenues from On-Premise Software Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Licenses for on-premise software are typically sold to the customer with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support service. The SSP for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis. The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence. Revenues from Maintenance and Support Services Maintenance and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available during the subscription. Revenues from maintenance and support services are recognized over time as such services are performed. Revenues for consumption-based services are generally recognized as the services are performed and accepted by the customers. Revenues from Software as a Service (“SaaS”) The Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. The subscription contracts are generally one year or less in length. HEARTCORE ENTERPRISES, INC. Revenues from Software Development and Other Miscellaneous Services The Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application, and workflow development. The Company also provides other miscellaneous services, such as 3D Space photography. The Company generally recognizes revenue at a point in time when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers. Revenues from Customized Software Development and Services The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. The contract pricing is at stated billing rates per hour. These contracts are generally short-term in nature and not longer than one year in duration. For services provided under the contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date. Revenues from Consulting Services The Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service contracts are generally less than one year in length and normally include both cash and noncash consideration. Cash consideration is paid in installment payments and is recognized in revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is in the form of warrants of the customers and is measured at fair value at contract inception. Noncash consideration that is variable for reasons other than only the form of the consideration is included in the transaction price, but is subject to the constraint on variable consideration. The Company assesses the estimated amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been resolved. The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $ 1.5 1.2 Disaggregation of Revenues The Company disaggregates its revenues from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the three and nine months ended September 30, 2023 and 2022 is as following: SCHEDULE OF DISAGGREGATION OF REVENUES For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues from on-premise software $ 396,647 $ 257,121 $ 1,457,836 $ 1,775,254 Revenues from maintenance and support services 650,603 678,521 2,226,802 2,251,137 Revenues from software as a service (“SaaS”) 148,857 122,347 497,430 352,251 Revenues from software development and other miscellaneous services 474,859 340,742 1,561,655 1,518,032 Revenues from customized software development and services 2,405,907 - 6,332,479 - Revenues from consulting services 612,035 473,745 6,442,229 922,100 Total revenues $ 4,688,908 $ 1,872,476 $ 18,518,431 $ 6,818,774 HEARTCORE ENTERPRISES, INC. The Company’s disaggregation of revenues by product/service is as following: 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues from customer experience management platform $ 1,403,932 $ 1,171,150 $ 4,696,241 $ 4,757,369 Revenues from process mining 99,618 68,560 390,374 453,368 Revenues from robotic process automation 58,051 69,693 271,520 317,110 Revenues from task mining 74,958 66,799 277,725 252,234 Revenues from customized software development and services 2,405,907 - 6,332,479 - Revenues from consulting services 612,035 473,745 6,442,229 922,100 Revenues from others 34,407 22,529 107,863 116,593 Total revenues $ 4,688,908 $ 1,872,476 $ 18,518,431 $ 6,818,774 As of September 30, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and the majority of revenues generated were attributed to the Company’s operation in Japan. Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. For the nine months ended September 30, 2023, customer B and C represent 14.2 13.6 10.0 For the nine months ended September 30, 2023, vendor D, B, A and E represent 26.4 26.2 22.1 15.9 25.9 19.7 16.3 15.5 Stock-based Compensation The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur. HEARTCORE ENTERPRISES, INC. Business Combinations The Company accounts its business combinations using the acquisition method of accounting in accordance with ASC Topic 805. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible asset acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Consideration transferred in a business combination is measured at the fair value as of the date of acquisition. Where the consideration in an acquisition includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability. It is subsequently carried at fair value with changes in fair value reflected in earnings. In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive loss. Fair value is determined based upon the guidance of ASC Topic 820, “Fair Value Measurements and Disclosures,” and generally are determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgments and estimates. The Company utilizes the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition. Fair Value Measurements The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value: ● Level 1: quoted prices in active markets for identical assets or liabilities; ● Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or ● Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. As of September 30, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments. Investments in Warrants The Company received warrants from its customers as noncash consideration from consulting services. The warrants are not registered for public sale and are measured at fair value at contract inception. The Company’s investments in warrants are measured on a recurring basis and carried on the balance sheet at an estimated fair value at the end of the period. The valuation of investments in warrants was determined using a Black-Scholes model of value based upon the stock price, exercise price, expected volatility, time to maturity, and a risk-free interest rate for the term of the warrants exercise. Such valuations are classified within Level 3 of the fair value hierarchy. The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF INVESTMENTS IN WARRANTS \ For the Nine Months Ended September 30, 2023 2022 Fair value of investments in warrants at beginning of the period $ - $ - Warrants received as noncash consideration 4,009,335 - Changes in fair value of investments in warrants (294,565 ) - Investments in warrants converted to marketable securities (1,257,868 ) - Fair value of investments in warrants at end of the period $ 2,456,902 $ - Investments in Marketable Securities The Company’s investments in marketable securities registered for public sale with readily determinable fair value are measured at quoted prices on a recurring basis at the end of the period. Marketable securities are classified within Level 1 of the fair value hierarchy. The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES For the Nine Months Ended September 30, 2023 2022 Fair value of investments in marketable securities at beginning of the period $ - $ - Investments in warrants converted to marketable securities 1,257,868 - Changes in fair value of investments in marketable securities (500,762 ) - Marketable securities sold - - Fair value of investments in marketable securities at end of the period $ 757,106 $ - HEARTCORE ENTERPRISES, INC. Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, “Financial Instruments – Credit Losses” is effective for public companies for annual reporting periods, and interim periods within those years beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements. New Accounting Pronouncements Not Yet Effective The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s unaudited consolidated financial statements. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2023 | |
Credit Loss [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 — ACCOUNTS RECEIVABLE Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE NET September 30, December 31, 2023 2022 Accounts receivable – non-factored $ 2,344,989 $ 551,064 Accounts receivable – factored with recourse 217,250 - Accounts receivable, gross 2,562,239 551,064 Less: allowance for credit losses - - Accounts receivable $ 2,562,239 $ 551,064 |
PREPAID EXPENSES
PREPAID EXPENSES | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES | NOTE 4 — PREPAID EXPENSES Prepaid expenses consist of the following: SCHEDULE OF PREPAID EXPENSES September 30, December 31, 2023 2022 Prepayments to software vendors $ 185,540 $ 162,046 Prepaid marketing and consulting fees 102,839 99,770 Prepaid subscription fees 83,207 113,685 Prepaid insurance premium 208,385 66,023 Others 103,356 96,706 Total $ 683,327 $ 538,230 HEARTCORE ENTERPRISES, INC. |
NOTE RECEIVABLE AND LONG-TERM N
NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE | NOTE 5 — NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE On May 2, 2023, the Company purchased a $ 300,000 8 the date of the closing of capital-raising transactions in the amount of $ 300,000 12 600,000 On September 1, 2023, the Company purchased a $ 300,000 4 10 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 — RELATED PARTY TRANSACTIONS As of September 30, 2023 and December 31, 2022, the Company has a due to related party balance of $ 7,859 402 7,562 3,098 As of September 30, 2023 and December 31, 2022, the Company has a loan receivable balance of $ 226,515 294,919 1.475 34,823 33,042 During the period from January 1, 2022 through January 13, 2022, the Company completed a private placement, in which it issued 30,000 2.50 75,000 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 7 — PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following: SCHEDULE OF PROPERTY AND EQUIPMENT NET September 30, December 31, 2023 2022 Leasehold improvements $ 471,069 $ 298,637 Machinery and equipment 673,435 316,827 Vehicle 85,111 106,490 Software 142,829 163,049 Subtotal 1,372,444 885,003 Less: accumulated depreciation (619,504 ) (681,376 ) Property and equipment, net $ 752,940 $ 203,627 Depreciation expenses were $ 70,200 64,398 |
INTANGIBLE ASSET, NET
INTANGIBLE ASSET, NET | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSET, NET | NOTE 8 — INTANGIBLE ASSET, NET Intangible asset, net is as follows: SCHEDULE OF INTANGIBLE ASSETS September 30, December 31, 2023 2022 Customer relationship $ 5,100,000 $ - Less: accumulated amortization (425,000 ) - Intangible asset, net $ 4,675,000 $ - Amortization expenses were $ 425,000 nil As of September 30, 2023, the future estimated amortization cost for intangible asset is as follows: SCHEDULE OF AMORTIZATION INTANGIBLE ASSET Estimated Year Ended December 31, Amortization Remaining of 2023 $ 159,375 2024 637,500 2025 637,500 2026 637,500 2027 637,500 Thereafter 1,965,625 Total $ 4,675,000 HEARTCORE ENTERPRISES, INC. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
LEASES | NOTE 9 — LEASES The Company has entered into four leases for its office space, which were classified as operating leases. It has also entered into two leases for office equipment, one of which was terminated in June 2022, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases. Right-of-use assets of these finance leases in the amount of $ 85,591 18,335 Operating lease expenses for lease payments are recognized on a straight-line basis over the lease term. Finance lease costs include amortization, which are recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with initial term of twelve months or less are not recorded on the consolidated balance sheets. The components of lease costs are as follows: SCHEDULE OF LEASE COSTS 2023 2022 For the Nine Months Ended September 30, 2023 2022 Finance lease costs Amortization of right-of-use assets $ 15,215 $ 26,825 Interest on lease liabilities 98 370 Total finance lease costs 15,313 27,195 Operating lease costs 286,934 244,688 Total lease costs $ 302,247 $ 271,883 HEARTCORE ENTERPRISES, INC. The following table presents supplemental information related to the Company’s leases: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES 2023 2022 For the Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 98 $ 370 Operating cash flows from operating leases 257,277 243,108 Financing cash flows from finance leases 16,537 29,051 Finance lease right-of-use asset obtained in exchange for finance lease liability 93,117 - Operating lease right-of-use asset obtained in exchange for operating lease liability 317,040 - Remeasurement of operating lease liability and right-of-use asset due to lease modification 12,579 - Weighted average remaining lease term (years) Finance leases 5.0 1.1 Operating leases 7.7 9.4 Weighted average discount rate (per annum) Finance leases 1.32 % 1.32 % Operating leases 1.33 % 1.32 % As of September 30, 2023, the future maturity of lease liabilities is as follows: SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES Year Ended December 31, Finance Lease Operating Lease Remaining of 2023 $ 4,649 $ 101,255 2024 17,844 388,730 2025 17,593 383,300 2026 17,593 321,614 2027 17,593 277,553 Thereafter 13,195 1,142,795 Total lease payments 88,467 2,615,247 Less: imputed interest (2,856 ) (136,089 ) Total lease liabilities 85,611 2,479,158 Less: current portion (17,076 ) (365,241 ) Non-current lease liabilities $ 68,535 $ 2,113,917 Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amounted to $ 338,220 244,395 HEARTCORE ENTERPRISES, INC. |
FACTORING LIABILITY
FACTORING LIABILITY | 9 Months Ended |
Sep. 30, 2023 | |
Factoring Liability | |
FACTORING LIABILITY | NOTE 10 — FACTORING LIABILITY Sigmaways, the newly acquired subsidiary of the Company, entered into a Factoring and Security Agreement (the “Factoring Agreement”) with The Southern Bank Company, an unrelated factor (the “Factor”), in 2017, for the purpose of factoring certain accounts receivable. Under the terms of the Factoring Agreement, the Company may offer for sale, and the Factor may purchase in its sole discretion, certain accounts receivable of the Company (the “Purchased Receivable”). The Factoring Agreement provided for a maximum of $ 850,000 Selected accounts receivable is submitted to the Factor, and the Company receives 90 The Factoring Agreement specifies that eligible accounts receivable is factored with recourse. Under the terms of the recourse provision, the Company is required to reimburse the Factor, upon demand, for Purchased Receivable that is not paid on time by the customers. The performance of all obligations and payments to the Factor is personally guaranteed by Prakash Sadasivam, CEO of Sigmaways and Chief Strategy Officer (“CSO”) of the Company, and secured by all Sigmaways’ now owned and hereafter assets and any sums maintained by the Factor that are identified as payable to the Company. The Factoring Agreement has an initial term of twelve months and automatically renews for successive twelve-month renewal periods unless terminated pursuant to the terms of the Factoring Agreement. The Company may terminate the Factoring Agreement with sixty days’ written notice to the Factor and is subject to certain early termination fee. The Factoring Agreement contained covenants that are customary for accounts receivable-based factoring agreements and also contained provisions relating to events of default that are customary for agreements of this type. As of September 30, 2023, there was $ 217,250 54,790 |
INSURANCE PREMIUM FINANCING
INSURANCE PREMIUM FINANCING | 9 Months Ended |
Sep. 30, 2023 | |
Insurance [Abstract] | |
INSURANCE PREMIUM FINANCING | NOTE 11 — INSURANCE PREMIUM FINANCING In January 2023, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 389,035 16.04 In February 2022, the Company entered into an insurance premium financing agreement with BankDirect Capital Finance for $ 388,538 12.80 As of September 30, 2023 and December 31, 2022, the balance of the insurance premium financing was $ 122,279 nil 25,988 19,859 HEARTCORE ENTERPRISES, INC. |
LONG-TERM DEBTS
LONG-TERM DEBTS | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBTS | NOTE 12 — LONG-TERM DEBTS The Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions, which consist of the following: SCHEDULE OF LONG-TERM DEBTS Name of Financial Institutions Original Amount Borrowed Loan Duration Annual Interest Rate Balance as of September 30, 2023 Balance as of December 31, 2022 Bond payable Corporate bond issued through Resona Bank, Limited JPY 100,000,000 (a)(c) 1/10/2019 – 1/10/2024 0.430 % $ 66,854 $ 228,956 Loans with banks and other financial institutions Resona Bank, Limited JPY 50,000,000 (a)(b) 12/29/2017 – 12/29/2024 0.675 % 63,779 113,677 Resona Bank, Limited JPY 10,000,000 (a)(b) 9/30/2020 – 9/30/2027 0.000 % 39,009 52,705 Resona Bank, Limited JPY 40,000,000 (a)(b) 9/30/2020 – 9/30/2027 0.000 % 156,037 210,822 Resona Bank, Limited JPY 20,000,000 (a)(b) 11/13/2020 – 10/31/2027 1.600 % 79,610 107,227 Sumitomo Mitsui Banking Corporation JPY 100,000,000 (a) 12/28/2018 – 12/28/2023 1.475 % 44,444 165,237 Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 12/30/2019 – 12/30/2026 1.975 % 31,849 44,532 The Shoko Chukin Bank, Ltd. JPY30,000,000 9/28/2018 – 8/31/2023 1.200 % - 34,343 The Shoko Chukin Bank, Ltd. JPY50,000,000 7/27/2020 – 6/30/2027 1.290 % 185,854 253,377 The Shoko Chukin Bank, Ltd. JPY30,000,000 7/25/2023 – 6/30/2028 Tokyo Interbank Offered Rate + 1.950 % 193,742 - Japan Finance Corporation JPY80,000,000 11/17/2020 – 11/30/2027 0.210 % 329,456 442,036 Higashi-Nippon Bank JPY 30,000,000 (a) 3/31/2022 – 3/31/2025 1.400 % 105,094 177,669 First Home Bank $ 350,000 (d) 4/18/2019 – 4/18/2029 Wall Street Journal U.S. Prime Rate + 2.750 % 237,336 - U.S. Small Business Administration $ 350,000 (d) 5/30/2020 – 5/30/2050 3.750 % 350,000 - Aggregate outstanding principal balances 1,883,064 1,830,581 Less: unamortized debt issuance costs (5,794 ) (8,969 ) Less: current portion (525,440 ) (697,877 ) Non-current portion $ 1,351,830 $ 1,123,735 (a) These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder. (b) These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts. (c) The bond is guaranteed by Resona Bank, Limited. (d) These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways. Interest expense for long-term debts was $ 44,295 19,502 As of September 30, 2023, future minimum loan payments are as follows: SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS Loan Year Ended December 31, Payment Remaining of 2023 $ 146,763 2024 462,065 2025 305,291 2026 293,302 2027 262,017 Thereafter 413,626 Total $ 1,883,064 HEARTCORE ENTERPRISES, INC. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 13 — INCOME TAXES United States HeartCore USA, Sigmaways and HeartCore Financial, incorporated in the United States, are subject to federal income tax at 21 Netherlands Sigmaways B.V. is a company incorporated in Amsterdam in Netherlands in November 2019. The first EUR200,000 of taxable income will be taxed at 19% and the remaining taxable income will be taxed at statutory tax rate of 25.80% Canada Sigmaways Technologies is a company incorporated in British Columbia in Canada in August 2020. It is subject to income tax on income arising in, or derived from, the tax jurisdiction in British Columbia it operates. The basic federal rate of Part I tax is 38 28 15 2 12 Japan The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory tax rate of approximately 34.59 For the nine months ended September 30, 2023 and 2022, the Company’s income tax expense (benefit) are as follows: SCHEDULE OF INCOME TAX EXPENSES 2023 2022 For the Nine Months Ended September 30, 2023 2022 Current $ 168,549 $ (2,108 ) Deferred (109,690 ) (8,798 ) Income tax expense (benefit) $ 58,859 $ (10,906 ) The effective tax rate was (3.47) 0.21 HEARTCORE ENTERPRISES, INC. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 14 – STOCK-BASED COMPENSATION Options In May 2016, the Company granted 507 1,494 10 0.09 324 484,056 324 The consideration received for the remaining early exercised options was recorded by the Company as a share repurchase liability included in other current liabilities in the consolidated balance sheet with JPY 1,830 16 183 11,005 16 273,489 183 The following table summarizes the Company’s stock option activity for the stock options issued in 2016 for the nine months ended September 30, 2022: SCHEDULE OF UNVESTED STOCK OPTION Number of Stock Options Issued and unvested as of January 1, 2022 183 Vested and exercised 183 Issued and unvested as of September 30, 2022 - On August 6, 2021, the Board of Directors and stockholders of the Company approved a 2021 Equity Incentive Plan (the “2021 Plan”), under which 2,400,000 1,534,500 2.50 25 December 25, 2031 On August 2, 2022, the Company awarded options to purchase 2,000 2.94 25 August 2, 2032 On August 9, 2022, the Company awarded options to purchase 14,500 2.48 August 9, 2026 On February 3, 2023, the Company awarded options to purchase 100,000 1.17 50 February 3, 2033 On August 25, 2023, the Company awarded options to purchase 2,000 1.10 25 August 25, 2033 On August 1, 2023, the Board of Directors and stockholders of the Company approved a 2023 Equity Incentive Plan (the “2023 Plan”), under which 2,000,000 HEARTCORE ENTERPRISES, INC. The following table summarizes the stock options activity and related information for the nine months ended September 30, 2023 and 2022: SCHEDULE OF STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Intrinsic Value As of January 1, 2022 1,534,500 $ 2.50 9.99 $ - Granted 16,500 2.54 4.59 - Exercised - - - - Forfeited (39,500 ) 2.50 - - As of September 30, 2022 1,511,500 $ 2.50 9.19 $ - As of January 1, 2023 1,466,500 $ 2.50 8.94 $ - Granted 102,000 1.17 9.36 - Exercised - - - - Forfeited (9,500 ) 2.50 - - As of September 30, 2023 1,559,000 $ 2.41 8.27 $ - Vested and exercisable as of September 30, 2023 425,125 $ 2.34 8.19 $ - The Company calculated the fair value of options granted in the nine months ended September 30, 2023 using the Black-Scholes model. Significant assumptions used in the valuation include expected volatility, risk-free interest rate, dividend yield and expected exercise term. For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to options of $ 144,306 479,122 280,883 858,633 578,075 Restricted Stock Units (“RSUs”) On February 9, 2022, the Company entered into executive employment agreements with five executives and granted 85,820 25 424,809 On February 25, 2022, the Company entered into a service agreement with a marketing company to purchase 6-month marketing services and granted 83,333 224,999 On March 22, 2023, the Company entered into agreements with employees and service providers of Sigmaways and granted 671,350 691,491 The following table summarizes the RSUs activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF RESTRICTED STOCK UNITS Number of RSUs Weighted Average Grant Date Fair Value per Share Unvested as of January 1, 2022 - $ - Granted 169,153 3.84 Vested (83,333 ) 2.70 Forfeited - - Unvested as of September 30, 2022 85,820 $ 4.95 Unvested as of January 1, 2023 85,820 $ 4.95 Granted 671,350 1.03 Vested (692,805 ) 1.15 Forfeited - - Unvested as of September 30, 2023 64,365 $ 4.95 For the three and nine months ended September 30, 2023, the Company recognized stock-based compensation related to RSUs of $ 29,000 788,577 55,768 366,844 130,110 HEARTCORE ENTERPRISES, INC. |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | NOTE 15 – SHAREHOLDERS’ EQUITY The Company was authorized to issue 200,000,000 0.0001 20,000,000 0.0001 During the period from January 1, 2022 through January 13, 2022, the Company issued 96,000 2.50 220,572 30,000 On February 14, 2022, the Company completed its initial public offering on the NASDAQ Capital Market under the symbol of “HTCR”. The Company offered 3,000,000 5.00 13,724,167 300,460 178,847 On February 14, 2022, 273,489 16 On May 15, 2022, 83,333 Share Repurchase Program On June 1, 2022, the Board of Directors approved a share repurchase program (“2022 Share Repurchase Program”), pursuant to which the Company is authorized to repurchase up to $ 3.5 During the period from June 1, 2022 through September 30, 2022, the Company repurchased 1,349,390 2.59 3.5 On February 1, 2023, 2,500,000 51 3,150,000 As of September 30, 2023 and December 31, 2022, there were 20,842,690 17,649,886 No |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Net loss per common share attributable to HeartCore Enterprises, Inc. | |
NET LOSS PER SHARE | NOTE 16 – NET LOSS PER SHARE Basic net loss per share is calculated on the basis of weighted average outstanding common shares. Diluted net loss per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs and other dilutive securities. Common shares equivalents are determined by applying the treasury stock method to the assumed conversion of share repurchase liability to common shares related to the early exercised stock options and unvested RSUs, and are not included in the calculation of diluted loss per share if their effect would be anti-dilutive. The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022 is as follows: SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Net loss per share - basic and diluted: Numerator: Net loss attributable to HeartCore Enterprises, Inc. common shareholders $ (2,307,220 ) $ (1,970,934 ) $ (1,336,731 ) $ (5,253,026 ) Denominator: Weighted average number of common shares outstanding used in calculating net loss per share 20,842,690 17,835,027 20,257,020 18,014,483 Net loss per share - basic and diluted $ (0.11 ) $ (0.11 ) $ (0.07 ) $ (0.29 ) For the three and nine months ended September 30, 2023 and 2022, the weighted average common shares outstanding are the same for basic and diluted net loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect. HEARTCORE ENTERPRISES, INC. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATION | NOTE 17 – BUSINESS COMBINATION On September 6, 2022, HeartCore USA entered into a share exchange and purchase agreement (“Sigmaways Agreement”) to acquire 51 4,150,000 1,000,000 2,500,000 3,150,000 The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities and non-controlling interest based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Amounts recorded in the business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available. The purchase price was allocated on the acquisition date as follows: SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION Amount Current assets $ 2,066,683 Acquired intangible asset 5,100,000 Non-current assets 47,979 Current liabilities (1,146,900 ) Deferred tax liabilities (1,428,000 ) Non-current liabilities (576,203 ) Goodwill 3,276,441 Non-controlling interest (3,190,000 ) Total purchase consideration $ 4,150,000 The results of operations, financial position and cash flows of Sigmaways and its subsidiaries have been included in the Company’s unaudited consolidated financial statements since the date of acquisition. Sigmaways and its subsidiaries contributed revenues and net loss of $ 6,332,479 855,532 Pro forma results of operations for the business combination have not been presented because they are not material to the unaudited consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022. The Company’s policy is to perform its annual impairment testing on goodwill for its reporting unit on December 31 of each fiscal year or more frequently if events or changes in circumstances indicate that an impairment may exist. The Company did not recognize any impairment loss on goodwill during the nine months ended September 30, 2023. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 18 - SUBSEQUENT EVENTS On October 4, 2023, the Company obtained a five-year term loan in the amount of JPY 10,000,000 73,000 0.2 On October 4, 2023, the Company obtained a five-year term loan in the amount of JPY 10,000,000 73,000 0.6 On October 5, 2023, the Company obtained a five-year term loan in the amount of JPY 30,000,000 219,000 1.45 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. These unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2022. |
Use of Estimates | Use of Estimates In preparing the unaudited consolidated financial statements in conformity U.S. GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for credit losses, useful lives of property and equipment, the impairment of long-lived assets and goodwill, valuation of stock-based compensation, valuation allowance of deferred tax assets, implicit interest rate of operating and financing leases, valuation of asset retirement obligations, valuation of investments in warrants, revenue recognition and purchase price allocation with respect to business combination. Actual results could differ from those estimates. |
COVID-19 | COVID-19 While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the unaudited consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s unaudited consolidated financial statements. HEARTCORE ENTERPRISES, INC. |
Asset Retirement Obligations | Asset Retirement Obligations Pursuant to the lease agreements for the office space, the Company is responsible to restore these spaces back to its original statute at the time of leaving. The Company recognizes an obligation related to these restorations as asset retirement obligation included in other non-current liabilities in the consolidated balance sheets, in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic 410, “Asset Retirement Obligation Accounting”. The Company capitalizes the associated asset retirement cost by increasing the carrying amount of the related property and equipment. The following table presents changes in asset retirement obligations: SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS September 30, December 31, 2023 2022 Beginning balance $ 138,018 $ 155,666 Liabilities incurred 83,821 - Accretion expense 328 459 Foreign currency translation adjustment (24,350 ) (18,107 ) Ending balance $ 197,817 $ 138,018 |
Software Development Costs | Software Development Costs Software development costs are expensed as incurred until the point the Company establishes technological feasibility. Technological feasibility is established upon completion of a detailed program design or the completion of a working model. Costs incurred by the Company between establishment of technological feasibility and the point at which the product is ready for general release are capitalized and amortized over the economic life of the related products. The Company’s software development costs incurred subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred. In the nine months ended September 30, 2023 and 2022, software development costs expensed as incurred amounted to $ 289,303 583,762 |
Investments in Warrants | Investments in Warrants Investments in warrants represent stock warrants of its consulting service customers and are not registered for public sale. The warrants are measured at fair value and any changes in fair value are recognized in other income (expenses). Investments in warrants are classified as long-term if the warrants are exercisable over one year after the date of receipt. |
Investments in Marketable Securities | Investments in Marketable Securities Investments in marketable securities represent equity securities registered for public sale with readily determinable fair value. The marketable securities as of September 30, 2023 were obtained through exercise of stock warrants of its consulting service customers and measured at fair value with changes in fair value recognized in other income (expenses). |
Intangible Asset, Net | Intangible Asset, Net Intangible asset represents the customer relationship acquired from business acquisition of Sigmaways and its subsidiaries. The acquired intangible asset is recognized and measured at fair value at the time of acquisition and is amortized on a straight-line basis over the estimated economic useful life of the respective assets. The estimated useful life of the customer relationship is 8 |
Impairment of Long-Lived Assets Other Than Goodwill | Impairment of Long-Lived Assets Other Than Goodwill Long-lived assets with finite lives, primarily property and equipment, operating lease right-of-use assets and intangible asset, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with ASC Topic 350, “Intangibles – Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of HeartCore Japan and HeartCore Capital Advisors is the Japanese Yen (“JPY”). The functional currency of HeartCore USA, HeartCore Financial and Sigmaways is the United States Dollar (“US$”). The functional currency of Sigmaways B.V. is the Euro (“EUR”). The functional currency of Sigmaways Technologies is the Canada Dollar (“CAD”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited consolidated statements of operations. HEARTCORE ENTERPRISES, INC. The reporting currency of the Company is the US$, and the accompanying unaudited consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited statements of changes in shareholders’ equity (deficit). |
Revenue Recognition | Revenue Recognition The Company recognizes revenues under ASC Topic 606, “Revenue from Contracts with customers”. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of value-added taxes and applicable local government levies. The Company currently generates its revenues from the following main sources: Revenues from On-Premise Software Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. The Company provides on-premise software in the form of both perpetual licenses and term-based licenses which grant the customers with the right for a specified term. Revenues from on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Licenses for on-premise software are typically sold to the customer with maintenance and support services in a bundle. Revenues under the bundled arrangements are allocated based on the relative standalone selling prices (“SSP”) of on-premise software and maintenance and support service. The SSP for maintenance and support services is estimated based upon observable transactions when those services are sold on a standalone basis. The SSP of on-premise software is typically estimated using the residual approach as the Company is unable to establish the SSP for on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence. Revenues from Maintenance and Support Services Maintenance and support services provided with software licenses consist of trouble shooting, technical support and the right to receive unspecified software updates when and if available during the subscription. Revenues from maintenance and support services are recognized over time as such services are performed. Revenues for consumption-based services are generally recognized as the services are performed and accepted by the customers. Revenues from Software as a Service (“SaaS”) The Company’s software is available for use as hosted application arrangements under subscription fee agreements without licensing the rights of the software to the customers. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. The subscription contracts are generally one year or less in length. HEARTCORE ENTERPRISES, INC. Revenues from Software Development and Other Miscellaneous Services The Company provides customers with software development and support services pursuant to their specific requirements, which primarily compose of consulting, integration, training, custom application, and workflow development. The Company also provides other miscellaneous services, such as 3D Space photography. The Company generally recognizes revenue at a point in time when control is transferred to the customers and the Company is entitled to the payment, which is when the promised services are delivered and accepted by the customers. Revenues from Customized Software Development and Services The Company’s customized software development and services revenues primarily include revenues from providing software development solutions and other support services to its customers. The contract pricing is at stated billing rates per hour. These contracts are generally short-term in nature and not longer than one year in duration. For services provided under the contract that result in the transfer of control over time, the underlying deliverable in the contract is owned and controlled by the customer and does not create an asset with an alternative use to the Company. The Company recognizes revenue on rate per hour contracts based on the amount billable to the customer, as the Company has the right to invoice the customer in an amount that directly corresponds with the value to the customer of the Company’s performance to date. Revenues from Consulting Services The Company provides public listing related consulting services to customers pursuant to the specific requirements prescribed in the contracts, which primarily include communicating with intermediary parties, preparing required documents related to the initial public offering and supporting the listing process. The consulting service contracts are generally less than one year in length and normally include both cash and noncash consideration. Cash consideration is paid in installment payments and is recognized in revenue over the period of the contract by reference to progress toward complete satisfaction of that performance obligation. Noncash consideration is in the form of warrants of the customers and is measured at fair value at contract inception. Noncash consideration that is variable for reasons other than only the form of the consideration is included in the transaction price, but is subject to the constraint on variable consideration. The Company assesses the estimated amount of the variable noncash consideration at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. Only when the significant revenues reversal is concluded probable of not occurring can variable consideration be included in revenues. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the variable noncash consideration is recognized in revenues until the underlying uncertainties have been resolved. The timing of revenue recognition may differ from the timing of invoicing to the customers. The Company has determined that its contracts do not include a significant financing component. The Company records a contract asset, which is included in accounts receivable on the consolidated balance sheets, when revenue is recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2023 and 2022 that were included in the opening deferred revenues balance was approximately $ 1.5 1.2 Disaggregation of Revenues The Company disaggregates its revenues from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the three and nine months ended September 30, 2023 and 2022 is as following: SCHEDULE OF DISAGGREGATION OF REVENUES For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues from on-premise software $ 396,647 $ 257,121 $ 1,457,836 $ 1,775,254 Revenues from maintenance and support services 650,603 678,521 2,226,802 2,251,137 Revenues from software as a service (“SaaS”) 148,857 122,347 497,430 352,251 Revenues from software development and other miscellaneous services 474,859 340,742 1,561,655 1,518,032 Revenues from customized software development and services 2,405,907 - 6,332,479 - Revenues from consulting services 612,035 473,745 6,442,229 922,100 Total revenues $ 4,688,908 $ 1,872,476 $ 18,518,431 $ 6,818,774 HEARTCORE ENTERPRISES, INC. The Company’s disaggregation of revenues by product/service is as following: 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues from customer experience management platform $ 1,403,932 $ 1,171,150 $ 4,696,241 $ 4,757,369 Revenues from process mining 99,618 68,560 390,374 453,368 Revenues from robotic process automation 58,051 69,693 271,520 317,110 Revenues from task mining 74,958 66,799 277,725 252,234 Revenues from customized software development and services 2,405,907 - 6,332,479 - Revenues from consulting services 612,035 473,745 6,442,229 922,100 Revenues from others 34,407 22,529 107,863 116,593 Total revenues $ 4,688,908 $ 1,872,476 $ 18,518,431 $ 6,818,774 As of September 30, 2023 and 2022, and for the periods then ended, substantially all of the long-lived assets (excluding intangible asset) and the majority of revenues generated were attributed to the Company’s operation in Japan. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and other receivables. The Company usually does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. For the nine months ended September 30, 2023, customer B and C represent 14.2 13.6 10.0 For the nine months ended September 30, 2023, vendor D, B, A and E represent 26.4 26.2 22.1 15.9 25.9 19.7 16.3 15.5 |
Stock-based Compensation | Stock-based Compensation The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur. HEARTCORE ENTERPRISES, INC. |
Business Combinations | Business Combinations The Company accounts its business combinations using the acquisition method of accounting in accordance with ASC Topic 805. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible asset acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Consideration transferred in a business combination is measured at the fair value as of the date of acquisition. Where the consideration in an acquisition includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability. It is subsequently carried at fair value with changes in fair value reflected in earnings. In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the unaudited consolidated statements of operations and comprehensive loss. Fair value is determined based upon the guidance of ASC Topic 820, “Fair Value Measurements and Disclosures,” and generally are determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgments and estimates. The Company utilizes the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition. |
Fair Value Measurements | Fair Value Measurements The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value: ● Level 1: quoted prices in active markets for identical assets or liabilities; ● Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or ● Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. As of September 30, 2023 and December 31, 2022, the carrying values of current assets, except for investments in marketable securities, and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments. Investments in Warrants The Company received warrants from its customers as noncash consideration from consulting services. The warrants are not registered for public sale and are measured at fair value at contract inception. The Company’s investments in warrants are measured on a recurring basis and carried on the balance sheet at an estimated fair value at the end of the period. The valuation of investments in warrants was determined using a Black-Scholes model of value based upon the stock price, exercise price, expected volatility, time to maturity, and a risk-free interest rate for the term of the warrants exercise. Such valuations are classified within Level 3 of the fair value hierarchy. The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF INVESTMENTS IN WARRANTS \ For the Nine Months Ended September 30, 2023 2022 Fair value of investments in warrants at beginning of the period $ - $ - Warrants received as noncash consideration 4,009,335 - Changes in fair value of investments in warrants (294,565 ) - Investments in warrants converted to marketable securities (1,257,868 ) - Fair value of investments in warrants at end of the period $ 2,456,902 $ - Investments in Marketable Securities The Company’s investments in marketable securities registered for public sale with readily determinable fair value are measured at quoted prices on a recurring basis at the end of the period. Marketable securities are classified within Level 1 of the fair value hierarchy. The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES For the Nine Months Ended September 30, 2023 2022 Fair value of investments in marketable securities at beginning of the period $ - $ - Investments in warrants converted to marketable securities 1,257,868 - Changes in fair value of investments in marketable securities (500,762 ) - Marketable securities sold - - Fair value of investments in marketable securities at end of the period $ 757,106 $ - HEARTCORE ENTERPRISES, INC. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC Topic 326, “Financial Instruments – Credit Losses” is effective for public companies for annual reporting periods, and interim periods within those years beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU No. 2016-13 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is expected to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2021-08 on January 1, 2023 and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements. New Accounting Pronouncements Not Yet Effective The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s unaudited consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS | SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS September 30, December 31, 2023 2022 Beginning balance $ 138,018 $ 155,666 Liabilities incurred 83,821 - Accretion expense 328 459 Foreign currency translation adjustment (24,350 ) (18,107 ) Ending balance $ 197,817 $ 138,018 |
SCHEDULE OF DISAGGREGATION OF REVENUES | SCHEDULE OF DISAGGREGATION OF REVENUES For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues from on-premise software $ 396,647 $ 257,121 $ 1,457,836 $ 1,775,254 Revenues from maintenance and support services 650,603 678,521 2,226,802 2,251,137 Revenues from software as a service (“SaaS”) 148,857 122,347 497,430 352,251 Revenues from software development and other miscellaneous services 474,859 340,742 1,561,655 1,518,032 Revenues from customized software development and services 2,405,907 - 6,332,479 - Revenues from consulting services 612,035 473,745 6,442,229 922,100 Total revenues $ 4,688,908 $ 1,872,476 $ 18,518,431 $ 6,818,774 HEARTCORE ENTERPRISES, INC. The Company’s disaggregation of revenues by product/service is as following: 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues from customer experience management platform $ 1,403,932 $ 1,171,150 $ 4,696,241 $ 4,757,369 Revenues from process mining 99,618 68,560 390,374 453,368 Revenues from robotic process automation 58,051 69,693 271,520 317,110 Revenues from task mining 74,958 66,799 277,725 252,234 Revenues from customized software development and services 2,405,907 - 6,332,479 - Revenues from consulting services 612,035 473,745 6,442,229 922,100 Revenues from others 34,407 22,529 107,863 116,593 Total revenues $ 4,688,908 $ 1,872,476 $ 18,518,431 $ 6,818,774 |
SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES | The following table summarizes the Company’s investments in warrants activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF INVESTMENTS IN WARRANTS \ For the Nine Months Ended September 30, 2023 2022 Fair value of investments in warrants at beginning of the period $ - $ - Warrants received as noncash consideration 4,009,335 - Changes in fair value of investments in warrants (294,565 ) - Investments in warrants converted to marketable securities (1,257,868 ) - Fair value of investments in warrants at end of the period $ 2,456,902 $ - |
Marketable Securities [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES | The following table summarizes the Company’s investments in marketable securities activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES For the Nine Months Ended September 30, 2023 2022 Fair value of investments in marketable securities at beginning of the period $ - $ - Investments in warrants converted to marketable securities 1,257,868 - Changes in fair value of investments in marketable securities (500,762 ) - Marketable securities sold - - Fair value of investments in marketable securities at end of the period $ 757,106 $ - |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Credit Loss [Abstract] | |
SCHEDULE OF ACCOUNTS RECEIVABLE NET | Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE NET September 30, December 31, 2023 2022 Accounts receivable – non-factored $ 2,344,989 $ 551,064 Accounts receivable – factored with recourse 217,250 - Accounts receivable, gross 2,562,239 551,064 Less: allowance for credit losses - - Accounts receivable $ 2,562,239 $ 551,064 |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
SCHEDULE OF PREPAID EXPENSES | Prepaid expenses consist of the following: SCHEDULE OF PREPAID EXPENSES September 30, December 31, 2023 2022 Prepayments to software vendors $ 185,540 $ 162,046 Prepaid marketing and consulting fees 102,839 99,770 Prepaid subscription fees 83,207 113,685 Prepaid insurance premium 208,385 66,023 Others 103,356 96,706 Total $ 683,327 $ 538,230 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY AND EQUIPMENT NET | Property and equipment, net consist of the following: SCHEDULE OF PROPERTY AND EQUIPMENT NET September 30, December 31, 2023 2022 Leasehold improvements $ 471,069 $ 298,637 Machinery and equipment 673,435 316,827 Vehicle 85,111 106,490 Software 142,829 163,049 Subtotal 1,372,444 885,003 Less: accumulated depreciation (619,504 ) (681,376 ) Property and equipment, net $ 752,940 $ 203,627 |
INTANGIBLE ASSET, NET (Tables)
INTANGIBLE ASSET, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF INTANGIBLE ASSETS | Intangible asset, net is as follows: SCHEDULE OF INTANGIBLE ASSETS September 30, December 31, 2023 2022 Customer relationship $ 5,100,000 $ - Less: accumulated amortization (425,000 ) - Intangible asset, net $ 4,675,000 $ - |
SCHEDULE OF AMORTIZATION INTANGIBLE ASSET | As of September 30, 2023, the future estimated amortization cost for intangible asset is as follows: SCHEDULE OF AMORTIZATION INTANGIBLE ASSET Estimated Year Ended December 31, Amortization Remaining of 2023 $ 159,375 2024 637,500 2025 637,500 2026 637,500 2027 637,500 Thereafter 1,965,625 Total $ 4,675,000 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
SCHEDULE OF LEASE COSTS | The components of lease costs are as follows: SCHEDULE OF LEASE COSTS 2023 2022 For the Nine Months Ended September 30, 2023 2022 Finance lease costs Amortization of right-of-use assets $ 15,215 $ 26,825 Interest on lease liabilities 98 370 Total finance lease costs 15,313 27,195 Operating lease costs 286,934 244,688 Total lease costs $ 302,247 $ 271,883 |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES | The following table presents supplemental information related to the Company’s leases: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES 2023 2022 For the Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 98 $ 370 Operating cash flows from operating leases 257,277 243,108 Financing cash flows from finance leases 16,537 29,051 Finance lease right-of-use asset obtained in exchange for finance lease liability 93,117 - Operating lease right-of-use asset obtained in exchange for operating lease liability 317,040 - Remeasurement of operating lease liability and right-of-use asset due to lease modification 12,579 - Weighted average remaining lease term (years) Finance leases 5.0 1.1 Operating leases 7.7 9.4 Weighted average discount rate (per annum) Finance leases 1.32 % 1.32 % Operating leases 1.33 % 1.32 % |
SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES | As of September 30, 2023, the future maturity of lease liabilities is as follows: SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES Year Ended December 31, Finance Lease Operating Lease Remaining of 2023 $ 4,649 $ 101,255 2024 17,844 388,730 2025 17,593 383,300 2026 17,593 321,614 2027 17,593 277,553 Thereafter 13,195 1,142,795 Total lease payments 88,467 2,615,247 Less: imputed interest (2,856 ) (136,089 ) Total lease liabilities 85,611 2,479,158 Less: current portion (17,076 ) (365,241 ) Non-current lease liabilities $ 68,535 $ 2,113,917 |
LONG-TERM DEBTS (Tables)
LONG-TERM DEBTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF LONG-TERM DEBTS | The Company’s long-term debts included bond payable and loans borrowed from banks and other financial institutions, which consist of the following: SCHEDULE OF LONG-TERM DEBTS Name of Financial Institutions Original Amount Borrowed Loan Duration Annual Interest Rate Balance as of September 30, 2023 Balance as of December 31, 2022 Bond payable Corporate bond issued through Resona Bank, Limited JPY 100,000,000 (a)(c) 1/10/2019 – 1/10/2024 0.430 % $ 66,854 $ 228,956 Loans with banks and other financial institutions Resona Bank, Limited JPY 50,000,000 (a)(b) 12/29/2017 – 12/29/2024 0.675 % 63,779 113,677 Resona Bank, Limited JPY 10,000,000 (a)(b) 9/30/2020 – 9/30/2027 0.000 % 39,009 52,705 Resona Bank, Limited JPY 40,000,000 (a)(b) 9/30/2020 – 9/30/2027 0.000 % 156,037 210,822 Resona Bank, Limited JPY 20,000,000 (a)(b) 11/13/2020 – 10/31/2027 1.600 % 79,610 107,227 Sumitomo Mitsui Banking Corporation JPY 100,000,000 (a) 12/28/2018 – 12/28/2023 1.475 % 44,444 165,237 Sumitomo Mitsui Banking Corporation JPY 10,000,000 (a)(b) 12/30/2019 – 12/30/2026 1.975 % 31,849 44,532 The Shoko Chukin Bank, Ltd. JPY30,000,000 9/28/2018 – 8/31/2023 1.200 % - 34,343 The Shoko Chukin Bank, Ltd. JPY50,000,000 7/27/2020 – 6/30/2027 1.290 % 185,854 253,377 The Shoko Chukin Bank, Ltd. JPY30,000,000 7/25/2023 – 6/30/2028 Tokyo Interbank Offered Rate + 1.950 % 193,742 - Japan Finance Corporation JPY80,000,000 11/17/2020 – 11/30/2027 0.210 % 329,456 442,036 Higashi-Nippon Bank JPY 30,000,000 (a) 3/31/2022 – 3/31/2025 1.400 % 105,094 177,669 First Home Bank $ 350,000 (d) 4/18/2019 – 4/18/2029 Wall Street Journal U.S. Prime Rate + 2.750 % 237,336 - U.S. Small Business Administration $ 350,000 (d) 5/30/2020 – 5/30/2050 3.750 % 350,000 - Aggregate outstanding principal balances 1,883,064 1,830,581 Less: unamortized debt issuance costs (5,794 ) (8,969 ) Less: current portion (525,440 ) (697,877 ) Non-current portion $ 1,351,830 $ 1,123,735 (a) These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder. (b) These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts. (c) The bond is guaranteed by Resona Bank, Limited. (d) These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways. |
SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS | As of September 30, 2023, future minimum loan payments are as follows: SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS Loan Year Ended December 31, Payment Remaining of 2023 $ 146,763 2024 462,065 2025 305,291 2026 293,302 2027 262,017 Thereafter 413,626 Total $ 1,883,064 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF INCOME TAX EXPENSES | For the nine months ended September 30, 2023 and 2022, the Company’s income tax expense (benefit) are as follows: SCHEDULE OF INCOME TAX EXPENSES 2023 2022 For the Nine Months Ended September 30, 2023 2022 Current $ 168,549 $ (2,108 ) Deferred (109,690 ) (8,798 ) Income tax expense (benefit) $ 58,859 $ (10,906 ) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
SCHEDULE OF UNVESTED STOCK OPTION | The following table summarizes the Company’s stock option activity for the stock options issued in 2016 for the nine months ended September 30, 2022: SCHEDULE OF UNVESTED STOCK OPTION Number of Stock Options Issued and unvested as of January 1, 2022 183 Vested and exercised 183 Issued and unvested as of September 30, 2022 - |
SCHEDULE OF STOCK OPTION ACTIVITY | The following table summarizes the stock options activity and related information for the nine months ended September 30, 2023 and 2022: SCHEDULE OF STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Intrinsic Value As of January 1, 2022 1,534,500 $ 2.50 9.99 $ - Granted 16,500 2.54 4.59 - Exercised - - - - Forfeited (39,500 ) 2.50 - - As of September 30, 2022 1,511,500 $ 2.50 9.19 $ - As of January 1, 2023 1,466,500 $ 2.50 8.94 $ - Granted 102,000 1.17 9.36 - Exercised - - - - Forfeited (9,500 ) 2.50 - - As of September 30, 2023 1,559,000 $ 2.41 8.27 $ - Vested and exercisable as of September 30, 2023 425,125 $ 2.34 8.19 $ - |
SCHEDULE OF RESTRICTED STOCK UNITS | The following table summarizes the RSUs activity for the nine months ended September 30, 2023 and 2022: SCHEDULE OF RESTRICTED STOCK UNITS Number of RSUs Weighted Average Grant Date Fair Value per Share Unvested as of January 1, 2022 - $ - Granted 169,153 3.84 Vested (83,333 ) 2.70 Forfeited - - Unvested as of September 30, 2022 85,820 $ 4.95 Unvested as of January 1, 2023 85,820 $ 4.95 Granted 671,350 1.03 Vested (692,805 ) 1.15 Forfeited - - Unvested as of September 30, 2023 64,365 $ 4.95 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Net loss per common share attributable to HeartCore Enterprises, Inc. | |
SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE | The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022 is as follows: SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Net loss per share - basic and diluted: Numerator: Net loss attributable to HeartCore Enterprises, Inc. common shareholders $ (2,307,220 ) $ (1,970,934 ) $ (1,336,731 ) $ (5,253,026 ) Denominator: Weighted average number of common shares outstanding used in calculating net loss per share 20,842,690 17,835,027 20,257,020 18,014,483 Net loss per share - basic and diluted $ (0.11 ) $ (0.11 ) $ (0.07 ) $ (0.29 ) |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION | The purchase price was allocated on the acquisition date as follows: SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION Amount Current assets $ 2,066,683 Acquired intangible asset 5,100,000 Non-current assets 47,979 Current liabilities (1,146,900 ) Deferred tax liabilities (1,428,000 ) Non-current liabilities (576,203 ) Goodwill 3,276,441 Non-controlling interest (3,190,000 ) Total purchase consideration $ 4,150,000 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - shares | 3 Months Ended | |||||
Feb. 24, 2022 | Jan. 13, 2022 | Jul. 16, 2021 | Jul. 15, 2021 | Mar. 31, 2022 | Sep. 06, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Stock issued during period, shares | 96,000 | |||||
Common Stock [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Stock issued during period, shares | 3,096,000 | |||||
Share Exchange Agreement [Member] | Stockholder [Member] | Common Stock [Member] | HeartCore Japan [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Stock issued during period, shares | 15,999,994 | |||||
Stock issued during period, exchange shares | 278 | 10,706 | 10,984 | |||
Ownership percentage | 97.50% | |||||
Share Exchange and Purchase Agreement [Member] | Sigmaways Inc [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Business acquisition percentage of voting interest acquired | 51% |
SCHEDULE OF CHANGES IN ASSET RE
SCHEDULE OF CHANGES IN ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 138,018 | $ 155,666 |
Liabilities incurred | 83,821 | |
Accretion expense | 328 | 459 |
Foreign currency translation adjustment | (24,350) | (18,107) |
Ending balance | $ 197,817 | $ 138,018 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Product Information [Line Items] | ||||
Total revenues | $ 4,688,908 | $ 1,872,476 | $ 18,518,431 | $ 6,818,774 |
On Premise Software [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 396,647 | 257,121 | 1,457,836 | 1,775,254 |
Maintenance And Support Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 650,603 | 678,521 | 2,226,802 | 2,251,137 |
Software As A Service Saa S [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 148,857 | 122,347 | 497,430 | 352,251 |
Software Development And Other Miscellaneous Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 474,859 | 340,742 | 1,561,655 | 1,518,032 |
Customised Software Development And Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 2,405,907 | 6,332,479 | ||
Consulting Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 612,035 | 473,745 | 6,442,229 | 922,100 |
Customer Experience Management Platform [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 1,403,932 | 1,171,150 | 4,696,241 | 4,757,369 |
Process Mining [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 99,618 | 68,560 | 390,374 | 453,368 |
Robotic Process Automation [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 58,051 | 69,693 | 271,520 | 317,110 |
Task Mining [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | 74,958 | 66,799 | 277,725 | 252,234 |
Others [Member] | ||||
Product Information [Line Items] | ||||
Total revenues | $ 34,407 | $ 22,529 | $ 107,863 | $ 116,593 |
SCHEDULE OF INVESTMENTS IN WARR
SCHEDULE OF INVESTMENTS IN WARRANTS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Accounting Policies [Abstract] | ||
Fair value of investments in warrants at beginning of the period | ||
Warrants received as noncash consideration | 4,009,335 | |
Changes in fair value of investments in warrants | (294,565) | |
Investments in warrants converted to marketable securities | (1,257,868) | |
Fair value of investments in warrants at end of the period | $ 2,456,902 |
SCHEDULE OF INVESTMENTS IN MARK
SCHEDULE OF INVESTMENTS IN MARKETABLE SECURITIES (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Fair value of investments in warrants at beginning of the period | ||
Investments in warrants converted to marketable securities | (1,257,868) | |
Changes in fair value of investments in marketable securities | (294,565) | |
Fair value of investments in warrants at end of the period | 2,456,902 | |
Marketable Securities [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Fair value of investments in warrants at beginning of the period | ||
Investments in warrants converted to marketable securities | 1,257,868 | |
Changes in fair value of investments in marketable securities | (500,762) | |
Marketable securities sold | ||
Fair value of investments in warrants at end of the period | $ 757,106 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Product Information [Line Items] | ||||
Software development costs | $ 170,071 | $ 58,275 | $ 289,303 | $ 583,762 |
Impairments assets | 0 | 0 | ||
Revenues recognized included deferred revenues | $ 1,500,000 | $ 1,200,000 | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer B [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 14.20% | |||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer C [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 13.60% | |||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer A [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 10% | |||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor D [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 26.40% | 15.50% | ||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor B [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 26.20% | 19.70% | ||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor A [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 22.10% | 25.90% | ||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor E [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 15.90% | |||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Vendor C [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 16.30% | |||
Customer Relationships [Member] | ||||
Product Information [Line Items] | ||||
Estimated useful life | 8 years | 8 years |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE NET (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | $ 2,562,239 | $ 551,064 |
Less: allowance for credit losses | ||
Accounts receivable | 2,562,239 | 551,064 |
Nonfactored [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | 2,344,989 | 551,064 |
Factored With Recourse [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | $ 217,250 |
SCHEDULE OF PREPAID EXPENSES (D
SCHEDULE OF PREPAID EXPENSES (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepayments to software vendors | $ 185,540 | $ 162,046 |
Prepaid marketing and consulting fees | 102,839 | 99,770 |
Prepaid subscription fees | 83,207 | 113,685 |
Prepaid insurance premium | 208,385 | 66,023 |
Others | 103,356 | 96,706 |
Total | $ 683,327 | $ 538,230 |
NOTE RECEIVABLE AND LONG-TERM_2
NOTE RECEIVABLE AND LONG-TERM NOTE RECEIVABLE (Details Narrative) - USD ($) | 9 Months Ended | |||
Sep. 01, 2023 | Jul. 27, 2023 | May 02, 2023 | Sep. 30, 2023 | |
Note Exchange Agreement [Member] | ||||
Short-Term Debt [Line Items] | ||||
Debt conversion shares issued | 600,000 | |||
Promissory Note [Member] | ||||
Short-Term Debt [Line Items] | ||||
Receivables | $ 300,000 | $ 300,000 | ||
Receivables interest rate | 4% | 8% | ||
Debt instrument maturity description | the date of the closing of capital-raising transactions in the amount of $300,000 or more consummated by the promissory note issuer, 2) the date on which the promissory note issuer completes its initial public offering (“IPO”) on the Nasdaq Capital Market or New York Stock Exchange | |||
Interest rate | 10% | 12% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |||
Jan. 13, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
Loan receivable balance | $ 300,000 | |||
Number of common stock issued | 96,000 | |||
Share price | $ 2.50 | |||
Proceeds private placement | $ 220,572 | |||
Heartcore Technology Inc., [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
Loan receivable balance | $ 226,515 | 294,919 | ||
Related party annual interest rate | 1.475% | |||
Repayment of debt related party | $ 34,823 | $ 33,042 | ||
Sumitaka Yamamoto [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
Other receivables | 7,859 | $ 402 | ||
Operating costs and expenses | $ 7,562 | $ 3,098 | ||
Officers [Member] | Private Placement [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
Number of common stock issued | 30,000 | |||
Share price | $ 2.50 | |||
Proceeds private placement | $ 75,000 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT NET (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 1,372,444 | $ 885,003 |
Less: accumulated depreciation | (619,504) | (681,376) |
Property and equipment, net | 752,940 | 203,627 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 471,069 | 298,637 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 673,435 | 316,827 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 85,111 | 106,490 |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 142,829 | $ 163,049 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expenses | $ 70,200 | $ 64,398 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Customer relationship | $ 5,100,000 | |
Less: accumulated amortization | (425,000) | |
Intangible asset, net | $ 4,675,000 |
SCHEDULE OF AMORTIZATION INTANG
SCHEDULE OF AMORTIZATION INTANGIBLE ASSET (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remaining of 2023 | $ 159,375 | |
2024 | 637,500 | |
2025 | 637,500 | |
2026 | 637,500 | |
2027 | 637,500 | |
Thereafter | 1,965,625 | |
Intangible asset, net | $ 4,675,000 |
INTANGIBLE ASSET, NET (Details
INTANGIBLE ASSET, NET (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 425,000 |
SCHEDULE OF LEASE COSTS (Detail
SCHEDULE OF LEASE COSTS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||
Amortization of right-of-use assets | $ 15,215 | $ 26,825 |
Interest on lease liabilities | 98 | 370 |
Total finance lease costs | 15,313 | 27,195 |
Operating lease costs | 286,934 | 244,688 |
Total lease costs | $ 302,247 | $ 271,883 |
SCHEDULE OF SUPPLEMENTAL INFORM
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO THE COMPANY’S LEASES (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||
Operating cash flows from finance leases | $ 98 | $ 370 |
Operating cash flows from operating leases | 257,277 | 243,108 |
Financing cash flows from finance leases | 16,537 | 29,051 |
Finance lease right-of-use asset obtained in exchange for finance lease liability | 93,117 | |
Operating lease right-of-use asset obtained in exchange for operating lease liability | 317,040 | |
Remeasurement of operating lease liability and right-of-use asset due to lease modification | $ 12,579 | |
Weighted average remaining lease term (years) Finance leases | 5 years | 1 year 1 month 6 days |
Weighted average remaining lease term (years) Operating leases | 7 years 8 months 12 days | 9 years 4 months 24 days |
Weighted-average discount rate: (per annum) Finance leases | 1.32% | 1.32% |
Weighted-average discount rate: (per annum) Operating leases | 1.33% | 1.32% |
SCHEDULE OF FINANCE LEASE AND O
SCHEDULE OF FINANCE LEASE AND OPERATING LEASE FUTURE MATURITY OF LEASE LIABILITIES (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Finance Lease, Liability [Abstract] | ||
Remaining of 2023 | $ 4,649 | |
2024 | 17,844 | |
2025 | 17,593 | |
2026 | 17,593 | |
2027 | 17,593 | |
Thereafter | 13,195 | |
Total lease payment | 88,467 | |
Less: imputed interest | (2,856) | |
Total lease liabilities | 85,611 | |
Less: current portion | (17,076) | $ (19,294) |
Non-current lease liabilities | 68,535 | 459 |
Operating Lease, Liability [Abstract] | ||
Remaining of 2023 | 101,255 | |
2024 | 388,730 | |
2025 | 383,300 | |
2026 | 321,614 | |
2027 | 277,553 | |
Thereafter | 1,142,795 | |
Total lease payment | 2,615,247 | |
Less: imputed interest | (136,089) | |
Total lease liabilities | 2,479,158 | |
Less: current portion | (365,241) | (291,863) |
Non-current lease liabilities | $ 2,113,917 | $ 2,421,054 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Impairment Effects on Earnings Per Share [Line Items] | ||
Security deposits | $ 338,220 | $ 244,395 |
Property, Plant and Equipment [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Finance lease right of use asset | $ 85,591 | $ 18,335 |
FACTORING LIABILITY (Details Na
FACTORING LIABILITY (Details Narrative) - Factoring Agreement [Member] | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Accounts receivable purchase | $ 850,000 |
Percentage of face value of accounts receivable received by wire transfer | 90% |
Total amount outstanding as per agreementr | $ 217,250 |
Interest expense | $ 54,790 |
INSURANCE PREMIUM FINANCING (De
INSURANCE PREMIUM FINANCING (Details Narrative) - USD ($) | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Feb. 28, 2023 | Dec. 31, 2022 | Feb. 28, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Insurance premium financing | $ 122,279 | ||||
Insurance interest incurred | $ 25,988 | $ 19,859 | |||
Insurance Premium Financing Agreement [Member] | Bank Direct Capital Finance [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Insurance premium financing | $ 389,035 | $ 388,538 | |||
Interest rate percentage | 16.04% | 12.80% |
SCHEDULE OF LONG-TERM DEBTS (De
SCHEDULE OF LONG-TERM DEBTS (Details) | 9 Months Ended | |||
Sep. 30, 2023 JPY (¥) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | ||
Schedule of Investments [Line Items] | ||||
Long-Term Debt | $ 1,883,064 | $ 1,830,581 | ||
Unamortized Debt Issuance Expense | (5,794) | (8,969) | ||
Long-Term Debt, Current Maturities | (525,440) | (697,877) | ||
Long-Term Debt, Excluding Current Maturities | 1,351,830 | 1,123,735 | ||
Resona Bank, Limited [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 12/29/2017 – 12/29/2024 | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.675% | |||
Original Amount Borrowed | ¥ | [1],[2] | ¥ 50,000,000 | ||
Long-Term Debt | 63,779 | 113,677 | ||
Resona Bank, Limited One [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 9/30/2020 – 9/30/2027 | |||
Debt Instrument, Interest Rate, Stated Percentage | 0% | |||
Original Amount Borrowed | ¥ | [1],[2] | ¥ 10,000,000 | ||
Long-Term Debt | 39,009 | 52,705 | ||
Resona Bank, Limited Two [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 9/30/2020 – 9/30/2027 | |||
Debt Instrument, Interest Rate, Stated Percentage | 0% | |||
Original Amount Borrowed | ¥ | [1],[2] | ¥ 40,000,000 | ||
Long-Term Debt | 156,037 | 210,822 | ||
Resona Bank, Limited Three [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 11/13/2020 – 10/31/2027 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.60% | |||
Original Amount Borrowed | ¥ | [1],[2] | ¥ 20,000,000 | ||
Long-Term Debt | 79,610 | 107,227 | ||
Sumitomo Mitsui Banking Corporation [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 12/28/2018 – 12/28/2023 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.475% | |||
Original Amount Borrowed | ¥ | [1] | ¥ 100,000,000 | ||
Long-Term Debt | 44,444 | 165,237 | ||
Sumitomo Mitsui Banking Corporation One [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 12/30/2019 – 12/30/2026 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.975% | |||
Original Amount Borrowed | ¥ | [1],[2] | ¥ 10,000,000 | ||
Long-Term Debt | 31,849 | 44,532 | ||
The Shoko Chukin Bank, Ltd. [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 9/28/2018 – 8/31/2023 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.20% | |||
Original Amount Borrowed | ¥ | ¥ 30,000,000 | |||
Long-Term Debt | 34,343 | |||
The Shoko Chukin Bank, Ltd One [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 7/27/2020 – 6/30/2027 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.29% | |||
Original Amount Borrowed | ¥ | ¥ 50,000,000 | |||
Long-Term Debt | 185,854 | 253,377 | ||
The Shoko Chukin Bank Ltd Two [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 7/25/2023 – 6/30/2028 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.95% | |||
Original Amount Borrowed | ¥ | ¥ 30,000,000 | |||
Long-Term Debt | 193,742 | |||
Japan Finance Corporation One [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 11/17/2020 – 11/30/2027 | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.21% | |||
Original Amount Borrowed | ¥ | ¥ 80,000,000 | |||
Long-Term Debt | 329,456 | 442,036 | ||
Higashi Nippon Bank [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 3/31/2022 – 3/31/2025 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.40% | |||
Original Amount Borrowed | ¥ | [1] | ¥ 30,000,000 | ||
Long-Term Debt | 105,094 | 177,669 | ||
First Home Bank [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 4/18/2019 – 4/18/2029 | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.75% | |||
Original Amount Borrowed | ¥ | [3] | ¥ 350,000 | ||
Long-Term Debt | 237,336 | |||
U S Small Business Administration [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 5/30/2020 – 5/30/2050 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.75% | |||
Original Amount Borrowed | ¥ | [3] | ¥ 350,000 | ||
Long-Term Debt | 350,000 | |||
Corporate Bond Securities [Member] | Resona Bank, Limited [Member] | ||||
Schedule of Investments [Line Items] | ||||
Debt Instrument, Maturity Date, Description | 1/10/2019 – 1/10/2024 | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.43% | |||
Original Amount Borrowed | ¥ | [1],[4] | ¥ 100,000,000 | ||
Long-Term Debt | $ 66,854 | $ 228,956 | ||
[1]These debts are guaranteed by Sumitaka Yamamoto, the Company’s CEO and major shareholder.[2]These debts are guaranteed by Tokyo Credit Guarantee Association, and the Company has paid guarantee expenses for these debts.[3]These debts are guaranteed by Prakash Sadasivam, CEO of Sigmaways and CSO of the Company, and secured by all assets of Sigmaways.[4]The bond is guaranteed by Resona Bank, Limited. |
SCHEDULE OF FUTURE MINIMUM LOAN
SCHEDULE OF FUTURE MINIMUM LOAN PAYMENTS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Remaining of 2023 | $ 146,763 | |
2024 | 462,065 | |
2025 | 305,291 | |
2026 | 293,302 | |
2027 | 262,017 | |
Thereafter | 413,626 | |
Total | $ 1,883,064 | $ 1,830,581 |
LONG-TERM DEBTS (Details Narrat
LONG-TERM DEBTS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Disclosure [Abstract] | ||
Interest expense for long-term debts | $ 44,295 | $ 19,502 |
SCHEDULE OF INCOME TAX EXPENSES
SCHEDULE OF INCOME TAX EXPENSES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Current | $ 168,549 | $ (2,108) | ||
Deferred | (109,690) | (8,798) | ||
Income tax expense (benefit) | $ 19,413 | $ (19,069) | $ 58,859 | $ (10,906) |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 9 Months Ended | ||
Jan. 01, 2010 | Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Loss Carryforwards [Line Items] | |||
Income tax examination, description | Sigmaways B.V. is a company incorporated in Amsterdam in Netherlands in November 2019. The first EUR200,000 of taxable income will be taxed at 19% and the remaining taxable income will be taxed at statutory tax rate of 25.80% | ||
Effective tax rate | (3.47%) | 0.21% | |
Domestic Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Effective statutory rate | 21% | ||
Foreign Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Effective statutory rate | 15% | 34.59% | 34.59% |
Taxable income, rate | 38% | ||
Federal tax abatement, after | 28% | ||
Foreign Tax Authority [Member] | Minimum [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Effective statutory rate | 2% | ||
Foreign Tax Authority [Member] | Maximum [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Effective statutory rate | 12% |
SCHEDULE OF UNVESTED STOCK OPTI
SCHEDULE OF UNVESTED STOCK OPTION (Details) - Equity Option [Member] | 9 Months Ended |
Sep. 30, 2022 shares | |
Offsetting Assets [Line Items] | |
Issued and unvested as of January 1, 2022 | 183 |
Vested and exercised | 183 |
Issued and unvested as of September 30, 2022 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($) | 9 Months Ended | ||
Feb. 14, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |||
Number of Options balance | 1,466,500 | 1,534,500 | |
Weighted Average Exercise Price, balance | $ 2.50 | $ 2.50 | |
Weighted Average Remaining Term (Years) | 8 years 11 months 8 days | 9 years 11 months 26 days | |
Intrinsic Value | |||
Number of Options, Granted | 102,000 | 16,500 | |
Weighted Average Exercise Price, Granted | $ 1.17 | $ 2.54 | |
Weighted Average Remaining Term (Years), Granted | 9 years 4 months 9 days | 4 years 7 months 2 days | |
Number of Options, Exercised | 273,489 | ||
Weighted Average Exercise Price, Exercised | $ 0 | ||
Number of Options, Forfeited | (9,500) | (39,500) | |
Weighted Average Exercise Price, Forfeited | |||
Number of Options, balance | 1,559,000 | 1,511,500 | |
Weighted Average Exercise Price, balance | $ 2.41 | $ 2.50 | |
Weighted Average Remaining Term (Years) | 8 years 3 months 7 days | 9 years 2 months 8 days | |
Intrinsic Value | |||
Number of Options, Vested and exercisable, balance | 425,125 | ||
Weighted Average Exercise Price, Vested and exercisable, balance | $ 2.34 | ||
Weighted Average Remaining Term (Years), Vested and exercisable, balance | 8 years 2 months 8 days | ||
Intrinsic Value |
SCHEDULE OF RESTRICTED STOCK UN
SCHEDULE OF RESTRICTED STOCK UNITS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of Restricted Stock Units, Unvested balance | 85,820 | |
Weighted Average Grant Date Fair Value per Share, balance | $ 4.95 | |
Number of Restricted Stock Units, Granted | 671,350 | 169,153 |
Weighted Average Grant Date Fair Value per Share, Granted | $ 1.03 | $ 3.84 |
Number of Restricted Stock Units, Vested | (692,805) | (83,333) |
Weighted Average Grant Date Fair Value per Share, Vested | $ 1.15 | $ 2.70 |
Number of Restricted Stock Units, Forfeited | ||
Weighted Average Grant Date Fair Value per Share, Forfeited | ||
Number of Restricted Stock Units, Unvested balance | 64,365 | 85,820 |
Weighted Average Grant Date Fair Value per Share, balance | $ 4.95 | $ 4.95 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||
Aug. 25, 2023 $ / shares shares | Mar. 22, 2023 USD ($) shares | Feb. 03, 2023 $ / shares shares | Aug. 09, 2022 $ / shares shares | Aug. 02, 2022 $ / shares shares | May 15, 2022 shares | Feb. 25, 2022 USD ($) shares | Feb. 14, 2022 shares | Feb. 09, 2022 USD ($) shares | Dec. 25, 2021 $ / shares shares | Nov. 03, 2021 shares | May 31, 2016 $ / shares shares | Sep. 30, 2023 USD ($) | Mar. 31, 2023 shares | Sep. 30, 2022 USD ($) | Jun. 30, 2022 shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Aug. 01, 2023 shares | Jan. 13, 2022 $ / shares | Dec. 31, 2021 USD ($) | Dec. 31, 2021 JPY (¥) | Aug. 06, 2021 shares | May 31, 2016 ¥ / shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Options granted | 102,000 | 16,500 | ||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Number of option forfeited | 9,500 | 39,500 | ||||||||||||||||||||||
Option exercise price per share | $ / shares | $ 0 | |||||||||||||||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Allocated share base compensation | $ | $ 29,000 | $ 55,768 | $ 788,577 | $ 366,844 | ||||||||||||||||||||
Unamortized share based compensation | $ | 130,110 | 130,110 | ||||||||||||||||||||||
Service Agreement [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Number of restricted stock issued | 671,350 | 83,333 | 83,333 | |||||||||||||||||||||
RSUs grant date fair value | $ | $ 691,491 | $ 224,999 | ||||||||||||||||||||||
Equity Option [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Number of options vested | 183 | |||||||||||||||||||||||
Allocated share base compensation | $ | 144,306 | $ 280,883 | 479,122 | $ 858,633 | ||||||||||||||||||||
Unamortized share based compensation | $ | $ 578,075 | $ 578,075 | ||||||||||||||||||||||
2021 Equity Incentive Plan [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Share based compensation authorized | 2,400,000 | |||||||||||||||||||||||
2023 Equity Incentive Plan [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Share based compensation authorized | 2,000,000 | |||||||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Options granted | 692,804 | 83,333 | ||||||||||||||||||||||
Number of shares issued in acquisition | 2,500,000 | |||||||||||||||||||||||
HeartCore Japan [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Options granted | 484,056 | |||||||||||||||||||||||
Other current liabilities | $ 16 | ¥ 1,830 | ||||||||||||||||||||||
Number of options vested | 183 | |||||||||||||||||||||||
HeartCore Japan [Member] | Common Stock [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Repurchase liability, shares | $ | $ 16 | |||||||||||||||||||||||
Repurchase liability, value | 273,489 | |||||||||||||||||||||||
HeartCore Japan [Member] | IPO [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Number of options vested | 183 | |||||||||||||||||||||||
Allocated share base compensation | $ | $ 11,005 | |||||||||||||||||||||||
Employees [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Options granted | 2,000 | |||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 2.94 | |||||||||||||||||||||||
Percentage of shares expected to be vested | 25% | 50% | 25% | |||||||||||||||||||||
Expiration date | Aug. 25, 2033 | Feb. 03, 2033 | Aug. 02, 2032 | |||||||||||||||||||||
Employees [Member] | HeartCore Japan [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Options granted | 507 | |||||||||||||||||||||||
Number of shares issued in acquisition | 1,494 | |||||||||||||||||||||||
Shares issued price per share | (per share) | $ 0.09 | ¥ 10 | ||||||||||||||||||||||
Options granted | 324 | |||||||||||||||||||||||
Chief Executive Officer [Member] | HeartCore Japan [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Number of option forfeited | 324 | |||||||||||||||||||||||
Officers, Directors, Employees and Consultants [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Option to purchase common stock | 1,534,500 | |||||||||||||||||||||||
Option exercise price per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Percentage of shares expected to be vested | 25% | |||||||||||||||||||||||
Expiration date | Dec. 25, 2031 | |||||||||||||||||||||||
Three Prior Employees [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Options granted | 2,000 | 100,000 | 14,500 | |||||||||||||||||||||
Shares issued price per share | $ / shares | $ 1.10 | $ 1.17 | $ 2.48 | |||||||||||||||||||||
Expiration date | Aug. 09, 2026 | |||||||||||||||||||||||
Five Executives [Member] | 2021 Equity Incentive Plan [Member] | Executive Employment Agreements [Member] | ||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||
Percentage of shares expected to be vested | 25% | |||||||||||||||||||||||
Number of restricted stock issued | 85,820 | |||||||||||||||||||||||
RSUs grant date fair value | $ | $ 424,809 |
SHAREHOLDERS_ EQUITY (Details N
SHAREHOLDERS’ EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||||||||||||
Mar. 22, 2023 | Feb. 01, 2023 | May 15, 2022 | Feb. 25, 2022 | Feb. 14, 2022 | Jan. 13, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jun. 01, 2022 | Dec. 31, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | |||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||||||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | |||||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | |||||||||||||
Issuance of common shares for cash, shares | 96,000 | ||||||||||||||
Shares Issued, Price Per Share | $ 2.50 | ||||||||||||||
Proceeds from Issuance of Private Placement | $ 220,572 | ||||||||||||||
Proceeds from issuance initial public offering | $ 13,602,554 | ||||||||||||||
Debt Issuance Costs, Net | $ 300,460 | ||||||||||||||
Deferred cost recognized | $ 178,847 | ||||||||||||||
Common stock issued from exercise of stock option | 273,489 | ||||||||||||||
Common stock issued from exercise of stock option, shares | $ 16 | $ 16 | |||||||||||||
Stock Repurchased During Period, Value | $ 2,163,238 | $ 1,336,762 | |||||||||||||
Common stock, shares issued | 20,842,690 | 17,649,886 | |||||||||||||
Common stock, shares outstanding | 20,842,690 | 17,649,886 | |||||||||||||
Preferred stock, shares issued | 0 | 0 | |||||||||||||
Preferred stock, shares outstanding | 0 | 0 | |||||||||||||
Common Stock [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Issuance of common shares for cash, shares | 3,096,000 | ||||||||||||||
Common stock issued from exercise of stock option | 273,489 | ||||||||||||||
Common stock issued from exercise of stock option, shares | $ 27 | ||||||||||||||
Stock Repurchased During Period, Value | |||||||||||||||
2022 Share Repurchase Program [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Repurchase | $ 3,500,000 | ||||||||||||||
2022 Share Repurchase Program [Member] | Common Stock [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Shares Issued, Price Per Share | $ 2.59 | $ 2.59 | $ 2.59 | ||||||||||||
Stock Repurchased During Period, Shares | 1,349,390 | ||||||||||||||
Stock Repurchased During Period, Value | $ 3,500,000 | ||||||||||||||
2022 Share Repurchase Program [Member] | Common Stock [Member] | Sigmaways [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Ownership percent | 51% | ||||||||||||||
2022 Share Repurchase Program [Member] | Common Stock [Member] | Sigmaways [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Share issued | 2,500,000 | ||||||||||||||
Share issued, value | $ 3,150,000 | ||||||||||||||
Service Agreement [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Number of restricted stock issued | 671,350 | 83,333 | 83,333 | ||||||||||||
IPO [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Issuance of common shares for cash, shares | 3,000,000 | ||||||||||||||
Share Price | $ 5 | ||||||||||||||
Proceeds from issuance initial public offering | $ 13,724,167 | ||||||||||||||
Officer [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Issuance of common shares for cash, shares | 30,000 |
SCHEDULE OF COMPUTATION OF BASI
SCHEDULE OF COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net loss per common share attributable to HeartCore Enterprises, Inc. | ||||
Net loss attributable to HeartCore Enterprises, Inc. common shareholders | $ (2,307,220) | $ (1,970,934) | $ (1,336,731) | $ (5,253,026) |
Weighted average common shares outstanding - basic | 20,842,690 | 17,835,027 | 20,257,020 | 18,014,483 |
Weighted average common shares outstanding - diluted | 20,842,690 | 17,835,027 | 20,257,020 | 18,014,483 |
Net income (loss) per share - basic | $ (0.11) | $ (0.11) | $ (0.07) | $ (0.29) |
Net income (loss) per share - diluted | $ (0.11) | $ (0.11) | $ (0.07) | $ (0.29) |
SCHEDULE OF BUSINESS PURCHASE P
SCHEDULE OF BUSINESS PURCHASE PRICE ALLOCATION (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 06, 2022 |
Business Combination and Asset Acquisition [Abstract] | |||
Current assets | $ 2,066,683 | ||
Acquired intangible asset | 5,100,000 | ||
Non-current assets | 47,979 | ||
Current liabilities | (1,146,900) | ||
Deferred tax liabilities | (1,428,000) | ||
Non-current liabilities | (576,203) | ||
Goodwill | $ 3,276,441 | 3,276,441 | |
Non-controlling interest | (3,190,000) | ||
Total purchase consideration | $ 4,150,000 |
BUSINESS COMBINATION (Details N
BUSINESS COMBINATION (Details Narrative) - USD ($) | 8 Months Ended | |
Sep. 06, 2022 | Sep. 30, 2023 | |
Business Acquisition [Line Items] | ||
Revenue | $ 6,332,479 | |
Net loss | $ 855,532 | |
Purchase Agreement [Member] | Sigmaways [Member] | ||
Business Acquisition [Line Items] | ||
Purchase combination consideration | $ 41,500 | |
Purchase consideration, cost | $ 10,000 | |
Acquisition, shares | 25,000 | |
Debt instrument, fair value | $ 31,500 | |
Purchase Agreement [Member] | Sigamaways Inc [Member] | ||
Business Acquisition [Line Items] | ||
Business acquisition percentage of voting interests acquired | 51% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Oct. 05, 2023 USD ($) | Oct. 05, 2023 JPY (¥) | Oct. 04, 2023 USD ($) | Oct. 04, 2023 JPY (¥) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Subsequent Event [Line Items] | ||||||
Debt conversion original debt amount | $ 1,883,064 | $ 1,830,581 | ||||
The Shoko Chukin Bank, Ltd. [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt conversion original debt amount | 34,343 | |||||
Debt conversion interest rate | 1.20% | |||||
The Shoko Chukin Bank, Ltd. [Member] | Subsequent Event [Member] | Five Year Term Loan One [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt conversion original debt amount | $ 73,000 | ¥ 10,000,000 | ||||
Debt conversion interest rate | 20% | 20% | ||||
The Shoko Chukin Bank, Ltd. [Member] | Subsequent Event [Member] | Five Year Term Loan Two [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt conversion original debt amount | $ 73,000 | ¥ 10,000,000 | ||||
Debt conversion interest rate | 60% | 60% | ||||
Higashi Nippon Bank [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt conversion original debt amount | $ 105,094 | $ 177,669 | ||||
Debt conversion interest rate | 1.40% | |||||
Higashi Nippon Bank [Member] | Subsequent Event [Member] | Five Year Term Loan Three [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt conversion original debt amount | $ 219,000 | ¥ 30,000,000 | ||||
Debt conversion interest rate | 145% | 145% |